Consumer Protection 2021

A practical cross-border insight into consumer protection law

Second Edition

Featuring contributions from:

ALRUD Blake, Cassels & Graydon LLP MinterEllison Ashurst LLP Bojorge & Associates Nagashima Ohno & Tsunematsu Banwo & Ighodalo Cozen O’Connor Pérez Alati, Grondona, Benites Bányaiová Vožehová, s.r.o. Gonzalez Calvillo & Arntsen (PAGBAM) advokátní kancelář Hassan Radhi & Associates ISBN 978-1-83918-113-9 ISSN 2633-7541

Published by

59 Tanner Street London SE1 3PL United Kingdom Consumer Protection 2021 +44 207 367 0720 [email protected] www.iclg.com Second Edition

Publisher James Strode

Production Editorial Assistant Charlotte Garcia

Senior Editor Contributing Editors: Sam Friend Nigel Parr & Christopher Eberhardt Head of Production Suzie Levy Ashurst LLP

Chief Media Officer Fraser Allan

CEO Jason Byles

Printed by Ashford Colour Press Ltd.

Cover image www.istockphoto.com

Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

Expert Analysis Chapter

The Relationship Between Consumer Protection and Competition Law 1 Nigel Parr, Danica Barley & Christopher Eberhardt, Ashurst LLP

Q&A Chapters

Argentina Italy 7 Pérez Alati, Grondona, Benites & Arntsen (PAGBAM): 66 Ashurst LLP: Denis Fosselard, Gabriele Accardo & Luis Diego Barry, María Carolina Abdelnabe Vila, María Giulia Carnazza Clara Rodríguez Llanos & Sonia Alejandra Del Regno Japan Australia 75 Nagashima Ohno & Tsunematsu: Oki Mori & Mai 14 MinterEllison: Miranda Noble & Geoff Carter Umezawa

Bahrain Mexico 24 Hassan Radhi & Associates: Fatima AlAli & 85 Gonzalez Calvillo: Edgar Grajeda, Jorge Mondragón, Mohamed Ali Shaban Enrique Muñoz & Lucía Fernández

Canada Nigeria 31 Blake, Cassels & Graydon LLP: Jill Lawrie & Emily 94 Banwo & Ighodalo: Azeezah Muse-Sadiq & Mavis Hazlett Abada

Czech Republic Russia 38 Bányaiová Vožehová, s.r.o. advokátní kancelář: 103 ALRUD: Ksenia Erokhina JUDr. Lucie Dolanská Bányaiová, Ph.D. & Mgr. Zuzana Kulhánková Spain 114 Bojorge & Associates: Marla Vanessa Bojorge Zúñiga France 46 Ashurst LLP: Michaël Cousin & Marie Florent United Kingdom 122 Ashurst LLP: Nigel Parr & Christopher Eberhardt Germany 58 Ashurst LLP: Dr. Fabian Klein & Dr. Michael USA Holzhäuser 131 Cozen O’Connor: Michael W. McTigue Jr., Meredith C. Slawe & Marie Bussey-Garza

Preface

Welcome to the 2021 edition of ICLG – Consumer Protection, which follows the success of the inaugural edition last year (one of the first comparative guides to consumer protection legislation and enforcement around the world). Although the level of consumer protections and enforcement differs around the world, this is an area which has been the subject of increased regulatory focus in many jurisdictions. This is expected to continue as a number of jurisdictions consider enhancing regulators’ and consumers’ powers and ability to enforce consumer protections. The COVID-19 crisis has led to various challenges to (and an increasing role for) consumer law enforcement; for example, in relation to retailer profiteering, misleading conduct and unfair contract terms. Consumer law is also increasingly seen as an important element of the regulatory toolkit in looking at the digital economy and markets. This publication provides a practical overview of the key protections from which customers benefit and the ways in which those rights may be enforced, and so we believe it will prove an essential resource for lawyers across the globe who are advising businesses or consumers in this fast-developing area.

Nigel Parr & Christopher Eberhardt Ashurst LLP

The Relationship Between Consumer Protection and Competition Law Nigel Parr

Danica Barley

Ashurst LLP Christopher Eberhardt

Introduction and Summary Recent Developments in the UK and EU It is evident that, in recent times, the protection of consumers In the UK, the focus on consumer protection law has been has become an increasingly important area of focus for legisla- increasing for some time. In particular, in August 2018, the UK tors and regulators around the world. However, whilst there is a Business Secretary requested advice from the newly appointed general consensus around the need to protect consumers as busi- Chair of the Competition and Markets Authority (“CMA”) at ness models develop in response to the digitalisation of markets, the time, Lord Andrew Tyrie, on whether legislative and insti- the methods of seeking to achieve and enforce appropriate levels tutional reforms were necessary to safeguard the interests of of protection vary across jurisdictions, to some extent reflecting consumers and to improve public confidence in markets. On 21 different perspectives on the relationship between consumer February 2019, Lord Tyrie responded to this request with a letter protection, competition, and data protection/privacy laws. In containing numerous proposals for reform. At the heart of Lord addition, the following developments have focused attention on Tyrie’s proposals were that the consumer protection regime, the need to ensure the appropriate application of legal and regu- together with the competition law regime, should be re-centred latory tools: to enable the CMA to focus more directly on protecting the (a) the growth of the digital economy, which has created interests of the consumer. This would be supported by strength- specific challenges and led to regulators identifying and ening the CMA’s powers to enforce consumer protection law, considering ways to address perceived “gaps” in their which Lord Tyrie described as “unfit for its current purpose, and far current enforcement regimes; short of what would be required to enable the CMA effectively to fulfil a (b) the COVID-19 pandemic, which has led regulatory consumer interest duty”. It was expected that the UK government authorities to consider their current laws and regulations would consult on the specifics of the CMA’s increased powers and adapt them where necessary (at speed) in order to meet in the course of 2020; however, the anticipated Consumer the challenges arising; and Protection White Paper is yet to be published. (c) the increasing focus on sustainability issues, which has Nevertheless, there have been a number of relevant devel- required regulators to consider whether their existing opments since then, including Lord Tyrie’s departure from the CMA. In addition, in June 2019, the Department for Business, consumer protection and competition law powers are Energy & Industrial Strategy (“ ”) Smart Data Review1 adequate to address the new questions and issues that are BEIS examined how to accelerate the development and use of new arising. data-driven technologies and services to improve the consumer These questions are being considered against an emerging experience in regulated markets. Furthermore, in February view that whilst “light touch” regulation may have encour- 2020, HM Treasury and BEIS commissioned the CMA to aged investment, and therefore competing business models produce a report on the “State of Competition” in the UK.2 and rivalry, which benefitted consumers in the past, it may Subsequently, John Penrose MP was commissioned by HM have resulted in under-enforcement in some areas, which has Treasury and BEIS to produce a brief report, building on and led to consumer detriment. However, there remains a concern adding to the recent competition policy developments set out to avoid over-enforcement through onerous and unnecessary above. One of the key questions Mr. Penrose was asked to regulation, which would increase business costs and, ultimately, consider related to consumer protection; namely, how the UK’s prices for consumers. competition regime can best “increase consumer trust, including [tack- This chapter attempts to consider these issues by reference ling] consumer rip offs and bad business practices, and by ensuring the compe- to the various approaches that are being taken to these issues tition regime operates in a way which is strong, swift, flexible and propor- by governments and regulatory authorities around the world. tionate”.3 Mr. Penrose published his findings (the “Penrose Although there are differences in approach, it is evident that Report”) on 16 February 2021. In the Penrose Report, Mr. the authorities are seeking to remedy similar concerns and are Penrose concluded that the UK’s “independent competition and closely watching and learning from each other. consumer regulation regime currently has a good reputation, but not a great one” … “Citizen-consumers feel ripped off when they buy things like energ y or

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car insurance, and increasingly feel that markets aren’t set up to work for them. The EU In other words, the system needs to be updated, improved and refreshed ”. In order to address this, the Penrose Report contains a number of In the EU, there has been a considerable number of signifi- recommendations, including that: cant developments in response to digitalisation and the growing (a) the CMA should publish an annual “State of Competition market power of digital companies. This has been seen in both and Consumer Detriment” report; and the competition law and consumer protection spheres, as well as (b) the CMA’s civil consumer enforcement powers be updated in terms of EU policy generally; for example, in the proposal in to bring them into line with, and have the same impor- December 2020 to introduce the Digital Services Act and Digital tance as, the competition toolkit. In particular, the Markets Act to provide a comprehensive set of new rules for Penrose Report considers that “the CMA should be able to decide [consumer law] cases itself and impose fines in the same way as all digital services, including social media, online marketplaces, it already does for competition law cases”. and other online platforms that operate in the EU. According to It remains to be seen the extent to which the UK government the Commission’s press release, the new rules will better protect will implement the recommendations in the Penrose Report. consumers and their fundamental rights online, and will lead to 7 However, it is clear that, if adopted, they could have a signifi- fairer and more open digital markets for everyone. cant impact on both the competition and consumer protection As noted above, from a consumer protection perspective, law regimes in the UK in the future. one of the key priorities in the Commission’s Agenda relates to In the EU, there has also been a significant increase in focus digital transformation. As part of its Agenda, the Commission on consumer protection law, and a number of key developments states that the “digital transformation is radically changing consumers’ which will be relevant to the particular issues identified above. lives offering new opportunities but also presenting them with challenges. In particular, on 13 November 2020, the European Commission The Commission aims to tackle online commercial practices that disregard (the “Commission”) launched its “New Consumer Agenda” consumers’ right to make an informed choice, abuse their behavioural biases (the “Agenda”), to “empower European customers to play an active role or distort their decision-making processes, such as dark patterns and hidden in the green and digital transitions”.4 According to the Commission’s advertising. In addition, consumers’ interests need to be duly taken into press release, the Agenda presents a vision for EU consumer account when setting rules governing the digital economy and requirements for policy from 2020 to 2025, focusing on five key priority areas: Artificial Intelligence (AI). To adapt current rules to the ongoing digitalisa- (a) green transition and digital transformation (see further tion and the increase of connected products, the Commission will also review below); the directive related to product safety. As there is a need to reinforce consumer (b) effective enforcement of consumer rights, whereby the protection regarding digitalisation of retail financial services, the directives for Commission will assist Member States in the timely imple- consumer credit and marketing of financial services will be reviewed”.8 mentation and enforcement of consumer law, including through the Consumer Protection Cooperation (“CPC”) network. The Commission will also support national The UK authorities, such as by deploying e-tools to strengthen national authorities’ capacity to tackle illegal online In the UK, there have been a number of recent developments in commercial practices and identify unsafe products; the competition and consumer protection law arenas as a result (c) the Commission will consider the specific needs of certain of the perceived need to address specific challenges arising in consumer groups, for example, children and older people; the digital market space. and For example, in March 2020, the CMA led a Digital Markets (d) international cooperation, which will include the adoption Taskforce to provide advice to the UK government on the design of an action plan with China in 2021 to enhance the safety and implementation of a pro-competition regime for digital of products sold online, as well as developing regulatory markets. This advice was published in December 2020, and it support, technical assistance and capacity building for EU recommended that the government establish a Digital Markets partner regions, including in Africa. Unit (“DMU”) to “further the interests of consumers and citizens in This follows a number of previous developments in this area, digital markets, by promoting competition and innovation”, and to imple- including the 2018 New Deal for Consumers, and the public ment a regulatory regime to address the market power of the consultation launched by the Commission in June 2020 on the 5 most powerful digital firms, which will include an enforceable new European consumer policy. Code of Conduct.9 On 7 April 2021, the DMU (based within the CMA) was launched, with the press release stating that the The Growing Importance of Digital Markets DMU “will oversee plans to give consumers more choice and control over and Related Challenges their data, promote online competition and crack down on unfair practices which can often leave businesses and consumers with less choice and more The digital revolution has brought significant benefits, as well expensive goods and services”.10 as new challenges, from a competition and consumer protection This follows the CMA’s market study into online platforms law perspective, and regulatory authorities are working hard and digital advertising, which found in its final report published to consider the best ways to respond to them. For example, on 1 July 2020 that competition is not working well in those as noted by Teresa Moreira, Head of the Competition and Consumer Policies Branch, United Nations Conference on markets, leading to substantial harm for consumers and society as a whole.11 It also reflects the CMA’s recent consumer law Trade and Development (“UNCTAD”), “when 104 nations met at the Eighth United Nations Conference on Competition and Consumer investigations into fake and misleading online reviews, which Protection, there was a growing sense of urgency around reviewing legislation, include: enforcement and even regulation. At the heart of the discussions were online (a) the CMA’s investigation, which began on 21 June 2019, platforms, which play an increasingly central role in today’s economy… As into fake and misleading reviews, in relation to which the of June 2020, seven of the world’s top 10 companies by market capitaliza- CMA has now obtained commitments from Instagram, 12 tion are digital platforms…”.6 In this regard, while the response to Facebook and eBay; and digitalisation has varied in some respects across jurisdictions, (b) an investigation launched on 22 May 2020 into whether there are a number of common themes. several major websites are taking sufficient measures to

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protect consumers from fake and misleading reviews, to take action against large tech companies and digital platforms and considering, in particular, how the websites currently by modernising the abuse of dominance provisions. detect, investigate and respond to such reviews.13 One of the most significant changes to the rules on abuse of In addition, digital markets are specifically considered in the dominance will enable the FCO to intervene at an early stage Penrose Report, together with a number of consumer protec- when competition is threatened by certain large digital groups. tion issues which have specifically arisen in the digital arena. The FCO can pre-emptively prohibit certain conduct by compa- In particular, the Penrose Report acknowledges the significant nies which, due to their strategic position and resources, are benefits of digitalisation, but notes that downsides can be caused of overwhelming importance for competition across markets by “new types of business which create enormous network monopolies, or (so-called “super-dominant companies”). Examples of the types which charge nothing upfront but harvest and use consumer data to make of conduct in which the FCO can intervene include, inter alia: money instead ”. The Penrose Report finds that tactics which can (a) granting preference to a company’s own offerings over its erode competition or consumer power hurt customers in several competitors (“self-preferencing”); practical ways. For example, as consumers do not know the (b) hindering third parties’ activities on procurement or sales value of the data they are signing away in exchange for notion- markets if the dominant company’s activities are impor- ally “free” products, it is not possible to tell if they are getting a tant for access to these markets; good deal, making services less interoperable makes switching (c) using competitively sensitive data collected by the company harder, and monopolies and barriers to entry mean innovative to create or appreciably raise barriers to market entry; and new companies may struggle to gain market share, leading to a (d) impeding the interoperability of products or services or reduction in customer choice. the portability of data. In relation to consumer protection issues specifically, the The amendment also expands some of the “classical” abuse Penrose Report identifies three “gaps” where it finds that of dominance provisions to include internet-specific criteria. consumer protection rules need to be stronger: When measuring market power, the law provides that access to (a) price discrimination and the so-called “loyalty penalty”, competition-relevant data and the question of whether a plat- with the Penrose Report recommending that a general form has so-called “intermediation power” are to be taken into regime be put in place that is similar to the UK Financial account. Another important innovation is that the FCO can, Conduct Authority’s planned requirement for home and under certain circumstances, order that data access be granted motor insurance providers to offer the same prices to new for an appropriate fee in favour of dependent companies. and existing customers; This follows the joint paper on data and its implications for (b) the asymmetry of information between sellers and buyers competition law published by the German and French competi- due to a lack of visible prices, complicated small print and tion authorities in 2016, in which it was recognised that data can “take it or leave it” digital offerings. To tackle this, the be a source of market power, and that the collection, processing Penrose Report recommends that, among other things, and commercial use of data can be relevant to competition law the CMA should track digital comparison tools to ensure issues, rather than merely data protection issues.14 Similar argu- that they are continuing to enable buyers to make reliable ments can be made in relation to consumer protection, given choices and consider how to improve transparency of the the relevance of data to consumers and the difficulty consumers prices that consumers are paying through providing their have in assessing its value. The German approach demonstrates data; that regulators are considering a variety of angles (including (c) “sludge”, which is where the consumer behaviour insights the expansion of traditional competition law tools) in order to of nudge theory are used to exploit consumers, including: address issues which may also be highly relevant to both the (i) subscription traps, where consumers are offered free consumer and data protection spheres. trials to snare them into long, expensive deals that are difficult to terminate; The Response to COVID-19 (ii) making opt-out icons smaller or less visible; (iii) creating a sense of urgency around price or availability, As mentioned above, the COVID-19 pandemic has created such as indicating the number of customers looking at unique challenges from a consumer protection and compe- the product; and tition law perspective, leading regulators to adopt a range of (iv) using defaults to influence behaviour, such as pre- approaches to address these issues. A detailed description of the checked boxes for add-ons, and displaying paid implications of COVID-19 on these areas is beyond the scope options more prominently; and of this chapter; however, it is interesting to note the various (d) the Penrose Report proposes that the CMA should under- methods deployed by regulators across the world to tackle take a market investigation to assess how “sludge” should common issues. be recognised and measured in future, and to identify rele- In the UK, the CMA launched a specific task force in response vant consumer protection techniques. to COVID-19, and is continuing a wide-ranging programme of work considering consumer protection issues arising from the COVID-19 pandemic. The CMA has focused, in particular, on Germany pricing practices and cancellations/refunds, and has used both consumer protection and competition law tools for these purposes. In Germany, there have been significant developments in For example: response to the increasing importance of digital markets, with (a) on 20 March 2020, the CMA sent an open letter to the regulators largely looking to expand their competition law pharmaceutical and food and drink industries raising powers in order to address issues of concern. For example, concerns about firms seeking to capitalise on the on 19 January 2021, the tenth amendment to the Act against COVID-19 pandemic by charging unjustifiably high prices Restraints of Competition (the “Digitalisation Act”) entered for essential goods, or making misleading claims regarding into force, bringing substantial changes to German compe- their efficacy.15 In this context, the CMA specifically tition law. In particular, the Digitalisation Act implements warned that it has recourse to a range of competition and far-reaching powers for the Federal Cartel Office (the “FCO”) consumer powers to tackle such behaviour. Subsequently,

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on 18 June 2020, the CMA launched investigations into consumers with better information on the sustainability of whether four pharmacies and convenience stores may have products and to fight practices, such as greenwashing or early abused a dominant position by charging excessive and obsolescence. The Commission will also promote, repair, and unfair prices for hand sanitiser products; however, these encourage more sustainable and “circular” products.18 investigations were subsequently closed (albeit, it is under- Similarly, in the UK, the CMA is carrying out work to better stood, after their conduct was changed); and understand how consumer protection legislation can be used (b) the CMA used its consumer law powers in order to address to tackle false or misleading environmental claims that affect its concerns relating to cancellations and refunds. In consumers.19 In particular, the investigation is focusing on: (i) particular, in April 2020, the CMA published a general how claims regarding the environmental impact of products overview on the legal position relating to refunds and and services are made; (ii) whether such claims are supported announced that it had opened an investigation into cancel- by evidence; (iii) whether such claims influence peoples’ behav- lations and refunds due to a large number of complaints. iour when purchasing such goods and services; and (iv) whether Initially, this investigation focused on three sectors (i.e. consumers are misled by an absence of information about the weddings and private events, holiday accommodation, environmental impact of products and services, with the CMA and nurseries and childcare providers) and has since been intending to produce guidance for businesses on how they can extended to package travel. As part of this work, the CMA be transparent in the way that they market goods and services in secured commitments from a number of travel companies. relation to claims made about environmental impacts. The CMA has also taken action in relation to wedding This comes at a time when many regulators are considering services, publishing an open letter to businesses in this how competition law should apply in a sustainability context, sector explaining how consumer protection law applies to with market participants keen to ensure there is sufficient avail- wedding contracts in the context of COVID-19. able guidance, and that competition law does not become an These issues have also been considered and addressed by unnecessary barrier to meeting sustainability goals. other regulators. For example: For example, on 27 January 2021, the UK’s CMA published (a) the Commission and CPC Network authorities issued a an information sheet with the aim of enabling “businesses and trade common position on 20 March 2020 in relation to stop- associations [to] better understand how competition law applies to sustain- ping scams and tackling unfair business practices on ability agreements and where issues may arise”.20 It covers a number online platforms in the context of COVID-19 in the EU;16 of areas, including providing an overview for businesses which (b) in its announcement regarding the Agenda, the Commission notes, inter alia, that many forms of collaboration between busi- recognised consumer rights in the context of the COVID-19 nesses for the achievement of sustainability goals are unlikely pandemic crisis, stating that the Commission will continue to raise any competition law issues, and that beneficial coopera- to tackle consumer scams in cooperation with the CPC tion (such as joint purchasing of common inputs or research and Network and in dialogue with the platforms and all rele- development) are unlikely to harm competition, provided the vant actors. The press release specifically noted that the businesses do not have market power. However, the guidance Commission will continue to ensure the protection of trav- also states that sustainability agreements must not be used as a ellers’ and passengers’ EU rights in case of cancelled trips, cover for a business cartel. It also notes that many sustainability and will analyse the longer-term impact of COVID-19 on agreements are standard-setting agreements by which busi- the consumption patterns of EU citizens, which will serve nesses set standards on the environmental performance of prod- as a basis for future policy initiatives;17 and ucts, production processes, or the resources used in production. (c) the French government introduced specific emergency legis- In this context, the information sheet sets out “dos and don’ts” lation to address the significant increase in the price of hand for businesses when setting up a new standard in order to ensure sanitiser. The first of these measures, which came into force they comply with competition law. Businesses will need to on 6 March 2020, placed a cap on the price of hand sanitiser ensure they are particularly aware of their consumer protection at €3 for a 100ml bottle, with prices initially being guaran- and competition law obligations in this area going forward. teed until the end of May 2020, and compliance being moni- tored by agents of the Ministry of Economy. Conclusion The Increase in Focus on ESG Issues It is evident that, as the pace of technological developments and the calls for greater sustainability continue to increase at a time Another area in which the roles of consumer protection and of unparalleled challenges posed by the COVID-19 pandemic, competition law are developing at pace alongside each other which itself has spurred the digitalisation of many businesses, is in the context of the increased focus on sustainability. In governments and regulators are being forced to ensure that the this regard, competition and consumer protection regulators tools they use to protect consumers are fit for purpose. In many are keen to ensure consumers and businesses are sufficiently ways, the magnitude of these challenges is only just beginning protected and aware of their obligations in this area, whilst also to materialise, and a number of different approaches are being ensuring that regulation is not an undue burden on companies adopted by governments and agencies around the world. One looking to become more sustainable. of the greatest challenges, which has not been discussed in this From a consumer protection perspective, as noted above, the chapter, is likely to be how governments and agencies cooperate “green transition” is a key area of priority under the Commission’s with each other in addressing these challenges. This is impor- Agenda, with the Commission aiming to ensure that sustainable tant not only to ensure that consumers are protected in relation to products are available to consumers on the EU market and that international supply chains, but also to ensure that businesses that consumers have better information to be able to make informed operate internationally are not faced with a myriad of conflicting choices. According to the Commission’s press release, as part laws and regulations which will increase costs and, ultimately, of the Agenda, the Commission will present a proposal to equip make consumers worse off.

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Endnotes 10. https://www.gov.uk/government/news/new-watchdog- to-boost-online-competition-launches--3. 1. https://www.gov.uk/government/publications/smart- 11. https://www.gov.uk/cma-cases/online-platforms-and- data-review#history. digital-advertising-market-study#final-report. 2. https://www.gov.uk/government/publications/state-of- 12. https://www.gov.uk/cma-cases/fake-and-misleading- uk-competition-report-commission-to-the-cma. online-reviews#history. 3. https://www.gov.uk/government/publications/terms-of- 13. https://www.gov.uk/cma-cases/online-reviews. reference-for-john-penrose-mp-report-on-competition- 14. https://webgate.ec.europa.eu/multisite/ecn-brief/en/ policy/terms-of-reference-john-penrose-mp-report-on- content/french-autorite-de-la-concurrence-and-german- competition-policy. bundeskartellamt-publish-joint-paper-data-and. 4. https://ec.europa.eu/commission/presscorner/detail/en/ 15. https://www.gov.uk/government/publications/covid-19- ip_20_2069. cma-open-letter-to-pharmaceutical-and-food-and-drink- 5. https://ec.europa.eu/info/law/better-regulation/have- industries. your-say/initiatives/12464-A-New-Consumer-Agenda. 16. https://ec.europa.eu/info/sites/info/files/live_work_ 6. https://unctad.org/news/building-back-better-requires- travel_in_the_eu/consumers/documents/cpc_common_ stronger-competition-and-consumer-protection-digital- position_covid19.pdf. economy. 17. https://ec.europa.eu/commission/presscorner/detail/en/ 7. https://ec.europa.eu/commission/presscorner/detail/en/ ip_20_2069. ip_20_2347. 18. https://ec.europa.eu/commission/presscorner/detail/en/ 8. https://ec.europa.eu/commission/presscorner/detail/en/ ip_20_2069. ip_20_2069. 19. https://www.gov.uk/cma-cases/misleading-environmental- 9. https://assets.publishing.service.gov.uk/media/5fce7567e- claims. 90e07562f98286c/Digital_Taskforce_-_Advice.pdf and 20. https://www.gov.uk/government/publications/environ- https://www.gov.uk/goverment/news/new-competition- mental-sustainability-agreements-and-competition-law/ regime-for-tech-giants-to-give-consumers-more-choice- sustainability-agreements-and-competition-law. and-control-over-their-data-and-ensure-businesses-are- fairly-treated.

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Nigel Parr chairs the Ashurst competition and consumer protection practice. He has advised clients in some of the leading consumer protection cases, including Abbey National’s successful appeal to the Supreme Court in connection with the OFT’s bank charges case, as well as the CMA’s investigation into online gambling. He also specialises in UK and EU competition law, including mergers, strategic business advice and competition risk management, cartel and abuse of dominance cases, market/sector investigations, appeals, competition litigation and consumer law. He is listed as a band 1 adviser for competition law and competition litigation in the major directories and appears in The Legal 500 EU and Competition Hall of Fame. Furthermore, he was listed as one of the top 30 antitrust lawyers in the world in Expert Guides’ “Best of the Best” 2018, as an Acritas “Star Lawyer” 2018 (independently nominated by clients), and was awarded 2019 Lawyer of the Year for Competition Law in London in Best Lawyers’ seventh edition. Additionally, he has long-standing experience of judicial review cases before the English Administrative Court and Competition Appeal Tribunal, particularly in relation to procedural failings in regulatory investigations.

Ashurst LLP Tel: +44 20 7859 1763 London Fruit & Wool Exchange Email: [email protected] 1 Duval Square URL: www.ashurst.com London E1 6PW United Kingdom

Danica Barley is a Senior Associate in the competition and consumer protection practice in London and practises all aspects of UK and EU competition law and consumer law. Danica has experience advising clients in the context of investigations and market reviews by various UK regulators. This includes the CMA (in relation to antitrust, consumer protection, and market investigations), the Financial Conduct Authority, Ofgem and the Payment Systems Regulator. Danica also has extensive experience in relation to merger control, including multi-jurisdictional transactions.

Ashurst LLP Tel: +44 20 7859 2883 London Fruit & Wool Exchange Email: [email protected] 1 Duval Square URL: www.ashurst.com London E1 6PW United Kingdom

Christopher Eberhardt is a Senior Associate in the competition and consumer protection practice in London and practises all aspects of UK and EU competition law and consumer law. He has experience in dealing with the European Commission, UK regulators and the UK Competition Appeal Tribunal in relation to competition law investigations and merger control. Key matters on which Christopher has advised recently include acting for IHS Markit in connection with its $44bn merger with S&P Global, Circle Health Group in relation to its acquisition of BMI Healthcare, and Royal Mail in relation to an abuse of dominance investigation by Ofcom and subsequent appeals to the Competition Appeal Tribunal and Court of Appeal. Furthermore, he has experience in advising companies on consumer law investigations work in the UK, including in relation to a recent investigation by the CMA.

Ashurst LLP Tel: +44 20 7859 2712 London Fruit & Wool Exchange Email: [email protected] 1 Duval Square URL: www.ashurst.com London E1 6PW United Kingdom

Ashurst is a leading global law firm with a rich history spanning almost ■ Always innovating to provide the most effective and efficient service. 200 years. We currently have 28 offices in 16 countries and a number of ■ Diversity of personnel. referral relationships covering 11 time zones that enable us to offer the ■ Transparency and efficiency in our costs. reach and insight of a global network, combined with the knowledge and ■ Always focusing on people – a human-first approach. understanding of local markets. With over 1,600 partners and lawyers www.ashurst.com across a network spanning Asia, Australia, Europe, the Middle East and North America, we are able to respond to our clients wherever and whenever they need us, by focusing on: ■ Being approachable, practical and commercially minded. ■ Taking a multi-disciplinary approach and working as a team. ■ Understanding our clients and their industry-specific issues. ■ Clarity and transparency in communication.

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Argentina Argentina

Luis María Carolina Diego Barry Abdelnabe Vila

María Clara Pérez Alati, Grondona, Benites & Arntsen Rodríguez Sonia Alejandra (PAGBAM) Llanos Del Regno

1.2 What is the definition of “consumer” (i.e., who does consumer protection law protect)? Yes, a few of which are as follows: ■ Insurance Activity: the Department of Orientation and Assistance to the Insured within the insurance regulator. Both the CCC (Section 1092) and the CPL (Section 1) provide ■ Financial Activity: the Principal Management for the the same definition of consumer, i.e. a natural or legal person Protection of Financial Services Users within the who acquires or uses, free of charge or due to a payment, goods Argentine Central Bank. or services as the final user, for his/her own benefit or that of ■ Social Security: the Permanent Council of Agreement his/her family or social group. A person is also considered a within the Superintendence of Social Security Services. consumer if he/she, without being part of the consumer relation- ■ Investments: the National Securities and Exchange ship, as a consequence or on the occasion of it, acquires or uses Commission. goods or services, free of charge or due to a payment, as the final ■ Data Protection: the Agency for Access to Public user, for his/her own benefit or his/her family or social group. Information.

1.3 Who is/which entities are required to comply with 22 Protections in Relation to the Quality and consumer protection law? Function of Goods and Services

All entities that enter into a consumer relationship are required to 2.1 Please describe any protections regarding the comply with consumer protection law. A consumer relationship quality and function of goods and services acquired by is defined as a relationship between a supplier and a consumer. consumers. For the definition of a consumer please refer to question 1.2. Suppliers are defined as any natural or legal person, private or Protection regarding the quality and functions of goods and public entity, that develops in a professional manner, even occa- services acquired by consumers is set by the regulator of the sionally, activities of production, assembly, creation, construc- specific activity (i.e. quality and functions of pharmaceutical tion, transformation, import, brand concession, distribution and products are established by the National Administration of marketing of products and services. Medicines, Food and Medical Technology). Activities that require professionals to have a university degree, Within the consumer protection regime, we can find only a as well as for them to be registered in an officially recognised few provisions: professional association or authority empowering them to carry ■ General provision: Section 5 of the CPL rules that goods out such activities, do not fall within the scope of application and services must be provided in such a way that, when of the consumer protection regime. However, advertisements used under foreseeable or normal conditions of use, they made by such professionals offering their services are governed do not present any danger to the health or physical integ- by the consumer protection regime (Section 2 of the CPL). rity of consumers.

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■ Regarding goods: (i) suppliers are obliged to grant consumers registered consumer associations have standing to initiate proceed- a three-month guarantee for second-hand products and six ings for a breach. Said proceedings can also be initiated ex officio. months for brand new products, covering any defect in its correct functioning; and (ii) suppliers must guarantee an 2.7 Describe at least two examples of public or private adequate technical service and the supply of spare parts. enforcement of these protections in the last five years, ■ Concerning services: (i) in contracts for the provision of including the conduct/alleged conduct, result and services whose purpose is to repair, there is the implicit penalties imposed. obligation to provide only brand new and necessary spare parts, unless otherwise informed to the consumer; and (ii) ■ In re: “Medero Alejandro A. y otro c/ Volkswagen Argentina S.A. if within 30 days following the date on which the service y otro s/ daños y perjuicios” – a consumer claimed that the was concluded there are deficiencies or defects in the work luxury car acquired did not comply with his expectations performed, the service provider will be obliged to correct all due to defects. The manufacturer, due to the legal guar- deficiencies or defects, or to replace the materials and prod- antee, repaired the car but such repair was not satisfactory. ucts used, at no additional cost of any kind to the consumer. Panel J of the Civil Chamber of Appeals ruled that the automobile manufacturer should deliver a brand new car 2.2 Please outline the substantive tests for these since the repair was not satisfactory, and so the consumer protections. was entitled to receive the car that he purchased in optimal condition. The automobile manufacturer was also obliged The Enforcement Authority may act ex officio or due to a complaint to pay for moral damages. filed by a consumer. In either scenario, the Enforcement Authority ■ In re: “Gionario, Gustavo D. c/ Serra Lima S.A. s/ ordinario” – may seize some products considered to be in infringement in Panel A of the Commercial Chamber of Appeals ruled that order to analyse them. In both circumstances, the supplier has consumers are entitled to make their own reparations in the burden of proving the legality of its goods and services. non-authorised services and such reparations cannot void the legal guarantee that the manufacturer must grant.

2.3 What types of goods and services are covered by the protections relating to the quality of goods and 32 Protections/Prohibitions in Relation to services? the Safety of Goods and Services

All goods and services are covered. Furthermore, as stated under 3.1 Please describe any protections regarding the question 2.1, suppliers are also obliged to fulfil specific obliga- safety of goods and services acquired by consumers. tions related to their activity, which exceed the consumer protection general obligations and are set by their specific regulator. The CPL indicates that goods and services must be provided in such a way that, used in foreseeable or normal conditions, does 2.4 Are there any exceptions to these protections? not present any danger to consumers’ health or physical integ- rity (Section 5). Yes, just for the rendering of reparation services, suppliers: (i) may use second-hand spare parts; and (ii) may not provide the 3.2 Please outline the substantive tests for these 30-day guarantee if it is duly informed and indicated in writing protections. to consumers. The Enforcement Authority may act ex officio or due to a complaint 2.5 What remedies are available for a breach of the filed by a consumer. In either scenario, the Enforcement Authority protections in relation to the quality and function of may seize any products considered to be in infringement in order goods and services? to analyse them. In both circumstances, the supplier has the burden of proving the legality of its goods and services. If the quality or function of certain goods or services is not satisfactory, the supplier is obliged to carry out repairs as per the 3.3 What types of goods and services are covered legal guarantee. If the repairs are not satisfactory, the consumer by the protections relating to the safety of goods and can opt between: services? (a) requesting the replacement of the goods acquired for another of identical characteristics; All goods and services must be safe for consumers. (b) returning the goods as if in exchange and receiving the corresponding refund, according to the current price of the goods; or 3.4 Are there any exceptions to these protections? (c) obtaining a proportional price reduction. In all cases, the consumer can claim for damages. If the No, there are no exceptions. consumer decides to file a judicial claim, he or she can also request the imposition of punitive damages. 3.5 What remedies are available for a breach of the protections in relation to the safety of goods and 2.6 Who has or which agencies have standing to services? initiate proceedings for a breach? Regulatory Decree No. 1798/1994 establishes a recall proce- The CPL states that: (i) any consumer affected by the supplier’s dure aimed to remedy a breach of the protection in relation to conduct; (ii) any administrative or judicial authority; and (iii) duly the safety of goods and services (Section 4). Said procedure

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was regulated by Mercosur Resolutions No. 4/2017 and 1/2010 42 Prohibitions Relating to “Conduct” (incorporated into the Argentine legislation by Resolution No. 808/2017 of the Secretariat of Commerce and Resolution No. Against Consumers 724/2020 of the Secretariat of Internal Trade, respectively). 4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., 3.6 Are there mandatory reporting requirements with manufacturers/retailers) which sell or supply goods respect to the safety of goods or services? and services to consumers (“Conduct”). For example, misleading and deceptive conduct, unconscionable The CPL has a special provision regarding goods or services conduct, etc. that may pose a risk to consumers’ health or physical integ- rity. In this sense, Section 6 of the CPL states that risky goods Failing to comply with the offer made and/or with the contract and services must be marketed observing the mechanisms, executed with the consumer is considered to be conduct against instructions and rules established to guarantee their safety. consumers, and is hence sanctioned by the CPL and the CCC. In such cases, a manual drafted in the national language must Furthermore, providing misleading information is sanctioned be provided to the consumer. In said manual the correct use, by Decree No. 274/2019 of the CPL and the CCC. installation and maintenance of the goods or service must be described. The obligation to provide a manual in the national 4.2 Please outline the substantive tests for the above- language also applies to imported goods. mentioned protections/prohibitions.

3.7 Describe any voluntary or mandatory product The Enforcement Authority may act ex officio or due to safety recall regimes. a complaint filed by a consumer. In either scenario, the Enforcement Authority may conduct an investigation in order Please refer to question 3.5. Suppliers which, after introducing to determine whether the supplier committed an infringement goods or services into the consumer market, acquire knowledge to the CPL. In both circumstances, the supplier has the burden of their danger, must immediately communicate such circum- of proving the legality of its actions. stance to the Enforcement Authority and consumers through sufficient advertisements. Furthermore, according to Mercosur 4.3 Are there any exceptions/exemptions to the Resolution No. 4/2017 (incorporated into the Argentine protections/prohibitions relating to Conduct? legislation by Resolution No. 808/2017 of the Secretariat of Commerce), the Enforcement Authority will require the filing of reports outlining the recall’s results. Yes, force majeure.

3.8 List at least two examples of public or private 4.4 What remedies are available for a breach of the enforcement of these protections in the last five years, protections/prohibitions relating to Conduct? including the breach/alleged breach, result and penalties imposed. If a supplier fails to comply with the offer or the contract, the consumer may choose between: (a) requiring the fulfilment of ■ In re: “M. M. X. c/ Asociación Deportiva y Cultural Lacar s/ the obligation, whenever possible; (b) accepting another equiv- daños y perjuicios derivados de la responsabilidad contractual de alent product or service; or (c) terminating the contract and particulares” – Panel II of the Civil, Commercial and Labor requesting the corresponding refund. The consumer may also Chamber of Appeals of the Province of Neuquén ruled claim damages. Furthermore, the consumer may request the that the club had to indemnify the death of an amateur imposition of punitive damages if he/she decides to file a judi- futsal player who, when playing a game on a rented court, cial claim. hit his head against a concrete wall behind the goal without any protection. It was ruled that the security duty estab- 4.5 List at least two examples of public or private lished under Section 5 of the CPL was breached, especially enforcement of the protections relating to Conduct in due to the fact that it was not proven that the victim had the last five years, including the breach/alleged breach, made unusual or abnormal use of the designed playground result and penalties imposed. in the gym. The club was obliged to pay for damages and moral damages. ■ In re: “Compañía Argentina de Marketing Directo SA c/ DNCI- s/ ■ In re: “M., M. R. c/ Parque de la Costa y otro s/ Daños y Perjuicios” Lealtad Comercial, Ley 22802” – the Administrative Contentious – Panel M of the Civil Chamber of Appeals condemned a Chamber of Appeals confirmed the fine imposed by the company that owned an amusement park in which a child Enforcement Authority on a company for misleading adver- fractured an arm after falling from a game that simulated a tising, since it did not have scientific supporting informa- rural dressage mechanical bull. The damages were related tion regarding the properties of the promoted product to causality with the security duty. It was ruled that the and ignored the recommendations that should be made to risk must be absorbed by the amusement park and not by people who present risk factors, as the product could even- the victim, who came to the park with the belief that it was tually generate risks to their health. Consumer protection harmless. The amusement park was ordered to pay for aims to protect consumers against advertisements that offer damages. or promote goods and/or services that present inaccuracy in

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their content; the purpose of this is to avoid damages to users registries that allow companies to contract with the State; order and consumers, as well as to ensure the protection of their the loss of concessions, privileges, special tax or credit regimes; economic interests in relation to consumption. and order the publication of the sanction. The Enforcement ■ In re: “Sprayette S.A. c. DNCI s/ Lealtad Comercial, Ley 22802 Authorities may also order the publication of the resolution or a – art. 22” – Panel I of the Administrative Contentious synthesis in a mass newspaper. Chamber of Appeals confirmed the administrative sanction of a fine imposed on the company for misleading 5.5 List at least two examples of public or private advertising when promoting a product to lose weight, enforcement of these protections in the last five years, which stated that it was “possible to lose 30 kilos in just including the breach/alleged breach, result and penalties 30 days”. It was stated that the advertisement was aimed imposed. at consumers who might be attracted to a quick solution offered with misleading claims, while the plaintiff ■ In re: “L. M. G. c/ INC S.A.- Supermercado Carrefour y otro promoted the product with expressions that generated in s/ daños y perjuicios” – the Civil and Commercial Chamber the consumer the idea that there were scientific studies of Appeals of San Martín condemned the supermarket to that supported the promised results. pay compensation for moral damage to a disabled woman who was mistreated by personnel of the establishment 52 Other Protections/Prohibitions when the alarm rang for a titanium prosthesis in her spine because, under such conditions, the supplier mistreated 5.1 Does consumer law in your jurisdiction have the consumer. any other prohibitions/protections not covered by ■ In re: “González, María Laura c/ Telecom Argentina S.A. s/ the questions above? If so, please describe these Daños y Perjuicios” – the Civil and Commercial Chamber prohibitions/protections. of Appeals of San Nicolás ordered a telecommunications company to compensate damages and to pay for puni- ■ Information duty: the supplier is obliged to provide to tive damages due to the mistreatment of a consumer. The consumers clear, accurate and detailed information related company took more than one year (an excessive period to the essential characteristics of the goods and services of time) to solve a consumer’s claim related to a billing that it provides, and the conditions of its commercialisa- problem concerning a mobile phone purchase that the tion (Section 4 of the CPL and Section 1100 of the CCC). consumer alleged she did not make. ■ Suppliers must treat consumers fairly and with no discrimination whatsoever (Section 8 bis of the CPL and Section 62 Investigation of Potential Breaches 1097 of the CCC). ■ A cooling-off period, allowing consumers to return goods 6.1 What powers does/do the consumer authority/ or cancel services purchased from a business away from a authorities in your jurisdiction have to investigate normal commercial premise, must be granted (Section 34 potential breaches of consumer law? Describe the key of the CPL and Section 1110 of the CCC). steps in a typical investigation.

5.2 Please outline the substantive tests for the above- Consumer Enforcement Authorities have the following powers: mentioned protections/prohibitions. (a) receiving consumer complaints and commencing investigations; The Enforcement Authority may act ex officio or due to a complaint (b) conducting inspections; filed by a consumer. In either scenario, the Enforcement (c) conducting, with the corresponding court order, a dawn Authority may conduct an investigation in order to determine raid; whether the supplier infringed the consumer protection regime. (d) requesting reports and opinions from public and private In both circumstances, the supplier has the burden of proving entities regarding the subject matter of consumer protec- the legality of its actions. tion; and (e) conducting ex officio investigations. In a typical investigation, the Enforcement Authority will 5.3 Are there any exceptions/exemptions? receive a complaint or commence an ex officio investigation and it shall immediately notify the investigated party, who will The cooling-off period does not apply in the following situations: be able to file the corresponding defence brief and may offer (a) tailor-made products or those that, by their nature, cannot different means of proof. Once the evidence is produced, the be returned or may rapidly deteriorate; (b) software that can be Enforcement Authority issues a resolution that may impose downloaded or reproduced immediately for permanent use; and different sanctions (please refer to question 5.4) or dismiss (c) the supply of daily newspapers, journals and magazines. charges to the supplier. Said resolution can be appealed (please refer to question 8.1). 5.4 What remedies are available for a breach of these protections? 6.2 How is an investigation triggered (e.g., ex officio, whistleblower or complaint)? Consumers can file complaints and seek damages. The Enforcement Authorities may: impose fines; seize products Investigations are typically triggered by a consumer complaint that are in infringement; order the closure of the establishment; or ex officio. order the suspension for up to five years in the corresponding

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6.3 Describe any complaints procedure for (i) 7.4 Where regulators/enforcement bodies have consumers, and (ii) businesses. a choice of enforcement tools/powers, what considerations do they take into account in determining which tools/powers to use? There is no impediment for a business to file a complaint against another business; however, it is not common practice. Instead, investigations are triggered by consumers’ complaints. Once The Enforcement Authorities typically choose to conduct a consumer files a complaint, the Enforcement Authority, inspections and to receive complaints from which they can depending on the jurisdiction, may conduct hearings where commence investigations. the supplier and the consumer may reach an agreement. If the agreement satisfies the consumer protection regime, then 7.5 Describe the relevant rules and procedures that the investigation would be closed. If there is no agreement, must be followed by such bodies (e.g., administrative, the investigation continues but the consumer is not part of judicial). it. Hence, if the consumer wants compensation, he/she will have to file a judicial claim for damages. The administrative Consumers can opt to file a complaint with the Enforcement proceedings will continue, without the involvement of the Authority (please refer to question 6.3) and/or file a judicial consumer, and if the Enforcement Authority finds that the claim. In most jurisdictions, in order to be able to file a judicial supplier has breached the consumer protection regime, it will claim, consumers must have entered into a previous conciliation impose sanctions (please refer to question 5.4). Even though the process, and only after not getting an agreement are consumers Enforcement Authority’s actual powers are discussed, it can still entitled to initiate a judicial claim. Consumers’ judicial claims impose the compensation of the direct damages suffered by the differ from other judicial claims since consumers are granted consumer that filed the complaint. with court tax-free benefit; the procedural rules that must be applied are those of the most abbreviated procedure, and the evidentiary burden is dynamically distributed. 6.4 What is the timeline for a typical investigation?

7.6 Is there a right to a stand-alone action and follow Investigations typically take three years. on right of action within consumer law? Who has standing to bring these actions? 6.5 Are there criminal penalties for non-compliance with a consumer law investigation? If so, provide The CPL states that any consumer affected by the supplier’s examples where such penalties have been imposed. conduct has the right to a stand-alone action. Duly registered consumer associations have standing to initiate proceedings for No, there are not. a breach.

6.6 Can investigations be resolved by way of 7.7 Is there a statute of limitations for bringing stand- commitments or undertakings? alone or follow on actions?

Yes, please refer to question 6.3 above. Yes, five years from the date on which the infringement was committed. 72 Enforcement 7.8 Describe any international or regional cooperative 7.1 How does/do the consumer authority/authorities mechanisms (e.g., MOUs) in which your jurisdiction is seek to enforce consumer law (for example, by involved in the enforcement of consumer protection. administrative decision or by commencing proceedings in court)? As stated on a regional level, Argentina is aligned with the Mercosur policies regarding consumer protection. However, Consumer authorities enforce consumer law by administrative there is no cooperative mechanism. decisions and imposing important monetary sanctions. 82 Appeals 7.2 Is/are the consumer protection authority/ authorities bound by a time limit to commence 8.1 Describe any appeal processes. proceedings on breaches?

