On the 17th of May 2022, the President of the Office of Competition and Consumer Protection published information that an administrative fine of over PLN 5.3 million has been imposed on the Lithuanian company Vinted UAB, the operator of a popular platform for buying and selling second-hand clothes.
What are the exact violations against Vinted?
The reason for the penalty was that the company neglected its information obligations related to the transfer of data about the conditions for transferring funds from the clothes’ sale from the service operator’s account to the bank account of the person who sold the product via the platform. In addition, according to the President of the UOKiK, the company failed to inform buyers that they could purchase clothes without incurring costs associated with participation in a buyer protection program launched as part of the platform. In the opinion of the President of the UOKiK, such actions constitute unfair market practices within the meaning of the Act on counteracting unfair market practices. The President of the Office of Competition and Consumer Protection found that the company violated the collective interests of consumers and ordered the entrepreneur to remove the violations.
An e-wallet activation
Within the Vinted. pl platform users can post ads for second-hand clothes and buy clothes displayed there. The Vinted platform operator offers the possibility to use an integrated payment system provided by an external provider – Ayden. To use this method of transferring funds between the buyer, the platform operator, and the seller, it is necessary to activate the e-wallet, from which the funds can be transferred to the seller’s bank account. Without its activation, the seller could not fully dispose of the funds from the sale.
Activation of the e-wallet required the merchant to provide the payment service provider with their personal information: name, surname, date of birth, and address. At further stages of the wallet’s use, sellers were required to provide further personal information, including a scan of their ID or passport.
The payment service provider most likely asked users to provide the indicated data to perform its statutory obligations – payment service providers are obliged institutions as defined in Art. 2 (1) para. 3 of the Act on Counteracting Money Laundering and Terrorist Financing. Therefore, they must verify the identity of persons using their services. The problem was that both at the stage of creating an account and when placing an ad on Vinted, the President of the UOKiK did not inform users that setting up an e-wallet and undergoing identity verification by Ayden would be necessary.
Buyer Protection Program
Additionally, Vinted offers buyers the possibility to participate in the Buyer Protection Program, which facilitates claims in case the product purchased by the platform turned out to be defective or was not delivered to the buyer at all. Participation in the program involves paying an additional fee. Vinted implicitly qualified buyers for the program, but did not provide clearly and transparently how to resign from the program.
Information omission and unfair market practice
Within the meaning of Art. 5(1) of the Act on Counteracting Unfair Market Practices, unfair market practice is any misleading action if the action in any way causes or is likely to cause the average consumer to take a contractual decision that he would not have taken otherwise. An action may be deemed misleading if the provision of incorrect information or omission of a material fact affects the consumer’s decision whether to agree with the seller.
In the opinion of the President of the Office for Competition and Consumer Protection, both the omission of the need to activate the e-wallet in the tool provided by Ayden and the lack of information about the possibility of opt-out of the buyer protection program were misleading practices. This is understandable. Awareness of the threat of fraudsters phishing users to gain access to their bank accounts or to make bank commitments on their accounts is increasing. It can be expected that the sudden request to provide a scan of an ID may have aroused some suspicion among some sellers who were reluctant to provide their data to an unknown company. The operator of Vinted did not warn users about the necessity of providing additional data to Ayden.
The lack of information on how to opt-out of the buyer protection program may have caused a significant number of buyers who would not otherwise have been interested in additional protection to incur unnecessary expenses. For these reasons, the President of the Office for Competition and Consumer Protection found that Vinted’s omission of the information indicated above was a misleading practice. The company does not agree with the penalty and intends to appeal the decision.
Vinted has recently announced that it will move its operations to another platform along with the accounts of its existing users. It is also possible that this will be an opportunity to make some changes in terms of informing consumers about the terms of sale within the platform.
A valuable lesson for e-commerce entities
According to the President of the Office of Competition and Consumer Protection suggestions, e-commerce entities that want to facilitate payments for consumers by offering an external integrated payment service should provide them with information about all the steps necessary to use this service. They should also be aware that payment service providers have clear responsibilities regarding customer identity verification and will seek to obtain certain data from them. It is essential to point out to consumers that such requests may be addressed to them in order not to expose themselves to accusations of deceptive practices.
By Magdalena Wielgosz, Junior Associate, Konieczny Wierzbicki