Ecommerce in Bulgaria

For the last five years, the annual growth in the e-commerce sector in Bulgaria is between 21% and 35%. The Bulgarian E-commerce Association reports over 1,530,000 customers shopped online in 2019. The share of e-commerce in GDP grew from 0.48% in 2014 to 1.53% in 2019. The trend of rapid development in the e-commerce sector has continued in 2020 and 2021.

There is no general requirement that prevents foreign companies from conducting e-commerce business in Bulgaria. There is no need for a business entity to establish a local presence: products and services can be sold from abroad. However, foreign entities wishing to sell their goods/services online in Bulgaria can do so through a subsidiary or a local branch. Selling from abroad may require tax registration even without an established presence.

It is important to note that where the law of a Member State of the European Union applies to a distance contract, the consumers may not waive the rights conferred on them by the Bulgarian Consumer Protection Act. Consumers will also not lose the protection granted by the consumer protection legislation of a Member State, transposing the requirements of Directive 2011/83/EU, where the distance contract is closely related with that Member State. The contract is closely linked to a Member State, e.g. where the trader directs its commercial activities to the Member State, e.g. the website offers the respective Member State language version, or advertising or marketing is directed to consumers in the Member State.

As a general rule, Bulgarian law allows business entities to freely participate in e-commerce business. Starting such activity does not involve any additional obligations in terms of licencing requirements compared to traditional retail activity. In practice, there is no need to obtain a licences or permit to run an online store.

Specific rules may apply in the case of certain product categories, including an obligation to obtain a relevant authorisation (e.g. in the case of foodstuffs) or license. However, these are product-specific requirements and apply to all sales channels. It is expressly prohibited to offer and sell medicinal products available on medical prescription by means of distance contracts.

Apart from the number of supply and logistic contracts in place, there are some specifics for setting up an e-commerce platform that must be addressed.

• Domain name: The domain name serves as an address for the e-commerce business. A wide choice of domain extensions is available, both national (.bg), and international, more suitable for cross-border activity (such as .eu or .com). It is also possible to offer goods via marketplaces.
• Hosting services: Hosting services may be acquired as cloud servers, shared webhosting, virtual private servers and dedicated servers
• IT-related services: A smooth ordering process is one of the key elements of creating a good customer experience. To achieve this, the e-commerce business has to ensure an appropriate level of IT services.
• Creative services: Sourcing creative services is required to set up a website, including both design and technical aspects of various applications and functionalities, such as invoicing, accounting, marketing tools and customer relationship management. 
• Logistics: Logistics is the backbone of a successful e-commerce business. The logistics processes include product sourcing, stock (inventory) management, order management, packaging, and delivery, as well as the management of (and sometimes picking up) product returns. E-commerce logistics may also be outsourced to a third-party logistics provider. A new alternative to the traditional logistics chain is dropshipping. In this model, the e-commerce entity forwards customers’ orders to another company, which fulfils the orders by shipping the items directly to the customer on behalf of the e-commerce entity. 
• Payments: Cash on delivery remains a popular payment method; however, a wide array of electronic and non-cash payments are also available to e-commerce businesses. These include payments by various types of credit and debit cards, quick online transfers, electronic wallets, mobile money, and alternative currency payment processors. 

If the e-commerce website is directed to consumers, the key is to ensure that all consumer rights are observed. Under the Bulgarian Consumer Protection Act (the “CPA”), consumers are natural persons who acquire products or use services for purposes that do not fall within their commercial or professional activity, and any natural persons who, as a party to a contract under the CPA, act outside their commercial or professional activity.