Administrative sanctions can be challenged by suppliers, who Yes, three years. However, such period will be interrupted if the must file the corresponding appeal brief within 10 business days of supplier commits new infractions or by the initiation of admin- having notice of the imposition of the sanction. In order to be enti- istrative proceedings. tled to appeal, suppliers must pay the fine imposed, if applicable.

7.3 Describe the enforcement powers/tools available to 8.2 Can consumers or retailers/manufacturers appeal these bodies (civil, administrative, criminal). decisions made by the consumer authority/authorities or by a court? Please refer to question 6.1. Consumers are not part of the administrative proceedings and hence are not entitled to appeal administrative decisions.

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However, if consumers file a judicial claim, they are entitled to with a link to all the standard form contracts that they appeal any court decision. offer. If consumers log in, access to executed contracts Suppliers/retailers/manufacturers can appeal administrative might be displayed. Suppliers of certain services (such decisions (please refer to question 8.1) as well as court decisions. as telephone, internet, prepaid medicine, among others) are also obliged to have an unsubscribe button on their websites so that consumers can easily unsubscribe from 8.3 Does an appeal suspend the effect of any penalty/ the requirement to pay any fine (if applicable)? the contracted service. ■ Resolution No. 424/2020 of the Secretariat of Internal Trade obliges suppliers to put a “regret button” on their The appeal suspends the effects of any penalty other than the websites to facilitate the exercise of the cooling-off period payment of the imposed fine, which is a requirement that must (please refer to question 5.1). be fulfilled in order to be entitled to appeal (please refer to ques- ■ Resolution No. 449/2020 of the Secretariat of Internal tion 8.1). Trade obliges suppliers to inform at their stores and at their websites, all the payment methods that they accept. 92 Current Trends and Anticipated Reforms ■ Resolution No. 137/2020 of the Secretariat of Internal regulates hearings by electronic means. 9.1 What are the recent enforcement trends in your ■ Resolution No. 139/2020 of the Secretariat of Internal Trade jurisdiction? created a new category of consumer: the hyper-vulnerable consumer (children and teenagers, disabled people, LGBT+ The most relevant recent enforcement trends are the following: people, elderly people, migrants and tourists, low-income people, among others) and promotes their assistance in E-commerce filing complaints as well as good business practices in the ■ Resolution No. 270/2020 of the Secretariat of Internal care, treatment and protection of these consumers. Trade (that incorporates the Mercosur Resolution No. 37/2019 into the Argentine legislation) obliges suppliers 9.2 Are there any proposed reforms to consumer law or to provide certain information prior to the purchase of policy within the next 12 months? the goods or the acquisition of the service, to give easy access to the terms of the contract, and to provide efficient There is a bill of amendment; however, it is not clear whether customer care service. this will be analysed in the next 12 months. ■ Resolution No. 271/2020 of the Secretariat of Internal Trade obliges suppliers to have a button on their websites

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Luis Diego Barry’s practice areas include competition and consumer protection, with great experience in complex and high-profile antitrust and product liability cases. Mr. Barry worked as head of the legal department of Unilever de Argentina S.A. and in the antitrust department of Cuatrecasas (Brussels Office). Furthermore, Mr. Barry is a professor at the most prestigious Argentine university. He publishes articles in key Argentine legal journals and participates as a speaker in several seminars.

Pérez Alati, Grondona, Benites & Arntsen (PAGBAM) Tel: +54 11 4114 3000 Suipacha 1111, 2nd floor Email: [email protected] C1008, City of Buenos Aires URL: www.pagbam.com Argentina

María Carolina Abdelnabe Vila specialises in competition and consumer protection. She graduated top of her class (summa cum laude) at Universidad Católica Argentina (UCA) and received the annual award due to her academic grades. In 2008, she took a course on Legal Counsel of Companies at UCA. During 2012–2013, she obtained an LL.M. in “International Business Law” at Université Catholique de Lyon (Lyon, France). In June 2013, Ms. Abdelnabe Vila was granted a full scholarship to take a course in Economic European Law at EBS Universität Law School (Germany). She is a professor at several Argentine universities. Furthermore, she publishes articles in key Argentine legal journals and participates as a speaker in several seminars.

Pérez Alati, Grondona, Benites & Arntsen (PAGBAM) Tel: +54 11 4114 3000 Suipacha 1111, 2nd floor Email: [email protected] C1008, City of Buenos Aires URL: www.pagbam.com Argentina

María Clara Rodríguez Llanos specialises in competition and consumer protection. She graduated from Universidad Torcuato Di Tella (UTDT). From June to September, 2016, Ms. Rodríguez Llanos worked on secondment as legal counsel at Google Argentina. From May to June, 2017, she attended the Academy of American and International Law at the Southwestern Institute for International and Comparative Law (Plano, Texas, U.S.). In 2017, Ms. Rodríguez Llanos took a course at ESEADE and obtained a Diploma on Competition, Antitrust and Product Liability. During 2018–2019, she studied at ESADE Business School (Barcelona, Spain) and obtained a Master’s Degree in International Business Law. During 2020, she worked in Gómez-Acebo & Pombo’s office in Barcelona.

Pérez Alati, Grondona, Benites & Arntsen (PAGBAM) Tel: +54 11 4114 3000 Suipacha 1111, 2nd floor Email: [email protected] C1008, City of Buenos Aires URL: www.pagbam.com Argentina

Sonia Alejandra Del Regno specialises in competition and consumer protection. She graduated with honours from Universidad Católica Argentina (UCA) and won the Academic Excellence Award issued by the Bar Association of Attorneys of the City of Buenos Aires. She was a member of the Law Student Centre of UCA. Currently, Ms. Del Regno is studying at the University of San Andrés in order to obtain a Master’s in Business Law.

Pérez Alati, Grondona, Benites & Arntsen (PAGBAM) Tel: +54 11 4114 3000 Suipacha 1111, 2nd floor Email: [email protected] C1008, City of Buenos Aires URL: www.pagbam.com Argentina

Pérez Alati, Grondona, Benites & Arntsen (PAGBAM) is widely recognised as Additionally, most partners and senior associates have postgraduate one of the preeminent law firms in Argentina. Established in 1991, over 140 degrees from universities in Argentina, the United States of America or professionals render their services at the Firm throughout its several prac- Europe and/or have been associated with major law firms in the United tice areas. Headquartered in Buenos Aires, our Firm provides coordinated States of America or Europe. Moreover, all attorneys are fluent in English, legal advice and transactional capability to international and local compa- and some of them are also fluent in other languages (including French, nies, financial institutions and international organisations doing business German, Italian and Portuguese). in Argentina and Latin America. www.pagbam.com Our Firm advises many of the largest Argentine and international corporations and has played a significant role in many of the most complex and landmark transactions of the last decades in Argentina. We are a market leader in Argentina, as evidenced by our rankings in recognised research publications. Among other awards, we were the first Latin American Law Firm to be honoured with the “Latin America Law Firm of the Year Award” by Chambers and Partners.

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Miranda Noble

MinterEllison Geoff Carter

12 General Both a supplier (retailer) of goods or services and/or the manufacturer of goods are required to comply with the ACL. A ‘manufacturer’ is broadly defined and includes any business 1.1 What legislation, regulations and guidelines are that permits its name/brand to be attached to goods, and the relevant to consumer protection in your jurisdiction? importer of goods where the ‘actual’ manufacturer has no place of business in Australia. Consumer protection legislation consists of the following: ■ Federal legislation: 1.4 Which agency/agencies is/are responsible for ■ Competition and Consumer Act 2010 (Cth) (previously enforcing consumer protection law (i.e., who is the known as the Trade Practices Act 1974 (Cth) (TPA), which investigator and who is the adjudicator)? includes the Australian Consumer Law (ACL); and ■ Competition and Consumer Regulations 2010 (Cth). The ACL is enforced jointly by the Australian Competition and ■ State and territory-based legislation: Consumer Commission (ACCC) and the State and Territory ■ Fair Trading (Australian Consumer Law) Act 1992 (ACT); consumer protection agencies, with the involvement of the ■ Fair Trading Act 1987 (NSW); Australian Securities and Investments Commission on relevant ■ Consumer Affairs and Fair Trading Act 1990 (NT); matters. At a practical level, the ACCC is the primary (and most ■ Fair Trading Act 1989 (Qld); active) enforcement agency. ■ Fair Trading Act 1987 (SA); The ACL is adjudicated by all Australian courts and tribunals, ■ Australian Consumer Law ( Tasmania) Act 2010 (Tas); including State and Territory courts and tribunals. ■ Australian Consumer Law and Fair Trading Act 2012 (Vic); and ■ Fair Trading Act 2010 ( WA). 1.5 Are there any specific bodies that regulate/enforce consumer protection law in specific sectors?

1.2 What is the definition of “consumer” (i.e., who does consumer protection law protect)? The following bodies enforce consumer protection law in specific sectors: ■ Therapeutic Goods Administration; For the purposes of the consumer guarantees regime, a person ■ Australian Pesticides and Veterinary Medicines Authority; is taken to have ‘acquired’ particular goods or services as a ■ Foods Standards Australia and New Zealand; and ‘consumer’ under the ACL if the: ■ Department of Infrastructure Regional Development. ■ goods or services, of any kind, are valued at less than A$40,000; 22 Protections in Relation to the Quality and ■ goods or services are valued in excess of A$40,000, but are of a kind ordinarily acquired for personal, domestic or Function of Goods and Services household use or consumption; or ■ goods consist of a vehicle or trailer acquired for use princi- 2.1 Please describe any protections regarding the pally in the transport of goods on public roads. quality and function of goods and services acquired by The definition of a ‘consumer’ under the ACL is set to expand consumers. on 1 July 2021, with the monetary threshold referred to above increasing from A$40,000 to A$100,000. The ACL creates ‘consumer guarantees’ regarding the quality There are other definitions of a ‘consumer’ for other parts and function of goods and services that automatically apply to of the ACL; for example, definitions of ‘consumer goods’ for every supply to a ‘consumer’. These cannot be waived, limited the product safety provisions and ‘consumer contracts’ for the or excluded, or misrepresented. unfair terms regime.

2.2 Please outline the substantive tests for these 1.3 Who is/which entities are required to comply with protections. consumer protection law? Liability for the consumer guarantees lies with both the supplier Any person (including businesses/corporations) engaged in trade (retailer) of the good or service and/or the manufacturer of the or commerce must comply with the ACL. goods.

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Consumer guarantees on goods relevant to suppliers ■ goods were purchased for the purpose of re-supply; Where goods are supplied to a consumer, the supplier guarantees ■ goods are lost or destroyed; that they: ■ consumer did not take reasonable care of the goods, such ■ are of acceptable quality. They must be fit for the purpose as failing to follow instructions or servicing; for which goods of that kind are commonly supplied, ■ goods are damaged by the consumer’s abnormal use; acceptable in appearance and finish, free from defects, safe ■ consumer examined the goods before purchase and should and durable, as a reasonable consumer fully acquainted have seen obvious faults; or with the state and condition of the goods would regard ■ defect was brought to the consumer’s attention prior to as acceptable, having regard to any relevant circumstances purchase. such as the nature and price of the goods and any description applied to them; ■ are fit for any particular specified purpose for which the 2.5 What remedies are available for a breach of the consumer tells the supplier; protections in relation to the quality and function of goods and services? ■ correspond with any description or sample given; ■ comply with any express warranty/representation given by the supplier; and Remedies from suppliers in relation to goods ■ are supplied with a clear title, undisturbed possession and If the failure to comply with a consumer guarantee is ‘major’, are free of undisclosed securities. or cannot be remedied, the ACL allows the consumer to decide which remedy they would prefer from the supplier, including: Consumer guarantees on goods relevant to manufacturers ■ compensation for any reduction in the value of the goods; or Manufacturers guarantee that their goods: ■ reject the goods and choose a full refund or replacement. ■ are of acceptable quality; If the failure is minor and can be remedied, the consumer ■ correspond with any description or sample given; may ask the supplier to remedy the defect within a reasonable ■ comply with any express warranty/representation given by time. The supplier has the right to choose the remedy including the manufacturer; and whether to repair or replace the goods, or provide a refund. ■ have facilities for repair and spare parts that are reasonably Otherwise, if the supplier does not remedy the failure (or fails available for a reasonable time after purchase. to within a reasonable time), the consumer may choose to: ■ have the defect remedied by someone else and recover Consumer guarantees relating to services reasonable costs from the supplier; or Suppliers guarantee to consumers that services will be: ■ reject the goods and seek a refund or replacement. ■ provided with due care and skill; ■ fit for any specified purpose for which the consumer tells Remedies from suppliers in relation to services the supplier; and If the failure is major, the consumer can choose to: ■ supplied in the timeframe agreed or within a reasonable ■ cancel the services and get a refund for any part of the time. service not already used; or ■ keep the contract and get compensation for the difference in value of the service performed and what they paid for. 2.3 What types of goods and services are covered If the failure is minor, the supplier can choose to: by the protections relating to the quality of goods and ■ remedy the issue with the service at no cost to the customer services? (and within a reasonable time); or ■ provide a full refund. The consumer guarantees regime covers: Otherwise, if the supplier takes too long to remedy the issue ■ any goods or services valued at less than A$40,000 (regard- or refuses to resolve the issue, the consumer can engage someone less of the kind of good/service or to whom it is supplied); else to fix the problem and is entitled to have their reasonable ■ goods or services valued in excess of A$40,000, of a kind costs reimbursed by the supplier. Alternatively, the consumer can ordinarily acquired for personal, domestic or household choose to cancel the service (if it is ongoing) and obtain a refund. use or consumption; or Consumers also have an additional right to damages for any ■ goods that consist of a vehicle or trailer acquired for use reasonably foreseeable consequential loss or damage incurred. principally in the transport of goods on public roads. The types of goods and services that are covered under the Remedies from manufacturers ACL is set to expand on 1 July 2021, with the monetary threshold A consumer can claim damages directly from the manufacturer referred to above increasing from A$40,000 to A$100,000. of goods for a failure to comply with the consumer guarantees. The manufacturer is liable to pay damages for the: 2.4 Are there any exceptions to these protections? ■ reduction in value of the goods resulting from the failure; and ■ reasonably foreseeable consequential loss or damage caused Any attempt to exclude, restrict or modify the application of the by the failure. consumer guarantee rights (or remedies) will be void. This is The manufacturer must also indemnify the supplier for subject only to very limited exceptions. breaches of certain consumer guarantees. Any representation that seeks to exclude, restrict, modify or otherwise limit the consumer guarantee rights will also breach provisions of the ACL that prohibit false or misleading 2.6 Who has or which agencies have standing to representations. initiate proceedings for a breach? However, consumer guarantees do not apply where the: ■ goods were bought from a one-off private sale (nonethe- The ACCC may, by application, commence an action on behalf less, such goods are still covered by guarantees as to title, of one or more persons who are entitled to take action under the undisturbed possession and undisclosed securities); consumer guarantees regime (if they obtain written consent from ■ goods were bought at auction; the person/s on whose behalf the application is being made).

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2.7 Describe at least two examples of public or private Safety warning notices enforcement of these protections in the last five years, A Commonwealth, State or Territory Minister responsible for including the conduct/alleged conduct, result and administering the ACL can issue a safety warning notice, penalties imposed. informing consumers and suppliers about products or product-related services that may cause injury or that are under Jetstar investigation. In May 2019, the Federal Court of Australia ordered Australian airline Jetstar Airways Pty Ltd (Jetstar) to pay A$1,950,000 for Bans on products/services making false or misleading representations regarding consumer In certain circumstances, an interim or permanent ban can guarantee rights under the ACL. Jetstar stated on its website be placed on products or product-related services. A ban on that certain tickets were not refundable and that refunds were a product makes it illegal to supply, offer to supply, manu- only available if consumers purchased more expensive tickets. facture, possess or have control of the product. A ban on a These representations were misleading because consumers have product-related service makes it illegal to supply or offer to automatic consumer guarantees that cannot be excluded, no supply that service. matter how inexpensive the ticket, and blanket ‘no refund’ statements can mislead consumers into thinking that they are not Mandatory safety standards entitled to a refund under any circumstance. Jetstar also agreed Mandatory safety standards apply to particular goods or to a court-enforceable undertaking to the ACCC to amend product-related services. A supplier must not manufacture, its consumer law policies and practices including its website possess or have control of those goods, or offer to supply those and booking systems, and agreed to review past consumer services if they do not meet these standards. complaints and offer affected consumers revised remedies. In the case of products, the standards may relate to safety, testing and information. Apple In the case of product-related services, the standards may In June 2018, the Federal Court of Australia ordered that Apple relate to: Inc. (Apple) pay A$9,000,000 for making false and misleading ■ how the services are supplied; representations regarding consumer guarantees under the ACL. ■ the skills or qualifications of a person supplying the service; Apple made representations to its customers who were experi- ■ the materials used in supplying the service; encing an error which disabled the function of their iPhones and ■ the tests the services must pass; and iPads that they were not entitled to a remedy if their device had ■ warnings or instructions, or other information. been repaired by a third party. These statements were misleading because the mere fact that the device had been repaired by a third 3.2 Please outline the substantive tests for these party other than Apple did not mean that the consumer guar- protections. antees under the ACL no longer apply. Apple also agreed to a court-enforceable undertaking with the ACCC to improve its staff With respect to the safety defect provisions, products will have training, conduct an audit regarding its warranties, and amend its a ‘safety defect’ if they are not as safe as people are entitled to website and procedures to ensure future compliance with the ACL. expect (taking into account the way they are packaged, marketed, labelled and instructions on any warning labels). Sony In June 2020, the Federal Court of Australia ordered Sony Interactive Entertainment Network Europe Limited (Sony) to 3.3 What types of goods and services are covered pay A$3,500,000 for breaching the ACL by making false and by the protections relating to the safety of goods and misleading representations on its website and in dealings with services? Australian consumers with respect to their ‘PlayStation Network’ product. Between September 2017 and May 2019, Sony repre- Under the ACL, ‘goods’ are broadly defined to include a range of sented to Australian consumers that they were not entitled to items such as ships, vehicles, animals, minerals, trees, gas, elec- the statutorily enshrined consumer guarantees of the ACL. This tricity, computer software, second-hand goods, and components conduct included Sony implying in the terms of service that users and parts of goods. did not have guarantees as to the quality, functionality or accu- The provisions relating to bans on products/services, manda- racy of digital games and representing to consumers via call-centre tory safety standards, safety warning notices and recalls apply agents and emails that Sony were not required to provide refunds specifically to ‘consumer goods’ and ‘product-related services’ for faulty game purchases. The Court held that Sony had breached as defined in the ACL. the ACL by falsely representing that consumer guarantees did not ■ ‘Consumer goods’ are goods that are intended to be used, apply and that users were not entitled to a refund irrespective of or are of a kind likely to be used, for personal, domestic or the condition or functionality of the goods. household use or consumption. ■ ‘Product-related services’ are also captured by the product 32 Protections/Prohibitions in Relation to safety provisions, which means a service for or relating to the Safety of Goods and Services the installation, maintenance, repair, cleaning, assembly or delivery of consumer goods of a particular kind, or any other service that relates to the supply of consumer goods 3.1 Please describe any protections regarding the of that kind. safety of goods and services acquired by consumers. With respect to the safety defect provisions, manufacturers are liable for any loss or damage suffered by an injured indi- Safety defects vidual where the manufacturer has ‘supplied the goods in trade Manufacturers are responsible if their products have a ‘safety or commerce’. defect’ and cause injury or damage to another person.

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3.4 Are there any exceptions to these protections? The Minister may issue a compulsory recall notice ordering suppliers to recall products that have safety-related defects or that do not comply with safety standards. A recall notice often With respect to the safety defect provisions, manufacturers may requires suppliers to: tell the public the nature and circumstances rely on various defences, including the fact that the safety defect of the defect; repair or replace the products; or provide refunds. occurred later in the distribution chain or it could not have been discovered given the state of scientific or technical knowledge at the time it was supplied. 3.8 List at least two examples of public or private enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties 3.5 What remedies are available for a breach of the imposed. protections in relation to the safety of goods and services? Thermomix In April 2018, Thermomix In Australia Pty Ltd (Thermomix), With respect to the safety defect provisions, manufacturers may a kitchen appliances company, was ordered to pay A$4,600,000 have to compensate a person who suffers loss arising from the by the Federal Court of Australia for engaging in false or use of a defective good, which may be as a result of: misleading conduct in relation to the safety of its kitchen appli- ■ death or personal injury; ances. The Court held that Thermomix was aware of a poten- ■ destruction or damage caused to (consumer) products; and/or tial risk of injury to users caused by the appliance lid lifting and ■ damage to land, buildings or fixtures ordinarily acquired hot food or liquid escaping, but failed to notify its customers of for private use. this safety risk, and that Thermomix also failed to comply with Entities importing defective products on behalf of a manufac- its mandatory reporting requirements for 14 serious injuries turer overseas will be liable if the manufacturer does not have a that arose from the use of the appliances. Only after the manu- place of business in Australia. facturer notified the ACCC of the safety issue did Thermomix undergo a voluntary product recall, which facilitated the replace- Pecuniary penalties ment of the sealing rings for all defective appliances. A supplier may be found guilty of a criminal offence if they: ■ fail to comply with a mandatory safety or information Woolworths standard; In February 2016, the Federal Court of Australia ordered ■ supply a product or product-related service which is the Woolworths Limited (Woolworths) to pay A$3,000,000 for subject of a ban; or breaches of the ACL relating to safety issues with its house ■ refuse or fail to comply with a recall notice. brand products sold in its supermarkets. The Court found The maximum fine is: that Woolworths engaged in misleading or deceptive conduct ■ A$500,000 for individuals; and regarding the safety of five of its products, which were defective ■ for a body corporate, the greater of: and caused several serious injuries including burns caused by hot ■ A$10,000,000; oil from a deep fryer, and that Woolworths had become aware ■ three times the value of the benefit received; or of the serious injuries from the defective products but failed to ■ 10% of the annual turnover in the preceding 12 months, recall them, and had also failed to report the serious injuries to if a court cannot determine the benefit obtained from the ACCC within two days. the offence. Civil penalties of the same amounts also apply. 42 Prohibitions Relating to “Conduct” Against Consumers 3.6 Are there mandatory reporting requirements with respect to the safety of goods or services? 4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., Mandatory reporting if a consumer good causes injury or manufacturers/retailers) which sell or supply goods death and services to consumers (“Conduct”). For example, The ACL includes a mandatory notification requirement for misleading and deceptive conduct, unconscionable suppliers that become aware that: conduct, etc. ■ the use (or foreseeable misuse) of a consumer good; or ■ the use (or foreseeable misuse) of a consumer good to General prohibition on misleading or deceptive conduct which its product-related services relate, Under the ACL, it is illegal to engage in conduct that is has caused, or may have caused, serious injury, illness or death. misleading or deceptive, or likely to mislead or deceive. This report must be made via the ACCC website within two days of the supplier becoming aware. Specifically prohibited false or misleading representations and conduct Notification of recalls In addition, specific kinds of false statements and representa- If a supplier recalls products voluntarily, the supplier must notify tions (for example, regarding price, quality, benefits, origin, etc.) the Minister within two days, setting out the nature of the defect are also prohibited. or danger in the products. Unconscionable conduct 3.7 Describe any voluntary or mandatory product Under the ACL, it is illegal to engage in unconscionable conduct. safety recall regimes. This includes conduct involving taking unfair or unjust advantage, which may include exploiting someone who is suffering Unsafe consumer products can be recalled by a Minister from a certain disability, or which oppressively exploits an organ- (compulsory recall) or voluntarily by the supplier. isation’s position in dealing with a smaller business or consumer.

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In March 2021, the Full Federal Court of Australia affirmed that ■ the relative bargaining strengths of the parties and their unconscionable conduct does not necessarily require a person to willingness to negotiate; exploit some special disadvantage or vulnerability on the part of ■ any use of undue influence or tactics; consumers or small businesses (although that is often the case), ■ whether the weaker party could have understood any docu- but rather, the court must consider whether the conduct involves mentation used; a sufficient departure from the norms of acceptable commercial ■ whether the advantaged party imposed conditions not behaviour as to be against conscience or to offend conscience. reasonably necessary to protect its legitimate interests; ■ how much the weaker party would have had to pay to buy Unfair contract terms equivalent products or services from elsewhere; All consumer contracts and small business contracts that are ■ whether the advantaged party unreasonably failed to standard form contracts must not contain ‘unfair terms’. disclose any foreseeable risks affecting the weaker party; ■ the terms of the contract; and Other prohibitions/protections ■ the conduct of both parties (including whether they have The ACL includes a wide range of other specific prohibitions, acted in good faith). including prohibitions against or protections relating to: ■ bait advertising; Unfair terms ■ wrongly accepting payment; For the purposes of the unfair contract terms laws, ‘consumer ■ unsolicited supplies; contracts’ are: ■ pyramid schemes and referral selling; ■ contracts for the supply of goods or services; ■ component/part pricing; ■ to an individual (i.e. a natural person); and ■ door-to-door/unsolicited sales; ■ where the acquisition of the goods or services or interest is ■ lay-by agreements; and wholly or predominantly for personal, domestic or house- ■ gift cards. hold use or consumption. ‘Small business contracts’: ■ are contracts for the supply of goods or services; 4.2 Please outline the substantive tests for the abovementioned protections/prohibitions. ■ are made with an entity that has fewer than 20 employees; and ■ have an ‘upfront contract price’ of less than A$300,000 or, In general terms, statements and conduct are likely to be if the contract is longer than 12 months, A$1,000,000. misleading if there is a ‘real’ (i.e. not remote) chance that a A ‘standard form contract’ is one that is essentially presented reasonable person in the audience to whom the statements or on a ‘take it or leave it basis’ and is not subject to negotiation. conduct are directed is likely to have been led into error. It is not All contracts are presumed to be standard form unless proven necessary for the person to have actually been misled. otherwise. The kinds of statements/conduct that can be misleading are A term will be ‘unfair’ if it: extremely wide-ranging and can include: ■ causes a significant imbalance in the parties’ rights and ■ making untrue claims about products/services, including obligations; their performance characteristics, composition and quality; ■ is not reasonably necessary to protect the legitimate inter- ■ omitting to provide relevant details about a product/service; ests of the party advantaged by the term; and ■ remaining silent/doing nothing, especially where it is likely ■ causes detriment to the consumer or small business (both the other person has misunderstood; financial or non-financial). ■ creating an overall impression which is not correct, or An unfair term may include terms that permit one party (but presenting factually correct information in a misleading not the other) to: context; and ■ avoid or limit their obligations under the contract; ■ making predictions/statements as to future matters where ■ terminate or vary the terms of the contract; there are no reasonable grounds to support them. ■ renew or not renew the contract; ■ unilaterally vary the characteristics of goods or services to Specifically prohibited false or misleading representations be supplied; and conduct ■ unilaterally determine whether the contract has been Specific kinds of false statements and representations are also breached; or prohibited. In particular, it is illegal to make false statements or ■ penalise the other party for breach or termination. representations regarding: ■ the standard, quality or value of products/services; ■ whether products are new; 4.3 Are there any exceptions/exemptions to the ■ sponsorship, performance characteristics, accessories, uses protections/prohibitions relating to Conduct? or benefits of products or services; ■ the availability of repair facilities or spare parts; Unfair contract terms ■ a customer’s need for the products/services; A term is not considered ‘unfair’ if it is reasonably necessary in ■ any exclusions, conditions or rights that the customer may order to protect the legitimate interests of the party who would have in relation to the products/services that were supplied be advantaged by the term. However, there is a presumption (or express representations to consumer guarantees); or that a term of a contract is not reasonably necessary in order to ■ misrepresentations regarding a contractual requirement to protect the legitimate interests of the party who would be advan- pay for a statutory right, warranty, condition or guarantee. taged by the term, unless that party proves otherwise.

Unconscionable conduct When deciding whether a person has acted unconscionably, a court may consider:

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4.4 What remedies are available for a breach of the iSelect protections/prohibitions relating to Conduct? In October 2020, the Federal Court of Australia ordered iSelect Limited (iSelect) to pay A$8,500,000 for making false or misleading representations regarding its electricity compar- General prohibition on misleading or deceptive conduct ison service. The Court found that iSelect misled consumers Remedies can include: damages; injunctions; compensation; and/ by representing that it would compare all electricity plans and or corrective advertising. recommend the most suitable plan to consumers, when this was not the case. iSelect’s commercial arrangements, which included Specifically prohibited false or misleading representations receiving commissions from the retailers it recommended, and conduct restricted the number of electricity plans those retailers could The same remedies apply as referred to above. In addition, if a upload onto the iSelect systems, and therefore the recommended court is satisfied that a person has engaged in unfair practices plans were not necessarily the most suitable or competitive. (including engaging in false or misleading conduct), penalties may be imposed. The maximum pecuniary penalty is: Kogan ■ A$500,000 for individuals; and In December 2020, the Federal Court of Australia ordered online ■ for a body corporate, the greater of: retailer Kogan Australia Pty Ltd (Kogan) to pay A$350,000 for ■ A$10,000,000; making false or misleading representations during a ‘tax time’ ■ three times the value of the benefit received; or promotional campaign in the lead up to the end of the finan- ■ 10% of annual turnover in the preceding 12 months, cial year in 2018. Kogan increased the prices of more than 600 if a court cannot determine the benefit obtained from of its products before the promotion, in most cases by at least the offence. 10%, to then be ‘reduced’ as a part of the discounts. The Court found that Kogan misled consumers about the nature of the Unconscionable conduct promotion and the disingenuous savings, and used statements The same pecuniary penalties apply as referred to above. such as ‘48 hours left!’ and ‘[e]nds midnight tonight!’ to entice consumers to make a purchase during the sale. Unfair contract terms The ACCC or other affected party may apply to the court to have Telstra a term declared an unfair term, which, if declared unfair, will In November 2020, the ACCC initiated proceedings against be void and unenforceable. However, the relevant contract will Australia’s largest telecommunications provider, Telstra continue, if it is capable of operating without the unfair term. Cooperation Limited (Telstra), for unconscionable conduct in the sale of post-paid cell phone products to Indigenous Australian consumers. Throughout five stores, Telstra staff 4.5 List at least two examples of public or private used unfair selling tactics and took advantage of a substantially enforcement of the protections relating to Conduct in stronger bargaining position. The ACCC claims that Telstra the last five years, including the breach/alleged breach, exploited an unfair or unjust advantage over consumers, many result and penalties imposed. of whom spoke English as a second language, had difficulties understanding Telstra’s written contracts and were relying on Volkswagen government benefits as their primary income source. Whilst In December 2019, the Federal Court of Australia issued its a final order has not been made, the ACCC and Telstra have highest ever consumer law penalty, ordering Volkswagen to pay agreed to a pecuniary penalty of A$50,000,000, which is A$125,000,000 for contravening the ACL. Volkswagen made awaiting approval from the Federal Court of Australia. false representations in relation to vehicles it imported into Australia between 2011 and 2015. It did not disclose to the 52 Other Protections/Prohibitions Australian Government or its consumers that it used ‘Two Mode’ software, whereby Mode 1 software was used for emissions 5.1 Does consumer law in your jurisdiction have testing, which caused vehicles to produce lower nitrogen oxide any other prohibitions/protections not covered by (NOx) emissions, and Mode 2 was used when vehicles were the questions above? If so, please describe these actually driven on road and produced higher emissions. Had the prohibitions/protections. vehicles been tested when operating on Mode 2, they would have exceeded the NOx emissions limits permitted in Australia. This is not applicable.

STA Travel In April 2020, the Federal Court of Australia ordered STA 5.2 Please outline the substantive tests for the above- Travel Pty Ltd (STA Travel) to pay A$14,000,000 for making mentioned protections/prohibitions. misleading representations to consumers regarding their ‘MultiFLEX Pass’ offering. Ordinarily, customers would be This is not applicable. required to pay a ‘change fee’ to STA Travel to alter a flight booking. STA Travel sold a range of MultiFLEX Passes which 5.3 Are there any exceptions/exemptions? were advertised as allowing customers to make ‘unlimited’ and ‘fee-free’ changes to their flights, without any qualifications to these general representations. Despite this, in a number of This is not applicable. instances, STA Travel continued to charge customers who had purchased a MultiFLEX Pass and sought to change their 5.4 What remedies are available for a breach of these booking. The Court therefore found that STA Travel had made protections? false or misleading claims with respect to the applicable costs when travel services were changed. This is not applicable.

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5.5 List at least two examples of public or private 72 Enforcement enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties imposed. 7.1 How does/do the consumer authority/authorities seek to enforce consumer law (for example, by administrative decision or by commencing proceedings This is not applicable. in court)?

62 Investigation of Potential Breaches The ACCC can seek to enforce the ACL by seeking remedies for unlawful conduct in a range of ways, including by commencing 6.1 What powers does/do the consumer authority/ proceedings in court. The court has wide discretion to impose authorities in your jurisdiction have to investigate orders for breaches of the ACL, including: potential breaches of consumer law? Describe the key ■ declarations; steps in a typical investigation. ■ pecuniary penalties (civil) and fines (criminal); ■ injunctions; The ACCC is responsible for enforcing the CCA, including ■ disqualification; the ACL. The ACCC has an extensive range of investigative ■ corrective advertising orders; powers, including the power to compel a person to provide ■ damages/consumer redress; and information, documents or give evidence (known as issuing a ■ compliance programme orders. section 155 notice), and powers to issue substantiation notices. Non-litigious options available to the ACCC include: ■ administrative resolutions, such as court-enforceable undertakings between the ACCC and the trader; and 6.2 How is an investigation triggered (e.g., ex officio, ■ infringement notices, where a business pays a fine in lieu of whistleblower or complaint)? court proceedings (and without admission).

An investigation can be triggered by complaints, whistle-blowers 7.2 Is/are the consumer protection authority/ and self-initiated inquiries, including as a result of the ACCC’s authorities bound by a time limit to commence market studies and inquiries. proceedings on breaches?

6.3 Describe any complaints procedure for (i) For civil matters, the usual statute of limitations apply, i.e. within consumers, and (ii) businesses. six years of the alleged breach of the ACL, while for criminal matters, prosecutions must be brought within three years. There is no formal complaints procedure for either consumers or businesses. Complaints can be made to the ACCC in a range 7.3 Describe the enforcement powers/tools available to of ways (in writing, phone, by email and through a call centre). these bodies (civil, administrative, criminal).

The ACCC has various enforcement options, including: 6.4 What is the timeline for a typical investigation? ■ bringing criminal action or civil proceedings in a court (noting that only the court, not the ACCC, has the power Investigations can vary significantly in duration. Some can be to determine liability and impose penalties and remedial resolved in a matter of weeks or months, while others can take orders); over a year. ■ enforceable undertakings; and ■ infringement notices.

6.5 Are there criminal penalties for non-compliance with a consumer law investigation? If so, provide 7.4 Where regulators/enforcement bodies have examples where such penalties have been imposed. a choice of enforcement tools/powers, what considerations do they take into account in determining which tools/powers to use? Failure to comply with a section 155 notice (see question 6.1 above) or knowingly furnishing information that is false or misleading is a criminal offence and attracts a significant fine or up to two When determining the appropriate enforcement measures, the years’ imprisonment. ACCC takes into account various considerations, including the nature and seriousness of the conduct, the detriment it has caused, and any steps taken to address the ACCC’s concerns. 6.6 Can investigations be resolved by way of commitments or undertakings? 7.5 Describe the relevant rules and procedures that must be followed by such bodies (e.g., administrative, Yes, in some cases the ACCC is willing to accept informal commit- judicial). ments and formal (court enforceable) undertakings to resolve a matter. A business may offer this voluntarily or the ACCC may The ACCC has a number of policies, governance and manage- propose it as an alternative option to pursuing litigation. The ment structures in place which enable it to exercise its powers in ACCC retains discretion as to whether to accept any proposed an accountable and transparent manner, such as its Accountability commitment or undertaking, and may decline to accept these Framework for Investigations. where it has determined that court proceedings are appropriate.

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In addition, the ACCC publishes its Compliance and Enforcement 8.2 Can consumers or retailers/manufacturers appeal Policy and Priorities, which sets out the principles adopted by the decisions made by the consumer authority/authorities or ACCC, and outlines its enforcement powers, functions, priori- by a court? ties and strategies. The priority areas are reviewed and updated each year. Consumers and suppliers/manufacturers can appeal a decision made by the court if they are party to the proceeding. In certain 7.6 Is there a right to a stand-alone action and follow cases, the ACCC can also seek leave of the court to intervene in on right of action within consumer law? Who has these private proceedings. standing to bring these actions?

8.3 Does an appeal suspend the effect of any penalty/ The ACL provides for a private right of action, which can be the requirement to pay any fine (if applicable)? either stand-alone or follow on. The ACCC may also, by application, commence an action on behalf of one or more persons A penalty will only be enforceable following a decision in the who are entitled to take action under the consumer guarantees appellate court. The decision may be upheld and the penalty will regime and the defective goods provisions (if the ACCC has remain enforceable; alternatively, if the decision is overturned, obtained the written consent of the person/s on whose behalf the penalty may no longer apply. the application is being made). 92 Current Trends and Anticipated Reforms 7.7 Is there a statute of limitations for bringing stand- alone or follow on actions? 9.1 What are the recent enforcement trends in your jurisdiction? Defective goods A person may commence a defective goods action at any time In recent years, the pecuniary penalties issued by the Courts within three years after the time the person became aware, or for consumer law breaches have increased significantly in size. ought reasonably to have become aware, of the following: This trend has been reinforced since the ACL was amended in ■ the alleged loss or damage; 2018 to increase the maximum civil pecuniary penalty for corpo- ■ the safety defect of the goods; and rations from A$1,100,000 per contravention to the greater of ■ the identity of the person who manufactured the goods. A$10,000,000, three times the value of the benefit, or 10% of the A defective goods action must be commenced within 10 years annual turnover of the corporation if the court cannot determine of the supply by the manufacturer of the goods to which the the value of the benefit. Penalties against individuals under the action relates. ACL also increased from A$220,000 to A$500,000 per breach. The purpose of these increases are to deter large companies from Consumer guarantees breaching consumer laws and align the financial consequences for An affected person may commence an action for damages consumer law breaches with competition/antitrust law breaches. against the manufacturer of the goods at any time within three Over 2020, the ACCC’s compliance and enforcement activities years after the day on which the affected person first became adapted to reflect the COVID-19 pandemic, including providing aware, or ought reasonably to have become aware, that the guar- guidance to businesses and consumers regarding a range of antee to which the action relates has not been complied with. consumer law issues emerging throughout the pandemic, including in relation to cancellations, delays and other impacts to services. Other provisions The ACCC released its 2021 compliance and enforcement For civil matters, the usual statute of limitations apply, i.e. within priorities in February 2021. In 2021, the ACCC will focus in six years of the alleged breach of the ACL, while for criminal particular on: matters, prosecutions must be brought within three years. ■ the impact of the COVID-19 pandemic, including sales practices of the travel and aviation sectors; 7.8 Describe any international or regional cooperative ■ pricing and selling practices of essential services such as mechanisms (e.g., MOUs) in which your jurisdiction is electricity and telecommunication; involved in the enforcement of consumer protection. ■ competition and consumer issues relating to digital platforms; The ACCC is involved in a number of international activi- ■ competition and consumer issues in the funeral services ties to pursue its aims of assisting with cross-border investiga- sector; tions into consumer issues, building partnerships with interna- ■ consumer issues in the financial services sector, particularly home loans and debt collection practices; tional agencies to share knowledge and assisting other countries ■ ensuring that receive the protections of to build effective consumer protection systems. Australia is a small businesses competition and fair trading laws, including franchising; member of the Organisation for Economic Co-operation and and Development’s (OECD) Committee on Consumer Policy, ■ implementing the new safety standards for button which focuses on improving the development and enforcement batteries and enforcing compliance in relation to the new of effective consumer policies in its Member States. quad bike safety standard. 82 Appeals 9.2 Are there any proposed reforms to consumer law or policy within the next 12 months? 8.1 Describe any appeal processes.

Definition of ‘consumer’ Either party to a legal proceeding can appeal to a higher-level The definition of a ‘consumer’ under the ACL is set to expand on court if they disagree with a court’s decision. 1 July 2021 to increase the amount a person can spend and still

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be considered to have acquired goods or services as a consumer. Unfair contract terms regime The anticipated amendment will see the threshold increase from The Australian Government has agreed to strengthen and A$40,000 to A$100,000, resulting in a broader range of goods broaden the existing unfair contract terms regime under the and services being classified as ‘consumer’ goods or services. ACL. Currently, if a contractual provision is found to be ‘unfair’, Consequently, the ACL’s consumer guarantees regarding quality it can be declared void by the court, but the conduct does not and function will apply to goods and services under the revised attract any pecuniary penalties. In order to deter companies threshold. from taking advantage of their superior bargaining power, the proposed reforms would see unfair contract terms being made Changes to ‘major’ failure illegal and provide the courts more flexible remedies including The Australian Treasury has proposed amendments to clarify the power to impose pecuniary penalties. This also involves what constitutes a ‘major’ failure to comply with the ACL. The broadening the definition of a ‘small business’ from one with proposed change will confirm that multiple, non-major (or fewer than 20 employees to one with fewer than 100 employees. ‘minor’) failures can amount to a major failure, by inserting an These changes have not yet been introduced. additional test into the definition of a major failure with respect to goods and services in the ACL. In practice, the courts have already interpreted and considered the meaning of a ‘major’ failure to include multiple minor failures; however, the amendment will provide clarity and address any uncertainties in the application of the law going forward.

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Miranda Noble specialises in assisting global and domestic clients to navigate Australia’s competition and consumer laws. Miranda advises clients on regulatory investigations and enforcement action for potential consumer law breaches, and assists clients with consumer protection issues, including misleading and deceptive conduct, packaging, marketing and advertising, unfair terms, unconscionable conduct, consumer guarantees, product safety, and recalls. She has extensive expertise in complex competition issues in domestic and global M&A transactions, both through the ACCC’s informal merger clearance process and in merger authorisation applications and associated (contested) proceedings before the Australian Competition Tribunal and Federal Court. Miranda has acted in three of the four merger authorisations proceedings before the Australian Competition Tribunal, and a significant range of other complex merger matters. Miranda has considerable expertise with significant investigations/proceedings relating to cartels, anti-competitive agreements, misuse of market power, predatory pricing, exclusive dealing and resale price maintenance. She provides pragmatic, responsive and commercial advice to clients, domestic and multinational, across a broad range of industries. This includes the automotive, agricultural, media/technology, education, energy, fast-moving consumer goods, financial services, government, logistics, manufacturing, industrial products, pharmaceuticals, resources and wagering spheres.

MinterEllison Tel: +61 3 8608 2489 447 Collins Street Email: [email protected] Melbourne, VIC 3000 URL: www.minterellison.com Australia

Geoff Carter is the head of MinterEllison’s Mergers Unit, and specialises in competition law with a commercial focus. His expertise includes merger clearances, authorisations and notifications, third-party access, economic regulation and consumer protection advice. He develops clearance strategies for complex transactions and assists clients to defend investigations into cartels and other prohibited practices. Geoff has extensive experience across a range of diverse industry sectors, including financial services, telecommunications, aviation, ports, energy, gambling, agribusiness, health services, manufacturing and infrastructure. Geoff is also: ■ Chair of the Competition and Consumer Law Committee of the Law Council of Australia. ■ Member of the Advisory Board for the Graduate Program on Competition Law at Melbourne Law School.

MinterEllison Tel: +61 3 8608 2090 447 Collins Street Email: [email protected] Melbourne, VIC 3000 URL: www.minterellison.com Australia

MinterEllison is an international law firm, headquartered in Australia The team have expertise in the consumer guarantees regime, acting for and regarded as one of Asia-Pacific’s premier law firms. MinterEllison’s suppliers, manufacturers and insurers, and the unfair contract terms teams collaborate across Australia, New Zealand, Asia and the UK to regime. In addition, we regularly advise on the unconscionable conduct deliver exceptional outcomes. MinterEllison’s Competition/Antitrust team provisions of the Australian Consumer Law, product liability and recalls, is regarded for assisting clients with all aspects of consumer protection industry codes and franchising. issues, handling significant domestic and international merger clearances www.minterellison.com and managing complex cartel/antitrust and related regulatory investigations and enforcement action. MinterEllison’s high-level technical knowledge of Australian consumer laws is complemented by many years of experience working with complex businesses and brands. They advise on strategies for launching new brands and protecting existing brands. They provide advice on the legal risks associated with marketing offers, promotions and strategic re-branding. MinterEllison have significant experience defending clients in proceedings for misleading and deceptive conduct, brought by the Australian Competition and Consumer Commission (ACCC) and competitors.

Consumer Protection 2021 © Published and reproduced with kind permission by Global Legal Group Ltd, London 24 Chapter 4 Bahrain Bahrain

Fatima AlAli

Hassan Radhi & Associates Mohamed Ali Shaban

12 General 1.5 Are there any specific bodies that regulate/enforce consumer protection law in specific sectors?

1.1 What legislation, regulations and guidelines are relevant to consumer protection in your jurisdiction? Consumers of services provided by specialised sectors are protected by provisions in the relevant industry-specific legislation enforced by the authority in charge of such sector, such as: The main legislation in Bahrain on consumer protection is Law ■ the Central Bank of Bahrain (the “CBB”) for services No. (35) of the year 2012 promulgating the Consumer Protection provided by financial institutions, which include banks, Law (the “Consumer Protection Law”). investment firms and insurance companies; In 2014, the Minister of Industry, Commerce and Tourism ■ the Telecommunications Regulatory Authority (the “TRA”) issued Ministerial Decision No. (66) of the year 2014 which for the telecommunications sector; promulgated the Implementing Regulations of the Consumer ■ the Ministry of Health and the National Health Regulatory Protection Law (the “Implementing Regulations”). Authority (the “NHRA”) for the medical sector; and More specific provisions on consumer protection can be ■ the Ministry of Education (the “MOE”) for consumers of found in the legislation specific to certain fields such as the educational services. medical field, insurance, telecommunications, etc. 22 Protections in Relation to the Quality and 1.2 What is the definition of “consumer” (i.e., who does Function of Goods and Services consumer protection law protect)?

