The Norwegian Digital Content and Services Act enters into force on 1 January 2023

The Act enters into force on 1 January 2023 and gives consumers a number of invariable rights in connection with the delivery of digital services. This means that businesses that deliver digital services to consumers should revise and update their standard terms and conditions within a short time (e.g. terms of use, Terms and Conditions, Terms of Service, etc.).

The Digital Content and Services Act will apply alongside the provisions in the Contract Act, the Marketing Control Act and the Cancellation Act, which set requirements for the content of agreements with consumers.

The Consumer Authority will monitor the compliance with the regulations.

Who is covered by the Act?

Digital services include digital content and digital services. Digital content is data that is produced and delivered in digital form (e.g. streaming services, online newspapers). Digital services are services that enable the user to generate, process, store or access data in digital form, or services that make it possible to share or otherwise interact with such data, such as cloud service providers (e.g. iCloud, Google), text editors (e.g. Office 365) and social media (e.g. Facebook, Instagram, TikTok).

As mentioned, the Act only applies to agreements between a consumer and a business where remuneration is provided by the consumer. “Remuneration” is given an extended meaning, and can consist of both money and other return services. If the consumer pays for the digital service by sharing their own personal data that is not strictly necessary to receive the service in question, the personal data will be covered by the concept of remuneration. Therefore, it is worth noting that if the user shares personal data with the provider of a “free” service, typically a social medium, this will be covered by the scope of the law. This is in line with the view that personal data has an economic value.

Exception when the product is delivered with a physical product

There are exceptions to the scope of the law. In cases where the digital service is delivered together with a physical product (i.e. delivery of both software and hardware), and the digital service is necessary for the product’s function, the circumstance shall be regulated by the Consumer Purchases Act. The necessity requirement should not be interpreted strictly and includes all functions the products should have according to the purchase contract. The preparatory works mentions as an example that if there is an agreement on specific video applications when purchasing a smart TV, this is covered by the necessity requirement and the circumstance will be covered by the Consumer Purchases Act.

Content of the Act

The Digital Content and Services Act is closely related to the other consumer laws, and several of the law’s provisions are modelled after the provisions of the Consumer Purchases Act. The Act codifies a legal area which until now has been governed by non-statutory law based on the principles of the Consumer Purchases Act.

In the following paragraphs, we will provide an introduction to some of the provisions of the Act which, in our opinion, are particularly relevant in connection with entering into agreements with consumers on digital services.

Requirements for the service

Section 8 of the Digital Content and Services Act sets out general requirements for the service. This means that the service shall be delivered in the latest version available at the time of the agreement, and meet the consumer’s expectations of the service based on its nature and the information the provider has given, unless otherwise expressly agreed.

Furthermore, the service shall be free from third party rights, including, among other things, intellectual property rights. This can raise issues for services that are based on open source code, including copy left licenses that are not complied with, or where the service is based on a license that can be withdrawn by the licensor.

The general requirements for the service are reflected in a number of the Act’s other provisions. Among other things, Section 9 of the Act sets requirements to update the service, including that the consumer shall be notified of and have updates delivered, including security updates.

Sections 41 and 42 of the Digital Content and Services Act limits the access to make changes to the service, particularly to the disadvantage of the consumer, after entering into the agreement.

Claim for defective product

If the business does not comply with the above-mentioned obligations, the consumer will be entitled to submit a claim for defective product pursuant to Section 19 of the Act, in the same way as the other consumer purchase laws.

It is interesting that this claim can be made against the provider’s distributive trades (direct claim), as long as the provider of the service can submit a corresponding claim, and the distributive trade has acted in economic activity, cf. Section 26 of the Digital Content and Services Act. This will be relevant if the consumer submits a claim against the cloud provider that “hosts” the digital service, such as Microsoft Azure or Amazon Web Services.

It is also worth noting that Section 48, second paragraph of the Digital Content and Services Act allows compensation for non-economic loss, including inconvenience. The preparatory work mentions the loss of family photos as a result of an error in a cloud storage service as an example of such a loss.

Limitations on pricing of the service

Section 28 second paragraph limits the right to change the prices for the service to the disadvantage of the consumer after entering into the agreement, including that the right to change the price must be stated in the agreement and that the price change must be notified within a reasonable time. Furthermore, the consumer will be entitled to terminate the agreement if the price change is higher than what the change in the consumer price index indicates.

The right to agree on a commitment period for the service is also tightened. The main rule is that it is not possible to agree on a commitment period for digital services of more than six months. In special cases, a longer commitment period can be agreed, but no longer than twelve months. Terms regarding a commitment period can only be agreed if the consumer is given an economic advantage that is in proportion to the length of the commitment period, for example a reduced monthly price.

Automatic termination

The Act contains provisions for automatic termination in the event of non-payment by the consumer for a period of six months after the due date.

See the draft law here.

Feel free to contact us if you would like a review of your company’s terms and conditions.