There are significant differences compared to B2B relations.  In particular, the CPA contains specific requirements on the information that must be provided to the consumer before the consumer is bound by a distance contract. The information must be provided in Bulgarian, in a clear and comprehensible manner. The information includes:

1. the main characteristics of the goods or services, to the extent appropriate to the medium and to the goods or services;
2. the name of the trader;
3. the registered head office and address of the trader; its telephone number, email address and website, where available, to enable the consumer to contact the trader; and if different from the registered address, the address of the place of business of the trader;
4. the total price of the goods or services including taxes, or where the nature of the goods or services is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated, as well as information on all additional freight, delivery or postal charges and any other costs; the distance communication cost for the conclusion of the contract where that cost is calculated other than at the basic rate;
5. the arrangements for payment, delivery, performance, the trader’s complaint handling policy;
6. the conditions, time limit and procedures for exercising that right of withdrawal and the conditions on bearing the withdrawal costs, as well as a model withdrawal form;
7. a reminder of the existence of a legal guarantee of conformity for goods with the sales contract;
8.  where applicable, the existence and the conditions of after sale customer assistance or services and commercial guarantees;
9. where applicable, the existence of relevant codes of conduct, where such codes are available and how copies of them can be obtained;
10. duration of the contract, where applicable, if the contract is of indeterminate duration or is to be extended automatically, the conditions for terminating the contract;
11. where applicable, the minimum duration of the consumer’s obligations under the contract;
12. where applicable, the existence and the conditions of deposits or other financial guarantees to be paid or provided by the consumer at the request of the trader;
13. where applicable, the functionality, including applicable technical protection measures, of digital content;
14. where applicable, any relevant interoperability of digital content with hardware and software of which the trader is aware or can reasonably be expected to have been aware;
15. where applicable, the possibility of having recourse to an out-of-court complaint and redress mechanism to which the trader is subject, and the methods for having access to it. 

This information is an integral part of the distance contract and cannot be altered unless both parties expressly agree. It is also crucial that all consumer rights be observed before and after concluding a contract (regarding product returns, liability for defective goods, etc.). 

On the other hand, if a website is dedicated to businesses only, e.g. sales of equipment to professionals only, consumer regulations will not apply, but in such case it should be ensured that the online store is accessible to professionals only.
In all cases (including for B2B services) in its capacity as an information society services provider, the trader will have to render, easily and directly accessible to the recipients of the service, at least information on:

1. its name;
2. registered head office and registered address or and if different from the registered address, the address of its place of business;
3. phone number and email address;
4. information on the registration in a commercial or similar public register;
5. prices, whether they are inclusive of tax, and delivery costs;
6. the relevant regulatory body where the activity is subject to notification, permission or licence and other information required by law. 

Bulgarian legislation imposes certain obligations that translate into the mandatory elements of an e-commerce website. Such mandatory elements differ depending on whether a website is directed to consumers or to businesses only. 

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The information provided to consumers must be in Bulgarian. This obligation is set forth in the Bulgarian CPA Act and concerns all documents and information that are mandatory. In practice, a consumer-website addressed to Bulgarian consumers would need to be mostly in Bulgarian. The aftersales service should also be available in Bulgarian.

In B2B relations, there is no analogical obligation. The website and communication can be in a foreign language.

These may be product-specific restrictions that apply in all sales channels, such as general foodstuff production and sales regulation. It is expressly prohibited to offer and sell medicinal products available on medical prescription by distance contracts. 

It is important to consider all the requirements in place concerning online sales of particular products

The main difference compared to traditional sales is that, as a rule, consumers are entitled to withdraw from a distance contract without giving a reason within 14 days from: (i) the date the contract to provide services is concluded; (ii) in the case of sales contracts, the day on which the consumer or a third party indicated by the consumer acquires physical possession of the goods.

Traders must inform consumers of their right of withdrawal, the conditions, time limit and procedures for exercising that right before the consumer is bound by the distance contract. If the trader does not provide the consumer with the relevant information on the right of withdrawal, the withdrawal period expires one year from the end of the initial withdrawal period.

The consumer bears the direct cost of returning the goods unless the trader has agreed to bear them or unless the trader has failed to inform the consumer that the consumer has to bear such costs.

The provisions related to legal guarantees and the commercial guarantees undertaken by the trader or the producer to the consumer apply to both traditional and online sales.