2.1 Please describe any protections regarding the The Consumer Protection Law defines “consumer” as: any natural quality and function of goods and services acquired by or corporate person who obtains products to satisfy his/its needs, consumers. or the requirements of dependants or those affiliated thereto. Pursuant to the Consumer Protection Law, the main consumer 1.3 Who is/which entities are required to comply with rights that must be safeguarded are as follows: consumer protection law? “1. The right to health and safety during his normal use of products. 2. The right to access correct information and particulars about the products he purchases or uses or those provided to him. Providers are defined in the Consumer Protection Law as: all 3. The right to freely choose products which fulfil the conditions of quality entities that provide products, whether as wholesalers, retail conforming to legally approved and recognized specifications. sellers, merchants, commercial agents, manufacturers or service 4. The right to obtain knowledge about protecting his legitimate rights providers, as well as advertisers, defined as: any natural or and interests. corporate person who advertises for products or promotes them 5. The right to respect the consumer’s privacy and safeguard his personal directly or through others, by any means. information and not abusing it for other purposes. 6. The consumer’s right to life in a healthy environment.” 1.4 Which agency/agencies is/are responsible for This is in addition to anti-monopoly measures and provisions enforcing consumer protection law (i.e., who is the related to pricing. investigator and who is the adjudicator)? It is notable from the above that the first and last protections are health and safety-related and the remaining are related to The main authority in charge of enforcing the provisions of consumer awareness and full information about the product and the Consumer Protection Law is the Consumer Protection its quality. Assuming the lack of any concealment of informa- Directorate (the “CPD”) in the Ministry of Industry, Commerce tion by the Provider (as defined in the Consumer Protection Law and Tourism (the “Ministry”). and quoted above), the consumer is considered to have accepted the functionality of the product as accurately described. If the

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Provider conceals information about the product or the product is or both, in addition to the confiscation or destruction of the advertised in a deceptive manner, then the functionality reason- goods which are the subject of the breach, the materials, and the ably sought by the consumer will be subject to complaint and equipment used therefor at the expense of the person respon- may lead to administrative or penal actions against the Provider. sible for the breach. In addition, the Court may order the publi- In respect of quality, the main protection is for health and cation of the judgment in two daily newspapers at the expense safety purposes. Furthermore, the Consumer Protection Law of the person responsible for the breach. requires a Provider to provide spare parts and maintenance Moreover, the law provides for an administrative penalty impos- required for the use of the product for a “reasonable” period able by the Court in case of a recurrence of the breach within three of time “commensurate” with the nature of the product, in years from the date of handing down the final conviction judg- the absence of an express agreement between the Provider and ment. Such penalty ranges between suspension of the business for consumer on the non-availability of the same. a period not exceeding three months, and finally striking off the The Implementing Regulations place an obligation on the registration of the business from the commercial registry. Provider to notify the CPD of any defects in the products within The Ministry is entitled to notify the legal person responsible seven days of the discovery thereof. In the case that the defect for the breach by a registered letter, with acknowledgment of poses a risk to the health and safety of the consumer, the noti- receipt, to remedy the breach of the Consumer Protection Law fication must be made immediately. A product recall must be within a reasonable period. In case of failure to comply, the announced and products refunded, exchanged or fixed by the Minister in charge of commercial affairs is empowered to issue a Provider at the request of the consumer. resolution to close the establishment for a period of at least seven The Provider of a recalled product is obliged to submit a days and not exceeding three months, or to strike off the registra- monthly report to the CPD on the number of units sold and tion in the commercial registry. In this case, re-registration in the recalled, whether the products were exchanged, refunded or commercial registry shall not be permitted except upon the lapse fixed, and the measures taken to fix the defect or avoid its occur- of six months from the date of issuing the strike-off resolution. rence in the future. In addition to the administrative measures that may be taken against those in breach of the Consumer Protection Law, compensatory remedies may be sought by the consumer affected 2.2 Please outline the substantive tests for these by the breach via tortious or contractual claims. protections.

2.6 Who has or which agencies have standing to Based on the provisions explained in question 2.1 above, the tests initiate proceedings for a breach? are those of reasonableness as “commensurate” with the nature of the product. These terms used by the law allow the CPD, the Ministry of Health, or even the Court, if the matter escalates to The CPD, the Ministry of Industry, Commerce and Tourism, the a litigation dispute, the discretion to decide compliance. Ministry of Health, the Public Prosecution, and the consumer The CPD plays a proactive role by conducting regular checks affected by a breach have standing to initiate proceedings. of the products on the market, and a reactive role by responding to complaints on specific products. 2.7 Describe at least two examples of public or private enforcement of these protections in the last five years, including the conduct/alleged conduct, result and 2.3 What types of goods and services are covered penalties imposed. by the protections relating to the quality of goods and services? In 2018, a chocolate factory and chocolate shop were closed for around two months for breach of Public Health Law provi- Pursuant to Article 1 of the Consumer Protection Law, all goods sions, due to the discovery of expired ingredients in their facto- and services provided by the Providers (as defined) are subject ries. Although the investigation led to the finding that none to the Consumer Protection Law, with the exception of medical of the expired ingredients were used in production, the closure and professional services, as detailed in question 2.4 below. continued, as possession of expired ingredients in a factory is criminalised. The closure also had deterrent purposes. After 2.4 Are there any exceptions to these protections? being referred to the Public Prosecution, a fine was imposed on the factory. Apart from the closure, fine and the publicity of such action, Yes. The Consumer Protection Law does not cover medicine, the Providers in question are subject to close monitoring. health preparations and health foods authorised to be imported Recently, in February 2020, the CPD closed down three phar- by the Ministry of Health and sold in licensed pharmacies and macies for monopolising medical masks to increase their prices, health centres. It also excludes the services provided by profes- which the CPD classified as anti-competitive conduct. sionals in the medical, engineering, legal, accounting and insur- In March 2020, the CPD closed down a hypermarket after ance fields. The products of such professionals are subject to discovering a number of expired products in its store. standards, quality parameters and consumer protection provisions in the specific laws governing the profession or industry. 32 Protections/Prohibitions in Relation to the Safety of Goods and Services 2.5 What remedies are available for a breach of the protections in relation to the quality and function of goods and services? 3.1 Please describe any protections regarding the safety of goods and services acquired by consumers.

The Consumer Protection Law sets a penalty for any breach in the quality and function of the goods, ranging between a fine of The Consumer Protection Law and Implementing Regulations at least BD 10,000 and imprisonment not exceeding three years, place an obligation on the Provider to immediately notify the

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CPD of any defect in a product if the defect poses a risk to the In addition to the penalties and remedies stated in question 2.5 health and safety of the consumer. The Provider is obliged to above, possible penalties include imprisonment for a minimum publish a product recall and advise the consumers not to use period of one year and a fine of no more than BD 10,000 (around the defective product. This may be carried out publishing the USD 26,500) for anyone who knowingly “imports or otherwise brings recall in the daily newspapers or by directly calling each and into the Kingdom goods that are hazardous to safety”. A Court order may every consumer as appropriate. If claimed by the consumer, the be issued for the re-export of the hazardous products “to their orig- Provider is obliged to exchange, refund or fix the product. inal source or destruction thereof at the expense of the offender” – Article Companies in the field of personal care, including barber 19 of the Consumer Protection Law. shops, beauty parlours, gyms, spas and cosmetics, and companies in the hospitality and food and beverage industries, and 3.6 Are there mandatory reporting requirements with food and beverage packaging industry (a Ministerial decision on respect to the safety of goods or services? the exact categories covered is pending issuance), are subject to the provisions in Public Health Law No. (34) of the year 2018. There is a mandatory immediate reporting requirement on Providers to report any defective products where the defect may 3.2 Please outline the substantive tests for these be hazardous (as detailed in question 3.1 above). There is no protections. mandatory reporting requirement on consumers.

Guidelines exist in respect of food and beverages and the prod- 3.7 Describe any voluntary or mandatory product ucts of industries covered by the Public Health Law. The safety recall regimes. substantive standards relate to the contents of the food, such as contamination of the food, the existence of poisonous ingredients, if it has a product derived from a disease-infected animal, if Any product that is deemed a hazard to health and safety must it has dirt or impurities above a certain threshold, or if it includes be recalled. The recall must be announced and a refund or exchange is mandatory for the Provider upon the request of the radioactive materials above a certain threshold. The stand- consumer. Voluntary recalls (for testing purposes or otherwise) ards also relate to the packaging of the product, in relation to are not regulated; however, given the close monitoring of the whether it contains any hazardous materials or has been handled market by the CPD and NHRA, arrangement with these author- by personnel with a contagious disease. ities is advised. Samples of imported food and beverages, cosmetics, and cleaning and sanitising products are checked at laboratories before they are permitted to enter the Bahraini market. 3.8 List at least two examples of public or private (It is to be noted that although interrelated, these matters are enforcement of these protections in the last five years, regulated from a public health perspective rather than a consumer including the breach/alleged breach, result and penalties protection perspective.) imposed. The CPD, together with the Ministry of Health and NHRA, conduct regular checks on the products on the market. If the On 19 March 2020, the NHRA announced the recall of a hand CPD comes across a possible risk to health and safety, the matter sanitising gel for its discovery of a “high percentage of methyl alcohol is referred to the Ministry of Health and NHRA. (methanol)… and the exposure to high levels of this substance may cause health risks to the consumer ”. The announcement included a photo of the product, the name of the manufacturer, the country of 3.3 What types of goods and services are covered origin and instructions to consumers to stop using the gel. The by the protections relating to the safety of goods and recall was triggered by a similar recall in the country of origin services? which the NHRA became aware of. We are not aware of the penalties imposed. All goods and services sold on the Bahraini market, whether On the same day, a hand sanitising gel produced locally was also imported or of local origin, are covered by the protections recalled for reasons of containing a “high percentage of Benzalkonium relating to safety. Chloride which can cause the following side effects: -swelling -redness -very bad skin irritation”. A photo of the product and the name of the manufacturer were included in the announcement, together with 3.4 Are there any exceptions to these protections? a warning to consumers not to use the product and to report any side effects experienced. We are not aware of the penalty imposed. The Consumer Protection Law does not cover medicines, health preparations and health foods authorised to be imported by the 42 Prohibitions Relating to “Conduct” concerned authority at the Ministry of Health and NHRA, and Against Consumers which are sold in licensed pharmacies and health centres, as well as the services provided by professionals involved in medicine, engineering, law, accounting and insurance. 4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., The excluded products are subject to the protections provided manufacturers/retailers) which sell or supply goods for in the specific laws governing the relevant industry. and services to consumers (“Conduct”). For example, misleading and deceptive conduct, unconscionable 3.5 What remedies are available for a breach of the conduct, etc. protections in relation to the safety of goods and services? The Consumer Protection Law sets out the prohibited conduct and divides it into five main categories as follows: As stated above, product recalls are required, as well as the “1. Manipulating the prices of products being traded by increasing or consumers’ right to refund, exchange, or repair if appropriate. reducing them without justification.

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2. Restricting the free flow of products to the markets or procuring the Public Health Law. The specific provisions in the Public Health total or partial disappearance thereof by unlawfully concealing or Law related to safety standards of hospitality, food and beverage storing or refraining from trading in them. production and packaging, and personal care products, serve to 3. Artificially creating a sudden abundance of products resulting protect the rights of consumers of these products. in selling them at an unreal price that affects the economies of the Other regulations exist for specific sectors, such as TRA remaining competitors. Decision No. (17) of the year 2017 promulgating the Consumer 4. Concealing the available products in the market either totally or Protection Regulation aiming to protect the rights of consumers partially from a certain person. of telecommunications services, alongside the existing provi- 5. Concealing the necessary information or misleading with regard to a sions in the Telecommunications Law relating to quality stand- certain product.” ards and consumer privacy protection. Consumers of the financial services sector are subject to the 4.2 Please outline the substantive tests for the above- regulations of the CBB, setting and regularly reviewing its regu- mentioned protections/prohibitions. lations on requirements such as transparency, fair pricing and confidentiality. As stated above, consumers of professional industry-specific The CPD would investigate and assess whether any of the products, such as the services provided by lawyers, are protected prohibited conduct has occurred on a case-by-case basis, subject by specific regulations and provisions. to its discretion.

5.2 Please outline the substantive tests for the above- 4.3 Are there any exceptions/exemptions to the mentioned protections/prohibitions. protections/prohibitions relating to Conduct?

In respect of public health provisions that serve to protect There are no express exemptions in the Consumer Protection consumers as part of the public, focus is placed on not only the Law to prohibited conduct. goods, but also their storage in clean, sanitised and non-contaminated facilities, and handling by personnel that follow hygiene 4.4 What remedies are available for a breach of the standards which are free from contagious diseases or infections. protections/prohibitions relating to Conduct? Storage facilities, for example, are not to be used as accommodation for personnel and should be kept at specific temperatures, In addition to the administrative remedies defined under ques- and flammable or hazardous chemicals (such as those in cleaning tion 2.5, the Consumer Protection Law stipulates a prison products) are to be stored separately from other goods, etc. sentence for a maximum period of five years and/or a fine not exceeding BD 5,000 for the prohibited conduct listed in ques- 5.3 Are there any exceptions/exemptions? tion 4.1 above. There are no notable exceptions. 4.5 List at least two examples of public or private enforcement of the protections relating to Conduct in the last five years, including the breach/alleged breach, 5.4 What remedies are available for a breach of these result and penalties imposed. protections?

In 2017, the CPD temporarily closed a pharmacy and hyper- The remedies for the specialised sectors are defined in the market for reasons related to deceptive pricing, i.e. prices on specific laws regulating the sector. In general, the penalties the product were not the same as the price of the item when range between the suspension of the supplier and striking off scanned. Five branches of the pharmacy and hypermarket were its trade licence permanently, without any prejudice to any other closed for a period of 15 days, and the matter was referred to criminal punishment if the breach constitutes a criminal charge. the Public Prosecution. After investigation, no penalties were This is in addition to civil rights to compensation available to imposed as the Provider in question was able to prove that the the consumer affected by such breach. reasons were of technical failure rather than intended deceit. 5.5 List at least two examples of public or private 52 Other Protections/Prohibitions enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties imposed. 5.1 Does consumer law in your jurisdiction have any other prohibitions/protections not covered by the questions above? If so, please describe these In addition to the examples listed in this chapter, there have been prohibitions/protections. significant enforcement of consumer protection in the field of legal services. The Lawyers’ Discipline Committee decided to As seen in the answers above, the provisions of the Public suspend more than four lawyers in 2019 and 14 more in 2020 Health Law and the protection of consumer rights are somehow due to violations related to the unethical conduct of the profes- interrelated. Although the scope of the Public Health Law is sion and quality of the legal services provided to their clients. significantly wider than the scope of the Consumer Protection The decisions were published by the Committee in the Law, consumers are part of the public that is covered by the Official Gazette.

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62 Investigation of Potential Breaches 72 Enforcement

6.1 What powers does/do the consumer authority/ 7.1 How does/do the consumer authority/authorities authorities in your jurisdiction have to investigate seek to enforce consumer law (for example, by potential breaches of consumer law? Describe the key administrative decision or by commencing proceedings steps in a typical investigation. in court)?

The investigators at the CPD have the right to: The authorities have the power to issue administrative disci- 1. enter the supplier’s premises; plines; criminal penalties are applicable by reference to the 2. examine the supplier’s books, accounts and documents, Public Prosecution if the breach is criminalised. and confiscate his goods in order to test them; and 3. question any relevant person deemed fit by the CPD 7.2 Is/are the consumer protection authority/ investigator. authorities bound by a time limit to commence proceedings on breaches? 6.2 How is an investigation triggered (e.g., ex officio, whistleblower or complaint)? According to Article 22 of the Implementing Regulations, the CPD is bound to investigate complaints within 60 days of the The investigations of the CPD can be triggered by either the day on which the complaint was submitted. findings of the CPD’s regular checks and tests, or submission of a complaint by any means, i.e. ex officio, whistleblowing (as was 7.3 Describe the enforcement powers/tools available to the case with the chocolate factory incident cited above), etc. these bodies (civil, administrative, criminal).

6.3 Describe any complaints procedure for (i) Generally, the authorities have administrative powers. The consumers, and (ii) businesses. CPD personnel have been given law enforcement powers to facilitate their work. The Consumer Protection Law does not set out a distinct procedure for businesses or consumers. Article 20 of the 7.4 Where regulators/enforcement bodies have Consumer Protection Law states that consumers, the CPD and a choice of enforcement tools/powers, what other consumer protection authorities have the right to submit considerations do they take into account in determining complaints along with the following information: which tools/powers to use? 1. The name of the complainant, his address, position in regard to the claim, and the documents that support this The enforcement bodies take into consideration the following: information. 1. The size of the breach and the resulting damages. 2. The name of the person against whom the complaint is 2. The recurrences of the breach. submitted and his address. 3. Whether the breach contains a criminal act or not. 3. The type of breach. 4. The proof of the breach and any other documents which support the claim. 7.5 Describe the relevant rules and procedures that must be followed by such bodies (e.g., administrative, 5. The damages suffered by the complainant (if any). judicial).

6.4 What is the timeline for a typical investigation? Upon receipt of a complaint, or the detection of a breach upon a regular check, the CPD personnel shall record the same, have The Consumer Protection Law sets 60 days as a maximum time- the power to take samples and record the action in a special form, frame for investigation. and investigate by entering factories or manufacturing units without interference in production. The owner of the Provider must be summoned for recorded investigations. Any further 6.5 Are there criminal penalties for non-compliance investigation required may be carried out. The CPD may write with a consumer law investigation? If so, provide to the Minister in charge of commercial affairs recommending examples where such penalties have been imposed. the temporary closure of the business. Any criminal proceedings are governed by the Penal Code Yes, the CPD investigators are given law enforcement officer and the Criminal Procedures Law. powers, and non-compliance with their measures will be considered a crime subject to the Penal Code and Criminal Procedures Law. 7.6 Is there a right to a stand-alone action and follow on right of action within consumer law? Who has standing to bring these actions? 6.6 Can investigations be resolved by way of commitments or undertakings? Administrative actions may be brought by the CPD or other relevant authority, such as the Ministry of Health and NHRA in This is not stipulated in the Consumer Protection Law or liaison with the CPD. Implementing Regulations; however, in practice, a commitment Criminal proceedings may be commenced in cases where the or undertaking may be required in addition to the other appli- breach is criminalised. cable penalties. Civil actions may be brought by the consumer or any person or entity suffering damage from the breach.

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7.7 Is there a statute of limitations for bringing stand- Appealing the administrative case: Judgments by the Civil alone or follow on actions? Court are subject to appeal before the High Court of Appeal, whose decisions are further appealable before the Court of Cassation, which is the highest judicial authority, equivalent to This would depend on the nature of the action. Civil actions for a Supreme Court. damages are subject to a time prescription of three years. Civil actions for a breach of a contract of sale are subject to a time prescription of one year. 8.3 Does an appeal suspend the effect of any penalty/ the requirement to pay any fine (if applicable)?

7.8 Describe any international or regional cooperative mechanisms (e.g., MOUs) in which your jurisdiction is As a general principle, the appeal process described above will involved in the enforcement of consumer protection. not have the effect of suspending the penalty; however, the supplier has the right to submit an interim request to the Court There are no international treaties or MOUs that are specifically for the suspension of the penalty. The Court has the discretion related to consumer protection. There are some that may serve to decide on the suspension of the penalty based on the justifi- to protect consumer rights, such as the Asbestos Convention, cations submitted therefor. but are indirect. 92 Current Trends and Anticipated Reforms 82 Appeals 9.1 What are the recent enforcement trends in your jurisdiction? 8.1 Describe any appeal processes.

Due to the spread of the COVID-19 pandemic, the Government The appeal process consists of a grievance that may be submitted of Bahrain issued a number of decisions to combat anti- to the Minister in charge of commercial affairs. The decision on competitive conduct that results in unjustified price increases of the grievance is further challengeable before the Civil Courts as certain goods. For example, the Minister in charge of commer- an administrative case. cial affairs issued Decision No. (18) of 2020 (the “Mask Prices Decision”) to set the price per unit of surgical face masks and 8.2 Can consumers or retailers/manufacturers appeal N95 face masks and referred to the sanctions stipulated in the decisions made by the consumer authority/authorities or Consumer Protection Law in case of violation. by a court? In February 2020, the CPD discovered several violations by some pharmacies to the Masks Prices Decision. On 25 February Appealing a Ministerial decision: Once the Minister issues 2020, the CPD closed three pharmacies and issued a warning to a decision on a breach of the Consumer Protection Law, the 14 others. The CPD issued a statement encouraging the public concerned person has the right to file a grievance to the Minister to report any increase to the prices of medical masks and this in charge of commercial affairs within 15 days. The Minister resulted in the stabilisation of the prices of masks until today. shall respond to the grievance within seven days of its submission; in case of a lack of response, the grievance shall be consid- 9.2 Are there any proposed reforms to consumer law or ered rejected. policy within the next 12 months? In case of a rejected grievance, the concerned person has the right to challenge the decision before the Civil Court within 60 days by a way of an administrative case. There is no news of any proposed reforms to consumer law or policy in the next 12 months.

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Fatima AlAli is Head of the Telecommunications and Corporate Team; she has strong experience and knowledge of the Telecommunications Law and the role, rules and regulations of the Telecommunications Regulatory Authority. Fatima renders legal assistance to our clients on various aspects of this dynamic business. Fatima also specialises in corporate law, including company formation and registration, restructuring, mergers and acquisitions, as well as liquidation. Fatima assisted in the establishment of financial institutions governed by the rules of the Central Bank of Bahrain, including the preparation and review of all relevant legal and statutory documents and conducting due diligence. In the dispute resolution field, Fatima represents clients in both litigation and arbitration. She is also experienced in a broad range of matters including insurance law, banking and finance disputes, employment law, and intellectual property. Fatima is a certified arbitrator at the GCC Commercial Arbitration Center.

Hassan Radhi & Associates Tel: +973 1753 5252 Flat 1801, Building 361 Email: [email protected] Road 1705, Block 317 Diplomatic Area URL: www.hassanradhi.com Manama Bahrain

Mohamed Ali Shaban is a litigation lawyer at Hassan Radhi & Associates and has worked on a variety of insurance, employment and banking disputes. Mohamed is an active young lawyer with a high level of knowledge and legal skills. He has proven himself within a short period of time since beginning his internship programme in the firm. He has excellent analytical skills, and compelling briefs, motions and arguments. He has conducted a large amount of legal research which has benefitted our firm immensely. The legal team is consistently impressed with Mohamed’s performance and productivity which shows a high degree of diligence. He is involved in various tasks including drafting and reviewing contracts, rendering legal opinions for clients, and representing clients before the courts of Bahrain.

Hassan Radhi & Associates Tel: +973 1753 5252 Flat 1801, Building 361 Email: [email protected] Road 1705, Block 317 Diplomatic Area URL: www.hassanradhi.com Manama Bahrain

Hassan Radhi & Associates (HRA) is one of the largest and most reputable The firm has been consistently listed among the top law firms in the region leading law firms in Bahrain and the Gulf region. The office was founded in by the world’s largest legal referral guides such as: Chambers and Partners; 1974 by Dr. Hassan Ali Radhi, the senior partner of the firm with more than IFLR1000; The Legal 500; and others. 40 years of legal experience and professionalism in the legal sector, espe- www.hassanradhi.com cially in banking and finance and corporate law. The firm has nine partners and eight lawyers supported by a dedicated and professional administrative team that provide exceptional legal services locally and internationally, in Arabic and English. As part of the Lex Mundi global network – the world’s leading network of independent law firms – HRA is the exclusive member firm in Bahrain and can provide its clients with preferred access to more than 21,000 lawyers around the world, with in-depth experience in 100+ countries worldwide, all from a single point of contact. Individually, each Lex Mundi member firm is a leader in its local market.

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Canada Canada

Jill Lawrie

Blake, Cassels & Graydon LLP Emily Hazlett

12 General cases, a direct contract is required to support any claim for relief under the statute. In terms of exclusions, persons who provide professional 1.1 What legislation, regulations and guidelines are services, such as accountants, pharmacists, doctors and lawyers, relevant to consumer protection in your jurisdiction? are exempted from the application of certain Consumer Protection Statutes. In Canada, there are numerous provincial, territorial and federal statutes, regulations and guidelines that provide consumer 1.4 Which agency/agencies is/are responsible for protection with respect to a wide range of goods, services and enforcing consumer protection law (i.e., who is the industry sectors. These laws range from general consumer investigator and who is the adjudicator)? protection with broad application, to specific protections applicable to specific goods, services or industry sectors. The present In each province, there are government authorities that receive publication provides an overview of the key consumer protec- consumer complaints and investigate alleged breaches of the tion laws in Canada in the areas of quality, unfair practices and Consumer Protection Statutes (“ consumer product safety. Consumer Protection ”). These agencies include Consumer Protection The main collection of consumer protection laws is found Agencies Ontario, Consumer Protection BC and Quebec’s Office de la in provincial and territorial consumer protection statutes regu- protection du consommateur. In each province, the applicable lating common consumer transactions (“Consumer Protection Consumer Protection Statute permits the minister responsible Statutes”). These Consumer Protection Statutes generally for consumer affairs to appoint inspectors. In many cases, include provisions relating to warranties of quality on goods and the Consumer Protection Agency itself acts as an adjudicator; services and often, but not always, also provide for specific rules however, some offences, generally those more serious, are pros- relevant to specific products, services or industries. In Quebec, ecuted in provincial Superior Courts. which is a civil law jurisdiction, there is also a legal warranty of quality in the Civil Code of Quebec. Some, but not all of the provincial Consumer Protection 1.5 Are there any specific bodies that regulate/enforce Statutes also include provisions relating to “unfair practices”, consumer protection law in specific sectors? including prohibitions on misrepresentations. The federal Competition Act prohibits the making of representations to the In addition to the provincial Consumer Protection Agencies, public that are false or misleading in a material respect. there are a myriad of other government authorities that regulate In terms of safety, the federal Consumer Product Safety Act sets and enforce consumer protection laws in specific sectors. For out the main standards that a wide variety of consumer products example, there are financial services regulatory bodies that regu- must meet, although many categories of products are regulated late the financial sector in each province. At the federal level, under other specific statutes and regulations. there is also the Competition Bureau, Canada Mortgage and Housing Corporation, Canada Deposit Insurance Corporation, 1.2 What is the definition of “consumer” (i.e., who does and the Office of the Privacy Commissioner of Canada, among consumer protection law protect)? others, which enforce specific statutes aimed at protecting consumers. Health Canada also enforces several consumer protection laws with respect to product safety, food, tobacco, While the definitions in the Consumer Protection Statutes vary, pharmaceuticals and medical devices, among other products. “consumer” generally refers to a natural person who obtains goods or services primarily for his or her personal, family or household use, and not for business purposes. 22 Protections in Relation to the Quality and Function of Goods and Services

1.3 Who is/which entities are required to comply with consumer protection law? 2.1 Please describe any protections regarding the quality and function of goods and services acquired by consumers. Merchants, suppliers and manufacturers can be required to comply with the Consumer Protection Statutes depending on The Consumer Protection Statutes vary in terms of the specific the specific (and variable) provisions in each statute. In some protections provided, but generally establish an implied warranty

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of quality for consumer goods and services. In Quebec, there are refund on the grounds that the hydro-seeding performed by the warranty protections under both the Consumer Protection Act and landscaper did not work. While the court suggested that the the Civil Code of Quebec. When applicable, statutory warranties failure of the seeding may have been a result of late-May frost, can be mandatory and cannot be excluded or varied by contract. the court nevertheless found that the defendant had breached the implied warranty provisions in Nova Scotia’s Consumer Protection Act, and ordered a refund of CAD 2,415, plus CAD 2.2 Please outline the substantive tests for these protections. 100 in court filing costs (Stewart v Lands Best Friend Landscaping, 2018 NSSM 90). Given that consumer protection actions often involve rela- Each of the Consumer Protection Statutes provides for various tively small amounts that make them prohibitively costly to pros- specific conditions under which any warranties of quality will ecute as individual actions, consumer claims are often advanced apply. Generally, the Consumer Protection Statutes provide that by way of class action. For example, in 2021 the Supreme Court consumer goods must be of reasonable or merchantable quality of British Columbia certified a class action against Nissan and fit for the purposes for which they are intended. In Quebec, involving allegations that the timing chain mechanisms in the Consumer Protection Act specifies that consumer goods must engines installed in certain vehicles were prone to premature be durable in normal use for a reasonable length of time, having failure, in breach of express or implied warranties, among other regard to their price, the terms of the contract and the condi- causes of action (Mueller v Nissan Canada Inc., 2021 BCSC 338). tions of their use. Similarly, in 2016 the Superior Court of Ontario certified a class action against Volkswagen involving allegations that the instal- 2.3 What types of goods and services are covered lation of defeat devices in its diesel-engine automobiles breached by the protections relating to the quality of goods and provincial Consumer Protection Statutes, as well as the federal services? Environmental Protection Act and Competition Act ( Quenneville v Volk s wagen, 2016 ONSC 7959). The following year, the court The terms “goods” and “services” are generally defined and approved a settlement of the class action. Among other things, interpreted broadly in order to capture a host of consumer prod- the court found that, in comparison to the settlement of a ucts and services. Goods generally refer to all kinds of personal similar U.S. class action, the compensation for Canadians was property, although there may be express exclusions under some proportionally similar, and was fair and reasonable ( Quenneville v acts, such as an exclusion for securities. Services include any Volk s wagen, 2017 ONSC 2448). service, entitlement or benefit, including the installation of goods, repair work or instructional programmes. 32 Protections/Prohibitions in Relation to the Safety of Goods and Services 2.4 Are there any exceptions to these protections? 3.1 Please describe any protections regarding the safety of goods and services acquired by consumers. The exact criteria for applicability of the implied warranty vary by province, and provincial Consumer Protection Statutes may exclude the application of the implied warranty for certain In terms of statutory protections, the Canada Consumer Product goods, services or sectors. Safety Act (“CPSA”) prohibits the manufacture, import and sale of products that pose a danger to human health or safety. The prohibition also extends to any advertising, packaging or 2.5 What remedies are available for a breach of the labelling that may mislead consumers as to the safety of the protections in relation to the quality and function of goods and services? product. The CPSA also restricts the sale of certain products and prohibits the sale of specific, inherently dangerous products. The CPSA does not provide for a private right of action for The remedies available vary by jurisdiction, but generally include breach of the statute. However, consumers may initiate legal a refund of the purchase price, repair or, in certain circum- claims relating to the safety of goods and services based on stances, damages. common law negligence and failure to warn principles. In Quebec, consumers have similar protections under the Civil Code 2.6 Who has or which agencies have standing to of Quebec. initiate proceedings for a breach? 3.2 Please outline the substantive tests for these Proceedings for breach of implied warranties are generally brought protections. by consumers directly, and not by consumer protection agencies. The CPSA defines a danger to human health as any hazard that 2.7 Describe at least two examples of public or private is posed by the normal or foreseeable use of a product that may enforcement of these protections in the last five years, reasonably be expected to cause death or any adverse effect on including the conduct/alleged conduct, result and human health, including injury. penalties imposed.

3.3 What types of goods and services are covered In order to enforce the warranty provisions in the Consumer by the protections relating to the safety of goods and Protection Statutes, consumers must bring court proceedings. In services? many cases, warranty claims are prosecuted by way of individual action, often in provincial small claims courts. For example, The CPSA applies to consumer products, including parts or in 2018 a consumer brought an action against a landscaping accessories, that may be used by an individual for non-commercial company in the small claims court of Nova Scotia, seeking a purposes.

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3.4 Are there any exceptions to these protections? products. This case was the first time Health Canada imposed a monetary penalty under the CPSA. In March 2020, Health Canada issued a recall on certain There are several products exempted from the abovementioned snowblowers that posed a safety hazard. While there were protections in the CPSA, including explosives, cosmetics, phar- no reports of injuries, Health Canada advised that consumers maceuticals, tobacco, food, vehicles and cannabis. A full list of should immediately stop using the machines. exceptions is outlined in Schedule I of the CPSA. The exempted products are generally regulated under different, more specific statutes, including the Explosives Act, the Food and Drugs Act, the 42 Prohibitions Relating to “Conduct” Tobacco and Vaping Products Act, the Motor Vehicle Safety Act and the Against Consumers Cannabis Act. 4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., 3.5 What remedies are available for a breach of the manufacturers/retailers) which sell or supply goods protections in relation to the safety of goods and and services to consumers (“Conduct”). For example, services? misleading and deceptive conduct, unconscionable conduct, etc. In addition to ordering a recall on a product, Health Canada may order any measures considered necessary to remedy Many, but not all provincial Consumer Protection Statutes prohibit non-compliance with the CPSA, including an order to stop unfair, deceptive or abusive practices. These provisions generally manufacturing, importing or selling a product. Health Canada capture any representations that are aimed at deceiving consumers, can also seek a civil injunction for non-compliance. Breach of taking advantage of them or placing undue pressure on them. the CPSA or an order made pursuant to it can result in a fine of Prohibited unfair practices may include making false, misleading up to CAD 5 million and imprisonment of up to two years. In or deceptive representations, failing to mention an important the event of a breach made knowingly or recklessly, the court fact, making unconscionable representations, or using control of can impose a fine at its discretion and imprisonment of up to a consumer’s goods to renegotiate the terms of a consumer agree- five years, or both. ment. The federal Competition Act also prohibits knowingly or reck- In terms of an individual action relating to the safety of a lessly making false or misleading representations. product, whether in negligence or under the Civil Code of Quebec, the remedy available to the consumer would be damages. 4.2 Please outline the substantive tests for the abovementioned protections/prohibitions. 3.6 Are there mandatory reporting requirements with respect to the safety of goods or services? The Consumer Protection Statutes generally do not include a single substantive test for what conduct amounts to an unfair Pursuant to the CPSA, manufacturers, importers and sellers practice. Rather, these statutes set out illustrations of what may of consumer products are required to report to Health Canada amount to unfair practices. For example, statutory illustrations any incident that results in an individual’s death or serious of what may amount to an unfair practice relating to representa- adverse effects on their health within 10 days of the occurrence. tions include: (1) making a representation that the goods or Mandatory reporting rules also apply with respect to any defect services have sponsorship, approval, performance characteris- or incorrect labelling that may be reasonably expected to result tics, accessories, uses, ingredients, benefits or qualities they do in death or serious adverse health effects. not have; (2) making a representation that the goods or services are of a particular standard, quality, grade, style or model, if they 3.7 Describe any voluntary or mandatory product are not; (3) making a representation using exaggeration, innu- safety recall regimes. endo or ambiguity as to a material fact that is deceptive; or (4) failing to state a material fact if doing so deceives the consumer. Health Canada may order a mandatory recall where it believes a consumer product is a danger to human health or safety. More 4.3 Are there any exceptions/exemptions to the often, manufacturers will initiate voluntary recalls, which can protections/prohibitions relating to Conduct? include removing products from the market, safety notices, and/ or repair programmes. Health Canada may also post any recall Each of the Consumer Protection Statutes provide for various on its Recalls and Safety Alerts Database and distribute notices conditions of applicability relating to the nature of the parties or to the public via email or through social media. types of transactions that fall within the prohibitions.

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4.5 List at least two examples of public or private 5.4 What remedies are available for a breach of these enforcement of the protections relating to Conduct in protections? the last five years, including the breach/alleged breach, result and penalties imposed. Under both the common law and civil law, damages are the most common remedy awarded to successful litigants. While In 2015, in the context of two class actions, the Superior Court of punitive damages are available in the common law provinces, Quebec ordered the three largest tobacco companies in Canada to the threshold for an award of punitive damages is high. Unlike pay approximately CAD 15 billion in damages. In addition to other under the common law, in Quebec punitive damages are only heads of liability, the court found that the defendants breached available where they are specifically provided for by statute. Quebec’s Consumer Protection Act by failing to mention an important fact to consumers; namely, in failing to warn consumers about 5.5 List at least two examples of public or private the health risks associated with tobacco use. In 2019, the Court of enforcement of these protections in the last five years, Appeal of Quebec substantially upheld the decision (Létourneau v including the breach/alleged breach, result and penalties JTI-MacDonald Corp., 2015 QCCS 2382; Imperial Tobacco Canada ltée imposed. c. Conseil québécois sur le tabac et la santé, 2019 QCCA 358). In 2019, in the context of a class action, the Superior Court The 2015 tobacco class actions in Quebec, also described above at of Justice of Ontario found that the defendant companies, who question 4.5, demonstrate how courts may impose extra-contrac- sell payment cards, violated various provisions of Ontario’s tual (or tort) liability. In addition to finding breaches of Quebec’s Consumer Protection Act by having amounts on the cards expire. Consumer Protection Act, the court also found that the defendants The Court also found that the defendants, among other things, breached provisions of the Civil Code of Quebec with respect to the misled consumers about their rights to expired balances, which manufacturer’s duty to warn, as well as reasonable civil conduct constituted a misrepresentation and an unfair practice. The (similar to common law negligence). The court also found a court awarded CAD 15,330,000 in aggregate damages and CAD violation of Quebec’s Charter of Human Rights and Freedoms. Based 1,500,000 in punitive damages. The decision was subsequently on various grounds of liability, the Superior Court of Quebec appealed and finally settled for CAD 17 million all-inclusive ordered the tobacco companies to pay approximately CAD 15 (Bernstein v Peoples Trust Company, 2020 ONSC 5880). billion in damages, which included a significant award of punitive damages. While the Court of Appeal reduced the damages 52 Other Protections/Prohibitions slightly, it otherwise upheld the trial judgment (Létourneau v JTI-MacDonald Corp., 2015 QCCS 2382; Imperial Tobacco Canada 5.1 Does consumer law in your jurisdiction have ltée c. Conseil québécois sur le tabac et la santé, 2019 QCCA 358). any other prohibitions/protections not covered by In 2019, the Saskatchewan Court of Queen’s Bench certified the questions above? If so, please describe these a class action against General Motors which alleged defects in prohibitions/protections. the cooling systems in Chevrolet Cruze vehicles. The certified common issues related to claims in negligence, unjust enrich- In addition to the rights set out in the Consumer Protection ment and breach of statutory warranties (Evans v General Motors Statutes, consumers can seek remedies relating to consumer of Canada Company, 2019 SKQB 98). While the court certified the class action, there has not been any decision on the merits transactions through common law claims of negligence, negli- of the claim. gent misrepresentation, fraudulent misrepresentation, failure to warn, or general breach of contract. In Quebec, the Civil Code of Quebec codifies similar contractual and extra-contractual rights 62 Investigation of Potential Breaches that can be advanced by consumers. 6.1 What powers does/do the consumer authority/ authorities in your jurisdiction have to investigate 5.2 Please outline the substantive tests for the above- potential breaches of consumer law? Describe the key mentioned protections/prohibitions. steps in a typical investigation.

Under the common law, in order to succeed in a negligence Consumer Protection Agencies generally have the power to enter claim, consumers must establish an applicable duty of care, a a business, examine documents, require production of records, breach of the standard of care, causation and damages. Under access electronic records, make copies and ask questions rele- Quebec civil law, in order to succeed in a negligence claim, vant to the investigation. Anyone involved with the inspections consumers must establish fault, causation and damages. is required to cooperate and not interfere with the process.

5.3 Are there any exceptions/exemptions? 6.2 How is an investigation triggered (e.g., ex officio, whistleblower or complaint)? There are many procedural rules and substantive principles that govern private claims. These are however more general appli- Consumer Protection Agencies generally have the power to cation and are not specifically designed to exclude or exempt investigate with respect to any matter that comes to their any particular claims relating to product safety or objectionable attention, but in practice investigations are often triggered by conduct in consumer transactions. consumer complaints.

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6.3 Describe any complaints procedure for (i) 7.3 Describe the enforcement powers/tools available to consumers, and (ii) businesses. these bodies (civil, administrative, criminal).

In most provinces, consumers can file a complaint online by Consumer Protection Agencies generally have investigative completing and submitting an online form. Consumers may powers, the power to impose mandatory undertakings, and also be required to attach any supporting documents, including the power to bring civil enforcement proceedings. They may the agreement in question, any correspondence with the busi- also make administrative orders requiring compliance with the ness and copies of any invoices. Consumer Protection Statutes.

6.4 What is the timeline for a typical investigation? 7.4 Where regulators/enforcement bodies have a choice of enforcement tools/powers, what considerations do they take into account in determining After being contacted, Consumer Protection Agencies may which tools/powers to use? respond to the consumer in seven to 15 days. However, the investigation process may take longer. In choosing enforcement mechanisms, Consumer Protection Agencies can consider the severity of the offence, as well as 6.5 Are there criminal penalties for non-compliance whether there have been repeat breaches of the Consumer with a consumer law investigation? If so, provide Protection Statutes. examples where such penalties have been imposed.

There are penal provisions in the Consumer Protection Statutes, 7.5 Describe the relevant rules and procedures that must be followed by such bodies (e.g., administrative, though minimum and maximum penalties vary across juris- judicial). dictions. In most jurisdictions, the maximum fines are higher for corporations than they are for individuals, and may also be higher for subsequent offences. For example, pursuant to There are a range of procedural rules applicable to adminis- Ontario’s Consumer Protection Act, an individual may be liable for trative bodies. Depending on the severity of the enforcement a maximum fine of CAD 50,000 or to imprisonment of up to measures, procedural rules can vary from informal written two years, and a corporation may be liable for a maximum fine submissions to full court hearings. of CAD 250,000. Under Quebec’s Consumer Protection Act, the potential penalties vary depending on the offence, but may range 7.6 Is there a right to a stand-alone action and follow as high as CAD 15,000 for an individual and CAD 100,000 for on right of action within consumer law? Who has a corporation, or twice those amounts for subsequent offences. standing to bring these actions?

6.6 Can investigations be resolved by way of Investigation or enforcement actions by Consumer Protection commitments or undertakings? Agencies typically do not preclude individual actions. Follow on rights, where consumers can join enforcement measures taken Written undertakings of voluntary compliance are a potential by consumer authorities, do not exist. However, violations of means of resolving investigations. In such cases, the under- the Consumer Protection Statutes can generally be brought by taking may be subject to terms and conditions, including poten- consumers as stand-alone actions. tial compensation to consumers, reimbursement of investigation costs, and/or the obligation to provide security. 7.7 Is there a statute of limitations for bringing stand- alone or follow on actions? 72 Enforcement The statute of limitations for consumers bringing stand-alone 7.1 How does/do the consumer authority/authorities actions varies from two to six years across jurisdictions, but is seek to enforce consumer law (for example, by most commonly two years. administrative decision or by commencing proceedings in court)? 7.8 Describe any international or regional cooperative mechanisms (e.g., MOUs) in which your jurisdiction is Consumer Protection Agencies generally seek to enforce involved in the enforcement of consumer protection. consumer law through administrative orders, fines and undertakings. In certain circumstances, the authority may also seek To ensure coordination and cooperation between them, there an injunction from the court to restrain the merchant from breaching consumer protection legislation, or to have an offence are memorandums of understanding in place between the prosecuted before the provincial Superior Court. federal Competition Bureau and certain Consumer Protection Agencies. The federal Competition Act also contains certain express provisions allowing for Canada to enter into agreements 7.2 Is/are the consumer protection authority/ of mutual legal assistance with foreign states and to assist in the authorities bound by a time limit to commence investigations of foreign states. proceedings on breaches?

Yes. The time limit is typically two years from the date the occurrence came to the attention of the authority, or, in some jurisdictions, two years from the date the breach occurred.

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82 Appeals 92 Current Trends and Anticipated Reforms

8.1 Describe any appeal processes. 9.1 What are the recent enforcement trends in your jurisdiction? In terms of private actions brought by consumers before the courts, either party can typically seek to appeal a final first level Since class action legislation was introduced in various trial judgment to the Court of Appeal in their respective prov- Canadian provinces throughout the 1990s, one notable trend ince; however, leave is required in some provinces depending on has been the increased use of class actions as a means of pros- the amount of the judgment. Further appeals to the Supreme ecuting consumer protection claims. These class action claims Court of Canada are only granted with leave on questions of are brought before provincial Superior Courts, particularly in national importance. Ontario, Quebec, British Columbia and Manitoba. Examples In terms of administrative decisions of Consumer Protection of these recent consumer protection class actions are described Agencies and other authorities, such as Health Canada, various above at questions 2.7, 4.5, and 5.5. statutes include specific administrative appeal rights. Following the exercise of any statutory appeal rights, in certain circum- 9.2 Are there any proposed reforms to consumer law or stances, retailers and manufacturers could also seek judicial review policy within the next 12 months? of the administrative authority’s decision. However, administrative authorities are typically afforded significant deference. On December 1 2020, Ontario’s Ministry of Government and Consumer Services issued a consultation paper proposing 8.2 Can consumers or retailers/manufacturers appeal significant legislative changes to Ontario’s Consumer Protection decisions made by the consumer authority/authorities or Act, including: creating a set of core requirements for written by a court? consumer agreements to increase disclosure rules; protecting consumers against unilateral agreement changes; banning Yes (see answer above). However, appeal rights vary from prov- changes to the amount charged during an agreement term unless ince to province. For example, in Quebec, a decision of the the consumer has the ability to cancel cost-free; amending the small claims court (which has jurisdiction over claims of up to unfair practices provision such that the remedy is available until CAD 15,000) is final and cannot be appealed. the later period of one year after entering into the agreement and one year after the unfair practice took place; banning advance payment for contract breaking and exit; and prohibiting contract 8.3 Does an appeal suspend the effect of any penalty/ the requirement to pay any fine (if applicable)? terms that suggest a consumer has waived legal rights, such as the right to join a class action. Public consultations are ongoing. A properly initiated appeal generally stays execution of the judgment unless immediate execution was ordered.

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Jill Lawrie began practising in 1993. Her practice focuses on product liability matters and the defence of class actions involving a range of matters. Jill has acted for clients involved in numerous industries, including manufacturers of medical devices, pharmaceuticals, automobiles and all manner of food and consumer products, as well as for professional service organisations, financial institutions and insurers. Jill regularly provides proactive advice on product warnings, recalls and litigation risks. Jill was trial counsel in the successful defence of the first medical products class action (146 trial days) to go to trial in Ontario. The defence was successful and the action was dismissed in 2014. Jill is recognised as a leading lawyer in product liability, class actions and life sciences in several Canadian and international directories. She was also named one of the “Top 25 Women in Canadian Litigation” by Benchmark in 2019 for the sixth consecutive year.

Blake, Cassels & Graydon LLP Tel: +1 416 863 3082 199 Bay Street, Suite 4000 Email: [email protected] Commerce Court West URL: www.blakes.com Toronto, ON M5L 1A9 Canada

Emily Hazlett’s practice includes complex commercial litigation and class action defence, with a focus on product liability. She represents clients in civil proceedings involving consumer protection as well as pharmaceutical, contract and negligence claims. She has acted for national and foreign clients in numerous industries, including manufacturers of medical devices, pharmaceuticals, automobiles and consumer products, as well as financial institutions. Emily is a member of the Barreau du Quebec and the Bar Society of Ontario, and advises clients in both French and English.

