With extensive internet penetration reaching about 88%, development of e-commerce is one of Russia’s key strategic initiatives, currently accounting for about 4.6% of GDP. In 2020, despite overall economic downturn, the pandemic spurred a substantial increase in online shopping across the country, extending even to Russia’s most remote regions.

According to Data Insight, the online retail market reached EUR74 billion (USD78.42 billion) in 2023. Compared to 2022, the number of orders grew by 78%, and market volume increased by 44%. Projections for 2024 suggest that e-commerce sales will reach EUR97 billion, with an annual growth rate of about 30%.

Electronics and small home appliances remain some of the most popular online purchases. However, the e-commerce market is diverse, offering opportunities for businesses across a broad range of products to find their niche.

Local presence

Local presence. In most cases, foreign companies are not required to establish a legal presence in Russia to operate an e-commerce business.

However, foreign online retailers targeting Russian consumers (such as those with a Russian-language website) must comply with certain mandatory provisions under Russian law, including regulations in these areas:

• Consumer protection;
• Data protection;
• Competition;
• Advertising;
• Anti-money laundering and currency control, among others.

To meet these regulatory requirements, a foreign seller may need to establish partnerships with local logistics providers, IT service providers, and legal or administrative service providers.

Website requirements

Online sellers generally have flexibility in the choice of content and language on their website. However, to serve Russian customers specifically, an online store must include these mandatory elements:

• Legal information about the seller including its name, registration number, address and contact details (aggregators must also provide this information about both themselves and the end seller);
• Terms and conditions (T&Cs) for products and services offered online. The product listing must include a comprehensive description of the goods, place of manufacture, price, terms of purchase, delivery information, shelf life or service life, warranty period, payment methods, and the period during which the offer to conclude the contract is valid;
• Privacy policy outlining the seller’s personal data processing practices; and
• Integrated online payment system from an accredited payment processing provider.

While it is not mandatory to use a domain name with a Russian extension to sell to Russian customers, such domain names can be obtained through an accredited registrar.

If a website receives 500,000 or more visits from Russian users daily, the website owner must establish a legal presence in Russia and register with the Russian data protection authority.

Personal data requirements

Russian data protection legislation applies to: (1) processing of personal data by all operators located in Russia; and (2) processing of personal data of Russian citizens by foreign entities, regardless of where processing takes place, in these cases:

• When processing is based on a contract with a Russian citizen or other arrangement between foreign entities/individuals and Russian citizens; and/or
• When a Russian citizen has consented to the processing of their personal data.

Consequently, online sellers targeting Russian consumers must comply with Russian data protection laws.

Firstly, websites that collect personal data must include a privacy policy. Additionally, any collection, recording, storage and initial processing of Russian citizens’ personal data must be conducted using databases (servers) located in Russia (the “localisation requirement”). To fulfil this requirement, foreign sellers targeting Russian consumers must either own or rent a server located in Russia.

Furthermore, any subsequent cross-border transfer of personal data requires mandatory notification to the Russian data protection authority.

Advertising

Advertising directed at Russian consumers must comply with Russian advertising legislation. This requires advertisements to contain accurate and complete information, with specific requirements in place for certain types of products (e.g. pharmaceuticals, medical devices and dietary supplements). Additionally, certain goods such as alcohol and tobacco are prohibited from being advertised online.

Since September 2022, all online ads targeting Russian consumers must be clearly marked as advertisements and registered with a designated entity known as an advertising data operator (ADO). ADOs are responsible for collecting and transmitting information to the Russian data protection authority about the advertising contract, closing documents, and viewership statistics.

Marketing communications via email, SMS and other electronic means are permitted, provided that prior consent is obtained from consumers. Each consent must be specific to a particular advertiser and given freely, with sufficient information provided to the consumer. For instance, consent may be collected through a dedicated checkbox on the website that must not be pre-checked. Consent for marketing communications must be collected separately and cannot be included within the text of the T&Cs or privacy policy.

Payments

If an online seller offers electronic payment options, including payments via credit or debit cards, online transfers, electronic wallets, mobile payments or alternative currency processors, the seller must have a contract with an accredited payment processing service provider.

Since April 2020, Russian banks have ceased processing transactions from foreign payment systems that lack subsidiaries in Russia and are not listed in the Bank of Russia’s Register of Payment System Operators. Therefore, to accept payments from Russian customers, an online seller must ensure that its payment processing provider is accredited by the Bank of Russia.

Additionally, certain Russian payment systems are not supported outside Russia or operate only in specific countries. However, many Russian citizens use UnionPay or other foreign cards for international payments.

Online sales: restrictions, limitations

Online trade in Russia is regulated by the same rules as in-person trade, with a few exceptions.

First, certain goods are prohibited from online sale, including:

• Alcoholic beverages;
• Tobacco products;
• Narcotic or psychotropic substances and poisons;
• Occult goods; and
• Weapons and other items restricted from civil circulation.

Second, some goods may be sold online but are subject to special regulations. For example, over-the-counter medications may only be sold by licensed pharmacies holding a special permit from the Federal Service for Surveillance in Healthcare.

Conclusion of contract

A seller must conclude a retail sales agreement with any customer expressing an intent to purchase goods under the terms posted on the seller’s website. The offer must provide complete and reliable information about the goods and the seller, including the seller’s name, registration number and address.

A distance sales contract is considered concluded when the seller:

• Receives a message from the consumer expressing intent to conclude a sales agreement; or
• Issues a cash (sales) receipt or another document confirming payment for goods to the consumer.

Consumer protection

Russian consumer protection laws impose specific requirements for online sales, including:

• Before the transaction, the seller must provide information about the basic properties of the goods, as well as the seller’s name, address and other relevant details;
• On delivery, the seller must provide extensive information about the goods, including a full description and details of conformity with applicable technical regulations;
• Consumers have the right to cancel the purchase at any time before delivery and within seven days after delivery;
• Consumers may also cancel the purchase within three months of delivery if they were not informed about the procedure and terms for returning the goods at the time of purchase;
• Consumers cannot return goods with unique properties that make them usable only by the purchaser; and
• If a consumer cancels a purchase, the seller must refund all payments made under the contract within 10 days, minus the cost of return shipping.

Consumers can enforce their rights individually or through class actions in civil court. In addition to civil liability, violations of consumer rights may lead to administrative or criminal liability, depending on the severity of the violation.

Authors:

Georgy Daneliya, Counsel

Alisa Mikheeva, Associate

Shermet Kurbanov, Associate

The publication is also available in Chinese and Korean.

Initially published in Asia Business Law Journal.