The marketing communications that present directly or in indirectly the goods, services or image of the trader represent commercial communications. Sending unsolicited commercial communications to consumers requires the prior consent (opt-in) of the consumer. The marketing opt-in should meet the GDPR-consent standard. This means that it should be a freely given, specific, informed, and unambiguous statement or clear affirmative action. Where the consumer objects to processing for direct marketing purposes, the personal data must no longer be processed for those purposes. A clear affirmative action means that a deliberate and specific action must be taken to opt in or to agree to the processing. This can be done, e.g. by ticking a box when visiting a website, choosing technical settings for information society services or signing a consent statement.

The Bulgarian Commission for Consumer Protection keeps an electronic register of the email addresses of the legal persons that do not wish to receive unsolicited commercial communications (opt-out register).

As a rule, Bulgarian competition law mirrors EU legislation. Every distributor is allowed to use the internet to sell products and must not be restricted in doing so, unless there are compelling reasons, e.g. health and safety concerns always assessed on a case-by-case basis. However, manufacturers are permitted to impose quality standards for online distribution in certain justified circumstances regarding each selective distribution system. In addition, as in other distribution channels, suppliers are not permitted to impose resale prices.

The current competition rules applicable in Bulgaria, covering the vertical aspect of online sales (supplier-distributor), are based on the EU legislative framework of 2010. The forthcoming revision of the EU framework will most probably impact corresponding Bulgarian competition regulation and case law.

Generally, regular e-commerce stores do not fall under financial services regulations. The Act on the Distance Marketing of Financial Services stipulates the requirements for the distance marketing of financial services and in particular on the distance contracts, the provision of information to the consumers, the right of withdrawal, and commercial communications. 

Тhe processing of customer payments constitutes a regulated activity. 

In Bulgaria, no authority specialises in e-commerce only. As in the case of brick-and-mortal sales, the relevant authority is the Commission for Consumer Protection (the “CCP”) for the public enforcement of consumer rights. CCP monitors and controls the compliance of the e-commerce businesses with the provisions of the Bulgarian Electronic Commerce Act (ECA) and the CPA. Regarding the general safety of products and services, the CCP is the controlling authority for the safety of non-food products and of services. The authority responsible for the safety of food products as per the CPA and the Foodstuff Act is the Bulgarian Food Safety Agency (the “BFSA”).

The safety of cosmetic products is monitored and controlled by the Minister of Health and the State Health Control authorities. Market surveillances authorities are also included in the Technical Requirements for Products Act for different categories of products that fall within the scope of the Act.

Regarding personal data protection issues, the Commission for Personal Data Protection (the “CPDP”) is the authority entitled to provide expert advice and issue opinions on data protection, as well as to enforce and issue fines for non-compliance with data protection law.

In Bulgaria, consumers can seek to enforce their rights before a civil court, either individually or in a class action. In Bulgaria, a significant role in the private enforcement of consumer rights is played by consumer organisations. The most active consumer organisation in Bulgaria is the Bulgarian National Association Active Consumers.

Note that arbitration clauses for resolving disputes with consumers are void.

Alternative dispute resolution (ADR) in Bulgaria is regulated by the CPA. The resolution of a dispute between a consumer and a trader will be binding if the parties were informed of its binding nature in advance and specifically accepted this. Specific acceptance by the trader is not required if the rules of procedure of the ADR entity state that the solutions bind traders. The Minister of the Economy is the competent authority for the recognition of ADR entities and lists them publicly. The CCP carries out alternative dispute resolution activities for consumer disputes through conciliation committees. 
All online traders must provide a link on their websites to the Online Dispute Resolution platform.

The legal developments relevant for e-commerce business in Bulgaria derive mostly from changes at the EU level. 
Member States should implement the Omnibus Directive by November 2021. The EU Directive introduces several amendments to the consumer-related Directives. For example, it includes new rules concerning price reductions, and restricts the marketing of “dual quality” products (items marketed as being identical, where in fact their quality is different between the respective Member States). There is no draft bill in Bulgaria yet.