Blake, Cassels & Graydon LLP Tel: +1 416 863 2494 199 Bay Street, Suite 4000 Email: [email protected] Commerce Court West URL: www.blakes.com Toronto, ON M5L 1A9 Canada

Blake, Cassels & Graydon LLP is one of Canada’s leading business law extensive background in domestic and international commercial arbitra- firms, representing many of Canada’s most prominent corporations, as tion, and mediation. well as international clients doing business in Canada. With offices in For more information on our firm and our Litigation & Dispute Resolution Montréal, Ottawa, Toronto, Calgary and Vancouver, and internationally in Group, visit: New York, London and Beijing, the firm’s strength across industry sectors www.blakes.com and propensity to transfer knowledge and expertise between offices and practices is a key strength. Blakes’ national litigation and dispute resolution practice is one of the largest and most successful in Canada, representing Canadian and international clients on complex litigation in virtually every forum. The firm’s approach to litigation focuses on understanding clients, exploring all methods of dispute resolution and litigating when appropriate. Blakes’ litigators also work to help reduce litigation risk and the group has an

Consumer Protection 2021 © Published and reproduced with kind permission by Global Legal Group Ltd, London 38 Chapter 6 Czech Republic Czech Czech Republic

JUDr. Lucie Dolanská Bányaiová, Ph.D.

Bányaiová Vožehová, s.r.o. advokátní kancelář Mgr. Zuzana Kulhánková

12 General 1.3 Who is/which entities are required to comply with consumer protection law?

1.1 What legislation, regulations and guidelines are relevant to consumer protection in your jurisdiction? The legislation is extensive and imposes various specific obligations on individual market subjects. All manufacturers, distributors, importers, service providers, sellers and other entities Consumer rights are primarily stipulated in the following marketing the products or services must comply with the obli- legislation: gations imposed on them to protect consumers. (i) Act No. 89/2012 Coll., the Civil Code, containing, with respect to consumer protection in particular: mandatory regulation of consumer contracts; contracts concluded 1.4 Which agency/agencies is/are responsible for online or outside of the seller’s business premises; regula- enforcing consumer protection law (i.e., who is the tion of liability for damage caused by defective products; investigator and who is the adjudicator)? sale of goods in the store; and a number of other provisions to protect the consumer as the weaker contracting The main authority enforcing consumer protection rules is the party in private law relations. CTIA, supervised by the Ministry of Industry and Trade of the (ii) Act No. 634/1992 Coll., on Consumer Protection (ACP), Czech Republic. The CTIA monitors and inspects businesses setting out various responsibilities of entrepreneurs and individuals who sell products on the Czech market unless, vis-à-vis consumers related to the sale of goods and services as a result of special legislation, these activities fall under the (together referred to as products), such as: the prohibi- authority of another administrative institution. The CTIA is tion of unfair trade practices and discrimination of the also one of the entities providing out-of-court settlement of consumer; information and labelling obligations; and the consumer disputes (ADR). enforcement of consumer protection by public authorities. The Czech civil courts are competent to decide administra- (iii) Act No. 102/2001 Coll., on General Product Safety, imposes tive lawsuits filed against the administrative decisions issued general responsibilities and obligations on manufacturers, by the CTIA or other competent authority based on public law distributors and importers relating to the safety of products. legislation on consumer protection. They are also competent to (iv) Act No. 22/1997 Coll., on Technical Parameters for Products, decide disputes between consumers and entrepreneurs in civil outlines the conformity assessment process and regulates the law proceedings when the consumer does not initiate the ADR implementation of technical requirements for products. or where the ADR fails. (v) Act No. 64/1986 Coll., on the Czech Trade Inspection With respect to breaches qualifying as crimes, the Czech Police Authority (CTIA), regulates the powers of the Czech and Public Prosecutors conduct the investigation, and the Czech Trade Inspection Authority as a supervisory authority. courts are competent to conduct the criminal court proceedings. The specific rights of consumers and the corresponding responsibilities of entrepreneurs can be further found in a range 1.5 Are there any specific bodies that regulate/enforce of special legislation governing the manufacturing, importation, consumer protection law in specific sectors? distribution and sale of specific products, commodities and services or certain properties of products. Severe breaches of obligations, especially in the field of Compliance concerning the following products is regulated by product safety, may qualify as criminal offences under the Act the following authorities: No. 40/2009 Coll., the Criminal Code. ■ agricultural products, foods, and tobacco products – State Agricultural and Food Inspection Authority (SAFIA); ■ products and provision of services regulated by the Public 1.2 What is the definition of “consumer” (i.e., who does Health Act – Regional Hygiene Stations; consumer protection law protect)? ■ veterinary care compliance – State Veterinary Administration, Regional Veterinary Care Authorities and A consumer is a natural person who, acting outside the scope of the Municipal Veterinary Administration in Prague; her/his economic activity or outside the independent exercise of ■ trade and services is supervised by the Trades Licensing her/his profession, enters into a contract or has other dealings Authority; with an entrepreneur. ■ weapons, ammunitions and pyrotechnic products – the Czech Proof House for Arms and Ammunition;

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■ business activities conducted on the basis of an authorisa- safety. The testing is performed by competent authorities in each tion, licence or registration granted by the Czech National field by comparison with standardised tests and measurements. Bank (CNB), namely consumer credits; Additional qualities may be agreed by contracting parties. A ■ pharmaceuticals – State Institute for Drug Control (SIDC); product is defective if it fails to meet the agreed quantity, quality ■ advertising – the Council for Radio and Television or design. Where the quality or design has been determined Broadcasting with respect to broadcasted advertisement; according to an agreed sample or model, the quality or design of in relation to particular products – authorities supervising the product must correspond to the sample or model. A defect the respective product market (e.g. advertisement of phar- of the documents required for the use of the product is consid- maceuticals is supervised by SIDC); ered a defect of the product itself. ■ business in the energy sector – Energy Regulatory Office (ERO); 2.3 What types of goods and services are covered ■ electronic communications and postal services – the Czech by the protections relating to the quality of goods and Telecommunication Office; services? ■ business activities of members of professional chambers with mandatory membership – the relevant chamber; All products and services which are marketed and intended for ■ processing of personal data – the Office for Personal Data consumers are covered by the general legislation listed above. Protection; and In addition, there is specific legislation setting out technical ■ gambling, safety of imported products and other specific and other mandatory parameters of products applicable to the areas – the Customs Authority. specific products falling thereunder. 22 Protections in Relation to the Quality and Function of Goods and Services 2.4 Are there any exceptions to these protections?

2.1 Please describe any protections regarding the There are no exceptions, unless the product is sold expressly as quality and function of goods and services acquired by defective and the consumer consciously buys it as such. consumers. 2.5 What remedies are available for a breach of the Pursuant to the ACP, each seller shall act honestly when selling protections in relation to the quality and function of products, and namely shall: (i) sell products of proper weight, goods and services? measure or quantity and enable consumers to check that the weights, measures or quantities are correct; (ii) sell products In the public law domain, the CTIA, or other authorities according of the prescribed or approved quality, if such quality is deter- to special laws (see question 1.1), dispose of a wide range of instru- mined in a binding manner, ensues from special regulations or is ments used to prevent violation of legal regulations; namely, the described by the seller; if the quality is not prescribed, approved authorities may impose fines up to CZK 50,000,000 (approx. or stated, products and services are to be of the usual quality; EUR 2,000,000). The severity of the fine depends on the impor- and (iii) sell products for prices agreed in compliance with tance of the obligation and the severity of the breach. pricing regulation and charge correct prices when selling prod- Furthermore, the authorities may issue binding instructions ucts or providing services. Breach of these duties is punishable for the purpose of rectifying any shortcomings ascertained. In by a penalty up to CZK 5,000,000 (approx. EUR 200,000). cases of imminent danger to life, health or property, they may Marketed products must also comply with the safety and stop the sale of products and the provision of services, or close technical requirements stated by the Act on General Product down the business premises; if the urgency of the situation so Safety and the Act on Technical Parameters for Products as well requires, such a decision may be announced verbally, and written as subsequently issued official technical and other standards. confirmation is to be delivered without delay. The authorities Breach of these duties is punishable by a penalty up to CZK may also order the manufacturer, importer, distributor or seller 50,000,000 (approx. EUR 2,000,000). to withdraw all defective goods or services from the market Under the Civil Code, depending on the nature of the (so-called “recall”), prohibit the marketing of the respective product, the seller of the product is obliged to provide to the goods or services as such, or seize or destroy the products. The consumer, mostly in writing, a wide scope of information CNB and ERO may also cancel the trading licence of an entre- regarding the product, its nature and quality as well as the rights preneur in the field of their respective competence. of the consumer in connection with the sale of the product. In the private law domain, the consumer may initiate the The consumer is entitled to request demonstration of function- ADR or court proceedings to enforce her/his consumer rights. ality of the product before the sale is executed. If the sale is concluded online or outside of the seller’s business premises, the consumer is entitled to withdraw from the contract without any 2.6 Who has or which agencies have standing to initiate proceedings for a breach? sanctions within 14 days of delivery of the product. The seller is liable for hidden defects of the product for a period of two years after the sale. The CTIA, or the authorities according to special laws (see question 1.5), are entitled to perform regular inspections and initiate proceedings in case of a detected or suspected breach. The 2.2 Please outline the substantive tests for these consumers, as well as other third parties, may submit complaints protections. or notifications with the competent authorities pursuant to which the authorities will commence ad hoc proceedings. The technical quality (mandatory technical parameters) of a With respect to civil court proceedings, only the consumer product is often set individually for each product by official has locus standi to enforce her/his private law claim from the technical and other standards and is primarily aimed at product entrepreneur.

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2.7 Describe at least two examples of public or private information must always be given in Czech); (ii) the effect on enforcement of these protections in the last five years, another product, if used jointly; (iii) the presentation of the including the conduct/alleged conduct, result and product; and (iv) the risks to consumers; in particular, children penalties imposed. and persons with reduced mobility. Products are considered safe if they comply with require- In 2020, the CTIA prohibited the distribution of an electric ments stated by legislation of the European Commission (EC) wheeled “hoverboard” due to its insufficient protection of elec- or legislation of an EU Member State pursuant to the criteria trical components which could cause unexpected failures and listed above. In the absence of such legislation, product safety is assessed according to Czech technical standards, EC recommen- pose danger to the user during operation. dations, best product safety practices, the state of science and In 2020, the CTIA prohibited the distribution of a pillow in the technology, and the consumer’s reasonable safety expectations. shape of a watermelon due to the risk of confusion with real food.

32 Protections/Prohibitions in Relation to 3.3 What types of goods and services are covered by the protections relating to the safety of goods and the Safety of Goods and Services services?

3.1 Please describe any protections regarding the All products which are marketed and intended for consumers safety of goods and services acquired by consumers. are covered by the general legislation, while specific legislation applies to the specific products falling thereunder. Pursuant to the ACP, it is prohibited to produce, import, export, offer, sell or give away products that are dangerous due to the risk of being mistaken for foods. 3.4 Are there any exceptions to these protections? Under the Act on General Product Safety, all manufacturers are obliged to: place only safe products on the market; take There are no exceptions. samples of products placed on the market and carry out tests of their safety when necessary to avoid existing risks; and take 3.5 What remedies are available for a breach of the other measures to ensure the safety of their products even after protections in relation to the safety of goods and placement on the market. Proper information about the prod- services? ucts shall be provided to the consumer and the products shall be properly labelled. The CTIA or the authorities (see question 1.5) are entitled to: The distributor may not distribute products of which it knows enter premises; take samples of products and test them; inform or can assume, based on available information and expertise, do concerned parties of ascertained safety risks; prohibit marketing, not meet the product safety requirements. The distributor must sale or display of the product; and order a recall of the products participate in activities related to ensuring the safety of products from the market and the destruction thereof. placed on the market; in particular, by communicating informa- The authorities may impose a fine up to CZK 50,000,000 tion on the risks associated with the product and cooperating with (approx. EUR 2,000,000); the severity of the fine depends on the manufacturers and supervisory authorities. The distributor the importance of the obligation and severity of the breach. If must also maintain and provide the written information necessary a breach may have resulted in endangering the life or health of for tracing the origin of the product. consumers, the inspector may prohibit the operation of business The manufacturer or distributor shall notify the supervi- or close down the business premises until the breach is remedied. sory authority of any ascertained product risk, cooperate with Regarding private law remedies, each manufacturer bears objec- the relevant supervisory authorities on measures to eliminate tive liability for any defects and damages caused to a consumer by or reduce the risk, notify the consumer, withdraw the unsafe an unsafe product; such liability may not be validly excluded. product from the market and from circulation, and allow all persons who own or hold the dangerous product to return it at the manufacturer’s or distributor’s expense. 3.6 Are there mandatory reporting requirements with respect to the safety of goods or services? The supervisory authorities conduct regular inspections of product safety as well as inspections initiated due to third-party complaints and notifications. Regarding reporting obligations of the manufacturers and distributors, please refer to question 3.1 above. Supervisory authorities are obliged to report the occurrence 3.2 Please outline the substantive tests for these of a dangerous product to the Ministry of Industry and Trade. protections. Where appropriate, the information is also shared within the European Community’s Rapid Information System (RAPEX) A safe product is a product which, under normal or reasonably and with the EC. foreseeable conditions of use, does not present a hazard for the period stated by the manufacturer or during the normal life of the product. 3.7 Describe any voluntary or mandatory product Namely, the following criteria are evaluated: (i) product char- safety recall regimes. acteristics, product life, composition, method of packaging, provision of assembly and commissioning instructions, avail- Product recall refers to a measure aimed at preventing the distri- ability, content and readability of the manual, method of use bution, offering or display of a dangerous product; the prod- including delimitation of the environment of use, method of ucts must be completely removed from the market and become marking, method of making and marking warnings, main- unavailable to consumers. tenance and disposal instructions, clarity and scope of other Regarding statutory obligation of the manufacturers and distrib- data and information provided by the manufacturer (data and utors to recall unsafe products, please refer to question 3.1 above.

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Regarding the authority of the CTIA and other authorities listed in enterprise; or (iv) is in breach of a code of conduct which the question 1.5 to order the recall, please refer to question 3.5. entrepreneur agreed to comply with. There is no specific regulation for a voluntary recall regime. Deceptive omission refers to when the entrepreneur fails to provide the consumer with clear and timely information which is essential for her/his decision-making regarding the purchase. 3.8 List at least two examples of public or private Business practice is considered aggressive if it may signifi- enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties cantly worsen the freedom of choice or the behaviour of the imposed. consumer in relation to a product, namely by harassment or coercion, including the use of force or undue influence. Timing, place, duration, manner and other significant circumstances are The CTIA and other authorities (see question 1.5) test several taken into account in the assessment of business practices. hundred products each year in the course of their regular inspec- The Act also lists concrete behaviours which will always be tion plan or in ad hoc inspections initiated due to third-party considered unfair, such as the unauthorised use of quality or complaints. certification labels, etc. In 2020, the CTIA ordered the recall of various clothes and The assessment is performed by the competent authority. toys which presented safety risks to children, as they contained small parts which could be easily inhaled, or contained heavy metals which posed a threat for human health and the environ- 4.3 Are there any exceptions/exemptions to the ment; the fine was not published. protections/prohibitions relating to Conduct? In 2020, the CTIA ordered the recall of a pressure cooker due to the malfunction of the pressure breaker, which could lead to Generally, there are no exceptions. severe burns caused by hot steam from the cooker or explosion of the lid; the fine was not published. 4.4 What remedies are available for a breach of the protections/prohibitions relating to Conduct? 42 Prohibitions Relating to “Conduct” Against Consumers Breach of obligations towards the consumer may result in inva- lidity of the consumer contract or part thereof, or in the consum- 4.1 Please describe any protections/prohibitions er’s right to withdraw from the contract without any sanctions. relating to the conduct of persons or businesses (e.g., Furthermore, breach of obligations both under the Civil Code manufacturers/retailers) which sell or supply goods and under the ACP presents administrative offences punishable and services to consumers (“Conduct”). For example, misleading and deceptive conduct, unconscionable by fines up to CZK 3,000,000 (approx. EUR 120,000). conduct, etc. 4.5 List at least two examples of public or private The Civil Code, excluding the general rules of conduct appli- enforcement of the protections relating to Conduct in cable to all parties to contractual relations, imposes vast infor- the last five years, including the breach/alleged breach, mation obligations on each entrepreneur when dealing with a result and penalties imposed. consumer, forbids certain contractual stipulations which are detrimental to the consumer (e.g. exclusion of liability) and In 2020, during a regular inspection, the SAFIA found that the forbids discrimination against the consumer. meat content of a canned pork product was significantly lower The ACP obliges the entrepreneurs to act honestly (see ques- on the can itself than the actual content. The breach qualified tion 3.1 above) and imposes several other obligations in relation as deceptive activity and the product had to be recalled from the to the sale of products, i.a., to provide the consumer with proper market; the fine was not published. documents regarding the purchase, to enable the consumer to In 2020, the SIDC imposed a fine of CZK 30,000 (approx. effectively file complaints and similar obligations. EUR 1,140) on a drugstore which had not published all the The ACP also prohibits so-called “unfair trade practices”, mandatory information for consumers regarding free available which include deceptive activity, deceptive omission and aggres- medicine, which was required by the law. sive business practice (please see the criteria in question 4.2 In 2020, during a regular inspection, the SAFIA found that below). an imported green tea contained multiple times more pesticides than permitted, posing a health risk to consumers. The breach 4.2 Please outline the substantive tests for the above- was qualified as the release of a dangerous, unsafe product on the mentioned protections/prohibitions. market and the product was recalled; the fine was not published.

A trade practice is considered unfair if it: (i) does not meet the 52 Other Protections/Prohibitions requirements of due care; and (ii) may substantially disrupt the economic behaviour of the consumer in relation to a product, 5.1 Does consumer law in your jurisdiction have particularly if it encourages the consumer to make a decision any other prohibitions/protections not covered by to purchase the product which s/he otherwise would not have the questions above? If so, please describe these purchased. prohibitions/protections. If the trade practice is focused on a certain group of consumers, such as children or the elderly, it is assessed according to the The ACP further prohibits businesses to: (i) offer for sale, sell average member of this group. or export outside the Czech Republic products intended for An activity is deceptive if it: (i) contains incorrect informa- humanitarian purposes; (ii) offer for sale, sell or store products tion; (ii) may mislead the consumer with respect to essential that violate intellectual property rights or that use unauthorised facts (e.g. attributes or necessity of the product, the price, etc.); labelling; or (iii) use eco-labels without authorisation. (iii) may lead to confusion for another product, trademark or

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The ACP further imposes specific obligations on operators of Seized products which are in breach of the legislation but a marketplace (market hall) and organisers of sales events related are otherwise safe, not harmful to consumer health and not in to mandatory documentation and appropriateness of conduct breach of any intellectual property rights, may be provided by towards the consumers. the authorities for humanitarian purposes. Further specific prohibitions and protections are stated under special legislation pertinent to specific categories of prod- 6.2 How is an investigation triggered (e.g., ex officio, ucts, such as consumer credits, energy distribution, foods and whistleblower or complaint)? timesharing. The authorities conclude regular inspections in their respec- 5.2 Please outline the substantive tests for the above- tive fields in accordance with both the inspection rules and mentioned protections/prohibitions. an approved yearly inspection plan. In case of a complaint or notification, the authorities also perform ad hoc inspections of The general criteria described above in questions 3.1 and 3.2 suspect entrepreneurs. apply to all products and conduct of the entrepreneurs in relation to consumers. Further specific and often detailed tests may 6.3 Describe any complaints procedure for (i) apply to concrete products under specific legislation. consumers, and (ii) businesses.

5.3 Are there any exceptions/exemptions? Both consumers and entrepreneurs can inform the CTIA or other state administration bodies in writing or by means of an There are no exceptions. electronic form on the websites of the relevant authorities.

5.4 What remedies are available for a breach of these 6.4 What is the timeline for a typical investigation? protections? The timeline depends on the respective field and findings of The same remedies are available as listed above, i.e. mainly the the authority; a simple inspection of a small business where imposition of fines, seizure and destruction of products, as well no breaches are detected may take less than an hour, whereas as the prohibition of economic activity and liability for damages. a complex investigation of a large business enterprise may take several days. Furthermore, the following administrative proceedings may take years. 5.5 List at least two examples of public or private enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties 6.5 Are there criminal penalties for non-compliance imposed. with a consumer law investigation? If so, provide examples where such penalties have been imposed.

In 2020, the CNB imposed a fine of CZK 70,000 (approx. EUR 2,662) on a company which mediated consumer credits without Investigators of the CTIA and other state authorities are consid- holding the necessary licence on its website. ered public officials. In 2020, the CNB imposed a fine of CZK 120,000 (approx. Assault against a public official or threat of assault qualifies EUR 4,562) on an exchange office which did not cooperate as a criminal act. Interference with the execution of a decision of a public authority or making the execution considerably diffi- during the inspection and did not submit the relevant documents cult is punishable under the Czech Criminal Code, e.g. breach of regarding its activities. The CNB also removed the licence prohibition to conduct business, breach of closure of the busi- necessary for providing exchange services for consumers. ness operation or attempts to hide or destroy seized products would qualify as crimes. 62 Investigation of Potential Breaches

6.6 Can investigations be resolved by way of 6.1 What powers does/do the consumer authority/ commitments or undertakings? authorities in your jurisdiction have to investigate potential breaches of consumer law? Describe the key steps in a typical investigation. Future commitments or undertakings are not acceptable. However, if the CTIA, or other competent authority, imposes With respect to authorisation and tools of the CTIA and other the obligation to remedy the situation and the entrepreneur authorities listed in question 1.5, please refer to questions 2.5 complies, then it may continue in its business operation. and 3.5. The authorities typically work in disguise until a purchase or 72 Enforcement other deal is made, at which point they then reveal their identity. Where possible, the identity is revealed and the tests are 7.1 How does/do the consumer authority/authorities performed immediately after the purchase (e.g. by weighing or seek to enforce consumer law (for example, by measuring other attributes of the product), and the results are administrative decision or by commencing proceedings documented and protocoled. After the tests are performed and in court)? documented, the inspector may, where appropriate, return the product to the entrepreneur or keep it as a sample; the entrepre- The measures imposed by the authorities such as a fine, order neur is obliged to return the purchase price. of a remedy or seizure of products are exercised in the form of an administrative decision which can be enforced in execution proceedings.

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7.2 Is/are the consumer protection authority/ 7.6 Is there a right to a stand-alone action and follow authorities bound by a time limit to commence on right of action within consumer law? Who has proceedings on breaches? standing to bring these actions?

The authorities are bound by the limitation periods; the general There is no specific consumer action regulated by Czech law. limitation period is one year. If an offence is punishable with a The consumer may enforce its civil claims before the Czech civil fine of at least CZK 100,000, the limitation period is three years. courts pursuant to the Civil Code, such as the right to a refund of the purchase price or payment of damages caused by a defective product. 7.3 Describe the enforcement powers/tools available to these bodies (civil, administrative, criminal). 7.7 Is there a statute of limitations for bringing stand- Regarding administrative bodies and their powers, please refer alone or follow on actions? to questions 2.5, 4.4, 6.1 and 6.5 above. Regarding criminal investigation, the Code on Criminal A three-year limitation period applies. Procedure applies, including all powers and tools available to criminal investigation authorities. 7.8 Describe any international or regional cooperative The consumer may enforce her/his rights stemming from the mechanisms (e.g., MOUs) in which your jurisdiction is Civil Code and possibly from specific legislation via ADR or in involved in the enforcement of consumer protection. civil law judicial proceedings. Furthermore, specific institutions established for the The CTIA and other authorities are involved in the EU struc- purposes of protection of consumer rights may take certain tures for consumer protection, particularly in the RAPEX actions against certain unfair competition practices distorting alert system designed to share and spread information about consumer rights (e.g. deceptive advertising). dangerous products across the EU. Furthermore, the authorities are engaged in the Information and Communication System 7.4 Where regulators/enforcement bodies have on Market Surveillance (ICSMS) for the exchange of informa- a choice of enforcement tools/powers, what tion on controlled products. considerations do they take into account in determining which tools/powers to use? 82 Appeals The authorities exercise so-called “administrative discretion”, 8.1 Describe any appeal processes. taking into account the nature and gravity of the offence, the importance of the protected interest, the consequences of the breach and other relevant circumstances. Appeals may be filed against decisions of the CTIA or other The choice and use of the instruments must be proportionate competent authorities in the field of consumer protection. to the intended objectives. The general appeal period is 15 days from the date of delivery of the decision of the first instance; however, the appeal period may vary depending on the specific legislation (e.g. in case of a 7.5 Describe the relevant rules and procedures that decision ordering a remedy of serious deficiencies, the appeal must be followed by such bodies (e.g., administrative, judicial). period is only three days). The appeal typically suspends the effect of the decision, unless specific laws provide otherwise. The inspector is obliged to identify her/himself to the entrepre- The appeal shall be filed with the authority that issued the neur, or the inspected person is notified of the commencement of first instance decision and addressed to the superior authority or, the inspection. Under certain circumstances, inspection may be in the absence of a superior body, the head of the first-instance performed up to a certain point without the investigator immedi- body (e.g. in case of the CTIA, the appellate body is the head of ately revealing her/his identity; such as the inspection of restau- the competent inspectorate). rants and the quality of served food. The inspector may also invite The decision of the appellate body is final and closes the another independent natural person to witness the inspection if it administrative procedure. is necessary in order to fulfil the purpose of the inspection. The The final administrative decision may be reviewed in court in inspector is obliged to investigate the state of the matter, issue judicial administrative proceedings. The pertinent action must a confirmation in case of sampling, and enable the inspected be filed within two months from the delivery of the final admin- person to be present during the inspection. Where necessary and istrative decision. The decision of the court of first instance may appropriate, the inspector may order immediate measures. Upon be appealed; furthermore, under certain circumstances, extraor- completion of the inspection, the inspected person is entitled to dinary appeal to the Supreme Administrative Court is available. receive a copy of the written inspection protocol, as well as the findings. The inspected person may file objections against the inspection protocol within 15 days of its delivery. 8.2 Can consumers or retailers/manufacturers appeal If the inspection results in the finding of an infringement, decisions made by the consumer authority/authorities or by a court? the authority of first instance issues an official administrative decision, specifying the breached obligations and the eventual penalties imposed. This decision may be appealed; please refer Only participants to the original administrative proceedings to question 8.1 below for further details. may file a lawsuit, i.e. the entrepreneurs.

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8.3 Does an appeal suspend the effect of any penalty/ products, including photographs of the products, are published the requirement to pay any fine (if applicable)? on the websites of the relevant authorities, such as the CTIA, the CNB, the SIDC and others. In order to systematically protect the consumer, the authorities draw up an inspection plan for each year, In general, the appeal does suspend the effect of the decision, which they then seek to implement. The authorities also largely particularly in relation to impositions of penalties. examine suggestions and complaints directly from consumers. However, in cases of other types of decisions, where there is a risk to health or other serious legitimate interests of consumers, the appeal does not have suspensory effects, e.g. if the compe- 9.2 Are there any proposed reforms to consumer law or tent authorities impose a protective measure, the appeal period policy within the next 12 months? is reduced from 15 days to three days and the appeal has no suspensive effect. The new Act on Collective Actions (ACA) is currently under discussion in the Parliament of the Czech Republic. 92 Current Trends and Anticipated Reforms

9.1 What are the recent enforcement trends in your jurisdiction?

The current trend is the authorities’ efforts to inform consumers about unsafe products and services. For this purpose, unsafe

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JUDr. Lucie Dolanská Bányaiová, Ph.D. is a partner in our law office. She focuses primarily on litigation, competition law, conflict of laws and European law. Lucie has been a member of the Czech Bar Association (Česká advokátní komora) since 2004. She speaks Czech and English. Lucie has represented major companies in proceedings before the Competition office, in judicial review proceedings and has also pleaded before the General Court of the EU. She also successfully represents clients before Czech courts. Thanks to her broad litigation and competition law practice, she has gained knowledge about the legal environment of various industries including the dairy, agriculture and telecommunications industries. She is also active in the academic sphere; at the Law Faculty of Charles University in Prague, she leads seminars and lectures on competition law to international students of LL.M. and Erasmus programmes. Lucie has been listed among the top attorneys in the field of competition law by Chambers and The Legal 500.

Bányaiová Vožehová, s.r.o. advokátní kancelář Tel: +420 222 517 088 Lazarská 13/8 Email: [email protected] 120 00 Praha 2 URL: www.bvlaw.cz Czech Republic

Mgr. Zuzana Kulhánková is a graduate of the Law School at Masaryk University in Brno; she also studied International Law at the University of Iceland. Zuzana has been a member of the Czech Bar Association (Česká advokátní komora) since 2010. She speaks Czech and English. Zuzana focuses on real estate law, business law and dispute resolution, as well as criminal law litigation. She has assisted international real estate development companies as well as banks with their real estate projects in the Czech Republic, participated in acquisitions and gained experience in drafting commercial contracts and handling litigation, including arbitration and insolvency proceedings.

Bányaiová Vožehová, s.r.o., advokátní kancelář Tel: +420 222 517 088 Lazarská 13/8 Email: [email protected] 120 00 Praha 2 URL: www.bvlaw.cz Czech Republic

We provide comprehensive legal services and advice to global corporations, as well as to clients operating regionally or locally. Our services include: corporate and M&A advisory; litigation and dispute resolution, including disputes in insolvency and in general insolvency related support; competition and antitrust law support; labour law; construction law; and assistance with criminal law matters. The team is led by partners with extensive, longstanding practice who have vast experience working on elaborate projects and transactions touching on various areas of the law. Our lawyers have in-depth knowledge of the legal environment as well as regulatory and commercial awareness which enables our clients to make effective and informed decisions. We are a member of E-Iure (http://www.e-iure.com), the international association of law offices/attorneys-at-law; therefore, we are able to arrange the provision of legal services through this network of law offices elsewhere in Europe and all over the world. www.bvlaw.cz

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Michaël Cousin

Ashurst LLP Marie Florent

12 General defendant in relation to certain offences. The DGCCRF may also use the civil courts in order to obtain the removal of unfair contract terms from certain consumer contracts. 1.1 What legislation, regulations and guidelines are relevant to consumer protection in your jurisdiction? 1.5 Are there any specific bodies that regulate/enforce consumer protection law in specific sectors? Rules on consumer protection are generally found in the Consumer Code. Specific authorities may be competent to set standards for consumer goods in certain given sectors (see, for instance, the answers 1.2 What is the definition of “consumer” (i.e., who does to questions 2.2 and 3.2); the French Directorate General for consumer protection law protect)? Food (“Direction Générale de l’Alimentation” (“DGAL”)) is notably competent to issue administrative decrees fixing safety standards Consumer law applies to both consumers and so-called “non-pro- for food. fessionals”. According to the Consumer Code’s Liminary Article, Moreover, other administrative bodies have consultative a consumer is “any physical person not acting for purposes which are in the powers; for instance, decrees adopted by the Council of the State framework of his/her commercial, industrial, artisanal, self-employed or agri- (“Conseil d’Etat ”) in the field of product safety or conformity cultural activity”. The same Article defines “non-professionals” can also be subject to prior opinions from the relevant sectoral as any legal person who is not acting in a professional capacity. administrative authority. For example, the National Agency for the Safety of Medicines and Health Products (“Agence Nationale de la Sécurité des Médicaments et des Produits de Santé ” (“ANSM”)) 1.3 Who is/which entities are required to comply with consumer protection law? may provide prior opinions for medicine, the French National Food Council (“Conseil national de l’alimentation”) for food, or the Commission for Energy Regulation (“Commission de regulation de As provided for by the Consumer Code’s Liminary Article l’énergie” (“CRE”)) for energy. mentioned above, Consumer protection rules apply to so-called In urgent cases, the Ministry in charge of consumer protection “professionals” which are defined as “any physical or legal person, and the other relevant Ministries may also issue decrees to suspend public or private, acting for purposes which are within the framework of its the making, import, export or marketing of a product and to commercial, industrial, artisanal, self-employed or agricultural activity, also initiate a recall procedure (Art. L. 521-17 of the Consumer Code). where it acts in the name and on behalf of another professional ”. Finally, French law allows multiple public bodies (e.g. Ministries, agencies) to enforce provisions of the Consumer Code 1.4 Which agency/agencies is/are responsible for in specific sectors (Arts L. 511-20 to L. 511-26 of the Consumer enforcing consumer protection law (i.e., who is the Code) and the competences of each administrative agent, i.e. investigator and who is the adjudicator)? which consumer law provisions a given administrative agent can enforce, must be assessed on a case-by-case basis. For instance: ■ For misleading and deceptive commercial practices (see The officials in charge of investigating and verifying alleged answer to question 4.1), inspectors for veterinary public breaches of the provisions of the Consumer Code are agents health and accredited agents from the Ministry of Agriculture of the Ministry of Economic and Financial Affairs, part of the are competent (Art. L. 511-20 of the Consumer Code). French Directorate for Competition Policy, Consumer Affairs ■ For infringements to Arts L. 511-5 to L. 511-9 of the and Fraud Control (“Direction Générale de la Concurrence, de la Consumer Code (concerning consumer information, disloyal Consommation et de la repression des fraudes” (“DGCCRF”)). commercial practices, formation and execution of consumer Different rules apply depending on the relevant sector (e.g. contracts and consumer credits), specific administrative product quality and security, consumer information, unfair trade agents can be appointed by governmental decrees in order practices, etc.). The agencies may, in addition to carrying out to enforce consumer law (Art. L. 511-21 of the Consumer investigations, impose official warnings, injunctions, adminis- Code). Currently, sectors in which such decrees have been trative penalties (see below) or refer matters to the public prose- issued include transport, insurance, and environment, cutor who will initiate criminal proceedings. As an alternative to amongst others (Art. L. 511-21 of the Consumer Code). these criminal proceedings, the DGCCRF may conclude, subject ■ For infringements of provisions of the Fourth Book of to the public prosecutor’s prior approval, a settlement with the the Consumer Code (concerning the conformity and the

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safety of products, as well as compliance to injunctions (“Décrets en Conseil d’Etat”); the so-called “Conseil d’Etat” (Art. of conformity), a list of competent administrative agents L. 412-1 of the Consumer Code); industry customs and norms can be found in Art. L. 511-22 of the Consumer Code, (e.g. norms of the “Association Française de Normalisation” (French which includes, for example, customs officials, tax agents, Standards Association (“AFNOR”)), a non-profit organisation labour inspectors, accredited agents from the Ministry controlled by the Minister for Industry); the state of art (e.g. the of Agriculture, accredited agents from the Ministry or level of knowledge and development achieved in the industry); authority in charge of the sea, etc. information previously given by the seller or the manufacturer Furthermore, more specific powers are defined in specific of the product; and the terms of the contract, amongst other sectors such as public health; doctors or pharmacists can be factors. The State Council decrees in relation to product safety accredited as agents (Art. L. 511-23 of the Consumer Code) in or security are specific and can set conditions on the compo- order to enforce specific consumer law provisions. sition or denomination of the products, safety rules and packaging. Moreover, in France, there are thousands of industry 22 Protections in Relation to the Quality and norms which are negotiated between interested parties (e.g. firms, consumer associations, etc.). Most of these norms are Function of Goods and Services established by AFNOR. Secondly, conformity can be assessed according to the 2.1 Please describe any protections regarding the specific terms of a contract. According to Art. L. 217-5 of the quality and function of goods and services acquired by Consumer Code, a product or service complies with the terms consumers. of the contract if it can perform the use expected from similar goods. Two types of analysis are available. First, an in concreto Both consumer law and civil law provide for a general duty of analysis can be used, which asks whether the product or service conformity (Art. L. 411-1 of the Consumer Code) according fits the seller’s description. Secondly, while applying an in to which the person who has first put a product or service on abstracto analysis, the product can be compared to the qualities the national market or on the European Union (“EU”) market and functions usually expected by a buyer. The defect of the must ensure that it complies with the relevant laws and regula- product must exist at the time the good or service was deliv- tions on security, safety, fairness of commercial transactions and ered or when the product was installed by the seller or under his consumer protection. The seller must carry out the necessary responsibility. When the existence of a defect is established, the checks and in case of non-conformity, it must inform the buyer. burden of proof lies on the seller to prove that it did not exist at A manufacturer who has affixed the “CE” mark on its product the time of delivery. has obtained a certificate of conformity allowing it to put the In the Civil Code, according to the guarantee of conformity product on the EU market; however, this does not exempt the (Art. 1604 et seq. of the Consumer Code), the seller must deliver first seller on the national or EU market of its duty to control the the buyer the goods and all the goods’ accessories which were products (French Supreme Court for civil and criminal matters agreed upon. The product must be able to be used in the way (“Cour de Cassation”), 7 April 1999, No 98-83770). Moreover, since usually expected from a reasonable buyer, with consideration to the burden of proof lies on it, the entity in charge (i.e. the manu- the terms of the contract and to the general principle of good facturer or the other professional who has first put the product faith which governs the execution of contracts under French law. on the market) should keep all relevant documents establishing Secondly, for the guarantee against hidden defects (Art. 1641 et compliance. seq. of the Civil Code), in order to give rise to remedies, the defect Non-conformity of the product or service may also be used must: (1) be inherent to the product; (2) be hidden from the buyer in order to characterise an offence of deceit (“tromperie”) (Art. L. at the time of sale; (3) exist before the sale or before the transfer 441-1 of the Consumer Code) or falsification (Art. L. 413-1 of of the risks associated to the good sold; and (4) remain unknown the Consumer Code). to the buyer. The buyer has two years from the moment he Both the Consumer and the Civil Codes provide for a specific becomes aware of the defect to initiate legal proceedings. duty to deliver goods which comply with the terms of the contract (Art. L. 217-4 of the Consumer Code and Arts 1604 2.3 What types of goods and services are covered and 1641 of the Civil Code). There are, however, differences by the protections relating to the quality of goods and between the Consumer Code and the Civil Code. services? Firstly, they differ in scope. The Consumer Code only applies to specific types of contracts (see answer to question 2.3), whereas The scope of application of the provisions relating to the quality the Civil Code applies to all contracts for the sale of goods. of goods and services varies. Secondly, the duty of conformity in the Consumer Code Firstly, every product or service put on the EU or national encompasses both the duty to deliver a good or service compliant market and sold by a professional to a consumer is covered by with contractual terms (“garantie de conformité”) and the duty to the general duty of conformity (Art. L. 411-1 of the Consumer offer a guarantee against any hidden defects (“garantie des vices Code). This duty of conformity applies to whichever entity in cachés”). In the Civil Code, this duty is divided into two articles the distribution chain (e.g. importer, wholesaler, retailer) first with separate conditions. put the product or service on the market. Secondly, the contractual duty of conformity contained in the 2.2 Please outline the substantive tests for these Consumer Code (Art. L. 217-4 of the Consumer Code) only applies protections. to contracts for the sale of tangible personal property (either already in existence or to be produced) and contracts for the sale of Conformity to the relevant laws and regulations on security, water and gas when it is packaged in a determined volume or quan- safety, loyalty of commercial transactions and consumer protec- tity according to Art. L. 217-1 of the Consumer Code. tion can be assessed in two ways. Thirdly, under the Civil Code, the duty to deliver goods Firstly, according to Art. L. 411-1 of the Consumer Code, compliant with contractual terms (“garantie de conformité ”) and conformity must be assessed against: State Council decrees the duty to offer a guarantee against any hidden defects (“garantie des vices cachés”) apply to all contracts for the sale of goods.

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More specific requirements apply to certain types of prod- seller. When suing the manufacturer, the consumer is using the ucts (e.g. food and medicine) and can be found, for instance, in action the first buyer (e.g. importer, wholesaler, retailer) had decrees of the State Council. on the manufacturer (“action récursoire”). Therefore, if he sues the manufacturer or intermediary seller using this action, the consumer cannot use the Consumer Code’s provisions but may 2.4 Are there any exceptions to these protections? rely on the Civil Code and the Commercial Code.

There are no exceptions to these provisions. 2.7 Describe at least two examples of public or private enforcement of these protections in the last five years, 2.5 What remedies are available for a breach of the including the conduct/alleged conduct, result and protections in relation to the quality and function of penalties imposed. goods and services? Private enforcement. The Lyon Court of Appeal ruled in Fines. Non-compliance with the self-control obligation (see January 2021 that the sale of a sick domestic animal, affected answer to question 2.1) does not lead to a specific fine. However, by a contagious disease from which it died a few days after the in case of non-compliance with decrees of the State Council sale, constituted a breach of the contractual duty of conformity, (see answer to question 2.1) for specific products or services, since the buyers were legitimately expecting to take care of an there can be a fine up to EUR 1,500 for a natural person and animal in perfect health. The Court of Appeal confirmed that EUR 7,500 for a legal entity. The amount is doubled in cases of as the recovery or replacement of the animal was impossible, repeated infringements. the buyers should be reimbursed of the sale price and amounts If an offence of deceit or falsification is committed, crim- corresponding to veterinary, hospitalisation and cremation inal proceedings can lead to a fine of up to EUR 300,000 and a costs, and should also be granted EUR 500 in damages (Lyon prison sentence of up to two years (the amount is increased in Court of Appeal, 21 January 2021, RG No 19/06969). cases of threat to human or animal health or in the event of a Public enforcement. In 2018, the DGCCRF conducted inves- group offence). The decisions taken by the DGCCRF can also tigations on eight marketplaces (e.g. Amazon, eBay, Cdiscount, be published. AliExpress) and analysed 152 products. Its report established that Contractual remedies. Several contractual remedies, such as 43% of the products were dangerous and 24% did not comply damages, may also be imposed. In most cases, there is a choice with existing legal requirements. In response to the DGCCRF’s between the repair or the replacement of the good or service, warnings and/or injunctions, most marketplaces have already a reduction of the price or the termination of the contract. removed the products in question from their websites. Depending on whether the buyer chooses to rely on the Civil In December 2019, the DGCCRF released the results of its Code or the Consumer Code, there is a difference in the reme- investigations into foie gras sold on the French market. It found dies available. If he relies on consumer law, the buyer may only that there was a non-conformity rate of 54%. Twelve warn- ask in the first place for the repair or the replacement of the ings and six injunctions were issued, and four sets of criminal goods. If these two remedies are not available, the consumer proceedings are currently ongoing. The exact amount of the may then request a price reduction or the termination of the fines imposed by the DGCCRF is usually not public since the contract. However, if the buyer chooses to rely on the Civil proceedings often lead to settlements. Code, more options are available. For instance, when applying the guarantee for hidden defects (“vices cachés”) under Art. 1641 32 Protections/Prohibitions in Relation to of the Civil Code, the buyer can choose between returning the the Safety of Goods and Services product or service purchased in exchange for the restitution of the price paid, or keeping the product or service in exchange for the restitution of part of the price. 3.1 Please describe any protections regarding the safety of goods and services acquired by consumers. In case of mistake or misrepresentation, the contract may also be void or voidable (Art. 1130 of the Civil Code). Limitations. Proceedings under the Consumer Code must be Under French law, the safety of goods and services is governed initiated two years from the delivery of the goods (Art. L. 217-12 by a number of legal provisions. Art. L. 421-3 of the Consumer of the Consumer Code), with the exception of the offences of Code imposes on professionals (manufacturers or distributors) deceit and falsification which are subject to a six-year limitation a general duty of safety and states that “products and services must, period. However, proceedings on the basis of the Civil Code are under normal conditions of use or under other circumstances that may reason- subject to a five-year limitation period and in practice, numerous ably be foreseen by the professional, offer the safety that can legitimately be claims use civil law. expected and must not be a danger to public health”. This duty applies to the professional liable for the product’s safety, which can be the actual manufacturer, its representative, 2.6 Who has or which agencies have standing to another person whose activities may impact product safety or initiate proceedings for a breach? another distributor. In order to satisfy this duty, professionals must inform, control Proceedings may be initiated either by the buyer, the public and report on any risks related to the products and services that Ministry or by the DGCCRF (see answer to question 1.4 above) they offer. For example, they must conduct the relevant safety in accordance with Art. L. 511-1 of the Consumer Code. The tests and recall the product if necessary. Furthermore, they must DGCCRF will conduct reviews periodically (e.g. annual inves- keep records of all relevant documents. tigations for biocidal products and detergents) or through large- Governmental bodies (e.g. DGCCRF or the Minister in scale investigations. The results of investigations are available charge of consumer protection) may also prohibit or restrict the on the DGCCRF’s website. sales of dangerous products. Additionally, more specific safety The buyer may initiate both criminal and civil proceedings requirements have been enacted for specific types of product against both the final seller and the manufacturer or intermediary (e.g. fresh food, medicine, cars).

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Businesses may also be liable on the basis of criminal, contract 3.5 What remedies are available for a breach of the or tort law: protections in relation to the safety of goods and ■ Firstly, a business may be held liable, for instance, for services? manslaughter (Art. 221-6 of the Criminal Code) or battery (Art. 222-19 of the Criminal Code) when the use of the Administrative measures. When a product is deemed to be product has led to death or injury. dangerous, administrative authorities may adopt all measures in ■ Secondly, there is a contractual duty to inform the order to remedy the threat (e.g. product recall or order destruc- consumer of the characteristics and risks associated with a tion of the products). Their action must be proportionate to product or a service, and case-law has often recognised the the danger that the public is facing. Therefore, it is not possible existence of an implied duty of safety in given contracts to prohibit the distribution of a product when consumer infor- (e.g. transport, sports). mation would be sufficient to prevent any threat or when it is ■ Thirdly, the Civil Code holds manufacturers (or the inter- possible to modify the product to make it compliant. mediary seller) liable for defective products (Art. 1245 Fines. Non-compliance with the general duty of safety is of the Civil Code). In specific cases, businesses have punishable by a fine with a maximum of EUR 1,500 (EUR 7,500 also been recognised as liable due to fault or negligence for a legal entity). The amount is doubled in case of repeated (Art. 1240 of the Civil Code) or due to an action under its infringements within one year. If there are no ongoing criminal control (Art. 1242 of the Civil Code). proceedings, the DGCCRF may also reach a settlement with the professional. The infringement of a duty to inform the relevant administra- 3.2 Please outline the substantive tests for these tive authorities of the measures taken to prevent consumer harm protections. can lead to the same level of fines. Non-compliance with the duty to establish and keep a record A product is considered compliant with the general duty require- of all products which have been recalled (Art. L. 452-7 of the ment if it complies with the relevant legal and regulatory frame- Consumer Code) can lead to a fine of EUR 5,000 (EUR 25,000 work on health and safety (Art. L. 421-5 of the Consumer Code). for legal entities). A product is deemed to be compliant if it complies with the Not declaring a product safety recall procedure or giving French non-mandatory regulations which implement European false or incomplete information (Art. R. 452-5 of the Consumer regulations on product safety (Art. L. 421-6 of the Consumer Code) can lead to a fine of up to EUR 1,500 (EUR 7,500 for legal Code). entities). The amount is doubled in cases of repeated infringe- In other cases, numerous factors can be considered in order ments within one year. to assess whether a product is compliant (Art. L. 421-7 of the There are specific penalties (e.g. imprisonment, fines) if the Consumer Code): offences of manslaughter and battery are committed. ■ non-mandatory French regulations implementing European Damages. The undertaking may be held liable for the harm norms; the consumers have suffered and may be required to remedy ■ other French regulations; their losses under either contract or tort law. ■ recommendations from the European Commission; ■ good practices guidelines; 3.6 Are there mandatory reporting requirements with ■ the current state of (technical, scientific, etc.) knowledge; respect to the safety of goods or services? and ■ the level of safety that consumers can reasonably expect, If a manufacturer or a distributor discovers that a product does under normal conditions of use. not satisfy the general duty of safety, he has a duty to immediately inform the competent administrative authority and 3.3 What types of goods and services are covered consumers (Art. L. 423-3 of the Consumer Code). A govern- by the protections relating to the safety of goods and mental order dated 9 September 2004 describes the informa- services? tion which must be given to the administration. As of 1 April 2021, the professional concerned will be required to inform Every product or service, if it is not subject to specific national the DGCCRF directly, by making a declaration on a dedicated or EU provisions on consumer health and safety, is subject website, “RappelConso”, whose operating modalities have been to a general duty of safety. The scope of the general duty of specified by a governmental order dated 20 January 2021. The safety is therefore wider in French than in European law since DGCCRF will then make the information collected available to Directive No 85/374/EEC of 25 July 1985 only applies to prod- the public, on another dedicated website. The relevant administrative authority depends on the type of ucts designed for or used by consumers. products concerned: There is, however, an exception: if the seller has duly informed ■ the DGCCRF is competent for: food for human consump- the buyer, this duty does not apply to antiques and second-hand tion; food for animal consumption (except for the prod- products which must be repaired or restored before being used ucts for which the DGAL is competent); products to be (Art. L. 421-2 of the Consumer Code). sold or given to consumers; and cars (except for the prod- Moreover, it is important to determine if there are specific ucts for which the Directorate General for Energy and laws and regulations which may impose additional safety Climate Change (“Direction Générale de l’Energie et du Climat” requirements for specific types of product (e.g. medicines, toys, (“DGEC”)); videogames, washing machines). ■ DGAL: meat for human consumption, canned products, and food for animal consumption composed of or 3.4 Are there any exceptions to these protections? containing meat; and ■ DGEC: cars (Art. R. 321-14-1 of the Highway Code). The manufacturer or the distributor cannot argue that he was There are no exceptions to these provisions. not aware of risks that he should have reasonably known.

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3.7 Describe any voluntary or mandatory product (“pratiques commerciales déloyales” (Art. L. 121-1 et seq. of the safety recall regimes. Consumer Code)). UCP may constitute offences in themselves but they also refer to the prohibition of deceptive commercial practices (“pratiques commerciales trompeuses” (Art. L. 121-2 et Non-food products can be subject to a mandatory product safety seq. of the Consumer Code)) and aggressive commercial prac- recall regime. Where a risk is identified, a professional must report tices (“pratiques commerciales agressives” (Art. L. 121-6 et seq. of the it to administrative authorities and take measures to prevent any Consumer Code)). consumer harm (Art. L. 423-2 of the Consumer Code). The scope of this prohibition is wide since there is no legis- Food is subject to a specific mandatory safety recall regime lative or regulatory definition of the concept of “commercial under Arts 19 and 20 of Regulation (EC) No 178/2002 of 28 practice” under French law. The case law refers to Art. 2(d) of January 2002. the Directive, which covers any act or omission committed by There are also specific product safety recall regimes for a professional and linked to its commercial activities. Art. L. given products, such as medicines. For instance, the ANSM 121-2 of the Consumer Code, which refers to practices by omis- can impose injunctions to remove medicine from the market or sion, may concern an infringement of pre-contractual informa- even destroy it if the product represents a threat to public health. tion obligations, which is also referred to in Art. L. 111-1 et seq. The concerned undertaking, in cases of threats to public health of the Consumer Code. and safety, must initiate an immediate recall procedure without In addition, the Consumer Code prohibits abuses of weak- waiting for the administrative authorities’ injunctions. Businesses ness, which includes a professional abusing a person’s weak- may report such an issue on the administration’s website. ness or ignorance in order to induce him or her, for example by means of doorstep selling or phone solicitations, to commit to 3.8 List at least two examples of public or private something in cash or on credit in any form whatsoever (Arts L. enforcement of these protections in the last five years, 121-8 to L. 121-10 of the Consumer Code). A similar form of including the breach/alleged breach, result and penalties behaviour is sanctioned by the Criminal Code (Arts L. 223-15-2 imposed. to 223-15-4 of the Criminal Code).

Private enforcement. The “Mediator” or “Benfluorex” case 4.2 Please outline the substantive tests for the above- has led to the introduction of numerous proceedings before mentioned protections/prohibitions. the French courts, including against the French State, for how it managed the crisis. The Mediator was a medicine designed to improve glycaemic control and decrease insulin resistance; A commercial practice is deemed to be unfair when it does not however, it emerged that it also caused heart disease. The meet the standard of professional diligence or when it substan- product has since been withdrawn from the French market and tially alters the consumers’ economic behaviour (Art. L. 121-1 individual private actions have been initiated against the phar- of the Consumer Code). The effect on consumers is assessed maceutical company Servier, its manufacturer. In a 2017 case with respect to a consumer who is reasonably well informed and (Cour de Cassation, 20 September 2017, No 16-19643), the Cour de reasonably observant, i.e. the “average” consumer. Cassation ruled that Servier could not use the risk of development As mentioned above, disloyal practices include both misleading defence and that it was liable under Art. 1245 of the Civil Code or deceptive conduct and aggressive practices. To constitute an which imposes tort liability on the manufacturer having sold a infringement, misleading or deceptive conduct may be directed defective product. against consumers, professionals or non-professionals and imple- Public enforcement. The DGCCRF regularly conducts large- mented, or with effects, in France. It must be misleading in the scale investigations. In December 2020, the DGCCRF released meaning of Arts L. 121-2 and L. 121-3 of the Consumer Code, the results of an investigation carried out with respect to the which establishes a list of the elements which can be used to char- compliance with EU Regulations in the toy sector in France. In acterise the conduct, but it also needs to materially distort or be its report, it stated that it had investigated over 3,200 businesses, likely to distort the economic behaviour of the consumer. The completed more than 10,000 control operations, and found that conduct may deceive the consumer either by action (e.g. false 16% of the products were non-compliant and dangerous. In information, deceiving marketing strategy) or by omission (e.g. total, 889 warnings were issued, as well as 269 injunctions, and silence kept on key information). Some practices are presumed 203,000 toys were either repaired or destroyed. to be misleading in any context (Art. L. 121-4 of the Consumer The French Parliament has also passed bills for specific prod- Code), the list of which can be found in the Consumer Code. ucts deemed to be dangerous. For instance, in 2010 and 2012, it For a practice to be sanctioned as aggressive, it must be passed bills to forbid the use of Bisphenol A (“BPA”) from 2015 the result of repeated solicitations or the use of physical or (see Law No 2010-729 of 30 June 2010 and Law No 2012-1442 moral constraints imposed on consumers (Art. L. 121-6 of the of 24 December 2012). Consumer Code), which either leads to the substantial modification of the consumer’s freedom of choice, the vitiating of the 42 Prohibitions Relating to “Conduct” consumer’s consent, or the restriction of the use of contractual rights. In addition to this, consideration may be given to the Against Consumers circumstances surrounding the practice, such as the time and place where the practice was conducted, or the use of threats. A 4.1 Please describe any protections/prohibitions list of presumed aggressive commercial practices can be found relating to the conduct of persons or businesses (e.g., in Art. L. 121-7 of the Consumer Code. manufacturers/retailers) which sell or supply goods In addition to this, establishing intent is necessary in theory, and services to consumers (“Conduct”). For example, since both misleading and aggressive practices may lead to the misleading and deceptive conduct, unconscionable imposition of a criminal penalty (Art. 121-3 of the Criminal Code). conduct, etc. However, in practice, this requirement has been subject to a flexible interpretation by case law when the professional is merely aware of French consumer law, implementing Directive No 2005/29/EC the practice (Cour de Cassation, 29 January 2019, No 17-86876). of 11 May 2005, prohibits unfair commercial practices (“UCP”)

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Abuses of weakness are penalised where the circumstances 4.5 List at least two examples of public or private of the case: (a) show that the victim was not able to appreciate enforcement of the protections relating to Conduct in the extent of the commitments being taken or detect the rules the last five years, including the breach/alleged breach, or tricks used to convince him/her to make such commitments; result and penalties imposed. or (b) make it appear that the victim has been subjected to a constraint (Art. L. 121-8 of the Consumer Code). This may be Private enforcement. The following examples may be provided: the case where the consumer is an elderly person, sick or in a ■ The Legal Tech company Jurysystem used the term state of intellectual weakness, prior to the solicitation. “lawyer” in a misleading way, leading consumers to believe that they were communicating with accredited lawyers. 4.3 Are there any exceptions/exemptions to the The French National Bar Association sued the company protections/prohibitions relating to Conduct? for misleading commercial practice. As a result, the court granted an injunction to stop the infringing behaviour (Cour de Cassation, 11 May 2017, No 16-13669). There are no exceptions or exemptions to these prohibitions. ■ The Cour de Cassation ruled that the mere fact of asserting that a product or service increases the chances of winning 4.4 What remedies are available for a breach of the at gambling is sufficient to characterise the material protections/prohibitions relating to Conduct? element as constituting a misleading commercial practice, without it being necessary to demonstrate any alteration Remedies available for a breach of the protection/prohibitions in the economic behaviour of a normally informed and relating to the aforementioned conduct differ slightly due to the reasonably attentive and wise consumer. Consequently, specificities of the relevant legal regimes. the Cour de Cassation upheld the Court of Appeal’s decision First, disloyal commercial practices may be remedied and which fined the founders of a website offering to buy grids terminated on the initiative of the agents of the DGCCRF or the of the Loto and Euromillions games that were supposed civil court on request of the DGCCRF. There is no specific crim- to give a greater chance of winning than those acquired inal penalty in the Consumer Code for these practices. However, outside, due to the use of a scientific method of calcula- it is nonetheless possible for a consumer to seek damages on the tion, and imposed a five-year professional ban on them basis of the general provisions on extra-contractual liability of (Cour de Cassation, 28 January 2020, No 19-80496). the French Civil Code (Art. 1240 of the Civil Code). ■ The Poitiers Court of Appeal fined a company EUR 2,500 Second, misleading commercial practices (Art. L. 132-2 of in damages for making a consumer sign a large number the Consumer Code) may be subject to a cease-and-desist order of purchase orders, following repeated and insistent solic- from both criminal and civil judges as well as the agents of itations resulting from intensive canvassing at home (i.e. the DGCCRF. Such practices are then likely to be subject to aggressive commercial practice) (Court of Appeal of Poitiers, compensation for damages on the basis of the general provi- 31 October 2017, No 13/12129). sions on extra-contractual liability of the French Civil Code Public enforcement. The DGCCRF conducts regular (Art. 1240 of the Civil Code) but also to be criminally sanc- investigations aimed at identifying UCP. In November 2020, it tioned by a two-year prison sentence and a EUR 300,000 fine published the results of its investigations of 555 establishments (EUR 1,500,000 for a legal entity). The amount of the penalty active in the furniture retail sector. It found that a number of can also amount to 10% of the annual turnover of the under- misleading and aggressive practices were used (20% of iden- taking, calculated on the basis on the last three known years, or tified anomalies concerned the fairness of commercial prac- 50% of the expenses used to commit the offence. It should be tices). In total, the consumer authority found that more than added that before any public action is taken, the conduct may half of establishments investigated presented at least one irreg- also be terminated by means of a settlement with the DGCCRF. ularity with respect to consumer protection law, and issued 169 Third, aggressive commercial practices (Art. L. 132-11 of warnings and 101 corrective measures. In addition, 29 criminal the Consumer Code) may also be subject to a two-year prison minutes and 13 administrative minutes were drawn up. sentence and a EUR 300,000 penalty (EUR 1,500,000 for a legal entity) may be imposed. The amount of the fine can 52 Other Protections/Prohibitions also amount to 10% of the annual turnover of the undertaking, calculated on the basis on the last three known years. In addi- 5.1 Does consumer law in your jurisdiction have tion, where the aggressive conduct leads to the conclusion of a any other prohibitions/protections not covered by contract, the sanction of the practice is the automatic nullity of the questions above? If so, please describe these the contract (Art. L. 132-10 of the Consumer Code). prohibitions/protections. The decision, as well as corrective announcements, can be published at the professional’s expense. There are numerous provisions designed to enhance consumer Fourth, abuses of weakness are sanctioned in the conditions protection in French law. of Art. L. 521-1 et seq. of the Consumer Code (see answer to ques- Specific rules exist regarding advertising. For instance, tion 7.1 below) but are also subject to criminal sanctions (EUR comparative advertising, i.e. when the professional is comparing 375,000 and three years’ imprisonment for natural persons and products or services in order to promote his own product or EUR 1,875,000 for a legal entity (Arts L. 132-14 and L. 132-15 service, must comply with a specific legal framework (Art. L. of the Consumer Code)). Where the abuse results in a contract, 122-1 of the Consumer Code). Specific and sensitive sectors are the latter is void (Art. L. 132-13 of the Consumer Code). Such also subject to specific regulatory provisions on advertisement abuses may also be sanctioned under the relevant provisions of and marketing (e.g. tobacco, medicine). the Criminal Code (Art. 223-15-2 of the Criminal Code). A large number of rules contained in various sources also For all of the practices mentioned above, additional criminal provide for a framework applying to the promotion of sales, penalties are also available (e.g. interdiction to have a commer- such as discounts and rebates, sales or liquidation, or the regu- cial activity) for both types of practices. lation of commercialisation techniques (e.g. distance contracts).

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In addition to this, consumer contracts are subject to specific euro for unlawful comparative advertising in relation to an requirements. There is, for example, a rigorous pre-contractual advertisement campaign launched in 2016 presenting some of duty of information imposed on the professional and a strict Lidl-branded products as identical to those of major manufac- prohibition of abusive contractual terms (Art. L. 212-1 et seq. of the turers’ brands. The Paris Court of Appeal notably considered Consumer Code). Moreover, there are also contracts for which a that the criterion used for the comparison was not objective specific legal framework has been set by the Consumer Code, such and therefore unverifiable for the consumer, since the compar- as consumer loans (Art. L. 311-1 et seq. of the Consumer Code) and ison was based not only on the products’ prices but also on their mortgage loans (Art. L. 313-1 et seq. of the Consumer Code). taste, which is by its very nature subjective (Paris Court of Appeal, Aside from this, the Consumer Code also sets a specific legal 31 January 2020, No 18/01091). framework for over-indebted consumers (Art. L. 711-1 et seq. of Public enforcement. In October 2020, the DGCCRF the Consumer Code). released the results of investigations conducted in the car rental sector. The DGCCRF looked at 31 professionals and found 5.2 Please outline the substantive tests for the above- that 42% of the structures that were controlled did not comply mentioned protections/prohibitions. with their legal obligations. Ten warnings and four injunctions were issued, the majority of which pertained to a general lack of precontractual information on prices and conditions of sale, as As mentioned above, the scope of the other protections/prohi- well as the presence of unfair clauses in the general terms and bitions available under French law is very wide and covers conditions of rental. The DGCCRF also referred one of the numerous practices. For each of these practices, substantive cases identified to the public prosecutor. tests and case law provide for specific conditions which must be fulfilled for the practice to constitute an infringement. Whilst the number of these practices and the conditions 62 Investigation of Potential Breaches related to each of them is too wide for the purpose of this chapter, some examples are set out below. 6.1 What powers does/do the consumer authority/ For instance, for comparative advertising not to constitute a authorities in your jurisdiction have to investigate breach of consumer law, the advert must first compare prod- potential breaches of consumer law? Describe the key ucts or services answering the same needs or fulfilling the same steps in a typical investigation. objectives. Secondly, the comparison must be objective and put essential, useful, verifiable and representative characteris- Depending on the nature of the infringement, the DGCCRF tics into perspective. Moreover, the advertising must not be agents have either ordinary powers of investigation (Arts L. misleading or deceptive. It must also not take undue advantage 512-5 to L. 512-50 of the Consumer Code), or coercive powers from the reputation of another product or service or create a in the form of dawn raids carried out under judicial control (Arts confusion between distinct products or services. Finally, it must L. 512-51 to L. 512-65 of the Consumer Code). not discredit competitors and their products. With regard to ordinary powers of investigation, the Regarding consumer loans, the legal framework set by the DGCCRF’s agents may operate in public spaces but also, from Consumer Code is complex and protective and contains, for 8am to 8pm, in places used for professional purposes or places instance, precise pre-contractual information, duties as well as where a service is provided – including when the place is used a specific right of withdrawal. for residential purposes. They may request the communication of documents of any nature, collect samples, and make a deposit 5.3 Are there any exceptions/exemptions? of certain products pending the results of the necessary checks. They may also interview any person likely to provide information useful to their findings. Finally, where it is necessary to There are no exceptions or exemptions to these provisions. obtain evidence, the agents are authorised to hide their identity (including online) and disclose their status only at the time they 5.4 What remedies are available for a breach of these inform the person being inspected of the finding of a breach protections? (Art. L. 512-7 of the Consumer Code). When such powers of investigation are not sufficient to collect Criminal, administrative and civil law remedies are available evidence and in relation to certain infringements of consumer depending on the prohibitions. As the scope of these prohi- law (e.g. misleading commercial conduct, infringements related bitions is very wide, they will not be considered in detail. As a to comparative advertising, distance contracts, consumer credit, general point, it is necessary to first define the infringement and abuse of weakness), the DGCCRF may request authority from a relevant provisions in order to determine the available remedies. judge in order to carry out dawn raids at one or more premises. For instance, as regards comparative advertising, the rele- In contrast to an ordinary investigation, the DGCCRF is then vant remedies depend on whether the infringement constitutes permitted to use coercive powers to seize documents or prod- a misleading or deceptive commercial practice (see the answer ucts, collect samples and interview individuals. to question 4.4 above) and/or an infringement of Intellectual The conduct of an investigation may vary greatly depending Property rights (Art. L. 716-10 of the Intellectual Property on the circumstances of the case; therefore, there are no Code). so-called “key steps” in a typical investigation. However, it is worth mentioning that before carrying out an investigation, the DGCCRF’s agents shall indicate to the person being 5.5 List at least two examples of public or private investigated their identity, unless they are carrying out inves- enforcement of these protections in the last five years, tigations undercover (Art. L. 512-7 of the Consumer Code). including the breach/alleged breach, result and penalties imposed. If the DGCCRF intends to carry out dawn raids or to pene- trate against the will of the occupant a premise used for both professional and residential purposes, it shall beforehand obtain Private enforcement. In January 2020, the Paris Court of authority from a judge (Arts L. 512-6 and L. 512-52 et seq. of the Appeal fined Lidl (a discount supermarket chain) a symbolic

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Consumer Code). Following the investigation, the DGCCRF by the DGCCRF agents, despite three reminders, and who also agents must keep minutes of the investigation (“procès-verbaux”). provided incomplete documents (Cour de Cassation, 16 January When the DGCCRF is not competent to issue a decision, the 2018, No 17-80291). case will be transferred to the public prosecutor who will decide Similarly, the French Supreme Court upheld a decision to on the outcome of the investigation. sanction a farmer for the offence of obstructing DGCCRF agents in the performance of their duties since she had, for 50 minutes, prevented the agents from entering the livestock build- 6.2 How is an investigation triggered (e.g., ex officio, whistleblower or complaint)? ings, and only gave her agreement after they had notified her of their departure and established an offence report (Cour de Cassation, 18 January 2000, No 99-82406). Investigations may be triggered ex officio or by a complaint filed by a consumer, a professional or an association. Whistleblowing is unlikely to be used in relation to consumer law infringe- 6.6 Can investigations be resolved by way of ments – French law Sapin 2 restricts whistleblowing to cases commitments or undertakings? of “serious and clear” violation of the law (Art. 6 of Law No 2016-1691 on transparency, the fight against corruption and There is no competition law-style commitment procedure. The the modernisation of economic life) – and its utility would be only case in which commitments may be relevant is where the limited since, when reporting a breach to the DGCCRF, the DGCCRF offers the offender a settlement. Indeed, provided consumer may already need to remain anonymous vis-à-vis the that the public proceedings have not been initiated against reported professional. the offender, the DGCCRF may resolve an investigation by proposing a transaction to the offender, in which they agree on the fine to be paid, the time limit for its payment and, if appli- 6.3 Describe any complaints procedure for (i) consumers, and (ii) businesses. cable, other obligations resulting from the acceptance of the settlement, such as behavioural commitments (Art. R. 523-1 et seq. of the Consumer Code). Consumers and professionals may alert the DGCCRF in several Such transaction requires the agreement of the public pros- ways, by: email; phone; physically going to the DGCCRF offices; ecutor and may only take place in relation to certain consumer or filling in an online questionnaire on the DGCCRF’s website. law infringements, including for instance: most offences sanc- In 2019, the DGCCRF also launched an app called tioned by a fine of less than EUR 3,000 (e.g. non-compliance “SignalConso” which enables consumers to alert the authority with the general pre-contractual information obligation); some to a large range of problems that may be encountered with a offences not punishable by a prison sentence (e.g. forced sales, professional. The business concerned is then informed of the infringements in relation to consumer credit); and misleading problem reported; however, if the problem remains unresolved, commercial practices (Art. L. 523-1 of the Consumer Code). is sufficiently serious or has been reported many times, the report may be transferred to the DGCCRF agents for investiga- 72 Enforcement tion. Nonetheless, there is no individual follow-up following a report as the alert is treated in a collective way. 7.1 How does/do the consumer authority/authorities seek to enforce consumer law (for example, by 6.4 What is the timeline for a typical investigation? administrative decision or by commencing proceedings in court)? The length of investigations largely depends on the type of infringement concerned and its complexity. It can range from In the event the DGCCRF finds that consumer law rules have one month to several years. The law does not impose a specific been infringed, three types of measures can be adopted by timeline for the conduct of an investigation; however, claims the DGCCRF: pedagogical measures; corrective measures; or against the excessive length of time of investigations are rarely sanctions. successful. In order to accelerate the procedure, a settlement is Pedagogical measures are favoured by the DGCCRF when often offered by the DGCCRF agents; the settlement procedure the identified breach stems from a lack of knowledge of the rele- is, however, available only under certain conditions and in rela- vant rules or negligence in their application. In such case, the tion to certain infringements of consumer law (see answer to DGCCRF sends a warning to the professional concerned to question 6.6 below). inform it of the observation made and then ensures the adoption of compliance measures by it in the months that follow. Corrective measures aim to prompt the professional to comply 6.5 Are there criminal penalties for non-compliance with a consumer law investigation? If so, provide with the regulation in force more quickly. There are a variety of examples where such penalties have been imposed. such measures, including: ■ Administrative police measures adopted by the DGCCRF, in particular to order the professional to adopt The Consumer Code provides for criminal penalties in case of measures necessary to comply with consumer law rules, obstruction of the conduct of an investigation by a DGCCRF to cease any unlawful conduct, or to remove any unlawful agent. Any person guilty of obstruction may be sentenced to two or abusive clause within a set reasonable time limit (Art. years’ imprisonment, a fine of EUR 300,000 – which may amount L. 521-1 et seq. of the Consumer Code). Order decisions to 10% of the average annual turnover in proportion to the bene- adopted by the DGCCRF against a professional may be fits derived from the offence – as well as additional penalties, such published at the latter’s expense (Art. L. 521-2 of the as being banned from exercising the professional activity at issue Consumer Code). (Arts L. 512-4 and L. 531-1 et seq. of the Consumer Code). Such decisions may only be issued after an adversarial For instance, the French Supreme Court upheld the convic- procedure initiated before the DGCCRF. tion of a person who failed to provide the documents requested

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In the event of failure to comply with the DGCCRF’s ■ If the administrative fine incurred for the infringement injunction, the professional may in certain cases be subject concerned does not exceed EUR 3,000 for a natural person to an administrative fine or a criminal penalty. or EUR 15,000 for a legal person, the DGCCRF must It should also be noted that the Consumer Code provides take action within one year from the date on which the for other specific types of administrative police measures breach or infringement was committed (Art. L. 522-3 of applicable to products which do not comply with the regu- the Consumer Code). lation in force, are dangerous to public health or consumer ■ If the amount of the administrative fine incurred exceeds safety (Art. L. 521-5 et seq. of the Consumer Code), or the thresholds indicated above, the limitation period to the provision of services (Art. L. 521-19 et seq. of the within which the DGCCRF may act is three years from Consumer Code). the date on which the infringement was committed (Art. ■ Summonses filed by the DGCCRF before civil courts L. 522-2 of the Consumer Code). (or administrative court – although this is rare in practice), If the DGCCRF has not taken any measure aiming at investi- which occur in order to ask the relevant judge to order a gating, finding, or punishing an offence within the abovemen- professional to cease any infringement or unlawful conduct, tioned time limit, no further action can be initiated. or to remove any unlawful, prohibited or abusive clause, The initiation of civil or criminal proceedings by the under a periodic penalty payment where appropriate. DGCCRF is also bound by limitation periods. In this respect, Repressive measures are reserved to cases where the it should be noted that: infringement is particularly serious and could be of ■ For civil actions, the usual limitation period is five years distinct nature, depending on the type of infringement. from the day on which the plaintiff knew, or should have ■ Administrative sanctions may be imposed directly by the known of, the facts of the infringement (Art. 2224 of the DGCCRF against a professional. Administrative fines are issued either in case of infringement to obligations laid down Civil Code). by the Consumer Code or in case of failure to comply with ■ For criminal actions, the starting point of the limitation a DGCCRF’s injunction relating to such infringement (Art. period commences from the day on which the infringe- L. 522-1 et seq. of the Consumer Code). Decisions imposing ment is committed. However, its duration depends on administrative fines may be published at the company’s the nature of the infringement and is as follows: one year expense (Art. L. 522-6 of the Consumer Code). for minor offences (“contraventions”); or six years for inter- Such decisions may only be issued after an adversarial mediate offences (“délits”) (Arts 8 and 9 of the Criminal procedure initiated before the DGCCRF, during which Procedure Code). It should, in addition, be specified that the professional concerned may have access to the file, according to Art. 40 of the Criminal Procedure Code, be assisted by a counsel of its own choice, and submit the DGCCRF must inform the public prosecutor of any written or oral observations within a 60-day time limit offence without delay, by providing him all relevant infor- (Art. L. 522-5 of the Consumer Code). When this period mation, reports or acts. has expired, the DGCCRF may adopt an administrative fine through a reasoned decision (Art. L. 522-5 of the 7.3 Describe the enforcement powers/tools available to Consumer Code). these bodies (civil, administrative, criminal). Where the same professional has had several administrative fines imposed on it for different infringements to consumer law rules, these penalties may be enforced The DGCCRF may directly implement three kinds of enforce- cumulatively (Art. L. 522-7 of the Consumer Code). ment powers: ■ The DGCCRF may ask a civil or commercial court – ■ Warnings sent to professionals, notably to inform of the through the Minister for Economic Affairs – to impose a fact that practices may be non-compliant with consumer civil fine on the professional concerned. law rules (pedagogical measures). ■ The DGCCRF may request a public prosecutor before ■ Administrative policing measures, the purpose of a criminal court to prosecute and impose a criminal which is to obtain from the professional compliance with penalty (i.e. a fine or imprisonment) to a professional, by the regulation in force within a reasonable set time limit sending him an inspection report (“procès-verbal de constata- (corrective measures). tion d’infraction”). ■ Administrative sanctions, the purpose of which is to In the event that no criminal proceedings are initiated by sanction an infringement to consumer law rules (repres- the public prosecutor, the DGCCRF may also ask the latter for sive measures). its approval to offer the professional concerned a settlement, Besides such powers, the DGCCRF may also initiate civil which notably includes the amount of the fine to be imposed or criminal proceedings against a non-compliant professional, on the latter, within three months from the establishment of the without adopting a sanction decision itself. inspection report – it being specified that such settlement may For more details on the tools available to the DGCCRF, only be offered for minor offences (“contraventions”) and interme- please refer to the answer to question 7.1 above. diate offences (“délits”) which are not punishable by imprisonment (Art. L. 523-1 of the Consumer Code). If the public prosecutor approves the settlement proposal, the DGCCRF notifies 7.4 Where regulators/enforcement bodies have it to the professional, which then has one month to accept it. a choice of enforcement tools/powers, what considerations do they take into account in determining which tools/powers to use? 7.2 Is/are the consumer protection authority/ authorities bound by a time limit to commence In order to determine which power to use, the DGCCRF may proceedings on breaches? consider two issues: 1. Which type of infringement has been committed? The DGCCRF’s action to impose administrative sanctions In consumer law, each type of obligation is defined by is subject to a limitation period, the duration of which varies a specific rule of law which sets out the nature of the according to the seriousness of the breach committed:

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sanction(s) incurred in the event of an infringement. by at least two consumers who have suffered damages Therefore, enforcement tools/powers to be implemented caused by the same professional and having a common by the DGCCRF may be determined according to the origin (Art. L. 622-1 et seq. of the Consumer Code); or (ii) characteristics of an infringement provided for by the rele- a group action, by which an association may, without any vant rule of law (e.g. where an infringement may be sanc- mandate, act in order to obtain damages for consumers tioned by a criminal fine or imprisonment, criminal courts having suffered the same loss by constituting a group, to have jurisdiction). which other consumers concerned by the loss may adhere 2. Which action should be taken in response to the (Art. L. 623-1 et seq. of the Consumer Code). While a joint infringement: a pedagogical measure; a corrective representation action may be initiated before any court, a measure; or a repressive measure? group action may only be filed before a specific civil court, When the DGCCRF has a choice between several enforce- namely the Tribunal Judiciaire. ment powers/tools following the first step described Finally, it should be noted that in the area of consumer law, above, it may analyse the specific circumstances of the case there are extrajudicial mechanisms for settling disputes, such as at stake, in order to adopt the most appropriate measures mediation. with respect to the seriousness of the infringement (e.g. lack of knowledge of the rules, negligence in the applica- 7.7 Is there a statute of limitations for bringing stand- tion of the rules, wilful violation of the rules). alone or follow on actions?

7.5 Describe the relevant rules and procedures that Damages actions for infringements to consumer law are time- must be followed by such bodies (e.g., administrative, barred in accordance with statutory limitation periods appli- judicial). cable to the case at stake, depending on the nature of the action (civil or criminal). In that respect, please refer to the answer to For a description of rules and procedures that must be followed question 7.2 above. for each enforcement tool/power, please refer to the answer to However, it must be specified that the initiation of a group question 7.1 above. action suspends the limitation period applicable to individual damages actions. 7.6 Is there a right to a stand-alone action and follow In addition, specific limitation periods exist for certain infringe- on right of action within consumer law? Who has ments to consumer law rules (for instance, actions for a guarantee standing to bring these actions? of conformity must be brought by the consumer within two years from the delivery of the goods by the professional, while the limitation period for bringing an action for personal injury is 10 years Actions for damages in relation to consumer law infringements from the date of consolidation of the damage). may be initiated irrespective of whether the DGCCRF or a civil, administrative, or criminal court issued a decision establishing the existence of such infringement. 7.8 Describe any international or regional cooperative Consumer disputes may be of a civil or criminal nature. mechanisms (e.g., MOUs) in which your jurisdiction is Consumer disputes may be initiated before civil or criminal involved in the enforcement of consumer protection. courts (the court with material jurisdiction being determined on the basis of the infringement concerned: minor offences Through the DGCCRF, France is part of the European Consumer (“contraventions”); or intermediate offences (“délits”)). From the Protection Cooperation (“CPC”) network implemented by consumer point of view, the main interest of initiating crim- Regulation (EC) No 2006/2004 of the European Parliament inal proceedings instead of civil ones lies in the fact that the and of the Council of 27 October 2004 on cooperation between burden of proof will lie on the public prosecutor. In any event, national authorities responsible for the enforcement of consumer it should be noted that whatever the nature of the court having protection laws, which has since been repealed by Regulation jurisdiction, the judge presiding over a consumer dispute may (EU) 2017/2394. This network aims at protecting the collective ex officio find that there had been an infringement to a provision interests of consumers and putting an end to infringements by laid down by the Consumer Code, even if such provision is not developing cooperation between national authorities in charge of of public policy. the consumer protection via mutual assistance mechanisms and Furthermore, actions for damages may take the form of indi- information exchange. vidual or collective actions. France is also a member of the International Consumer More specifically, collective actions may only be initiated by Protection and Enforcement Network (“ICPEN”), a network an association which has been approved in view of the fact that of different Organisation for Economic Co-operation and its purpose is notably to defend the interests of consumers. Development (“OECD”) countries. The purpose of such Such an association is entitled to bring two types of actions: network is to share information about cross-border commer- ■ Actions to protect the collective interest of consumers: cial activities that may affect consumer interests and to promote damages actions for the collective loss suffered by international cooperation and cooperation among national consumers may be brought by an approved association agencies in charge of consumer law rules enforcement. In this before criminal courts (Art. L. 621-1 of the Consumer context, the ICPEN notably shares among its members best Code) or civil courts (in such case, the action initiated practices regarding key consumer protection laws and enforce- by the association must be joint with that of one or more ment powers. consumers (Art. L. 621-9 of the Consumer Code)). France has at times concluded bilateral agreements allowing ■ Actions to protect the individual interest of consumers: consumers to lodge a complaint with another country’s such actions may notably take the form of: (i) a joint consumer protection authority. representation action by which an association is mandated

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82 Appeals suspension in front of the interim measures administrative court (Art. L. 521-1 of the Administration Procedural Code) under a distinct procedure. 8.1 Describe any appeal processes. There is no specific provision related to consumer protection in order to suspend the effect of a decision before civil courts The appeal process depends on the court or administration that or criminal courts, where appeals are in principle suspensory took the decision. (Arts 539 of the Civil Procedure Code and 708 of the Criminal When the DGCCRF issues a decision of sanction (i.e. an Procedure Code). administrative sanction such as an injunction or a fine), there are two ways for the professional to contest the sanction. First, the 92 Current Trends and Anticipated Reforms professional may introduce an “administrative” appeal, which is dealt with internally. This appeal may be “for reconsideration” 9.1 What are the recent enforcement trends in your (“gracieux”), wherein it is addressed directly to the person who jurisdiction? took the decision, or may be hierarchical, wherein it is addressed to the hierarchical superior of the person who took the decision). The DGCCRF’s website provides for an online form to fill in France is part of the same dynamic as the EU with respect to the enforcement of consumer protection law. Indeed, the current order to exercise this appeal, both “gracieux” or hierarchical. Second, the professional may choose to resort to a litigious trend observed in France is towards a modernisation of consumer protection rules, especially with respect to the digital economy. appeal before the French administrative courts (“recours pour excès The Law 2020-1508, on various provisions aimed at adapting de pouvoir”). The professional can do so before the administrative court located within the jurisdiction of the establishment French law in economic and financial matters to EU law, adopted whose activity is at the origin of the dispute (Arts L. 211-1, R. on 3 December 2020, is an illustration of such evolution. In the 312-10 and R. 421-1 of the Administrative Justice Code). chapter dedicated to consumer protection, the law implements, The litigious appeal before an administrative court must be within the Consumer Code, Regulation No 2018/302/EU on lodged within two months from the notification of the decision, geo-blocking. It also reinforces the powers of the DGCCRF in but this time limit is suspended where the professional has also the fight against online fraud. In particular, it introduces into the Consumer Code a provision under which in cases of breach lodged an administrative appeal (i.e. a “gracieux” or hierarchical appeal). Regarding the administrative appeal, there is no time of the rules relating to pre-contractual information, or the limit unless the claimant intends to lodge a litigious appeal. In conformity and safety of products, caused on an online inter- this case, the administrative appeal must be filed within the time face without its author being identified, the competent admin- limit required to file a litigious appeal, i.e. two months. istrative authority may require a message to be displayed on the When a decision is adopted by a criminal court, the appeal website, warning consumers of the risk which may be incurred when accessing the content of the relevant website. proceeding follows the rules of criminal appeals (Art. 496 et seq. of the Criminal Procedure Code). Finally, if the infringement has been invoked before a civil 9.2 Are there any proposed reforms to consumer law or court, an appeal of the judgment can be brought following the policy within the next 12 months? civil proceeding rules (Art. 538 et seq. of the Civil Procedure Code). With the adoption of the Law 2020-1508, the Government has 8.2 Can consumers or retailers/manufacturers appeal been empowered to adopt ordinances in order to transpose decisions made by the consumer authority/authorities or three Directives: by a court? ■ Directive No 2019/770/EU on certain aspects concerning contracts for the supply of digital content and digital In order to lodge a litigious appeal before an administrative services; court against a decision taken by the DGCCRF (“recours pour ■ Directive No 2019/771/EU on certain aspects concerning excès de pouvoir”), the claimant must demonstrate an interest contracts for the sale of goods; and in taking legal action, a condition that would be met for the ■ the so-called “Omnibus Directive” No 2019/2161/UE, addressee of a decision of sanction. In the case of an appeal which aims at modernising consumer protection rules. against a court judgment, only parties to the proceedings are The Government can also ensure better enforcement of such authorised to appeal. rules notably through the update of four existing consumer protection Directives: the Unfair Contract Terms Directive No 93/13/EEC; the Price Indications Directive No 98/6/EU; the 8.3 Does an appeal suspend the effect of any penalty/ Unfair Commercial Practices Directive No 2005/29/EC; and the requirement to pay any fine (if applicable)? the Consumer Rights Directive No 2011/83/EU.

Appealing before administrative courts does not suspend the effect of the penalty. It is, however, possible to request a specific

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Michaël Cousin is a Partner in the Ashurst competition and EU law practice. He represents clients in antitrust litigations, merger control, state aid, consumer law, counselling and establishing effective compliance programmes. He is also specialised in distribution law and restrictive trade practices. Michaël has considerable experience in competition and consumer law matters involving the energy, transport and consumer products sectors, and has represented clients in other industries including retail, banking, elevators and private equity.

Ashurst LLP Tel: +33 1 53 53 56 92 18, square Edouard VII Email: [email protected] 75009 Paris URL: www.ashurst.com France

Marie Florent is an Associate in the Ashurst competition and EU law department in Paris. She specialises in all areas of French and EU competition law. She has extensive experience in merger control and advises companies in antitrust investigations before the European Commission and the French Competition Authority. She is also specialised in consumer law, distribution law and restrictive trade practices. Marie is a graduate of the University of Paris X (Paris – Nanterre) and of the University of Paris II (Panthéon – Assas) and is a lawyer at the Paris Bar.

Ashurst LLP Tel: +33 1 53 53 53 80 18, square Edouard VII Email: [email protected] 75009 Paris URL: www.ashurst.com France

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Dr. Fabian Klein

Ashurst LLP Dr. Michael Holzhäuser

12 General 1.3 Who is/which entities are required to comply with consumer protection law?

1.1 What legislation, regulations and guidelines are relevant to consumer protection in your jurisdiction? Most consumer protection rules require a “consumer contract”, which is defined in sec. 310 para. 3 BGB as a contract between a consumer and an entrepreneur. An “entrepreneur” is defined in Germany does not have a general “consumer protection act”. sec. 14 BGB as a natural or legal person or a partnership with legal The various provisions that provide for consumer protection are personality who, when entering into a legal transaction, acts in exer- contained in various legal acts. Moreover, “consumer protec- cise of his/her or its trade, business or profession. Other consumer tion” is not a defined term in Germany; some provisions that protection rules, e.g. the Act on Product Safety (ProdSG), apply to qualify as consumer protection regulations have consumer the manufacturer, importer or distributor of a product. protection as their prime objective, while others provide for Consumers that are dealing with other consumers, e.g. in private consumer protection as a by-product of protecting other inter- sales, are mostly not required to comply with consumer protec- ests (e.g. environmental standards, or health and safety issues) or tion rules, since these contracts do not qualify as a “consumer by protecting other groups that include consumers but are not contract”. However, this may vary based on the applicable rules. limited to them (e.g. employees). The most important consumer protection rules are contained in the German Civil Code (BGB). These relate to contracts 1.4 Which agency/agencies is/are responsible for concluded with consumers, the use of general terms and condi- enforcing consumer protection law (i.e., who is the tions, and special types of consumer contracts (e.g. long-distance investigator and who is the adjudicator)? contracts, or consumer loans). In addition, the BGB, together with the Introductory Act to the German Civil Code (EGBGB), There is no central or specific consumer protection agency in provide for various information duties when entering into Germany, and for the most part consumers must enforce their contracts with consumers. Moreover, the German Act against rights themselves (primarily in civil court proceedings). Unfair Competition (UWG) provides for various regulations Administrative consumer authorities, e.g. the Federal Ministry regarding the conduct towards consumers, particularly in adver- of Justice and Consumer Protection or its equivalents at Federal tising, and the Act against Restraints of Competition (GWB) State level (Bundesländer), do have some, albeit limited, enforce- regulates conduct towards market competition. ment powers. Based on the Act on the Enforcement of Consumer In addition to these key provisions, a large number of special- Protection (VSchDG), the German consumer authorities desig- ised laws and regulations exist that provide for consumer protec- nated therein – mainly the Federal Ministry of Justice and tion in specific areas, e.g. relating to food, travellers’ rights, Consumer Protection – are given rights to investigate, impose product safety, and the protection of personal data. cease-and-desist orders, receive relevant information, and enforce Many of the consumer protection rules are influenced by EU these measures. This requires, however, an “intra-community law. The EU is very active in the field of consumer protec- infringement”, meaning that the violation of consumer inter- tion and aims at establishing minimum standards of consumer ests must take place in an additional EU Member State to that of protection in all Member States. EU rules are often directly where the violation originated or where the violator is located. In applicable in addition to German law (and, in case of a conflict, addition, specific consumer authorities exist for specific sectors, mostly take precedence). e.g. the Federal Financial Supervisory Authority (BAFIN), the Federal Institute for Occupational Safety and Health (BAUA), 1.2 What is the definition of “consumer” (i.e., who does the Federal Office of Consumer Protection and Food Safety consumer protection law protect)? (BVL), and the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway (BNetzAG). Furthermore, several private institutions and associations, A consumer is defined as any natural person who enters into a which in part are also subsidised by the Federal State and/or legal transaction for purposes that are predominantly outside the Bundesländer, may enforce certain consumer protection laws. his/her trade, business or profession. The definition is in sec. This applies, for example, to unfair or misleading advertising 13 BGB and applies for all national German law. under the UWG, or in relation to violations of various consumer protection rules under the Injunctive Relief Act (UKlaG).

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1.5 Are there any specific bodies that regulate/enforce 2.3 What types of goods and services are covered consumer protection law in specific sectors? by the protections relating to the quality of goods and services? Yes, there are sector-specific bodies that monitor, and in some cases enforce, consumer protection regulations. The most The general consumer protection provisions, e.g. regarding a important ones are the BAFIN, the BAUA, the BVL, and the material defect, apply to all goods, and the general provisions BNetzAG. In recent years, the Federal Cartel Office (BKartA) regarding a default of services apply to all services. In addi- has additionally developed a strong focus on consumer protection, there are regulations relating to specific types of goods/ tion in the area of competition law, e.g. the investigation of services, such as regarding consumer loans. In general, conduct having an impact on consumers, such as Facebook’s however, consumer protection regulations do not differen- data collection activities (see question 4.5). tiate between different goods and services, but rather differ- entiate between the situations in which the consumer contract 22 Protections in Relation to the Quality and is concluded. Thus, contracts concluded at the home of the Function of Goods and Services consumer trigger different information duties compared with contracts concluded at a store, and only certain contracts trigger the right of the consumer to rescind the contract within (usually) 2.1 Please describe any protections regarding the 14 days without cause. quality and function of goods and services acquired by consumers. 2.4 Are there any exceptions to these protections? The BGB determines when purchased goods are deemed to be defective (sec. 434 BGB). According to this provision, a Many information duties do not apply to “everyday contracts” purchased good will be free from material defects if it is of the that are fulfilled immediately, such as purchases at bakeries and agreed quality. If the quality has not been agreed upon, the many purchases in bricks-and-mortar stores. good must be suitable for its intended use, or must be of the The right to rescind an agreement without cause does not apply same quality as comparable goods, as would be expected by the to certain types of contracts; for example, for goods that have consumer. Advertising claims are also relevant to these expec- been customised for the consumer (e.g. tailor-made shirts), easily tations. In addition, goods must be free from legal defects (i.e. perishable goods, goods that have been sealed for hygienic or third parties must not be able to assert any rights against the medical reasons (where the seal is broken), software that has been buyer in respect of the goods). If a material defect in the goods shrink-wrapped, newspapers or magazines (excluding subscrip- becomes apparent within the first six months, the law provides tions), and certain agreements where the price is highly volatile. for a presumption that the goods were already defective at the time they were passed on to the consumer (sec. 477 BGB). 2.5 What remedies are available for a breach of the No specific definition exists as regards what constitutes a protections in relation to the quality and function of “defective” or “sub-standard” service, and the general rules on goods and services? default of performance apply, according to which, the service must comply with the agreed-upon requirements or the require- In the case of a defective product, the consumer can demand the ments that could have been expected. The test is therefore repair or replacement of the product. If this fails or is impos- similar to that for goods. sible, the consumer may revoke the agreement or reduce the In addition to the regulations relating to defective goods purchase price. In addition, consumers can claim damages or or sub-standard services, consumers are protected by various reimbursement of futile expenditure. information duties imposed on suppliers. The relevant infor- In the case of violation of other consumer protection rules, e.g. mation must be provided before or at least at the time when information duties, the consumer may, under certain conditions, the consumer contract is entered into. The information duties rescind the contract, and in such circumstances, the commence- include information on the main features of the good or service, ment of the time period within which such breach must be the identity of the seller, the terms of delivery, and the main declared does not begin (however, such a customer must gener- rights of the consumer in case of a default. ally make any such declaration within a maximum period of, Further, consumers are in many cases protected by a right to typically, one year). If the missing information relates to costs rescind a consumer contract without cause within (mostly) 14 (e.g. for delivery), the consumer may decline to pay these costs. days (which they must be properly informed about). This right to rescind applies particularly to purchase agreements which were concluded online or where consumers were approached at 2.6 Who has or which agencies have standing to home, as well as to consumer loan agreements. initiate proceedings for a breach?

2.2 Please outline the substantive tests for these The remedies available typically must be pursued by the consumer protections. in individual civil court proceedings. There is no specific enforcement regime, and no specific agency is in general authorised to initiate proceedings for a breach. There is no specific test for all of the above protections. The In specific cases, there are limited possibilities for (i) associa- requirements vary significantly depending on the consumer tions which exist for the promotion of commercial or independent protection regulation in question. professional interests, or (ii) qualified entities to raise claims in

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the name of multiple consumers in class action proceedings. light of specific regulations for individual products (which vary Under the UKlaG, such associations/qualified entities (which from product to product). In addition, products that require must fulfil the requirements in sec. 3 and/or 4 UKlaG) may raise the CE to sign (a certification mark that indicates conformity claims for cease-and-desist orders against companies that violate with health, safety, and environmental protection standards for consumer protection laws. Under the Model Declaratory Action products sold within the European Economic Area) may only be Act (Musterfeststellungsklagegesetz ), which was introduced on 1 put on the market if they fulfil the requirements relating to CE November 2018, certain qualified entities can seek a declaration marking (sec. 7 ProdSG). Manufacturers must also provide rele- from a court as to whether certain claims between consumers vant information on the use of the product and contact details and entrepreneurs exist. Consumers can therefore use this (sec. 6 para. 1 ProdSG). mechanism as a “first step” to raise their specific claims in subsequent individual proceedings. 3.3 What types of goods and services are covered by the protections relating to the safety of goods and 2.7 Describe at least two examples of public or private services? enforcement of these protections in the last five years, including the conduct/alleged conduct, result and The ProdSG applies to all goods provided, presented or used on a penalties imposed. commercial basis for the first time on the market (sec. 1 ProdSG).

Since enforcement actions for the most part must be taken by 3.4 Are there any exceptions to these protections? individual consumers, there are few cases that stand out. Over the past few years, however, courts have been confronted by a very large number of consumers raising claims against Volkswagen in The Act in principle applies to all goods offered on the market relation to the use of illegal software to limit the measurement of by commercial suppliers to consumers; however, it lists certain exhaust emissions (“Dieselgate”). Furthermore, in recent years exceptions, namely: antiques; products that require refurbishing consumer claims relating to data security issues and violations (if made clear that they require refurbishing); products for mili- of the General Data Protection Regulation (GDPR) have risen tary use; food; animal feed; live plants and animals; medical significantly. products (for these, a specific act applies); and plant protection It is notable that the relatively new “declaratory action” model products (for these, a specific act applies) (sec. 1 para. 2 ProdSG). has been used in various instances, including in relation to “Dieselgate”, as well as against various German savings banks 3.5 What remedies are available for a breach of the (Sparkassen) in connection with illegal stipulations of interest protections in relation to the safety of goods and rates in terms and conditions for consumer credits. services?

32 Protections/Prohibitions in Relation to Fines of up to EUR 100,000 can be imposed for intentionally or the Safety of Goods and Services negligently breaching the ProdSG (sec. 39 ProdSG). Repeated and persistent violations of individual, specific obligations 3.1 Please describe any protections regarding the under the ProdSG are punishable by imprisonment for up to safety of goods and services acquired by consumers. one year or a fine (sec. 40 ProdSG). In addition, selling goods in violation of the ProdSG may The safety requirements of goods and services acquired by lead to additional legal breaches, e.g. under the UWG, and such consumers are regulated in different acts, the most impor- goods may be regarded as defective in terms of the BGB. Any tant one being the ProdSG, according to which a product may such violation can lead to additional claims, e.g. damages claims only be made available on the market if it does not pose a risk or cease-and-desist claims by competitors or consumers. to the safety and health of persons when used as intended or expected. Several European directives are embodied in this law, 3.6 Are there mandatory reporting requirements with e.g. the Directive on the Safety of Toys and the Lift Directive. respect to the safety of goods or services? According to the ProdSG, manufacturers, importers and distributors may only place goods on the market that meet the legal The manufacturer, its authorised representative and the importer requirements for the health and safety protection of consumers; are required to immediately inform the competent market there are also acts and regulations applicable to specific goods. surveillance authorities if they know, or should have known on In addition to the ProdSG, there are numerous other regula- the basis of the information or experience available to them, tions relating to the health of consumers, such as the Food and that a consumer product made available on the market by them Commodities Act, and the Medicinal Products Act. In cases presents a risk for the safety and health of persons. In particular, where a product is subject to certain industry-specific regula- they must inform the market surveillance authority about the tions (e.g. the Machinery Directive), these take precedence; measures they have taken to prevent this risk. The market surveil- however, the ProdSG continues to apply. lance authority shall immediately inform the BAUA about the facts, in particular in the event of recalls (sec. 6 para. 4 ProdSG). 3.2 Please outline the substantive tests for these protections. 3.7 Describe any voluntary or mandatory product safety recall regimes. The ProdSG sets out various requirements that goods must meet in order to be offered on the German market (sec. 3 et There are no specific legal requirements regarding product seq. ProdSG). In particular, these include the requirement to recall regimes. Excluding the information duties as regards the ensure the safety of products put on the market and the health of competent agencies, the requirements and steps to be taken in persons (sec. 3 para. 1 ProdSG), which is in turn to be assessed in

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relation to an individual product recall must be assessed and As regards anti-competitive conduct, the BKartA has been decided on a case-by-case basis. given certain powers to investigate compliance with consumer The BAUA provides additional information on how to best protection in general, i.e. the BKartA is assigned to carry out conduct product recalls. In addition, EU laws may apply. sector inquiries that serve primarily to reveal any sector-wide consumer protection deficiencies.

3.8 List at least two examples of public or private enforcement of these protections in the last five years, 4.3 Are there any exceptions/exemptions to the including the breach/alleged breach, result and penalties protections/prohibitions relating to Conduct? imposed. There are no specific exceptions. Most product recalls are voluntary or at least initiated by the manufacturers. The most prominent areas of product recalls are in relation to food and beverages, cars, childcare items and toys. 4.4 What remedies are available for a breach of the protections/prohibitions relating to Conduct? Unsurprisingly, 2020 saw a large number of product recalls and product warnings with regard to health-related items, such as mouth-and-nose masks and hand sanitisers distributed by two The possible claims include cease-and-desist, recall/removal of major German drugstores. products, damages, and profit absorption. In practice, the claims are often raised in a warning letter and enforced in preliminary 42 Prohibitions Relating to “Conduct” injunction proceedings; however, main action proceedings are also possible. Violations of the UWG may also constitute a criminal Against Consumers offence triggering fines of up to EUR 300,000 or imprisonment. However, claims under the UWG are not open to consumers. 4.1 Please describe any protections/prohibitions They may only be raised by: (i) competitors of the violating entity; relating to the conduct of persons or businesses (e.g., (ii) associations which exist for the promotion of commercial manufacturers/retailers) which sell or supply goods or independent professional interests if a considerable number and services to consumers (“Conduct”). For example, of entrepreneurs belong thereto, and which distribute goods or misleading and deceptive conduct, unconscionable services of the same or similar type on the same market; or (iii) conduct, etc. consumer protection associations that are “qualified entities” pursuant to sec. 4 UKlaG. The most relevant act regulating the conduct of persons towards consumers is the UWG, which provides for various restrictions 4.5 List at least two examples of public or private against aggressive commercial practices and misleading commer- enforcement of the protections relating to Conduct in cial practices, in particular misleading advertising and compar- the last five years, including the breach/alleged breach, ative advertising. For example, companies may not advertise result and penalties imposed. products with features they do not possess. It also provides for various restrictions on how businesses may approach and Most enforcement is private enforcement by competitors, and contact consumers, e.g. under which circumstances consumers there are numerous cases every year. Recent relevant case law may be contacted with advertising via telephone or email. includes the question of how advertising must be identified by The UWG applies to both business-to-consumer (B2C) influencers on online/social media accounts, and the use of fake relationships and business-to-business (B2B) relationships. product reviews. However, several of its rules apply in B2C situations only, e.g. Examples of public enforcement include TV broadcasting regarding after-sales services in a different language than that of company Sky being fined EUR 250,000 by the Federal Network the country in which the consumer is located. Agency for repeatedly making unauthorised advertising phone In addition, the GWB has the objective of maintaining sound calls to consumers. market competition by regulating anti-competitive business In recent decisions, the BKartA has begun to put a stronger conduct. The GWB contains various provisions which directly emphasis on data and consumer protection concerns, and or indirectly aim at consumer protection. Relevant forms of found that Facebook abused its dominant position by collecting consumer detrimental infringements prohibited under German user data in breach of data protection regulations and there- competition law include the abuse of market power under sec. fore harming consumer and data protection rights. Facebook 19 GWB, particularly by means of exploitative (as well as exclu- later appealed this decision and requested interim relief. The sionary) abuses. Sec. 2 para. 1 GWB provides that even a cartel Higher Regional Court of Düsseldorf granted this request, only may persist if it, among other criteria, benefits the consumer. for the Federal Court of Justice to overturn this decision later. Thus, Facebook is obliged to cease such business practices on 4.2 Please outline the substantive tests for the above- an interim basis; a conclusive decision on the appeal, outside of mentioned protections/prohibitions. interim relief, has yet to be reached. In December 2017, the BKartA launched a sector inquiry in relation to the supply of so-called “Smart TVs”. The purpose The Code against Unfair Competition requires that the act or of the sector inquiry was to clarify whether and to what extent omission qualifies as a “commercial practice”. The commer- personal data is collected, disclosed and commercially exploited cial practice is further tested against the understanding of an by the TV manufacturers and whether consumers are informed “average consumer”, i.e. a consumer that is of average under- about this. In particular, the terms of business and data protec- standing and knowledge (unless specific rules are aimed at tion conditions were thoroughly examined. The BKartA found protecting individual groups, e.g. children, in which case an that almost all Smart TV manufacturers active on the German average member of that group is used as the benchmark). The market are subject to serious shortfalls in terms of transparency additional requirements depend on the individual prohibition of how the user’s data is stored and used. The BKartA therefore that may have been violated.

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recommended that manufacturers change their market behav- 5.5 List at least two examples of public or private iour and that the legislator tighten regulation for Internet of enforcement of these protections in the last five years, Things (IoT) devices. including the breach/alleged breach, result and penalties In 2020, two more sector inquiries were launched. The first imposed. one deals with publicly accessible charging infrastructure for electric vehicles. As the charging infrastructure does not underlie In the area of data protection rules, there has been a significant any specific energy laws, possible restraints of competition may be increase in investigations and fines within the last year. For remedied by the application of antitrust law. This inquiry comes example, telecom provider 1&1 was fined EUR 10 million for as registrations of electric cars in Germany surge. The second disclosing personal data of customers in hotline calls. sector inquiry concerns messenger services. As a part of almost In 2019, the BKartA launched a sector inquiry into user every consumer’s daily life, shortfalls with regard to data protec- ratings on the internet. Studies and media coverage frequently tion and the security of communications may be encountered. point out that user ratings on the internet are not authentic in many cases, e.g. because they were posted by a person who has 52 Other Protections/Prohibitions received something in return. The BKartA has identified this as an issue of unfair competition law, for which it is not compe- 5.1 Does consumer law in your jurisdiction have tent. Nonetheless, it proposes increased transparency in relation any other prohibitions/protections not covered by to reviewers’ motivations for rating a product or service. This the questions above? If so, please describe these would in turn enable consumers to better assess the authenticity prohibitions/protections. of a rating.

Since 25 May 2018, the new EU data protection rules (GDPR) 62 Investigation of Potential Breaches have applied throughout Europe. They apply to companies based in the EU, as well as international companies which offer their goods or services in the EU or monitor the behaviour of 6.1 What powers does/do the consumer authority/ authorities in your jurisdiction have to investigate EU consumers. They provide for various regulations that are potential breaches of consumer law? Describe the key aimed at protecting consumers, in particular regarding informa- steps in a typical investigation. tion on the collection and use of personal data. Various regulations also aim to protect consumers in e-commerce situations, especially by requiring various information to be German consumer authorities have only limited investigation provided to consumers, but also, for example, via the geo-blocking and enforcement powers. Most violations of consumer protec- regulation which requires providers to grant country-specific tion rules must be pursued by the consumers themselves (e.g. access to websites. These are mostly EU legislative acts which where a product is defective). often apply directly (i.e. without the need to be implemented in Specific acts, however, grant the respective competent authority national German law). investigation possibilities. This applies most importantly to the In addition, competition law is also relevant. The increasing ProdSG which provides the competent authorities the rights to importance of internet platforms raises new and different request relevant information, initiate investigations, and to enter competition and economic issues which has led to the BKartA premises during normal operational hours (sec. 28 ProdSG). focusing on the digital economy. Due to the nature of the In cases of violations of consumer protection rules in inter-com- online-retailing market, digital platforms often have a dominant munity situations (i.e. where the violation of consumer interests market position. Therefore, they tend to pose a strong risk of takes place in an EU Member State other than that where the abuse of market power. Many of the changes in the tenth amend- violation originated or where the violator is located), the VSchDG ment to the GWB were made as a result of this. One of the most gives the competent consumer authority the right to investigate important changes is the wholly new sec. 19a GWB. It enables an alleged or actual violation (sec. 5 VSchDG). This includes the BKartA to prohibit abusive behaviour of undertakings more the right to be provided with all relevant information from the effectively, with paramount importance across multiple markets. (alleged) violator, to request contact details from postal or other In this context, the BKartA focuses on the distribution systems service providers, to be granted copies of electronic data, and to of digital marketplaces as well as their terms of business. In enter business premises during normal operating hours. addition, it has announced that it is making use of this provision Moreover, the BKartA is authorised to carry out sector inves- in an investigation of Facebook regarding its practice of linking tigations even if there is no specific suspicion that any relevant the Facebook network with their Oculus devices. laws were violated. The sector investigations by the BKartA are rather an instrument to reveal sector-wide consumer protec- 5.2 Please outline the substantive tests for the above- tion deficiencies in order to take appropriate countermeasures. mentioned protections/prohibitions. Typically, the BKartA sends questionnaires to companies in the relevant sector covering e.g. financial numbers or company There is no uniform substantive test. structures. If companies fail to comply with this request, i.e. do not answer in full or at all, the BKartA may impose a fine of up to EUR 100,000. 5.3 Are there any exceptions/exemptions?

6.2 How is an investigation triggered (e.g., ex officio, The scope of applicability is diverse. whistleblower or complaint)?

5.4 What remedies are available for a breach of these In general, investigations may be triggered ex officio, or by protections? complaints of consumers or other third parties. In case of intra-community violations, investigations may also be requested The scope of remedies and/or sanctions is diverse. by competent consumer authorities of other EU Member States.

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The launch of a sector inquiry is within the discretion of the 7.2 Is/are the consumer protection authority/ BKartA, provided it has reasonable grounds to suspect substan- authorities bound by a time limit to commence tial, permanent or repeated infringements of consumer protec- proceedings on breaches? tion provisions which might harm the interests of a large number of consumers. There is no specific time limit to commence proceedings for breaches. However, the general statute of limitations applies, 6.3 Describe any complaints procedure for (i) which in most cases is three years. For violations of unfair consumers, and (ii) businesses. competition law, the limitation period is as short as six months. Under German cartel law, the limitation period for the pros- There are no specific complaints procedures, either for consumers ecution of regulatory offences, such as the abuse of market or for businesses. However, submissions to the BKartA can be power according to sec. 19 GWB, is five years (see sec. 81g para. made informally. Furthermore, there is a standardised anony- 1 GWB). The limitation period begins to run as soon as the mous notification procedure for cartel participants. infringing conduct has been completed (see sec. 31 para. 3 of the Administrative Offences Act (OWiG)).

6.4 What is the timeline for a typical investigation? 7.3 Describe the enforcement powers/tools available to these bodies (civil, administrative, criminal). There is no general timeline for an investigation as these are always case specific. Depending on the basis of a claim, the responsible authorities or courts have the power to impose fines. Where the violator is 6.5 Are there criminal penalties for non-compliance required to act but does not, the necessary steps may be under- with a consumer law investigation? If so, provide taken by a third party (e.g. bailiff, third-party provider). In examples where such penalties have been imposed. extreme cases, court or administrative orders can be enforced by imprisonment of responsible persons (e.g. the CEO of a Criminal penalties for non-compliance with consumer law inves- company). The BKartA, according to sec. 32 GWB, may require tigations in general do not apply. However, non-compliance with the termination of a cartel infringement and issue a reimburse- the orders of a consumer authority under the VSchDG may result ment order under sec. 32 para. 2a GWB. With the tenth amend- in a fine of up to EUR 10,000. Furthermore, non-compliance ment to the GWB, another tool was handed to the BKartA; sec. with an investigation under the ProdSG can lead to imprison- 32a GWB was heavily modified. It enables the BKartA to order ment of up to one year. interim measures if an infringement of the GWB is very likely and the measures are necessary in order to prevent irreparable harm to another undertaking. This might lead to heightened 6.6 Can investigations be resolved by way of levels of enforcement, especially in digital markets. In terms of commitments or undertakings? regulatory-offence proceedings, sec. 81 et seq. GWB entitles the BKartA to impose fines of up to a total amount of 10% of the For cartel investigations, sec. 32b GWB opens up the possi- annual worldwide turnover. Other consumer protection laws, bility of the resolution of investigations by way of commitments. in particular unfair competition law, may be brought before a In other areas, commitments or other undertakings may be civil court by way of private enforcement. With regard to unfair adequate to cure the violation; however, these are not explicitly competition law, the limitations already mentioned apply (see foreseen as remedies under the relevant acts. question 1.4).

72 Enforcement 7.4 Where regulators/enforcement bodies have a choice of enforcement tools/powers, what 7.1 How does/do the consumer authority/authorities considerations do they take into account in determining seek to enforce consumer law (for example, by which tools/powers to use? administrative decision or by commencing proceedings in court)? One fundamental concept of the German legal system is the principle of proportionality. In general, the authorities must Consumer authorities enforce consumer protection rules typi- always take the least restrictive measure which is effective. cally by way of court proceedings (where they have standing to sue). In specific sectors and for intra-community violations, the competent consumer authority is given enforcement powers 7.5 Describe the relevant rules and procedures that must be followed by such bodies (e.g., administrative, (e.g. in the VSchDG) by being able to give administrative orders. judicial). These orders may also be enforced by the authorities themselves, in particular by setting fines. The BKartA enforces consumer protection decisions through In the case of civil court actions, the Code of Civil Procedure administrative acts. In addition, the BKartA may act as “amicus (ZPO) applies. In the case of administrative actions, the curiae” under sec. 90 para. 6 para. 1 GWB in conjunction with Administrative Procedure Act (VwVfG) and the Administrative sec. 90 para. 2 GWB in cases on substantial, permanent or Court Regulations (VwGO) apply, in addition to the special repeated infringements of consumer protection provisions rules set out for the authorities, e.g. GWB and TKG. Individual which, due to their nature or scale, harm the interests of a large consumer authorities in addition must follow any specific rules number of consumers. This is, however, rarely utilised. applying to them, e.g. the VDSchG.

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7.6 Is there a right to a stand-alone action and follow 8.3 Does an appeal suspend the effect of any penalty/ on right of action within consumer law? Who has the requirement to pay any fine (if applicable)? standing to bring these actions? This depends on the situation, in particular whether the payment Most violations of consumer protection rules may be prosecuted was ordered by an administrative authority or by a court. in stand-alone actions. Investigations by consumer authorities or actions taken by these in general do not preclude individual 92 Current Trends and Anticipated Reforms claims. Violations of unfair competition rules, however, may only be prosecuted by competitors and different consumer protection associations/qualified entities, not by consumers them- 9.1 What are the recent enforcement trends in your jurisdiction? selves. Follow-on rights, where consumers can join investigations and/or enforcement measures taken by consumer authorities, do not exist. However, there are different class-action proceedings Following “Dieselgate”, German legislators realised the that are available to specific consumer protection associations increasing need for consumers to have access to class actions and/or qualified entities where consumers can directly benefit. or to otherwise bundle their interests. By implementing Regarding cartel claims, sec. 33 and 33a GWB grant the legal Musterfeststellungsklagegesetz in 2018, German legislation reacted entity (including consumers, as defined in question 1.2) affected to this requirement. Consumers will also have an additional by the infringement actions for injunction, rectification and option under the “New Deal for Consumers” initiative started damages. However, actions brought by consumers on the basis of by the European Union, and the possibility for consumers to a cartel infringement are the absolute exception in Germany due unite under a class action led by a qualified entity such as a public to the typically low damage to the individual and litigation risk. body or charity (Verbandsklage) was approved in November 2020. There have been attempts to establish de facto class action suits by This Directive must be implemented by the individual EU way of transfers of claims to a company. This attempt to circum- Member States by the end of 2022. vent civil procedure rules has, however, been denied by the courts.

9.2 Are there any proposed reforms to consumer law or 7.7 Is there a statute of limitations for bringing stand- policy within the next 12 months? alone or follow on actions? In late 2019, the EU agreed upon the so-called “New Deal for The general statute of limitations applies, which in most cases Consumers”, which will require the Member States to imple- is three years. For violations of unfair competition law, the ment various new consumer protection rules. Most notably, limitation period is as short as six months. Claims based on a consumers will be granted direct claims for withdrawal from a competition infringement under sec. 33 and 33a GWB become contract and/or damages in case of a violation of unfair competi- time-barred after five years (sec. 33h para. 1 GWB). tion rules (which is not the case in Germany currently). Fines for unfair competition will be significantly increased to up to 4% of 7.8 Describe any international or regional cooperative the annual turnover, or up to EUR 2 million. Additional infor- mechanisms (e.g., MOUs) in which your jurisdiction is mation duties will be introduced, e.g. regarding the main param- involved in the enforcement of consumer protection. eters of online search results or listings, and companies will be obliged to ensure that product reviews are in fact done by actual In Germany, Regulation (EU) 2017/2394 on cooperation between customers. These regulations will have to be implemented by the national authorities responsible for the enforcement of consumer Member States from November 2021 onwards, and need to be protection laws applies. This EU Regulation aims to create a more effective within six months of that date at the latest. effective framework for cooperation in the field of consumer law Moreover, new European directives enhance consumer rights enforcement, in order to improve compliance with consumer regarding contracts on digital content and services, as well as for protection rules in the EU. products featuring such digital elements. The directives aim to assure conformity of content with the contract and remedies, in 82 Appeals the event of lack of such conformity or failure to supply. They must be transformed into national law by mid-2021. On a national level, a law for “fair consumer contracts” was 8.1 Describe any appeal processes. presented to the legislator in December 2020 and will likely be approved in 2021. The new law will provide, for example, For court decisions and/or orders of consumer authorities, appeal for additional time limitations for certain types of contracts proceedings exist. Depending on the relevant situation, these are (e.g. mobile phones, gyms), and introduce several new restric- mostly before the Higher Regional Courts (appeals against court tions for clauses used in general terms and conditions towards decisions) or before the administrative courts (appeals against consumers. It will also provide increased protection against decisions of administrative authorities). Depending on the exact contracts concluded via telephone (and related advertising). situation, a right of further appeal may exist. In addition, a recent amendment to the GWB touches upon consumer protection. Under the essential facilities doctrine, 8.2 Can consumers or retailers/manufacturers appeal market dominance can be concluded based on an undertak- decisions made by the consumer authority/authorities or ing’s access to competitively relevant data. This is to effectively by a court? ensure portability of such data which for consumers is a vital factor when switching between different operators (e.g. in the A party against which a court or administrative decision is field of social media). The power of intermediaries may also directed may appeal; third parties in general cannot appeal any be considered when assessing whether an undertaking is market such decision. They may, however, initiate an action themselves dominant. This ensures that equal access is granted to market- if they were affected by a company’s wrongdoing. places, so that consumers may benefit from more offers.

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Dr. Fabian Klein advises national and international clients in all areas of intellectual property (IP) and commercial law. His practice focuses on trademark law, unfair competition law and the protection of trade secrets. His practice includes the enforcement in contentious and non-contentious proceedings as well as giving advice on complex IP and commercial contracts, such as licence agreements, research and development agreements, and co-operation agreements. In addition, he has extensive expertise in advising on the IP and commercial aspects in M&A transactions. His clients include leading national and international companies from the technology, consumer goods, healthcare and aviation industries. Fabian studied law in Tübingen (Germany) and Madrid (Spain). He has almost a decade of experience in the IP/commercial field.

Ashurst LLP Tel: +49 69 97 11 27 18 Bockenheimer Landstraße 2–4 Email: [email protected] 60306 Frankfurt am Main URL: www.ashurst.com Germany

Dr. Michael Holzhäuser advises clients on all aspects of EU and German antitrust/competition law. As well as having strong multi-jurisdictional merger control experience, his practice focuses on defending companies in international antitrust proceedings for cartels or abusive practices before the German and European cartel authorities and courts. In addition, he specialises in the defence of companies in private follow-on cartel damages claims. His practice also includes advising enterprises on their commercial agreements (e.g. distribution systems, R&D-licence, JV or specialisation agreements) as well as in regulatory and EU law matters. Michael has extensive experience in developing and implementing comprehensive compliance systems and expert knowledge in conducting and coordinating internal investigations using state-of-the-art legal technology and project management.

Ashurst LLP Tel: +49 69 97 11 28 50 Bockenheimer Landstraße 2–4 Email: [email protected] 60306 Frankfurt am Main URL: www.ashurst.com Germany

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Denis Fosselard

Gabriele Accardo

Ashurst LLP Giulia Carnazza

12 General Directive 2005/29/EC and amending Directive 84/450/EEC on misleading advertising.

1.1 What legislation, regulations and guidelines are relevant to consumer protection in your jurisdiction? 1.3 Who is/which entities are required to comply with consumer protection law? Consumers’ rights are safeguarded by provisions in the Italian Civil Code and in Legislative Decree No. 206 of 6 September All traders must comply with the rules of the Code concerning 2005 (hereinafter the “Code” or the “Consumer Code”), unfair business-to-consumer (or micro-enterprises) commercial implementing EC Directive No. 29/2005. practices (see answer to question 4.1). As a result of Legislative Decree No. 146 of 2 August 2007, A “trader” is any natural or legal person who is acting for implementing Directive 2005/29/EC concerning unfair busi- purposes related to their trade, business, craft or profession, as ness-to-consumer commercial practices in the internal market well as anyone acting in the name of or on behalf of a trader and amending Directives 84/450/EEC, 97/7/EC, 98/27/EC, (Section 18(1)(b) of the Code). 2002/65/EC and Regulation (EC) No. 2006/2004, the Italian Manufacturers and distributors must comply with the provi- Competition Authority (“ICA”) is responsible for enforcement sions of the Code concerning product quality and safety (Part IV). of the Code in relation to unfair business-to-consumer practices A “producer” is the manufacturer of the product in the EU, as carried out before, during and after a commercial transaction. well as any other person(s) presenting themselves as the manufac- This chapter sets out enforcement of the Code rules by the turer by placing a name, trademark or other distinguishing mark ICA in relation to business-to-consumer commercial practices; on the product. The definition additionally includes the person however, it does not consider the rules on contracts entered into who reconditions the product, the manufacturer’s representative by consumers, which, pursuant to article 1469-bis of the Italian if the manufacturer is not established in the EU, the importer Civil Code, are governed by the general provisions of the Italian of the product, and other persons in the supply chain insofar as Civil Code (Title II), unless amended by the specific consumer their activities may affect the safety properties of a product. protection rules introduced in Italy by the Code, or by other A “distributor” is any professional undertaking which is rules that are more favourable to the consumer. active in the supply chain and whose activity does not affect the safety properties of a product.

1.2 What is the definition of “consumer” (i.e., who does consumer protection law protect)? 1.4 Which agency/agencies is/are responsible for enforcing consumer protection law (i.e., who is the investigator and who is the adjudicator)? Sections 3(a) and 18(1)(a) of the Code define “consumer or user” as the natural person acting for purposes other than trade, business, craft or profession. However, under Section 5 The ICA is the agency entrusted with powers to enforce the of the Code, concerning information provided to consumers, a Code, either ex officio or following complaints by consumers and consumer is any individual (natural person) who is the addressee consumer associations, as well as micro-enterprises. In some of commercial information. instances, the ICA has intervened following complaints by The protection against unfair commercial practices has been undertakings other than micro-enterprises. The ICA is both the investigator and the adjudicator. In further extended to so-called “micro-enterprises” (see Section 19(1) of the Code), i.e. entities, companies or associations with practice, a Case Team is tasked with the role of instructing the fewer than 10 employees and an annual turnover that does not investigation and bringing evidence before the ICA’s Board exceed EUR 2 million. Micro-enterprises are similarly safe- of Commissioners. All decisions concerning an investigation, guarded against misleading advertising, pursuant to Legislative including whether to impose fines, are adopted by the ICA’s Decree No. 145 of 2 August 2007, implementing Section 14 of Board.

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The ICA’s decisions can be appealed before the Regional 2.5 What remedies are available for a breach of the Administrative Tribunal of Lazio (“TAR”), which can, in protections in relation to the quality and function of turn, be appealed before the Council of State (Administrative goods and services? Supreme Court). Moreover, the Ministry of Economic Development (“MISE”) Typically, unfair commercial practices are subject to monetary is responsible for consumer protection policies and its local fines (see answer to question 4.4 below). offices are tasked with monitoring compliance of the rules and Furthermore, counterfeiting of geographic indications or enforcement powers, notably with regard to the general rules of designations of origin pertaining to agricultural and food prod- the Code concerning product quality and safety. ucts constitutes a criminal offence under article 517-quater of the The MISE has supervisory powers both on goods already Criminal Code. placed on the market and imports from non-EU countries. The MISE manages the Rapid Alert System – Non-Food (“RAPEX”) and may order the recall and withdrawal of unsafe 2.6 Who has or which agencies have standing to and risky products. initiate proceedings for a breach?

The ICA has the competence to enforce the Code in relation to 1.5 Are there any specific bodies that regulate/enforce consumer protection law in specific sectors? unfair business-to-consumer practices. The various Ministries apply sectoral regulations concerning product quality on the basis of their specific competences. Other than the MISE, other sector-specific bodies enforcing In case of a criminal offence, the competent authority is the product quality and safety rules are the Ministry of Health, the Criminal Court, and its decisions may be appealed before the Ministry of Economy and Finance, the Ministry of Welfare, the Criminal Court of Appeal. Ministry of the Interior and the Ministry of Infrastructure and Transport (depending on the nature of the product or service involved). 2.7 Describe at least two examples of public or private For instance, in relation to food products, the competent enforcement of these protections in the last five years, including the conduct/alleged conduct, result and authority is the Ministry of Health, which manages the Rapid penalties imposed. Alert System for Food and Feed (“RASFF”) and may order the recall or withdrawal of food from the market. In October 2020, the ICA fined Apple EUR 5 million, alleging 22 Protections in Relation to the Quality and that its “waterproof claims” misled consumers regarding the features of certain models of iPhone. In particular, Apple failed Function of Goods and Services to specify that the claims that the products concerned were water resistant for up to 30 minutes at depths of up to four metres only 2.1 Please describe any protections regarding the actually applied in controlled lab tests with pure water. In addi- quality and function of goods and services acquired by tion, Apple rejected consumers’ complaints of water damage, consumers. since these were not covered by the iPhone’s warranty. In January 2020, the ICA imposed a EUR 5 million fine on ENI Section 21 et seq. of the Code prohibits so-called “misleading in relation to an illegal claim that its Diesel+ fuel allegedly contrib- practices”, meaning commercial practices distorting the uted to reducing greenhouse emissions, and that the “green diesel” economic choices of consumers by, for instance, containing label for a highly polluting product was misleading in relation to false information or omitting relevant information in relation the environmental impact and the characteristics of ENI’s diesel. to the existence or nature of the product, or its main charac- In September 2018, the ICA imposed a fine of EUR 5 teristics (e.g. its availability, benefits, risks, execution, composi- million fine each on Apple and Samsung in relation to so-called tion, accessories, aftersales assistance and complaint handling, “planned obsolescence practices” concerning their respective method and date of manufacture or provision, delivery, fitness smartphone devices, insofar as they did not adequately inform for purpose, usage, geographical or commercial origin or the consumers about some essential characteristics of the batteries, results to be expected from its use, etc.). See also the answer to such as their average duration and deterioration factors, nor about question 4.1 below. the correct procedures to maintain, verify and replace batteries in order to preserve the full functionality of their devices. 2.2 Please outline the substantive tests for these protections. 32 Protections/Prohibitions in Relation to the Safety of Goods and Services Please see the answer to question 4.2 below. 3.1 Please describe any protections regarding the safety of goods and services acquired by consumers. 2.3 What types of goods and services are covered by the protections relating to the quality of goods and services? As noted, the Code prohibits misleading commercial practices that may induce consumers to take a transactional decision All goods and services are covered by the protections. that would not have been taken otherwise, e.g., in relation to the product characteristics and the risks involved in its use. See further information in the answer to question 4.1 below. 2.4 Are there any exceptions to these protections? Part IV of the Code specifically concerns measures addressing the safety of products (other than food products) to be put on Please see the answer to question 4.3 below. the market.

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Pursuant to Section 104 of the Code, producers may only put 3.6 Are there mandatory reporting requirements with safe products on the market. “Safe products” can be defined respect to the safety of goods or services? as any product which, under normal or reasonably foreseeable conditions of use, including duration and, where applicable, Where producers and/or distributors know or ought to know installation and maintenance, does not present any risk or only that a product that they have placed on the market poses the minimum risks compatible with the product’s use, considered hazards to consumers which are incompatible with general to be acceptable and consistent with a high level of protection for safety requirements, they are required to notify the competent the safety and health of persons. authorities immediately, specifying the actions taken to prevent Products that are not safe shall be recalled or may be subject to risk to consumers (Section 107 of the Code). Non-compliance withdrawal from the market (either voluntarily or upon request or delays to report are punished with an administrative fine of of the competent authorities). between EUR 1,500 and EUR 30,000 (Section 112 of the Code).

3.2 Please outline the substantive tests for these 3.7 Describe any voluntary or mandatory product protections. safety recall regimes.

With regard to misleading practices, please see the answer to The competent authorities can prevent dangerous products from question 4.2. being commercialised or order a ban or recall if the product is The MISE can order the recall of unsafe products that are already on the market. already placed on the market (see answer to question 3.7) or the If the product can be made compliant with safety requirements, withdrawal of unsafe products before they are placed on the the authorities may order that the manufacturer meets safety market. The assessment as to whether a product is unsafe is requirements before the product can be further commercialised. made on a case-by-case basis. Under Section 104 of the Code, a manufacturer may choose a voluntary recall when other actions are not sufficient to prevent 3.3 What types of goods and services are covered risks in the specific circumstances, or when the manufacturers by the protections relating to the safety of goods and consider the recall to be necessary. services? However, where there is an imminent risk to public health and safety caused by a dangerous product, the competent author- Pursuant to Section 102(6) of the Code, the provisions in Part ities can prohibit commercialisation and take necessary meas- IV, Title I of the Code apply to all products other than food ures to ensure compliance with any such prohibition. For an products pursuant to Parliament and Council Regulation No. unsafe product already placed on the market for which the 178/2002/EC of 28 January 2002. action already taken by producers and distributors is unsatisfactory or insufficient, the competent authorities can order a recall or organise an effective and immediate seizure and withdrawal 3.4 Are there any exceptions to these protections? of the unsafe product from the market. Consumers will then be informed about the risks presented by the unsafe product, with With regard to misleading practices, please see the answer to the cost met by the producer. The competent authorities will question 4.3. additionally notify the RAPEX system for an EU-wide recall. As regards the rules that determine only safe products may be put on the market, it is presumed that products bearing the 3.8 List at least two examples of public or private CE marking will typically meet EU health, safety, and environ- enforcement of these protections in the last five years, mental standards. In the same vein, absent EU rules, a similar including the breach/alleged breach, result and penalties presumption applies where the product meets the requirements imposed. of the Member State where the product is marketed. Food products (which fall outside the scope of Part IV, Title In November 2020, the ICA made mandatory commitments I of the Code) must be compliant with relevant EU regulations proposed by Amazon to solve the concerns arising from its sales (e.g. Regulation (EC) No. 1924/2006). activities of products related to the spread of COVID-19 carried out by third party vendors on its marketplace. Specifically, the 3.5 What remedies are available for a breach of the commitments related to the publication of advertisements and protections in relation to the safety of goods and the use of misleading claims for the sale of products that would services? have induced consumers to purchase them due to their alleged “anti-COVID-19” characteristics, as well as the considerable Misleading practices are sanctioned with monetary fines (up to increase in prices compared to the pre-pandemic period. EUR 5 million). In March 2020, the Ministry of Health ordered the with- Pursuant to Section 112 of the Code, unless the facts at issue drawal and recall of a type of tattoo ink originating from the would amount to a more serious criminal law infringement, pro- USA due to an allergenic risk due to the presence of abnormal ducers or distributors placing unsafe products on the market may levels of nickel and brass. be sanctioned with imprisonment between six months and one On 17 December 2019, the Ministry of Health ordered the year, and a monetary fine between EUR 10,000 and EUR 50,000. withdrawal and recall of the product Capsule Compatibili Dolce Gusto due to the risk of plastic particles being released from the capsule during the dispensing process.

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On 3 March 2017, the Ministry of Health ordered a prohi- 4.3 Are there any exceptions/exemptions to the bition on the national sale as well as the withdrawal and recall protections/prohibitions relating to Conduct? from the market of flying lanterns imported from China due to the presence of asbestos. In general, commercial practices cannot be considered misleading when they are not capable of distorting consumers’ 42 Prohibitions Relating to “Conduct” capacity to make an informed choice. Against Consumers Typically, a one-off conduct that is not widespread would be unlikely to be considered a “practice”. 4.1 Please describe any protections/prohibitions Pursuant to Section 20(3) of the Code, the common adver- relating to the conduct of persons or businesses (e.g., tising practice consisting of exaggerated statements or state- manufacturers/retailers) which sell or supply goods ments which are not intended to be taken literally cannot be and services to consumers (“Conduct”). For example, considered misleading. misleading and deceptive conduct, unconscionable conduct, etc. 4.4 What remedies are available for a breach of the protections/prohibitions relating to Conduct? Part II, Title III, of the Code prohibits traders from carrying out unfair commercial practices, which refers to any act, omission, course of conduct or representation, or commercial communi- Under Section 27 of the Code, the ICA may launch an investiga- cation including advertising and marketing by a trader directly tion ex officio or following a complaint. connected with the promotion, sale or supply of a product to Pending the investigation, the ICA can order the interim consumers (Section 18(1)(d) of the Code). suspension of the practice as a matter of urgency. Pursuant to Section 21 of the Code, a commercial practice If the ICA finds that the trader has carried out an unfair is misleading if it contains false information and is therefore commercial practice, it will prohibit the dissemination/contin- untruthful or in any way deceives or is likely to deceive the “average uation of the practice and may impose a fine of up to EUR 5 consumer” (a consumer who is reasonably well-informed, obser- million, depending on the seriousness of the infringement. vant and circumspect), and in either case causes or is likely to cause Additional fines can be imposed in case of non-compliance. him/her to take a transactional decision that he/she would not In principle, the ICA may (under certain circumstances) have taken otherwise. close proceedings by accepting commitments proposed by the Misleading practices additionally include misleading and/ trader, provided they are considered suitable to solve the orig- or comparative advertising (Legislative Decree No. 145 of 2 inal concerns. August 2007). Similar remedies are provided by Section 8(9) of Legislative Pursuant to Section 24 of the Code, a commercial practice Decree No. 145 of 2007, in case of misleading and comparative is aggressive if, by harassment, coercion (including the use of advertising. physical force), or undue influence, it significantly impairs or is likely to significantly impair the average consumer’s freedom of 4.5 List at least two examples of public or private choice or conduct with regard to the product and thereby causes enforcement of the protections relating to Conduct in him/her or is likely to cause him/her to take a transactional the last five years, including the breach/alleged breach, decision that he/she would not have taken otherwise. result and penalties imposed. A number of misleading and aggressive practices are blacklisted, respectively, in Sections 23 and 26 of the Code. In November 2020, the ICA fined HP EUR 10 million for the failure to provide relevant information to consumers purchasing 4.2 Please outline the substantive tests for the above- its printers, namely: (i) on the presence of an authentication mentioned protections/prohibitions. system which recognises genuine HP cartridges, and does not work with non-original parts, thereby limiting the use of non-original parts on HP printers; and (ii) regarding the collec- In order to assess whether a commercial practice might be consid- tion (without prior consent) of data related to specific cartridges ered misleading or aggressive, the ICA focuses its analysis on used (in particular if original or not), and refusal to provide whether the practice is in line with the professional diligence typi- assistance if non-original cartridges have been used. cally required and the effects on the average consumer’s economic In December 2019, the ICA fined both Wind Tre and behaviour, having regard to the product/service which is the Vodafone EUR 5 million in connection with their promotion of object of the commercial conduct. “personalised” win-back offers for mobile services, sent by text The ICA typically carries out a case-by-case assessment messages, without informing consumers of the various services of whether a commercial practice complies with the duty and/or options that would be activated in addition to the main of professional diligence, taking into account the corpo- offer, with additional costs, and therefore without their prior rate organisation of the trader in the sector concerned and the and express consent. information-asymmetry of consumers. In November 2018, the ICA fined Facebook EUR 10 million Practices can generally be characterised as misleading if they after finding that it misled consumers registering on its platform are capable of preventing the average consumer from making by not adequately and immediately informing them during the fully informed choices, regardless of whether consumers were setting up of the account that the users’ data would be used for actually deceived or the trader intended to deceive them.

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commercial purposes. The information provided by Facebook 5.3 Are there any exceptions/exemptions? was too generic and incomplete, and did not adequately make a distinction between the use of data to personalise the service Unfair terms. Some terms, mainly those related to price setting, and the use of data to conceive targeted advertising campaigns. which are considered unfair by Section 33(2) of the Consumer The ICA additionally found that Facebook carried out an Code, shall not apply to contracts relating to financial instru- aggressive practice, insofar as transmitting their data to third- ments or similar financial contracts. party websites/apps for commercial purposes, and vice versa, Moreover, terms that have been individually negotiated without the express and prior consent of the users, and imposed between the parties cannot be considered unfair, except those: significant restrictions on users who sought to change the excluding or limiting the trader’s liability in case of a consum- pre-selected consent settings. er’s death/harm caused by an action/omission of the trader; See also cases referred to in the answer to question 2.7. excluding or limiting the consumer’s actions or rights against the trader in the event of non-performance or incorrect perfor- 52 Other Protections/Prohibitions mance by the latter; or providing for the consumer’s acceptance of terms that he/she has never acknowledged before entering 5.1 Does consumer law in your jurisdiction have into the contract. any other prohibitions/protections not covered by On-premises contracts. Section 47 of the Consumer Code the questions above? If so, please describe these provides a list of contracts that do not fall within the rules prohibitions/protections. concerning on-premises contracts. Moreover, the pre-contractual information listed in Section 1(1), of the Consumer Code shall Unfair terms. Section 1341 of the Civil Code and Sections not be provided in case of contracts relating to daily transactions 33–38 of the Consumer Code provide that “unfair terms” in which are performed immediately upon their conclusion. consumer contracts shall be null and void. Unfair terms are Distance and off-premises contracts. Section 47 of the contractual terms that cause a significant imbalance in the Consumer Code provides a list of contracts that do not fall parties’ rights and obligations arising under the contract to within the rules concerning distance and off-premises contracts the detriment of the consumer, such as clauses excluding or and Section 59 of the Consumer Code provides a list of cases limiting the consumer’s actions or rights against the trader in in which the right of withdrawal is excluded; for instance, in the event of non-performance or incorrect performance by the the event of customised products, products with risk of dete- latter, or clauses authorising only the trader to withdraw from rioration, products whose value depends on fluctuations of the the contract. market, etc. On-premises contracts. Section 48 of the Consumer Code Other consumer protections. There are no applicable provides for minimal requirements relating to the information exceptions. that the trader shall provide to the consumer before entering into a contract. Distance or off-premises contracts. Sections 49–59 5.4 What remedies are available for a breach of these protections? of the Consumer Code provide for specific safeguards for the consumer who has entered into distance or off-premises contracts, notably concerning mandatory pre-contractual infor- Unfair clauses. Pursuant to Section 36 of the Consumer Code, mation, formal requirements of the contract and the right of unfair terms shall be void, while the remaining part of the withdrawal without cause at no cost. contract remains valid. Other consumer protections. Sections 61–65 of the If the ICA finds that the terms included in contracts between Consumer Code provide for further guarantees aimed at traders and consumers concluded by adhering to general terms avoiding any additional cost or burden for the consumer, notably and conditions or by signing forms or templates are unfair, it concerning: (i) the delivery of goods; (ii) the use of payment will order that the amended terms are published on the trader’s methods; (iii) the passing of risk; (iv) phone communications websites. If the trader does not comply, the ICA can impose a with the trader; and (v) additional payments. fine of up to EUR 50,000 (Section 37-bis of the Consumer Code). On-premises contracts, distance and off-premises contracts and other consumer protections. Section 27 of the 5.2 Please outline the substantive tests for the above- Code – as described above in answer to question 4.4 – applies mentioned protections/prohibitions. and therefore monetary fines may be imposed. Rules on class actions shall apply (see the answer to question Unfair terms. The assessment of the fairness of contractual 7.6 below). terms is based on the nature of the goods/services and all the circumstances at the time of entry into the contract, as well as the other terms of the contract or of another contract on which 5.5 List at least two examples of public or private it is dependent. enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties . It shall be assessed whether the On-premises contracts imposed. trader has provided the consumer with all the relevant information indicated in the law. Distance or off-premises contracts. It shall be assessed Between October and December 2020, the ICA closed several whether the consumer has been provided with all the rele- investigations against football clubs for having breached Section vant information and the possibility to exercise the right of 33 of the Consumer Code in relation to unfair terms and condi- withdrawal. tions for the sale of tickets. Specifically, the ICA assessed the Other consumer protections. It shall be assessed whether unfairness of those clauses that: (i) do not recognise the right of the contract disregards the safeguards and imposes the additional consumers to obtain reimbursement in cases where the match burdens/costs on the consumer, either directly or indirectly. is delayed/postponed (due to the stadium being closed); (ii) do not recognise the right of consumers to be compensated for

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damages if these events are directly attributable to the football regulatory authority (e.g. the Institute for the Supervision club; and (iii) grant the football club the power to unilaterally of Insurance, the Italian Communication Regulatory modify the contractual conditions and not to comply with the Authority, the Bank of Italy, etc.). rules on jurisdiction over consumer contracts. (iv) Decision-making. The final decision is adopted by the In May 2017, the ICA assessed that WhatsApp Inc. applied ICA’s Board. If the ICA concludes that the practice is certain unfair contractual terms, infringing Section 33 of the unfair, the party is ordered to desist its continuation and Code regarding its contractual relationship with consumers. to pay a fine. The ICA is additionally competent to accept Specifically, WhatsApp Inc. imposed unfair terms, such as: the trader’s commitments and make them binding (see also (i) a broad/general exclusion and limitation of its liability; (ii) its the answers to questions 4.4 and 5.4). unilateral right to interrupt the service, without reason/notice; Proceedings concerning the assessment of unfair terms and, (iii) its unilateral right to withdraw from the contract at any time in general, the legality of consumer contracts follow the same and for any reason; (iv) the right to unilaterally amend the terms procedure (with a few exceptions, e.g., no fines are imposed in of the contract by applying the “silence means consent” mech- the event of unfair terms). anism; (v) the imposition of the laws and courts of California as governing law and competent jurisdiction, respectively; (vi) 6.2 How is an investigation triggered (e.g., ex officio, the possibility to not fulfil “orders” and provide refunds; and whistleblower or complaint)? (vii) the predominance of the English version of the contract, excluding the most favourable interpretation for the consumer, regardless of the language in which the clause was drafted. The ICA may launch an investigation either ex officio, following In October 2016, the ICA fined Norwegian Air and Blue Air complaints by consumers, consumers’ associations, micro-en- EUR 170,000 for charging extra fees where payments for online terprises, competitors, or any individual that may be interested. purchases by consumers were made by credit card. For the first time, the ICA implemented article 62 of the Code. The low-cost 6.3 Describe any complaints procedure for (i) airlines did not comply with the new rule introduced as a result consumers, and (ii) businesses. of the transposition of Directive 2011/83/EU on Consumer Rights into Italian legislation. There are no specific formal requirements to submit a complaint; however, it is important to describe facts as precisely as possible, 62 Investigation of Potential Breaches including any supporting documentation. Consumers and businesses may submit a complaint by mail, 6.1 What powers does/do the consumer authority/ email or by filling in an online form (contacts and forms are authorities in your jurisdiction have to investigate available on the ICA’s website). potential breaches of consumer law? Describe the key steps in a typical investigation. 6.4 What is the timeline for a typical investigation?

The ICA’s investigations are administrative proceedings that The investigation phase shall start within 180 days from typically include the following steps: (i) the pre-investigation the receipt of a complaint. The proceedings should then be phase; (ii) the investigation phase; (iii) closing of the investiga- concluded within 120 days of the communication of the decision tion phase; and (iv) the decision-making phase. to open the proceedings to the party concerned, or 150 days if (i) Pre-investigation. The ICA collects background docu- the opinion of a regulatory authority is necessary or in proceed- mentation and carries out a preliminary assessment in order ings concerning unfair terms. If the party has its seat/registered to determine whether to open formal proceedings (possibly office outside Italy, the terms mentioned above are extended to launching an inspection of the premises of the trader). The 180 and 210 days, respectively. These terms for the conclusion of ICA typically closes the pre-investigation phase without the proceedings can be (further) extended by up to a maximum opening formal proceedings if: the complaint is inadmis- of 60 days if necessary, taking into account the complexity of the sible or ungrounded; consumer law is not applicable; the investigation or in case the trader submits commitments. trader has complied with ICA’s “moral suasion”; the practice was not capable of materially distorting consumers’ behaviour (e.g. negligible dissemination); or if the ICA has 6.5 Are there criminal penalties for non-compliance with a consumer law investigation? If so, provide other priorities. examples where such penalties have been imposed. (ii) Investigation. The ICA adopts a formal decision to open proceedings, which is addressed to the concerned trader(s) and all the interested parties that are requested to inter- No, there are no criminal penalties for non-compliance. vene. The ICA may additionally impose interim measures ordering the suspension of the alleged unfair commercial 6.6 Can investigations be resolved by way of practice. The ICA gathers additional documentation and commitments or undertakings? generally requests information from the parties during hearings. Within 45 days of the opening of the proceedings, Yes, except in the event of serious misleading commercial practice. the party under investigation may propose commitments to Following the submission of commitments (within 45 days meet the ICA’s concerns. from the launch of the proceedings), the ICA may: (i) accept the (iii) Closing of the investigation. The ICA sends a statement commitments, making them binding, and therefore close the of objections setting out the final charges, indicating the proceedings without making a finding on the infringement; (ii) date of the conclusion of the investigation and the dead- grant a deadline to have the commitments improved; or (iii) reject line within which the party can submit conclusive obser- the commitments on the basis that they are deemed unsuitable to vations or documents. When the case concerns regulated meet the concerns raised, or if the practice is manifestly unlawful sectors, the ICA shall request the opinion of the competent and serious.

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Once the commitments are made legally binding, the ICA may 7.6 Is there a right to a stand-alone action and follow automatically reopen the investigation if: (i) the trader has not on right of action within consumer law? Who has implemented the commitments; (ii) the underlying facts that led standing to bring these actions? to the acceptance of the commitments have changed; or (iii) the decision making the commitments binding is based on incom- There is no stand-alone or follow on right of action in relation to plete, incorrect or misleading information provided by the parties. unfair commercial practices, as in antitrust cases. However, under Section 140-bis of the Consumer Code, it is 72 Enforcement possible to bring a class action to assess the trader’s liability and seek damages and repayment. 7.1 How does/do the consumer authority/authorities Customarily, consumers have the right to bring an action for seek to enforce consumer law (for example, by damages before civil courts in cases relating to unfair terms, de- administrative decision or by commencing proceedings fective products or consumer contracts provisions (on-premises, in court)? distance and off-premises contracts as well as other consumer protections). The ICA is entrusted to adopt administrative decisions. The ICA’s Board is independent from the Case Team which carries 7.7 Is there a statute of limitations for bringing stand- out the investigation. alone or follow on actions? The decisions issued by the ICA are immediately enforceable. Therefore, the traders must immediately refrain from carrying According to Section 2946 of the Civil Code, action for damages out the concerned conduct and must pay the imposed fine. arising from contracts can be brought within 10 years from the infringement. Pursuant to Section 2947 of the Civil Code, 7.2 Is/are the consumer protection authority/ action for damages deriving from non-contractual liability can authorities bound by a time limit to commence be brought within five years from the event. proceedings on breaches? In case of defective products, Section 125 of the Consumer Code provides that the right to bring an action for damages can Please see the answer to question 6.4. be exercised only within three years from the day the consumer had knowledge or should have had knowledge of the damage.

7.3 Describe the enforcement powers/tools available to these bodies (civil, administrative, criminal). 7.8 Describe any international or regional cooperative mechanisms (e.g., MOUs) in which your jurisdiction is involved in the enforcement of consumer protection. The ICA has administrative enforcement powers. In particular, the ICA may: (i) carry out dawn raids to search the trader’s premises; (ii) send requests for information; and Italy has been a member of the International Consumer Protection Enforcement Network (“ ”) since 1992, (iii) request independent experts to provide technical and/or ICPEN which is an organisation consisting of consumer protection law economic evaluations, if required. enforcement authorities from across the world. Specifically, The ICA can order the trader to interrupt the practice and can ICPEN activities are aimed at sharing information regarding impose fines of up to EUR 5 million for each unfair commercial cross-border commercial activities that may affect consumer practice at issue. In addition, it can order the trader to publish interests and encouraging international cooperation and collab- the decision and to adopt all the necessary adjustments/remedies. oration among consumer law enforcement agencies.

7.4 Where regulators/enforcement bodies have 82 Appeals a choice of enforcement tools/powers, what considerations do they take into account in determining which tools/powers to use? 8.1 Describe any appeal processes.

The ICA is required to set enforcement priorities. If a commer- Decisions issued by the ICA may be challenged before the cial practice is not a priority, it may use methods such as advocacy administrative courts, notably the TAR (Latium) at first instance or moral persuasion, which require fewer resources. and before the Council of State at second instance. An appeal before the TAR must be submitted within 60 days of the notification of the ICA’s decision. This term is extended 7.5 Describe the relevant rules and procedures that by 30 days if the trader has its registered office outside Italy but must be followed by such bodies (e.g., administrative, within the European Union and by 90 days if the trader has its judicial). registered office outside the European Union. The ICA will submit its defence within 30 days of the notifi- Rules of procedure concerning misleading and comparative cation of the appeal. advertising, unfair commercial practices, consumer’s contracts The court then schedules the hearing, so the parties can and unfair terms are provided by the ICA’s Decision No. 25411 submit: (i) documents 20 days before the hearing; (ii) briefs of 1 April 2015 – Regulation on Investigation Procedures 15 days before the hearing; and (iii) replies 10 days before the Concerning Consumer’s Protection. hearing. Following the hearing, the court issues its judgment. The same deadlines apply to appeals before the Council of State.

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8.2 Can consumers or retailers/manufacturers appeal Overall, the focus of ICA enforcement will likely continue to decisions made by the consumer authority/authorities or be on online commercial practices, specifically if such practices by a court? are being carried out by “tech giants”. However, the ICA is also careful to assess the conduct of smaller companies when active The addressee of the decision can appeal it before the adminis- in the e-commerce sector, particularly with regard to failure to trative courts. deliver products, the provision of misleading information on the status of an order, or failure to reimburse the cost where an order has been cancelled. 8.3 Does an appeal suspend the effect of any penalty/ Furthermore, it is notable that Law No. 31/2020, which the requirement to pay any fine (if applicable)? entered into force in May 2020, provides the ICA with enforcement powers to investigate so-called “ambush marketing”, i.e. The appeal has no automatic suspensive effects. commercial practices concerning the unauthorised or false asso- However, the addressee of the ICA’s decision may ask the ciation of events in the public interest, ultimately interfering with administrative court for an interim measure in order to suspend the rights of event organisers and official sponsors. While it is the decision’s effects. As regards the payment of the fine, if any, primarily aimed at protecting the rights of events organisers and the court can make the suspension of the payment conditional official sponsors, consumers will additionally be safeguarded upon the provision of a guarantee. against false or misleading advertisement. Finally, the ICA is keen to tackle new marketing practices. This 92 Current Trends and Anticipated Reforms includes so-called “influencer marketing” on social media, which relies on the endorsement of products without mentioning 9.1 What are the recent enforcement trends in your the existence of a commercial relationship with the trader. jurisdiction? 9.2 Are there any proposed reforms to consumer law or In 2020, the ICA’s workload was particularly affected by policy within the next 12 months? the outbreak of the COVID-19 pandemic. Many businesses expanded their commercial activities online; however, not Law No. 31 of 12 April 2019 sets out certain provisions aimed at always in compliance with consumer law. Hence, the ICA modifying, inter alia, article 140-bis of the Consumer Code regu- opened several investigations against such businesses and lating class actions, and at amending the Civil Code accordingly. concluded 24 proceedings concerning practices relating to It was originally expected to enter into force in April 2020; the pandemic; these included the use of misleading claims, however, it has been postponed until May 2021. conditions on the repayment of loans, and reimbursement for Among other provisions, these new rules provide the possi- cancelled flight tickets. Post-COVID-19, it is likely that the ICA bility for any entity whose rights have been infringed, including will strengthen its focus on effective compliance with a broader consumers associations, to bring an action for infringement of variety of consumer protection rules, such as cost transparency, the Consumer Code, as well as the right for individuals to join the right to withdraw/receive a reimbursement, and the applica- the class action. tion of surcharges depending on the payment system.

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Denis Fosselard is a partner in the Competition and EU Law department. His practice focuses on all aspects of EU and Italian antitrust and consumer law. Denis has more than 20 years’ experience in advising leading European corporates in relation to antitrust behavioural and merger control cases as well as consumer law compliance. In addition, he has significant experience in assisting companies in State Aid investigations. Denis regularly represents clients before both the European Commission and the Italian Competition Authority, as well as the EU General Court and the Court of Justice in antitrust and other community law proceedings.

Ashurst LLP Tel: +32 2 641 9976 Avenue Louise 489 Email: [email protected] 1050 Brussels URL: www.ashurst.com Belgium

Gabriele Accardo is counsel in the firm’s Competition and EU Law practice, based in Milan. He has extensive experience in competition and EU law, as well as in developing areas of business law intersecting technological innovation issues, having also worked for more than 10 years in leading international firms in Brussels. He assists clients in EU, Italian and international antitrust merger procedures, cartel enforcement, distribution and dominance issues, as well as unfair commercial practices. He regularly represents clients in investigations before the Italian Competition Authority, the European Commission and related litigation proceedings before EU and Italian Courts.

Ashurst LLP Tel: +39 02 854 23430 Piazza San Fedele Email: [email protected] 2 – 20121, Milan URL: www.ashurst.com Italy

Giulia Carnazza is a senior associate in the Ashurst Competition and EU Law practice, based in Brussels. Her practice focuses on competition law and consumer protection. She provides assistance in merger control, cartel and abuse of dominant position proceedings, misleading and comparative advertising and unfair competition, both before national competition authorities and before the European Commission. She also deals with appeals before national and EU courts. Additionally, Giulia has experience in antitrust damages actions. She regularly provides out-of-court advice on antitrust and unfair competition.

Ashurst LLP Tel: +32 2 641 9942 Avenue Louise 489 Email: [email protected] 1050 Brussels URL: www.ashurst.com Belgium

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Japan Japan

Oki Mori

Nagashima Ohno & Tsunematsu Mai Umezawa

12 General For example, the Consumer Contract Act defines a “trader” as “a corporation or association, or an individual who becomes a party to a contract as a business or for business purposes”. 1.1 What legislation, regulations and guidelines are However, we use the term “business” in this chapter, unless relevant to consumer protection in your jurisdiction? otherwise noted, to refer to entities which are required to comply with consumer laws. There is no uniform code of consumer law in Japan. The most fundamental law for consumer protection is the Basic Act on 1.4 Which agency/agencies is/are responsible for Consumer Policies ( ). The act stipulates the shohisha-kihon-hou enforcing consumer protection law (i.e., who is the fundamental principles of consumer policy and responsibilities of investigator and who is the adjudicator)? businesses; however, it merely stipulates non-binding targets and political policies to be followed by the national government and does not stipulate the legal rights and obligations of citizens to The Consumer Affairs Agency (the “CAA”) is responsible for receive relief through court procedure. Specific rules on consumer investigating and enforcing many consumer protection laws, but protection are set out in a number of individual laws. For instance, such responsibility may differ depending on individual laws. there are laws that regulate businesses in specific industry sectors (e.g., the Act on Specified Commercial Transactions (toku- 1.5 Are there any specific bodies that regulate/enforce tei-shotorihiki-hou) (the “ASCT”) and the Installment Sales Act consumer protection law in specific sectors? (kappu-hanbai-hou)), as well as special laws of the Civil Code (e.g., the Consumer Contract Act (shohisha-keiyaku-hou) and the Product Other specific agencies, which regulate/enforce consumer Liability Act (seizobutsu-sekinin-hou)). Among these, with regard to protection laws, are described in the table below. the laws regulating businesses in specific industry sectors, detailed regulations are stipulated in subordinate norms such as Cabinet Regulatory/ Orders and Ministerial Ordinances, and in many cases, interpre- Law tations of these regulations are indicated in guidelines issued by Enforcement Agency supervisory authorities. Therefore, it is necessary to understand Ministry of Health, Act on Securing Quality, Efficacy these interpretations in order to correctly understand the contents Labour and Welfare and Safety of Products Including of the laws and regulations. Pharmaceuticals and Medical Devices ( yakki-hou) (the “APMD”) (which covers pharmaceuticals and 1.2 What is the definition of “consumer” (i.e., who does cosmetics, etc.). consumer protection law protect)? Ministry of Economy, Installment Sales Act (which Trade and Industry (the covers credit transactions, etc.). There is no unified definition of “consumer” that is common to “METI”) all consumer protection laws, and consumers or similar targets to be protected are often defined in individual laws. For example, Financial Services Financial Instruments and the Consumer Contract Act, which broadly regulates contrac- Agency Exchange Act (kinyu-shohin-torihiki- tual relationships between consumers and businesses, defines hou). “consumers” as “an individual, excluding those who become a Money Lending Business Act party to a contract as a business or for business purposes”. As (kashiking yo-hou). described above, individuals, excluding those who act as sole Ministry of Land, Real Estate Brokerage Act proprietors, in principle, are the targets to be protected. Infrastructure, (takkeng yo-hou). Transport and Tourism 1.3 Who is/which entities are required to comply with Ministry of Internal Act on Regulation of Transmission consumer protection law? Affairs and of Specified Electronic Mail (toku- Communications/CAA tei-denshimail-hou) (which regulates There is no unified definition of entities regulated by consumer spam mail and direct marketing). protection laws, and the definition is based on individual laws.

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22 Protections in Relation to the Quality and The HGQLA only covers some specific goods, including “textile goods”, “plastic goods”, “electrical appliances and Function of Goods and Services apparatus”, and “miscellaneous manufactured goods” used by general consumers in their daily lives, which are designated by 2.1 Please describe any protections regarding the a Cabinet Order as those whose quality is difficult for general quality and function of goods and services acquired by consumers to discern at the time of purchase, where there is a consumers. particular necessity to discern their quality. The Food Labeling Act covers all food and drinks. The Food In relation to laws that regulate labelling related to quality and Labeling Standards, which specifically stipulate labelling infor- function, which are necessary for consumers to select products mation, requires the labelling of nutrients in processed foods, etc. and services, there are laws such as the Act against Unjustifiable Premiums and Misleading Representations (keihin-hyoji-hou) (the 2.4 Are there any exceptions to these protections? “AUPMR”), the Household Goods Quality Labeling Act (kateiyohin-hinshitsu-hyoji-hou) (the “HGQLA”), the Food Labeling Act, and the Health Promotion Act (kenko-zoshin-hou). “Food” covered by the Food Labeling Act includes additives but excludes pharmaceuticals, etc. which are covered by the APMD.

2.2 Please outline the substantive tests for these protections. 2.5 What remedies are available for a breach of the protections in relation to the quality and function of goods and services? The AUPMR regulates misleading representations and the offering of excessive premiums in connection with a transaction. Among them, the following three types of regulations are Since these laws are fundamentally administrative laws, when stipulated for misleading representations: there are violations of these laws, the Commissioner of the I. Representation relating to the content of goods or services CAA, etc. takes administrative actions provided, however, that portrayed as being better than the actual content (unjust no administrative actions shall order regulated entities to help misrepresentation of the content of goods or services). victims recover from any damage suffered. In the case of viola- II. Representation of trade terms of goods or services tion of the AUPMR, the Commissioner of the CAA may order portrayed as being more advantageous than the actual the violating business to pay a surcharge; however, the paid terms (unjust misrepresentation concerning trade terms of surcharge must not be appropriated for consumer recovery. If goods or services). consumers seek relief from businesses, they must make a claim III. Other unjust misrepresentations (misrepresentations for compensation based on tort liability, etc. However, in cases designated by the Prime Minister). where a considerable number of consumers have incurred finan- Regulations I. and II. prohibit any representation that (i) cial damage according to a contract between the consumer and misleads general consumers into believing that the content or trade the business, and where certain requirements are satisfied, a terms of goods or services are significantly better or more advan- business certified by the Prime Minister (a “Specified Qualified tageous than the actual/competitive businesses’ goods or services, Consumer Organization”) may file a special lawsuit, “Court (ii) induces customers unjustly, and (iii) is likely to interfere with Proceedings for Redress for Damage”, against a business. If general consumers’ voluntary and rational choice-making. a request by a Specified Qualified Consumer Organization is Regulation III. governs the labelling of goods’ country of granted in the Court Proceedings for Redress for Damage, origin. For example, labelling using a country name or a national the damages can be recovered by paying a certain amount of flag, etc. other than the country of origin is prohibited, as this money to each consumer. This system came into effect in 2016; makes it difficult for general consumers to discern whether a however, there have been only four lawsuits filed as of the end product was produced in the country of origin. of December 2020. The HGQLA specifically stipulates what must be displayed Though it is not a remedy, in order to protect the inter- concerning the quality of household goods used by consumers ests of many unspecified consumers, Qualified Consumer on a daily basis and how they should be displayed for each Organizations certified as satisfying the requirements set by the product, etc. For example, regarding textile goods such as sweaters, it is stipulated that the composition of fibres, home Prime Minister are granted the right to demand an injunction washing, etc., care labelling, and the name and address or phone against certain unjust acts of business. In addition to certain number of the labeller shall be displayed. acts stipulated in the AUPMR and the Food Labeling Act, the The Food Labeling Act stipulates labelling standards for object of a demand for an injunction is limited to certain acts food for sale (matters to be labelled (e.g., name, allergen, pres- stipulated in the Consumer Contract Act and the ASCT. A ervation method, expiration date, ingredients, additives, nutri- Qualified Consumer Organization may file an action in order to tional value and caloric value, country of origin, etc.), and exercise its right to demand an injunction. matters to be complied with by businesses when labelling), etc. The concrete standards are stipulated by the Food Labeling 2.6 Who has or which agencies have standing to Standards (Cabinet Office Order), which are subsidiary stand- initiate proceedings for a breach? ards of the Food Labeling Act, for each category of processed foods, perishable foods, and additives. Essentially, the Commissioner of the CAA holds the authority of investigation and execution on the AUPMR. However, since 2.3 What types of goods and services are covered the CAA does not have offices nationwide, some authorities are by the protections relating to the quality of goods and delegated to local offices of the Japan Fair Trade Commission services? (and, in very exceptional cases, the ministry in charge of the business), and the prefectures have the authority to conduct The AUPMR broadly covers representations concerning the investigation and execution. Consequently, each of these organ- content and trade terms of goods or services supplied by businesses. isations may initiate an investigation for a breach.

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The HGQLA stipulates the administrative agencies holding 3.2 Please outline the substantive tests for these authority according to the type of business and the scale of busi- protections. ness to be investigated and enforced. The Commissioner of the CAA has the authority to receive a report submitted by a The Consumer Product Safety Act stipulates regulations below consumer and to investigate them, regardless of the type and on “Consumer Products” (i.e., any product supplied mainly for scale of the business. In addition, the Minister of Economy, use by general consumers in their everyday lives): Trade and Industry has the authority for: nationwide manufac- I. “Specified Products” (Consumer Products which are turers, labelling contractors and wholesale sellers; the Director- found to be highly likely to cause harm, particularly to General of Economy, Trade and Industry for manufacturers, the lives or health of general consumers, as specified by a labelling contractors and wholesale sellers at the level of only Cabinet Order. There are 10 in-scope products, including one jurisdiction of Economy, Trade and Industry; the prefec- pressure cookers for household use, riding helmets for tural governor for retail sellers at the level of only one prefec- two-wheeled motor vehicles or motorised bicycles, and oil ture; and the mayor for retail sellers at the level of only one city. heaters, amongst others). Technical standards have been The Food Labeling Act grants: the Commissioner of the CAA; established in order to prevent the occurrence of harm as the Minister of Agriculture, Forestry and Fisheries (excluding a result of these products. Manufacturers and importers, Liquor); the Minister of Finance (only Liquor); and the prefec- etc. of Specified Products are required to inspect the tural governors the authority to investigate. Specified Products; they cannot sell such products without labelling them with the PSC mark – – which indicates 2.7 Describe at least two examples of public or private that the products meet the technical standards. enforcement of these protections in the last five years, II. “Special Specified Products” (i.e., Specified Products for including the conduct/alleged conduct, result and which the manufacturers or importers thereof have not penalties imposed. sufficiently ensured the level of quality necessary to prevent the endangering of the lives or health of general consumers, The following are examples of the aforementioned protections as specified by a Cabinet Order. There are four in-scope being enforced: products, including baby beds and lighters, amongst I. In August 2017, the Minister of Agriculture, Forestry and others). Manufacturers and importers, etc. of Special Fisheries instructed a business which sold two imported Specified Products shall have their products inspected by processed food stuffs in subdivided packages without a Registered Conformity Inspection Body and may display labelling the country of origin, as required by the Food Labeling Act, that it should inspect the labelling of all food a PSC mark – – in order to confirm that the Special sold in retail stores affiliated to the business immediately, Specified Products meet the technical standards. and should sell food after promptly correcting the label- III. “Specified Products Requiring Maintenance” (i.e., ling to be in accordance with the Food Labeling Standards. Consumer Products that are found to be highly likely to cause particularly serious harm to the lives or health of II. In June 2020, the CAA ordered a cigarette manufac- general consumers arising from safety troubles, due to turer to pay a surcharge of approximately JPY 552 million deterioration caused by long-term use making the product under the AUPMR, because although the manufacturer unsafe, and which are specified by a Cabinet Order. There had made representations in advertisements displayed at are nine in-scope products, including bathtub water heating convenience stores, etc. about a limited-period promo- units, indoor installations, and built-in dishwashers, tion to receive discounts, etc., the manufacturer conducted amongst others). For these products, there are two systems the limited-period promotion repeatedly, changing adver- that have been established: (i) the Long-term Use Consumer tisements after the limited period had passed. This is the Product Safety Inspection System; and (ii) the Long-term highest surcharge under the AUPMR so far. Use Consumer Product Safety Indication System. (i) The Long-term Use Consumer Product Safety 32 Protections/Prohibitions in Relation to Inspection System stipulates obligations on manufac- the Safety of Goods and Services turers or importers of Specified Products Requiring Maintenance to set the design standard use period 3.1 Please describe any protections regarding the (the standard period of use without any safety trouble), safety of goods and services acquired by consumers. inspection periods, and indication of such periods, etc. on the product. This system also requires the As administrative regulations, there are the Consumer Product owners of Specified Products Requiring Maintenance Safety Act (shohiseikatsuyo-seihin-anzen-hou), the Act on Control of to provide the owners’ information with manufac- Household Products Containing Harmful Substances, ( yugaibus- turers or importers, and to conduct maintenance such shitsu-kateiyohin-kisei-hou) and the Food Sanitation Act, amongst as inspections. others. As a civil regulation, the Product Liability Act is of (ii) The Long-term Use Consumer Product Safety particular importance. Despite not being under the jurisdiction Indication System requires manufacturers or importers of the CAA, the Electrical Appliance and Material Safety Act to display warnings about the design standard period of use and deterioration, etc., and is applied to prod- (denkiyohin-anzen-hou), the Road Transport Vehicle Act (doro-un- ucts with no high risks of serious accidents due to dete- so-sharyo-hou) which regulates the safety of cars, and the APMD rioration over time but with a large number of accident are nonetheless important. reports (there are six in-scope products: fans; venti- lators; air conditioners; CRT TVs; automatic washing machines; and double-drum washing machines).

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The Food Sanitation Act prohibits the sale of food and addi- other product, concerning the other product’s design, and where tives that (i) have deteriorated, (ii) contain or are suspected to the manufacturer, etc. is not negligent with respect to the occur- contain toxic or harmful substances, (iii) are contaminated or rence of such defect. suspected to be contaminated with pathogens, or (iv) involve a risk to human health due to contamination by foreign substances, 3.5 What remedies are available for a breach of the or on other grounds. The Minister of Health, Labour and protections in relation to the safety of goods and Welfare can establish the criteria for the methods of producing, services? processing, using, cooking, or preserving food or additives and establish standards for the ingredients. Since the Consumer Product Safety Act and the Food Sanitation The Product Liability Act shall cause the manufacturer or Act are fundamentally administrative laws and regulations, if importer, etc. to be liable for damages arising from the infringe- there are cases that violate these laws, the Minister of Economic, ment on life, body or property which is caused by a defect in the “Product” (a movable property which is manufactured or Trade and Industry takes administrative measures based on the processed). “Defect” refers to a lack of safety that the Product former, and the Minister of Health, Labour and Welfare takes ordinarily should provide, taking into account the nature of on the latter, provided, however, that no administrative dispo- the Product, the ordinarily foreseeable manner of use, the time sition shall help the victims recover from the damage. In order of delivery, and other circumstances concerning the Product. for a consumer to seek remedies from a business, it is necessary Product liability is a responsibility without fault of the manu- for the consumer to make a claim for damages on the basis of facturers, etc. tort liability or product liability. Additionally, the system Court Proceedings for Redress for Damage described in question 2.5 is not available in cases in which the safety of goods or services 3.3 What types of goods and services are covered is problematic, since it is restricted to contract-related disputes by the protections relating to the safety of goods and and, furthermore, excludes life and bodily injury. services?

The Consumer Product Safety Act covers “Consumer Products”; 3.6 Are there mandatory reporting requirements with respect to the safety of goods or services? namely, any product to be supplied mainly for use by general consumers in their everyday lives. The Food Sanitation Act covers all food and drinks as well The Consumer Products Safety Act stipulates that a manufac- as additives, except pharmaceutical products, etc. In addition, turer or importer who comes to know that “Serious Product there are also restrictions on (i) apparatus such as tableware, Accidents” (i.e., a fatal accident, accident in which an injury or (ii) containers and packaging, and (iii) toys that may harm the disease which requires no less than 30 days for medical treatment health of infants when they touch them. has been caused, accident in which a physical disability specified The Product Liability Act covers “products”; namely, a by a Cabinet Office Order has been caused, carbon monoxide movable property which is manufactured or processed. poisoning accident, or fire (recognised by the fire authority)) have occurred with any Consumer Products must report to the Commissioner of the CAA the name and type of the Consumer 3.4 Are there any exceptions to these protections? Products, a detailed account of the incidents, and the quantity of the Consumer Product that the person manufactured Under the Consumer Products Safety Act, the following prod- or imported, within 10 days of becoming aware of the Serious ucts have their safety regulated by other individual laws and are Product Accidents with regard to the Consumer Products. subject to such regulations, thus are excluded from Consumer Product Accidents that do not amount to Serious Product Products (regulatory laws are in brackets below): Accidents are not subject to reporting obligations under laws ■ ships (Ship Safety Act); and regulations. However, according to the guidelines, manu- ■ food, additives and detergents (Food Sanitation Act); facturers, importers, retailers, and repair businesses of prod- ■ machines or tools, etc. subject to inspection, and machines ucts are required to submit reports to the National Institute of or tools, etc. subject to self-labelling (i.e., machines or Technology and Evaluation (“NITE”) in the prescribed format. tools, etc. used for fire defence as specified by a Cabinet Order) (Fire Service Act); ■ poisonous substances and deleterious substances (Poisonous 3.7 Describe any voluntary or mandatory product safety recall regimes. and Deleterious Substances Control Act); ■ road transport vehicles (Road Transport Vehicle Act); ■ containers for filling high-pressure gas (High Pressure The Food Sanitation Act, the Food Labeling Act, the Consumer Gas Safety Act); Products Safety Act, the Road Transport Vehicle Act, etc. stipu- ■ hunting guns (Ordnance Manufacturing Act); and late the recall order based on the law. However, the administra- ■ medicines, quasi-medicines, cosmetics, medical devices tive agency has discretion to decide whether or not to issue the and regenerative medicine products (APMD). recall order. In practice, manufacturers, etc. voluntarily recall in The Product Liability Act exempts the manufacturer or many cases and the recall order is rarely issued. Even if manu- importer, etc. from liability on the grounds that: (i) the defect facturers, etc. voluntarily recall the Consumer Products, the busi- of such product could not have been discovered given the state ness submits a notice of starting product recall and a periodic of scientific or technical knowledge at the time when the manu- report on the progress of the recall, etc. to the METI. However, facturer, etc. delivered the product; and (ii) in cases where the this is not a legal obligation which is required by the guideline. product is used as a component or raw material of another In addition, the Food Sanitation Act and the Food Labeling product, the defect occurred primarily as a result of the compli- Act, which was amended and will be enforced on June 1 2021, ance with the instructions given by the manufacturer of the have introduced a new regulation that requires businesses to report information on voluntary recalls to administrative organs.

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3.8 List at least two examples of public or private material information, or information related to a piece enforcement of these protections in the last five years, of material information, would be advantageous to including the breach/alleged breach, result and penalties the consumer, and intentionally failing to convey a imposed. fact regarding that piece of material information that would be disadvantageous to the consumer. The following are examples of the aforementioned protections II. Overwhelming being enforced: Causing a consumer to manifest an intention to be bound I. In response to a fatal accident that was suspected to be by the offer of a consumer contract, or by the acceptance caused by an abnormality in the components of an air bag of an offer for such contract, as a result of being over- mounted in a vehicle, in December 2019, the Ministry of whelmed due to the business. This refers to engaging in Land, Infrastructure, Transport and Tourism instructed an action when soliciting the consumer to enter into the seven manufacturers of vehicles with air bags suspected to consumer contract such as: be the cause of the accident to report the results of inves- (i) failing to leave the consumer’s residence, etc. in defi- tigations on the cause of the accident and the necessity of ance of the consumer’s request that the business leave recall, based on the Road Transport Vehicle Act. such place; II. In February 2018, the Kyoto District Court gave the first (ii) inflaming a consumer’s anxiety and telling the decision on a case where many consumers filed lawsuits consumer that it would be difficult to maintain his/her nationwide based on the Product Liability Act, insisting lifestyle without a contract, knowing that a consumer that they had allergic reactions to wheat by using facial is excessively anxious about maintaining their current soaps shipped and sold between 2004 and 2010. The lifestyle due to declining judgment by ageing or phys- court approved the liability of a soap manufacturer and ical disorder; or ordered payment of a total of JPY 9.2 million. Since then, (iii) making it extremely difficult to restore the orig- several court decisions have approved the liability of the inal state, prior to performing the obligations of the soap manufacturer; however, as for the liability of the raw contract, by performing all or part of the obligations material manufacturer, the decisions of the court vary, i.e., that must be assumed if the contract were concluded, some decisions approved liability while others dismissed it. before the contract is concluded. The ASCT regulates the specific transactions below which are 42 Prohibitions Relating to “Conduct” likely to cause consumer issues: Against Consumers (1) Door-to-Door Sales (transactions such as the sale of goods or the provision of services at a consumer’s residence, etc., 4.1 Please describe any protections/prohibitions or unscrupulous sales on the street). relating to the conduct of persons or businesses (e.g., (2) Mail Order Sales (transactions for which a business has manufacturers/retailers) which sell or supply goods received a consumer’s offer by postal mail or internet, etc.). and services to consumers (“Conduct”). For example, (3) Telemarketing Sales (transactions for which a business misleading and deceptive conduct, unconscionable conduct, etc. telephones a consumer and solicits him/her during the phone call and receives an offer by the consumer). (4) Multilevel Marketing Transactions (transactions of goods The Consumer Contract Act regulates unjust solicitations or services, wherein a person is induced to sell such goods (misleading, overwhelming) and unjust contractual provisions or services by the possible receipt of a profit, and trans- for consumers. actions that involve burden being carried out with such a The ASCT prohibits unjust solicitation, obligates delivery of person). documents, and prohibits false or misleading advertisement for (5) Provision of Specified Continuous Services (transactions specific commercial transactions such as Door-to-Door Sales, in which continuous services which will increase the recip- Mail Order Sales, and Multilevel Marketing Transactions, in ient’s physical beauty, or increase the recipient’s knowledge accordance with the characteristics of each transaction type. or skills, etc. exceeding a certain amount, are provided). (6) Business Opportunity Sales Transactions (transactions 4.2 Please outline the substantive tests for the above- in which a consumer is solicited on the grounds that the mentioned protections/prohibitions. consumer will receive income through engaging in business activities and causes the consumer to buy and bear the The Consumer Contract Act regulates unjust solicitations and cost of goods, etc. said to be necessary for such business unjust contractual provisions for consumers. As for the undue activities). solicitations, it regulates two categories below: (7) Door-to-Door Purchases (transactions in which a business I. Misleading visits a consumer’s residence, and purchases goods, etc.). Causing a consumer to be under a mistaken belief and, as a (8) Goods Sent in Absence of Sales Contract Therefor (trans- result of such belief, to manifest the intention to be bound actions in which a seller sends goods to a consumer who by the offer of that consumer contract or by the accept- has not applied for such goods, deeming that he/she is ance of the offer for such contract, through the actions willing to purchase the goods and charges for them unless below, in which the business engages when soliciting the he/she returns the goods). consumer to enter into the consumer contract: In (1), (3), (4), (5), (6) and (7), delivery of a sales contract is (i) conveying something that diverges from the truth obliged and unjust actions (conveying false information, inten- with regard to a piece of material information; tionally failing to disclose facts, etc.) are prohibited. In (2), what (ii) providing a conclusive assessment of something whose is to be indicated is stipulated, and misleading advertising and behaviour in the future is uncertain; or sending email advertising to a person who has not given his/her (iii) conveying to the consumer that a piece of consent is prohibited.

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4.3 Are there any exceptions/exemptions to the of the Consumer Contract Act, indicating that a busi- protections/prohibitions relating to Conduct? ness stipulated in membership terms and conditions that the business could revoke membership “if the Company reasonably determines that [a member] causes nuisance to The regulations of Door-to-Door Sales, Mail Order Sales, other members” and “if the Company reasonably deter- Telemarketing Sales, Provision of Specified Continuous Services, mines that [a member] is not suitable as a member”. In and Door-to-Door Purchases do not apply to cases in which the addition, the business stipulated that “even if a member person offering the service concludes a contract for business suffers damage as a result of the Company’s action, the purposes or as a part of business, or to cases in which goods Company shall not be liable for any damages whatsoever”. or rights are sold, or services are provided, to persons residing These provisions were significantly vague, and the Court outside Japan, etc. held the provision which stipulated that the business The Consumer Contract Act does not apply to labour would not be liable for damages to be an unjust provision contracts. completely exempting a business from liability to compensate a consumer for damage arising from default or a tort 4.4 What remedies are available for a breach of the by the business. protections/prohibitions relating to Conduct? II. Between December 2019 and January 2021, the CAA ordered administrative dispositions such as business The Consumer Contract Act provides two remedies. Firstly, suspension under the ASCT against six business compa- with regard to contracts induced by solicitations that mislead or nies as a result of these companies engaging in fraudulent overwhelm consumers, the right to rescind a contract is granted. conduct in relation to periodic purchases, such as label- It also stipulates that provisions which unjustly harm the inter- ling in a manner that made it impossible for consumers ests of consumers shall be null and void. By exercising the right to easily recognise that such purchases were periodic of rescission, consumers are entitled to receive a refund of the purchases; this fell under conduct through which a busi- amount already paid due to the restoration duty, and as a result, ness sought to cause a consumer to offer a contract against they are able to recover from the damage. Consumers can be the consumer’s will regarding Mail Order Sales regulated relieved from their obligation to make payments, etc., by invali- by the ASCT. dation of a contractual clause. Since the ASCT legislation is administrative in nature, the 52 Other Protections/Prohibitions Commissioner of the CAA imposes administrative dispositions on businesses that violate the ASCT; however, administrative 5.1 Does consumer law in your jurisdiction have dispositions shall not order businesses to help victims recover any other prohibitions/protections not covered by from damages. In addition, the ASCT stipulates a cooling-off the questions above? If so, please describe these system, which allows the consumer to cancel the contract uncon- prohibitions/protections. ditionally, within a certain period of time, from the delivery of a contract document describing the matters stipulated by laws and The Act on Sales, etc. of Financial Instruments obligates finan- regulations as effective in civil affairs (name of business, date cial instrument providers, etc. to explain a risk of loss of prin- of conclusion of contract, etc.). If the contract document is not cipal and important portions of the transaction structure when delivered, or if there is a defect in the document, the cooling-off selling financial instruments, such as savings and insurances, period does not commence; thus, the cooling-off period can be and prohibits the provision of conclusive evaluations on uncer- set at any time, and the consumer can recover from the damage tain matters. as a result. Additionally, if a business conveys false information The Installment Sales Act obligates the business to indicate or intentionally fails to disclose facts and the consumer misap- terms and conditions of instalment sales, etc. and prohibits prehends and concludes a contract, the consumer may rescind credit sales exceeding the credit limit. the contract. Furthermore, if the business has concluded a The Money Lending Business Act regulates moneylenders contract for Door-to-Door Sales or Telemarketing Sales of a offering products such as consumer loans, and prohibits mali- quantity that considerably exceeds what is normally required in cious collection and loans exceeding the amount of one-third daily life, and the seller has been aware of the excessive amount, of annual income. the consumer may rescind the contract within one year from the Additionally, in the revised Civil Code which came into effect time of the conclusion. on April 1 2020, new rules have been established regarding In addition, the Court Proceedings for Redress for Damage pre-formulated terms and conditions such as the terms of conducted by a Specified Qualified Consumer Organization, as service of email order services and insurance contracts: “the described in question 2.5, may be available. standard terms of contract” (teikei-yakkan). While it is not a remedy, a demand of injunction by a Qualified Consumer Organization is stipulated for specific acts indicated by the Consumer Contract Act and the ASCT. 5.2 Please outline the substantive tests for the abovementioned protections/prohibitions.

4.5 List at least two examples of public or private enforcement of the protections relating to Conduct in The Act on Sales, etc. of Financial Instruments: (i) obligates the last five years, including the breach/alleged breach, financial instruments providers, etc. to explain the important result and penalties imposed. facts such as a risk of incurring a loss of principal or exceeding the initial principal, or restrictions on the exercising of rights; and (ii) prohibits the provision of conclusive evaluations on The following are examples of these protections being enforced: uncertain matters. I. In November 2020, the Tokyo High Court upheld a claim The Installment Sales Act stipulates the obligations of the seeking an injunction on the conclusion of consumer business for each type of contract category. For example, with contracts including a provision which was in violation respect to a contract that uses a credit card – in which the credit

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card is used to purchase goods by presenting the card to a seller is disadvantageous to consumers, and if this amendment does after predetermining the usage limit amount and payment terms, not satisfy the conditions that the amendment runs afoul of the etc. – the obligation to deliver a document stating the transac- purpose of the contract and is reasonable in light of the circum- tion terms and to investigate the payable amount are stipulated. stances concerning the amendment, etc., the amendment will The Civil Code stipulates that in order to conclude contracts not bind the counterparty. by the standard terms of contract, it must be agreed that the standard terms of contract as the terms of contract will be 5.5 List at least two examples of public or private applied. Alternatively, the intention to apply the standard enforcement of these protections in the last five years, terms of contract as the terms of the contract must be made including the breach/alleged breach, result and penalties apparent to consumers in advance. If a business amends the imposed. standard terms of contract in a manner that is disadvantageous to consumers, the amendment must not run afoul of the purpose Recent examples of these protections being imposed include: of the contract and must be reasonable considering the circum- I. In January 2020, the Tokyo Metropolitan Government stances concerning the amendment, etc. issued to a corporation an order for business improvement, on the ground that the corporation which provided loan 5.3 Are there any exceptions/exemptions? services for individuals provided loans which exceeded one-third of the annual income regulated by the Money The provisions of explaining the duty of the Act on Sales, etc. of Lending Business Act. Financial Instruments do not apply when a customer is a person II. In February 2019, the METI ordered a registered indi- specified by a Cabinet Order as having expert knowledge and vidual credit purchase intermediary to take necessary experiences on sales, etc. of financial instruments. measures to improve their business operations according Many provisions of the Installment Sales Act do not apply in to the Installment Sales Act because it did not prop- cases where a person concludes contracts for business purposes erly investigate the cause of complaints from purchasers or as a part of its business. regarding unjust solicitation, etc. The regulations under the Civil Code in respect of the standard terms of contract only apply to cases where terms and 62 Investigation of Potential Breaches conditions fall under “the standard terms of contract” (teikei- yakkan). The Civil Code sets forth that “the standard terms of 6.1 What powers does/do the consumer authority/ contract” are a collection of provisions prepared by a specific authorities in your jurisdiction have to investigate person with the purpose of applying them as the terms of a potential breaches of consumer law? Describe the key contract for a standard transaction. A “standard transaction” steps in a typical investigation. as defined here refers to a transaction conducted by a specified person with an unspecified and large number of persons as the Each law stipulates the investigative authority of each admin- counterparties, in which the uniformity of the whole or part of istrative organ. For example, the ASCT gives the competent the transaction is reasonable to both parties. Therefore, in cases minister the authority to: (i) order businesses to submit reports where terms and conditions do not fall under this definition, and to submit books and documents; (ii) conduct on-site inspec- the regulations in respect of the standard terms of contract will tions of places of business such as stores; and (iii) question not apply. workers. Similar authority is often given to administrative organs under other consumer laws. In practice, however, it is 5.4 What remedies are available for a breach of these often the case that businesses are asked to cooperate in investi- protections? gations (so-called “voluntary investigations”) before exercising such right to investigate. Under the Act on Sales, etc. of Financial Instruments, a customer may claim damages from the providers, etc., of the financial instru- 6.2 How is an investigation triggered (e.g., ex officio, ments in the event of a violation of the provisions concerning the whistleblower or complaint)? obligation of explanation and provision of conclusive evaluations. In this case, the providers, etc. are liable without fault, and the loss There are various ways in which investigations are triggered, of principal is presumed to be the amount of damage incurred to such as the provision of information from related businesses or the customer. organisations and general consumers, ex officio detection, and The Installment Sales Act stipulates the cooling-off of indi- whistleblowing. vidual credit agreements used for Door-to-Door Sales, etc. In order to collect and compile records of complaints regarding Furthermore, the act stipulates: the right to rescind the case of consumer affairs, the “PIO-NET” system has been established conveying false information; that the right to terminate the indi- for the purpose of connecting the National Consumer Affairs vidual credit contract will be granted in the case of excessive Center with Consumer Affairs Centers nationwide. Through sales; and that consumers are entitled to receive a refund of the the information collected on PIO-NET, Consumer Affairs advance payment by exercising these rights. Centers are able to inform the CAA of matters worthy of As for the regulations regarding the standard terms of attention/investigation. contract under the Civil Code, if a business fails to agree to The Consumer Product Safety Act and the ASCT, etc. stip- apply the standard terms of contract as the terms of contract, ulate that if any person finds it to be likely that the interests of or fails to make the intention to apply the standard terms of consumers will be prejudiced, the person may notify the compe- contract as the terms of the contract apparent to consumers in tent minister to that effect and request that appropriate meas- advance, the provisions of the standard terms of contract will ures be taken, and, if the minister finds the report compelling, not be applied as the terms of a contract. In addition, if a busi- he/she is obligated to conduct the necessary investigations and ness amends the standard terms of contract in a manner that take measures.

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6.3 Describe any complaints procedure for (i) 7.3 Describe the enforcement powers/tools available to consumers, and (ii) businesses. these bodies (civil, administrative, criminal).

The procedures for filing a complaint are stipulated in the It depends on individual laws. Many laws that regulate busi- Administrative Procedure Act, which specifies common rules nesses in specific industry sectors, such as the Installment Sales for administrative activities. Where an administrative agency Act and the Money Lending Business Act, stipulate criminal renders adverse dispositions under laws and regulations to a penalties in addition to administrative guidance and dispo- designated specified person (business), the administrative agency sitions. The Consumer Contracts Act, which is a civil law, shall take procedures for statements of opinions. There are two provides only for civil remedies, such as the right to rescind or types of procedures for a statement of opinions: (i) procedures the invalidation of contract provisions (except for the proce- for hearings; and (ii) grants of opportunity for explanation. dures for the certification of Qualified Consumer Organizations This is, however, provided that there are no specific consumer and Specified Qualified Consumer Organizations). The ASCT complaint procedures for investigation into the business. provides, in addition to civil remedies such as cooling-off and cancellation rights, for administrative measures in case of viola- 6.4 What is the timeline for a typical investigation? tion, as well as criminal penalties.

In general, the authority to investigate under laws and regula- 7.4 Where regulators/enforcement bodies have tions is rarely exercised; voluntary investigations are carried out a choice of enforcement tools/powers, what first, and the authority to investigate laws and regulations may be considerations do they take into account in determining exercised as necessary. Under the ASCT, the Commissioner of which tools/powers to use? the CAA initially requests consumers and businesses to submit materials voluntarily and to explain their circumstances. If it is Essentially, administrative agencies have the discretion to decide deemed necessary to enforce the ASCT, the orders are issued whether to impose administrative dispositions, to limit them to businesses, etc. for the collection of reports, the submission to administrative guidance, or to decide what kind of meas- of materials, etc., and on-site inspections. The period of inves- ures should be taken in the case of administrative dispositions. tigation varies depending on the laws and regulations or cases; However, with regard to the payment order for surcharge under however, in recent years it is not uncommon for investigations the AUPMR, the Commissioner of the CAA has no discretion to last for over a year. and must issue the surcharge order when the case meets the requirements of the law. 6.5 Are there criminal penalties for non-compliance with a consumer law investigation? If so, provide 7.5 Describe the relevant rules and procedures that examples where such penalties have been imposed. must be followed by such bodies (e.g., administrative, judicial). Individual laws by jurisdiction may stipulate criminal punishment in the event of refusal to cooperate with investigations, In general, when the competent minister imposes administra- false reports, obstruction, or evasion of on-site inspections, etc. tive dispositions stipulated in the consumer laws, the compe- For example, under the ASCT, if a seller, etc. fails to submit a tent minister must comply with the Administrative Procedure requested report, provides a false report, or avoids an on-site Act, which provides that in the case of adverse disposition, such inspection, the seller, etc. is subject to imprisonment for not as an order for business suspension, the minister shall provide more than six months or a fine of not more than JPY 1 million. the person to whom the adverse disposition is to be designated with the reasons for the disposition and provide an opportunity for explanation. 6.6 Can investigations be resolved by way of commitments or undertakings? 7.6 Is there a right to a stand-alone action and follow There is no such system in Japan. on right of action within consumer law? Who has standing to bring these actions? 72 Enforcement There are no follow-on actions in Japan. However, under the Act on Special Measures Concerning Civil Court Proceedings 7.1 How does/do the consumer authority/authorities seek to enforce consumer law (for example, by for the Collective Redress for Property Damage Incurred by administrative decision or by commencing proceedings Consumers, the “Court Proceedings for Redress for Damage” in court)? system has been established in order to address lawsuits. Under the proceedings, in order to collectively recover the damage suffered by a considerable number of consumers, a Specified In Japan, there is no system of filing to enforce consumer laws; Qualified Consumer Organization (a Qualified Consumer however, the competent minister may enforce consumer law by Organization that meets additional requirements) seeks declara- administrative decision. tory judgment on common obligations to consumers at the first stage, and, if a judgment upholds the obligation of a business to 7.2 Is/are the consumer protection authority/ pay money, at the second stage, the amount of the claim is deter- authorities bound by a time limit to commence mined through Simple Determination Proceedings in which the proceedings on breaches? consumer participates, and the amount of the claim is finally determined. The amount is then paid to the consumers through There is no time limit for the commencement of procedures by the Specified Qualified Consumer Organization. the competent minister.

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7.7 Is there a statute of limitations for bringing stand- 8.3 Does an appeal suspend the effect of any penalty/ alone or follow on actions? the requirement to pay any fine (if applicable)?

Claims subject to Court Proceedings for Redress for Damage The filing of a request for review or an administrative lawsuit are limited to certain monetary payment obligations borne by does not automatically suspend the liability to pay penalties, a business against a consumer concerning consumer contracts, etc. In order to prevent the entry into force of an administra- and claims such as those for consolation money, medical tive disposition, it is necessary to file a provisional disposition expenses, and lost profits are excluded from the scope of claims. with the court requesting a stay of execution, based on which the court has the authority to uphold the claim and issue an order of suspension of execution. 7.8 Describe any international or regional cooperative mechanisms (e.g., MOUs) in which your jurisdiction is involved in the enforcement of consumer protection. 92 Current Trends and Anticipated Reforms

Japan is a member of the Organisation for Economic 9.1 What are the recent enforcement trends in your Co-operation and Development (“OECD”) Committee on jurisdiction? Consumer Policy (“CCP”) and the International Consumer Protection and Enforcement Network (“ICPEN”). Four With the spread of COVID-19, the CAA called consumers’ atten- consumer organisations, including Consumers Japan, are tion three times to health foods claiming prevention of COVID- members of Consumers International (“CI”). In addition, the 19, and to disinfectant or antibacterial sprays. The CAA also Cross-border Consumer center Japan (“CCJ”) has been estab- gave administrative guidance actively and issued administrative lished as a consulting service for consumers who encounter guidance in relation to five businesses which sold portable air troubles in trading with overseas businesses. The CCJ works disinfection goods and six businesses which sold antibody detec- in collaboration with organisations such as the Better Business tion kits because they could be in violation of the AUPMR. Bureaus (the United States, Canada and Mexico), the Chartered Trading Standards Institute (the United Kingdom), and the 9.2 Are there any proposed reforms to consumer law or Korea Consumer Agency (the Republic of Korea). policy within the next 12 months? 82 Appeals The Act on Sales, etc. of Financial Instruments will be revised drastically and the name of the Act will be changed to “the 8.1 Describe any appeal processes. Act on Provision of Financial Services”. The revised Act will establish a new category of business of “Financial Services In order to challenge the legality of administrative disposi- Intermediation”, which will be subject to the regulations of the tions undertaken by administrative agencies, there are appeal Act. In addition, the Act on Sales, etc. of Financial Instruments processes concerning such dispositions, including complaints is a law comprising solely 10 articles, while the revised Act will under the Administrative Complaint Review Act and actions for comprise over 100 articles and establish detailed regulations for revocation under the Administrative Case Litigation Act. businesses. The revised Act will come into effect in the Autumn or Winter of 2021. The CAA plans to submit bills in respect of the revised Act 8.2 Can consumers or retailers/manufacturers appeal decisions made by the consumer authority/authorities or on the Deposit, etc., Transaction Agreements of Specified by a court? Commodities, etc., and the revised ASCT to the Diet in 2021 in order to prohibit, in principle, deposit, etc., transaction agreements which have caused widespread damage to consumers, as When a business subject to an administrative disposition wishes well as to reinforce regulations in respect of fraudulent periodic to seek revocation or modification of a disposition by an admin- purchases. The deposit, etc. transaction agreements which have istrative agency, it may file a complaint under the Administrative caused widespread damage to consumers concerns transaction Complaint Review Act. Such request for review of a disposition agreements where businesses sell goods, etc.; at the same time, is not a lawsuit and does not involve the court. Within three the business accepts deposits of such goods, runs a business to months from the day following the day on which the business operate the goods by themselves or rents the goods to third comes to know of the disposition, the business files a request parties, etc., thereby returning profits to consumers through for review with the administrative agency that made the disposi- dividends, etc., or purchasing goods, etc., at a certain price at tion, and, thereafter, review officers review the disposition and the expiration of the contract period. Additionally, the CAA is determines, based on the documents provided, as to whether the considering making a new law in order to ensure an environ- agency should review it or not. In addition, if a business wishes ment wherein consumers can make transactions on digital plat- to seek the revocation of a disposition, it may file a lawsuit for forms safely and securely. The new law will include a definition revocation under the Administrative Case Litigation Act. In of “digital platform regarding transactions” and will provide for principle, a business can choose freely whether to file a request development of a framework for resolving problems. The bill for review or a lawsuit for revocation. If a business wants to file for this new law is planned to be submitted to the Diet in 2021. a lawsuit for revocation, the business must file a lawsuit with the court within six months from the date when the business became aware of the disposition. Consumers are not entitled to appeal administrative dispositions.

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Oki Mori is a partner at Nagashima Ohno & Tsunematsu. He practises in a wide variety of civil litigation and other dispute resolution procedures including, but not limited to, consumer litigation, corporate litigation, commercial litigation, real estate litigation, finance litigation, labour litigation and tax litigation. Moreover, he specialises in consumer law such as cases involving the Act against Unjustifiable Premiums and Misleading Representations, food labelling, product recalls/accident reports, the Product Liability Act, the Consumer Contract Act and the Act on the Protection of Personal Information. He has extensive experience in responding to emergency situations involving governmental authorities such as the Consumer Affairs Agency, mainly in consumer law. In addition, he has obtained many judgments/orders in his favour in administrative litigation and appeal procedures. Furthermore, he was awarded the honour of being named the Dispute Resolution Lawyer of the Year at the ALB Japan Law Awards 2019 hosted by Asian Legal Business.

Nagashima Ohno & Tsunematsu Tel: +81 3 6889 7000 JP Tower, 2-7-2 Marunouchi Email: [email protected] Chiyoda-ku, Tokyo 100-7036 URL: www.noandt.com Japan

Mai Umezawa is an associate at Nagashima Ohno & Tsunematsu. Since joining the firm, she has engaged in a wide variety of civil litigation and other dispute resolution matters, including commercial litigation, matters regarding trading by consumers and businesses, intellectual property matters, labour disputes, and international arbitration. In addition, she has experience in matters involving governmental authorities in Japan, such as the Consumer Affairs Agency and the Personal Information Protection Commission. She graduated with an LL.B. from the faculty of law of Waseda University in 2013, and a J.D. from Waseda Law School in 2016, and was subsequently admitted to the Bar of Japan in 2018.

Nagashima Ohno & Tsunematsu Tel: +81 3 6889 7000 JP Tower, 2-7-2 Marunouchi Email: [email protected] Chiyoda-ku, Tokyo 100-7036 URL: www.noandt.com Japan

Nagashima Ohno & Tsunematsu is the first integrated full-service law firm in Japan and one of the foremost providers of international and commercial legal services based in Tokyo. The firm’s overseas network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai, and collaborative relationships with prominent local law firms. In representing our leading domestic and international clients, we have successfully structured and negotiated many of the largest and most significant corporate, finance and real estate transactions related to Japan. In addition to our capabilities spanning key commercial areas, the firm is known for path-breaking domestic and cross-border risk management/corporate governance cases and large-scale corporate reorganisa- tions. Over 500 lawyers of the firm work together in customised teams to provide clients with the expertise and experience specifically required for each client matter. www.noandt.com

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Mexico Mexico

Edgar Jorge Grajeda Mondragón

Enrique Lucía Gonzalez Calvillo Muñoz Fernández

12 General as such per the applicable laws, may be consumers under the LFPC if they acquire, store, use or consume goods or services with a purpose to integrate them into any process of produc- 1.1 What legislation, regulations and guidelines are tion, transformation, marketing or the provision of services relevant to consumer protection in your jurisdiction? to third parties. In this second case, the LFPC only grants micro-companies or members of micro-industries the possi- The most relevant legislation, regulations and guidelines for bility of exercising certain rights set forth in such law. consumer protection in Mexico are the Ley Federal de Protección al Consumidor (Federal Consumer Protection Law or “LFPC”) and 1.3 Who is/which entities are required to comply with its Regulations (the “LFPC Regulations”). consumer protection law? Notwithstanding the foregoing, there are many other relevant laws, regulations and guidelines that relate to consumer protection, including: All suppliers must comply with the LFPC. Article 2 of the a. The personal data protection laws in Mexico that regulate LFPC defines a “supplier” as any physical or legal entity (as such the processing of personal data of all individuals in Mexico, legal figures are defined in the Mexican Federal Civil Code) including consumers (the “Mexican DPL”), particularly: that regularly or periodically offers, distributes, sells, grants the i. the Ley Federal de Protección de Datos Personales en Posesión use or enjoyment of, or leases any goods, products or services. de los Particulares (Federal Law on the Protection of Considering the definition of individual and legal entity in the Personal Data Held by Private Parties or the “DPL Mexican Federal Civil Code, it could be construed that foreign Law”); individuals and legal entities could also be considered suppliers ii. the DPL Law’s Regulations (the “DPL Regulations”); if they carry out the abovementioned activities in Mexican terri- and tory or cater to Mexican consumers. iii. the Lineamientos del Aviso de Privacidad (Privacy Notice The provisions of the LFPC: (i) are matters of public order Guidelines). and social interest and must be adhered to throughout Mexico; b. Laws that regulate consumer protection in specific indus- and (ii) cannot be waived, and no person can allege to have tries, for example: customs, uses, practices, agreements or stipulations preventing i. the Ley de Protección y Defensa al Usuario de Servicios their observance. Financieros (the Law for the Protection and Defense of Users of Financial Services) or “LFPDUSF”, as appli- 1.4 Which agency/agencies is/are responsible for cable to the financial industry; or enforcing consumer protection law (i.e., who is the ii. the Ley Federal de Telecomunicaciones y Radiodifusión investigator and who is the adjudicator)? (Telecommunications and Broadcasting Federal Law or “LFTR”), as applicable to broadcasting. The Procuraduría Federal del Consumidor (Federal Consumer c. Laws, regulations and other legislation that regulate Protection Agency or “PROFECO”) is the agency that is the publicity, labels and information to be provided to responsible for enforcing the LFPC. consumers in connection to food, beverages, cosmetics, The Instituto Nacional de Transparencia, Acceso a la Información y medicines, and medical devices, among others, including Protección de Datos Personales (National Institute for Transparency, the Ley General de Salud (General Health Law or “LGS”) Access to Information and Personal Data Protection or “INAI”) and its different regulations, such as: is responsible for the enforcement of the Mexican DPL which, i. regulations of the LGS in publicity matters; and as previously mentioned, regulates the processing of personal ii. regulations of sanitary control of products and services. data of individuals in Mexico, including consumers.

1.2 What is the definition of “consumer” (i.e., who does 1.5 Are there any specific bodies that regulate/enforce consumer protection law protect)? consumer protection law in specific sectors?

Article 2 of the LFPC defines “consumer” as the physical or The following are the main agencies that enforce consumer moral person who acquires, carries out or enjoys goods, prod- protection laws in specific sectors in Mexico: ucts or services as the final beneficiary. Micro-companies ■ the Comisión Nacional para la Protección y Defensa de los Usuarios or members of micro-industries, which will be considered de Servicios Financieros (the National Commission for the

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Protection and Defense of Users of Financial Services or are non-binding technical norms as established in the law that “CONSDUSEF”), which regulates consumer protection specifically regulates the scope and the nature of this type of in the financial sector; standard; or (ii) the methods or procedures that are determined ■ the Instituto Federal de Telecomunicaciones (Federal by the Ministry of Economy or the applicable governmental Telecommunications Institute or “IFT”), which regu- agency, prior to an audience with the interested parties. lates consumer protection in the telecommunications and broadcasting sector; and 2.3 What types of goods and services are covered ■ the Comisión Federal para la Protección contra Riesgos Sanitarios by the protections relating to the quality of goods and (Federal Commission for the Protection against Sanitary services? Risks or “COFEPRIS”), which protects consumers against risks related to the use and consumption of health-related The protection of the LFPC applies to all products, goods and products and services. services provided by suppliers (as the term is defined in the law). 22 Protections in Relation to the Quality and Function of Goods and Services 2.4 Are there any exceptions to these protections?

2.1 Please describe any protections regarding the The LFPC fails to establish general exceptions to these protec- quality and function of goods and services acquired by tions; however, exceptions may be applicable to specific goods, consumers. products, services, industries, or sectors, which should be included in the NOMs or any other specific legislation appli- The main protections under the LFPC regarding quality and cable there. functions of goods and services are as follows: a. Any goods or services offered with a warranty must be 2.5 What remedies are available for a breach of the issued as per the provisions of the LFPC and the agree- protections in relation to the quality and function of ment between supplier and consumer, and must: (i) be goods and services? effective for at least 90 days from the date of delivery; and (ii) contain at least the scope, period, conditions and All consumers have the right to file a claim or complaint against mechanisms of the goods or services in order to make such a supplier before PROFECO. PROFECO then starts a concil- warranty effective, as well as an address for complaints. iation procedure between the consumer and the supplier. The b. The consumer can request the fulfilment of a warranty conciliation procedure is not mandatory per se; however, if the to the producer, importer and distributor of the goods or supplier fails to attend the conciliation hearing(s), PROFECO services, without distinction. can fine the supplier assuming that the claim or complaint filed c. In the event that the product has been repaired or serviced by the consumer is true. PROFECO can also issue an opinion and it shows deficiencies attributable to the person that (dictamen) regarding the monetary amount resulting from the carried out the maintenance or repair, the consumer shall unfulfilled obligation, which is considered an enforceable be entitled to have the product repaired or serviced again instrument (título ejecutivo) in favour of the consumer, and which free of charge, within 90 calendar days of delivery. could include a quantification of the bonification or compensa- Furthermore, the Normas Oficiales Mexicanas (Mexican Official tion owed to the consumer. Standards or “NOMs”) are mandatory technical regulations The following are some of the most relevant remedies avail- issued through the competent governmental entities in connec- able for a breach of the protections in relation to the quality and tion with various subjects, including the characteristics (and in function of goods and services: some cases their verification methods) that products, goods or a. In the event that products, services or goods which are services must meet and comply with in connection to security, the subject of a contract have hidden defects or flaws that health, terminology, labelling and measurements, among others. make them unsuitable for their traditional use, diminish There are a significant number of NOMs that have been issued their quality or their possibility of use, and fail to provide in Mexico and they are applicable to a vast number of products the security that is typically expected of them, consumers and services, including telecom services, electrical and house- have the right to request: hold products and medical devices. Suppliers, manufacturers or i. the return of the goods, product or service; producers of products, goods or services must comply with any ii. the reduction of the price; or applicable NOMs. iii. the early termination of the applicable contract, in the The LFPDUSF and LFTR and their related legislation and understanding that the supplier must return the amounts norms, as well as other laws and norms applicable to consumer paid by the consumer, plus interest, if applicable. protection in specific sectors or industries, may have their own b. Consumers will be entitled, when appropriate, to the protections regarding the quality and function of goods and replacement of the product or the return of the amount services acquired by consumers in the applicable sectors or paid when: industries. i. the content or quantity of a product is less than the one indicated; 2.2 Please outline the substantive tests for these ii. the goods do not correspond to the quality, brand or protections. specifications under which they were offered or do not comply with any applicable NOMs; and iii. the repaired goods are not in a suitable state for their Per the LFPC and the LFPC Regulations, PROFECO’s test of use or destination within the warranty period. the quality, specifications or any other characteristic of goods, c. Consumers will be entitled to request the indemnification products and services shall be carried out in accordance with of any damages and losses sustained. any applicable NOMs, otherwise per: (i) the NOMs, which

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d. In the foregoing events, and other specific events (e.g. if c. Order calls for review addressed to suppliers and make services rendered were deficient or were never rendered known those of other authorities on products or services for causes attributable to the supplier), consumers have the that are defective, harmful or that threaten consumer life, additional right to: (i) bonification of no less than 20% of health or safety. the price paid by the consumer; and/or (ii) compensation d. Withdraw from the market goods or products that threaten of 5% of the cost of the reparation of the goods or, in the consumer life, health or safety, when this has been reliably event of major defects or faults, 20% of the price of the determined by the competent authority. goods as set out in the applicable contract. e. Order the repair or replacement of products or services that threaten consumer life, health, safety or the economy. 2.6 Who has or which agencies have standing to initiate proceedings for a breach? 3.2 Please outline the substantive tests for these protections. PROFECO can initiate proceedings for any breach under the LFPC. CONDUSEF and IFT have standing to initiate proceed- Per the LFPC and LFPC Regulations, PROFECO’s test of ings for breaches under the LFPDUSF and LFTR, respectively, the quality, specifications or any other characteristic of goods, and any related laws, NOMs and other legislation. products and services shall be carried out in accordance with any applicable NOMs, otherwise per: (i) the NMX, which are non-binding technical norms as established in the law that 2.7 Describe at least two examples of public or private enforcement of these protections in the last five years, specifically regulates the scope and nature of this type of including the conduct/alleged conduct, result and standard; or (ii) the methods or procedures that are determined penalties imposed. by the Ministry of Economy or the applicable governmental agency, prior to an audience with the interested parties. ■ In 2019, PROFECO received more than 1,677 complaints against various airlines. The main reasons for filing 3.3 What types of goods and services are covered complaints were cancellations, flight delays, improper by the protections relating to the safety of goods and charges and lost or damaged luggage. For this reason, services? PROFECO imposed penalties of more than $7.5 million pesos in total on various companies, including Aeromexico, The protection of the LFPC applies to all products, goods and Volaris, Interjet, Aerobus and Aeromar. services provided by suppliers (as the term is defined in the law). ■ In 2020, 971 gas stations were fined a total sum of $357 million pesos due to the failure to deliver full litres of 3.4 Are there any exceptions to these protections? gasoline. ■ In August 2020, PROFECO initiated sanction procedures against 550 businesses (supermarkets and pharmacies, When dealing with the safety of goods and services, the LFPC among others) for abuses in prices and services during and the applicable NOMs do not consider any exceptions. the COVID-19 pandemic; most of these related to unjust increases in prices or failing to conform to the prices 3.5 What remedies are available for a breach of the exhibited by the suppliers. protections in relation to the safety of goods and ■ In late 2020, NOVIRSA was sanctioned by PROFECO services? for using misleading advertising to promote its products, since the company claimed their use created physical and Please refer to question 2.5. health changes with no technical or scientific evidence thereof. As a result, PROFECO ordered the suspension of the advertisement of these products. 3.6 Are there mandatory reporting requirements with Excluding the last point, the above information was reported respect to the safety of goods or services? by the media since PROFECO’s yearly reports do not provide such information. Yes, a compliance certificate in accordance with the applicable NOM must be secured to be able to import or commercialise 32 Protections/Prohibitions in Relation to products within the Mexican territory. the Safety of Goods and Services There is a catalogue of NOMs, depending on the type of product or service to be developed, and these must be complied with.

3.1 Please describe any protections regarding the safety of goods and services acquired by consumers. 3.7 Describe any voluntary or mandatory product safety recall regimes. Regarding safety of goods and services, PROFECO is entitled to: a. Publish by any means the goods and services that have Any supplier is entitled to communicate to PROFECO volun- been detected as risky. tarily that he/she/it has detected some type of risk in prod- b. Issue alerts addressed to consumers and help other author- ucts, e.g. the designed product does not fully satisfy a company’s ities or agencies in the publication of their alerts regarding internal standards, even if it complies with the applicable NOMs. products or services that are defective, harmful or that The companies must inform PROFECO and consumers by threaten consumer life, health or safety. issuing a “Call for Review” or “Alert” through the micro-site http://www.alertas.gob.mx.

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3.8 List at least two examples of public or private celebrated in the national territory are only valid if they are enforcement of these protections in the last five years, in written form, in Spanish, with readable characters and including the breach/alleged breach, result and penalties with a uniform size and type of font. Standard contracts imposed. may not include disproportionate duties for consumers, unfair or abusive obligations or any other clause or text ■ In 2017, PROFECO issued a Call for Review for a possible that violates the provisions of the LFPC. failure in the assembly of the Britax B-agile stroller as The following are the most relevant clauses that are it could cause falls in minors. Although a total of 4,561 prohibited under the LFPC for standard contracts: strollers had been sold in Mexico, the products remaining i. Clauses that allow the supplier to unilaterally modify in stores were immobilised. the content of the contract, or unilaterally withdraw ■ In 2020, PROFECO immobilised the sale of antibacterial from its obligations. and mouth covers since such products lacked commercial ii. Clauses that release the supplier from civil liability, except if the consumer breaches the contract. information and therefore could be unsafe when used (i.e. iii. Clauses that transfer civil liability to a third party that they were not disinfected or did not meet their purpose). is not part of the contract. ■ In 2021, PROFECO ceased the distribution of 2,198 iv. Clauses that foresee prescription terms that are shorter food and drink products for non-compliance with frontal than the legal terms. legends about excess calories, fat, sodium, and sugars. v. Clauses that require the consumer to waive the protec- There is no formal resolution thereof yet. tion of the LFPC or submit to the jurisdiction of foreign courts. 42 Prohibitions Relating to “Conduct” c. Protections/prohibitions in e-commerce Against Consumers i. The suppliers will use the information provided by the consumer in a confidential way, so it will not be able to 4.1 Please describe any protections/prohibitions disseminate it or transmit it to suppliers unrelated to the relating to the conduct of persons or businesses (e.g., transaction, except with the express authorisation of the manufacturers/retailers) which sell or supply goods consumer or at the request of a competent authority. and services to consumers (“Conduct”). For example, ii. The suppliers will use available technical elements to misleading and deceptive conduct, unconscionable provide security and confidentiality to the informa- conduct, etc. tion provided by the consumer and will inform the consumer, prior to the conclusion of the transaction, The following are some of the most important protections/ of the general characteristics of such elements. prohibitions relating to the conduct of suppliers under the LFPC: iii. The suppliers must provide the consumer, before a. Protections/prohibitions relating to misleading adver- concluding the transaction, with their physical address, tising and information telephone numbers and other means to which the i. All information and advertisements in connection consumers can file their claims or request clarifications. with goods, products and services that are dissemi- iv. The suppliers will avoid misleading commercial prac- nated through any means must be truthful, ascertain- tices regarding the characteristics of the products; they able or measurable (comprobables), clear and with no must comply with the provisions related to the infor- text, dialogue, sounds, images, trademarks or other mation and advertising of the goods and services the deceitful or abusive descriptions that create or may supplier offers, as indicated in the LFPC and related induce error because they are misleading or abusive. legislation. ii. Misleading advertising ( publicidad engañosa) is prohib- v. The consumers will have the right to know all infor- ited; this is defined in the LFPC as advertising that mation regarding the terms, conditions, costs, addi- refers to characteristics or information related to tional charges (if any), and forms of payment for the goods, products or services that, real or unreal, induce goods and services offered by the supplier. a consumer to error or confusion, due to the inac- vi. The suppliers will respect the consumer’s decision curate, false, exaggerated, partial or contrived way regarding the quantity and quality of the products it is presented. Furthermore, the information and the supplier wishes to receive, as well as that of not publicity that compares products and services may not receiving commercial notices. be deceitful or abusive in terms of the foregoing. vii. The suppliers must refrain from using sales or adver- iii. Any legend or information in advertising or other tising strategies that do not provide the consumers material that advertises a product or service, which with clear and sufficient information regarding the indicates that such product or service has been services offered, particularly in the case of marketing endorsed, approved, recommended or certified by practices directed at the vulnerable population, such as entities or professional associations, is prohibited children, the elderly and the sick, incorporating mech- when the supplier/advertiser fails to have the appro- anisms that warn when the information is not suitable priate documents that support, “with scientific, objec- for that population. tive and reliable evidence”, the qualities or properties viii. The suppliers that offer, market or sell products or of such product or service, as well as any other requi- services through electronic means shall “guide them- site required by law. selves” by the provisions of a Norma Mexicana (Mexican b. Protections/prohibitions in standard contracts (con- Norm or “NMX”) that was issued in connection tratos de adhesión) with e-commerce in Mexico, the NMX-COE-001- Standard contracts are defined in the LFPC as documents SCFI-2018. Notwithstanding the foregoing, as previ- drafted unilaterally by suppliers to establish uniform ously mentioned, NMXs are non-binding, as expressly formats with the terms and conditions applicable to a stated in the law that specifically regulates the scope product or service, even if such document lacks the ordi- and nature of this type of standard. nary clauses included in contracts. Standard contracts

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d. Protections/prohibitions relating to marketing xi. The suppliers must provide a manual when selling i. If required by consumers, suppliers must confirm the dangerous products or remodelling services. information the supplier has in its databases of such The NOMs can consider additional protections/prohibitions consumers. relating to the conduct of suppliers. ii. Publicity sent to consumers by suppliers must include The LFPDUSF and LFTR and their related legislation and the name, address, telephone number, or email of the norms, as well as other laws and norms applicable to consumer supplier and the contact data of PROFECO. protection in specific sectors or industries, may have their own iii. PROFECO administers the Public Consumer Registry protections regarding the quality and function of goods and (the “REPEP”) where consumers who do not want to services acquired by consumers in the applicable sectors or receive publicity can register their phone number and, industries. per a very recent legal reform to the LFPC Regulations that has yet to be implemented by PROFECO, their 4.2 Please outline the substantive tests for the above- email. PROFECO provides suppliers access to this mentioned protections/prohibitions. list. Per the LFPC, suppliers and marketing companies must not send advertising to persons that have expressed that they do not want to receive publicity Please refer to question 2.2. and those who are registered in the REPEP. Furthermore, PROFECO reviews publicity per the terms iv. Suppliers and companies that use consumers’ informa- of the Lineamientos para el Análisis y Verificación de la Información tion for marketing or publicity purposes are prohibited y Publicidad (Guidelines for the Analysis and Verification of from using such information for other purposes. Information and Publicity), which requires all advertising to e. Other protections/prohibitions under the LFPC comply with the following: i. The information of the products or their labels, a. All information in connection with advertised goods, containers and packaging and the respective adver- products or services must be verifiable and ascertainable tising, both of national manufacture and of foreign or measurable (comprobables), as well as any claimed effects origin, will be expressed in Spanish and their price or benefits thereof. in national currency in understandable and read- b. All objective affirmations must be verifiable and measurable terms according to the general system of units of able (comprobables). measurement, in the understanding that they may also c. No categoric or superlative terms in connection with be expressed in another language or another measure- the performance, characteristics or the conditions of the ment system. publicised goods, products or services, which may induce ii. Suppliers may apply neither coercive and unfair consumers to error or confusion, may be used. If such terms, commercial methods or practices, nor abusive or along with objective affirmations, are used, or reference is imposed clauses or conditions in the supply of prod- made to studies, samples and/or tests, such information must ucts or services. be verifiable and ascertainable or measurable (comprobable). iii. Suppliers may neither provide additional services d. Advertising that compares goods, products or services to those originally contracted that have not been must not cause error or confusion in consumers, since such expressly requested or accepted, in writing or electron- comparison is unverifiable or lacks objectivity. ically, by the consumer, nor may they apply charges In addition to the foregoing, PROFECO has internal guides without the prior consent of the consumer or that are in connection with the criteria that must be followed internally not derived from the corresponding contract. when reviewing advertising, which are not obligatory for indi- iv. Suppliers may not unreasonably increase prices for viduals or private companies. natural, meteorological or health contingencies. Finally, the LFPC Regulations permit suppliers to prove the v. Suppliers are obliged to deliver the invoice, receipt veracity of any information in connection with goods, prod- or “proof of purchase” to the consumer, stating the ucts and services, through documents issued by international specific data of the sale, service provided or operation or national organisations of “proven scientific and technical carried out. capacity”, when there are no applicable regulations within the vi. Suppliers must inform PROFECO or obtain a permit Mexican territory. The LFPC Regulations also state, in connec- if they want to carry out certain types of promotions tion with the Conduct described in point a.iii. of question 4.1, (e.g. collectibles) and raffles. that technical and scientific studies that contain the report of vii. Any legends that restrict or limit the use of goods the original results of an investigation will be considered “scien- or services must be set out clearly, truthfully and tific, objective and reliable evidence” if they comply with specific unambiguously. requirements set forth in the LFPC Regulations. viii. The legends “guaranteed”, “guarantee” or any other equivalent may only be used when they indicate what 4.3 Are there any exceptions/exemptions to the such “guarantee” consists of and how the consumer protections/prohibitions relating to Conduct? can make it effective. ix. Publicity of promotions and offers must include There are no general exceptions to these protections; however, specific information set forth in the LFPC and any exceptions may be included in the NOMs or other legislation appli- consumer that meets the applicable criteria will have cable to specific goods, products, services, industries or sectors. the right to obtain the applicable promotion or offer. x. Credit transactions, property-related operations, service suppliers and door-to-door suppliers or those 4.4 What remedies are available for a breach of the who sell outside the commercial establishment or indi- protections/prohibitions relating to Conduct? rectly must comply with specific requirements set forth in the LFPC. All consumers have the right file a claim or complaint against a supplier before PROFECO, as mentioned in question 2.5.

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The following are some of the most relevant remedies avail- 5.2 Please outline the substantive tests for the above- able for a breach of the protections/prohibitions relating to the mentioned protections/prohibitions. Conduct described above: a. In the event that information, instructions, data and condi- This is not applicable. tions promised or suggested by the supplier are untruthful, the consumer has the right to request what was actually 5.3 Are there any exceptions/exemptions? offered and, when that is not possible, the replenishment of the consumer’s expenditures and if applicable, the bonification and compensation as set forth in question 2.5. This is not applicable. b. In the event that the author of a promotion or offer fails to honour his/her/its offering, the consumer may opt for 5.4 What remedies are available for a breach of these its compliance, accepting equivalent goods or services, protections? the early termination of a contract and, if applicable, the right to be paid the difference between the offered price This is not applicable. of the goods or services and its normal price. The foregoing is in addition to the bonification and/or compensation described in question 2.5. 5.5 List at least two examples of public or private enforcement of these protections in the last five years, c. In the event that, after a warranty is executed, and the including the breach/alleged breach, result and penalties defects or faults of goods or services persist, the supplier imposed. must repair them again immediately and provide the consumer the compensation described in question 2.5. This is not applicable. d. If suppliers fail to provide a manual when selling dangerous products or rendering services, they will be liable for any damages and losses caused by this omission, plus the boni- 62 Investigation of Potential Breaches fication and compensation described in question 2.5. e. Consumers will be entitled to request the indemnification 6.1 What powers does/do the consumer authority/ of any damages and losses they have sustained. authorities in your jurisdiction have to investigate potential breaches of consumer law? Describe the key steps in a typical investigation. 4.5 List at least two examples of public or private enforcement of the protections relating to Conduct in According to articles 96 and 97 of the LFPC, PROFECO has the last five years, including the breach/alleged breach, result and penalties imposed. the power to initiate investigations and sanction procedures by itself and derive from anonymous complaints by affected parties. In case the procedure is initiated by an anonymous ■ In 2018, PROFECO imposed a fine on Uber for an complaint, PROFECO notifies the potential offender and then approximate amount of $3.97 million pesos. This was due opens a conciliation process; if they do not reach an agreement, to the following violations of the LFPC: (i) the company PROFECO initiates a proper sanctioning process, in which the was applying a standard contract which contained unfair opportunity to present grounds and evidence is given to the and abusive provisions to the disadvantage of consumers offender, and then PROFECO issues the final resolution in and other provisions prohibited under the LFPC; and (ii) which sanctions can be imposed. PROFECO considered their guarantee of a “safe service” Please note that, according to the Civil Procedures Federal of transportation as false advertising. Code, private plaintiffs, government entities, and certain ■ In 2018, PROFECO initiated investigation procedures non-profits may bring consumer claims as class, or “collective”, for infractions to the LFPC by Colgate-Palmolive Universidad lawsuits. Intercontinental, Merkatari, Mead Johnson Nutricionales de México, Tempure Sealy México, Spring Air México and others, 6.2 How is an investigation triggered (e.g., ex officio, particularly in connection with the advertisement of whistleblower or complaint)? certain of their products having been endorsed, approved, recommended or certified by entities or professional asso- PROFECO has the authority to initiate the investigations by ciations, without the appropriate documentation that anonymous complaint or ex officio through a verification visit. supported such claims. In case of ex officio investigations, PROFECO does not have the The above is information reported by the media, since obligation to justify the reason for its investigation; therefore, in PROFECO’s yearly reports do not provide such information. practice, it is common for PROFECO to order verification visits derived from whistleblowers or public information contained in 52 Other Protections/Prohibitions TV, radio and/or social media.

5.1 Does consumer law in your jurisdiction have 6.3 Describe any complaints procedure for (i) any other prohibitions/protections not covered by consumers, and (ii) businesses. the questions above? If so, please describe these prohibitions/protections. The complaint procedure is the same for consumers and busi- This is not applicable. nesses, provided they are considered consumers under the LFPC. The procedure commences with the filing of the

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complaint, which can be in writing, verbally, by telephone or 7.3 Describe the enforcement powers/tools available to electronically. Once the complaint is received, PROFECO noti- these bodies (civil, administrative, criminal). fies the potential offender and requires a written report related to the facts which are the object of the complaint. Following In order to apply and enforce the provisions of consumer this, PROFECO opens a conciliation process, and if the parties protection regulation, PROFECO can carry out surveillance do not reach an agreement, PROFECO initiates a proper sanc- and verification of the places where products or merchandise tioning process against the potential offender. are managed, stored, transported, distributed or sold, or at the places where services are rendered, including those in transit. 6.4 What is the timeline for a typical investigation? Furthermore, PROFECO has the power to impose sanctions stipulated in the LFPC, for which PROFECO shall give notice The timeline for a typical investigation ranges between 15 and to the alleged infringer of the procedure’s facts and shall grant a 60 working days, depending on the kind of products or services term of 10 business days to introduce evidence and refute them that are investigated, and if a conciliation process is commenced. in writing. PROFECO has the authority to impose all sanctions in the administrative field, which are listed in the LFPC as follows: (i) economic fines; (ii) total or partial closure; and (iii) 6.5 Are there criminal penalties for non-compliance prohibition on marketing goods or products. with a consumer law investigation? If so, provide examples where such penalties have been imposed. 7.4 Where regulators/enforcement bodies have a choice of enforcement tools/powers, what Not directly. According to article 24, section XVII of the considerations do they take into account in determining LFPC if, exercising its powers, PROFECO detects the poten- which tools/powers to use? tial commission of a crime, it is obliged to inform the prosecution service (Ministerio Público), which would initiate the criminal To determine which powers to use, PROFECO must determine process according to the applicable Criminal Code. the seriousness of the case. In such respect, article 128 or the LFPC establishes those cases that are particularly serious, which 6.6 Can investigations be resolved by way of are: commitments or undertakings? a. Cases where the rights and interests of a group of consumers could be affected if the supplier continues to operate. Yes, during the conciliation process, the parties – the consumer b. When the infringement in question could endanger the and the potential offender – can reach an agreement in which life, health or safety of a group of consumers. commitments and undertakings are established, and PROFECO c. Infringements committed in relation to goods, products then gives that agreement the character of administrative reso- or services that, due to the season or special circumstances lution. In case of non-compliance with such agreement, the of the market, adversely affect the rights of a group of affected party could initiate a claim to PROFECO, which has consumers. the authority to enforce the agreement. d. Conduct committed by advantage of shortages, remote- ness or difficulty to supply goods or to render a service. 72 Enforcement e. Acts with respect to basic commodities of generalised consumption, such as food, natural gas or liquefied petroleum gas, gasoline or other products subject to a maximum 7.1 How does/do the consumer authority/authorities price or prices or fees established or registered by the appli- seek to enforce consumer law (for example, by administrative decision or by commencing proceedings cable Ministry or by any other competent authority. in court)? f. Recidivism in the commission of infringements indicated in article 128 of the LFPC. PROFECO enforces consumer regulation by administrative resolutions. Prior to issuing an administrative resolution to 7.5 Describe the relevant rules and procedures that enforce consumer regulation, PROFECO follows an adminis- must be followed by such bodies (e.g., administrative, trative process which has different stages: (i) investigation/veri- judicial). fication; (ii) conciliation; (iii) sanctioning process; and (iv) resolution (sanctioning or not). The procedure is administrative. In order to establish a viola- Please note that according to the Civil Procedures Federal Code, tion of the provisions of the LFPC and, if applicable, the impo- private plaintiffs, government entities, and certain non-profits sition of sanctions, PROFECO shall give notice to the alleged may bring consumer claims as class, or “collective”, lawsuits. infringer of the procedure’s facts and shall grant a term of 10 business days to introduce evidence and refute them in writing. Otherwise, PROFECO shall issue a decision pursuant to the 7.2 Is/are the consumer protection authority/ authorities bound by a time limit to commence evidentiary means that have been made available to it. proceedings on breaches? When PROFECO detects infringements to the NOMs and initiates against a supplier the abovementioned procedure in connection with the marketing of goods or products that are Yes, according to article 14 of the LFPC, PROFECO has one not in compliance with such standards, it shall also give notice to year to initiate the investigation process. In that event, the proce- the manufacturer, producer or importer of such goods or prod- dure is initiated by an anonymous complaint, and the one-year ucts on the initiation of the procedure set forth in article 123 of period is interrupted when the complaint is filed. There is an the LFPC. exemption in which, when the proceeding relates to sanctioned PROFECO shall establish the sanctions that may be legally breaches that may have effects on children’s rights, the limit is admissible once the procedure in question is completed. extended to 10 years.

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PROFECO shall admit the evidence it deems advisable and 92 Current Trends and Anticipated Reforms shall proceed to introduce it. Likewise, it may request from the alleged infringer or from third parties other evidence it may deem advisable. 9.1 What are the recent enforcement trends in your Once the introduction of evidence concludes, PROFECO jurisdiction? shall give notice to the alleged infringer so that it may submit arguments within the next two business days. PROFECO shall PROFECO has been active throughout the pandemic; it has then render a decision within the next 15 business days. imposed a significant number of sanctions in connection with unfair practices and abuses by suppliers, particularly unjustified price increases or failing to comply with publicised prices. Its 7.6 Is there a right to a stand-alone action and follow focus has been on the industries that have been relevant during on right of action within consumer law? Who has standing to bring these actions? the COVID-19 pandemic; for example, funeral homes, oxygen devices, pharmacies, food suppliers and supermarkets, among others. Furthermore, last year a new NOM regarding food The LFPC does not establish the right of stand-alone action. and drink legends came into force and PROFECO has been purposefully investigating the compliance thereof. 7.7 Is there a statute of limitations for bringing stand- alone or follow on actions? 9.2 Are there any proposed reforms to consumer law or policy within the next 12 months? This is not applicable. The Mexican Senators Chamber has issued an initiative to 7.8 Describe any international or regional cooperative modify the direct marketing-related provisions of the LFPC, mechanisms (e.g., MOUs) in which your jurisdiction is which was approved in October 2019. Such initiative has involved in the enforcement of consumer protection. been sent to the Chamber of Deputies and, if approved, it will become law, unless the Executive Power uses its veto power to There is not any international mechanism in which Mexico is reject it. We do not presently have information regarding the involved in the enforcement of consumer protection. date in which this proposal will be discussed in the Chamber of Deputies. 82 Appeals In general terms, the initiative modifies the LFPC to state that: ■ It is strictly prohibited for companies and suppliers to use 8.1 Describe any appeal processes. or share any kind of information about consumers for advertising or marketing purposes. These advertising and The resolutions issued by PROFECO imposing sanctions can marketing practices will be permitted only after a request be challenged by a motion for review, under the terms of the made from the consumer by means of previous, expressed Federal Administrative Procedure Law. This motion is substan- and informed consent, which may be revoked at any given tiated before PROFECO and it is solved by the hierarchical moment. superior of whoever issued the challenged resolution. ■ Suppliers and companies will be responsible for the Another challenging option is through a nullity trial before management of consumer information when such adver- the Federal Administrative Justice Court. This is a jurisdic- tising is communicated by themselves or through a third tional process, in which a collegiate and a specialised court party. review whether the resolution was issued in accordance with the ■ The model of the REPEP will evolve. This registry (or the consumer law and administrative procedure law. registry that will replace it) will refer to the consumers that have granted their consent for suppliers to use their infor- 8.2 Can consumers or retailers/manufacturers appeal mation for marketing purposes and publicity. The compa- decisions made by the consumer authority/authorities or nies and suppliers shall inform PROFECO of the list of by a court? consumers that have granted such consent. ■ The amendment mandates that the origin of marketing calls and messages must be fully identifiable and that these Yes, through the processes mentioned in question 8.1. Affected can only be issued at reasonable hours of the day. parties (consumer or manufacturer) can initiate an Amparo ■ The fines are increased for unsolicited marketing and proceeding against the resolution issued by the Federal those who violate these provisions. Administrative Justice Court.

8.3 Does an appeal suspend the effect of any penalty/ the requirement to pay any fine (if applicable)?

Yes, if the plaintiff requests the suspension of the effect of the penalties; however, the amount of the fines must be guaranteed.

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Edgar Grajeda is a partner at the firm and a leading practitioner in civil, commercial and administrative litigation, representing clients before State and Federal courts, arbitration panels and all kinds of governmental authorities. He has developed a strong practice in consumer protection matters and represents clients before the PROFECO, including complaints filed by consumers and conciliatory procedures, as well as in administrative and jurisdictional procedures related to sanctions imposed by administrative authorities in connection with consumer protection matters.

Gonzalez Calvillo Tel: +52 55 5202 7622 Montes Urales 632, Lomas de Chapultepec Email: [email protected] 11000, Mexico City URL: www.gcsc.com.mx Mexico

Jorge Mondragón is managing partner of Gonzalez Calvillo. Throughout his over 26 years of experience, he has developed a commercial legal practice with a focus on corporate, franchising, distribution, IT and data protection matters. Additionally, he has focused his practice on consumer protection matters in a wide range of industries and has strong experience counselling product and service providers for compliance purposes. Jorge is an active member of several local and international associations, including the IBA, ABA, IFA and the ANADE.

Gonzalez Calvillo Tel: +52 55 5202 7622 Montes Urales 632, Lomas de Chapultepec Email: [email protected] 11000, Mexico City URL: www.gcsc.com.mx Mexico

Enrique Muñoz is counsel at the firm and has more than 15 years of experience in environmental, life sciences and consumer protection matters. He has experience advising clients from health, MedTech, medical devices, food, beverages, cosmetic and innovative products industries, particularly in advertising, promotions, warranties, packaging, labelling and commercial agreements, among others. Likewise, he advises companies in identifying and obtaining environmental permits, licences, authorisations and concessions required for the development of infrastructure projects in diverse industrial sectors.

Gonzalez Calvillo Tel: +52 55 5202 7622 Montes Urales 632, Lomas de Chapultepec Email: [email protected] 11000, Mexico City URL: www.gcsc.com.mx Mexico

Lucía Fernández is counsel at the firm and has more than 15 years of experience in commercial and corporate matters, including franchising, IT and data protection, as well as regulatory matters, advising particularly in connection with consumer protection and advertisement. She advises clients with online terms and conditions, privacy notices, and their compliance with consumer protection laws, privacy laws and other laws in connection with advertising, e-commerce and personal data processing.

Gonzalez Calvillo Tel: +52 55 5202 7622 Montes Urales 632, Lomas de Chapultepec Email: [email protected] 11000, Mexico City URL: www.gcsc.com.mx Mexico

For over 30 years, Gonzalez Calvillo has challenged the standards and Our firm’s solution-centred approach allows us to advise clients on all rewritten the full-service firm model with a solution-oriented approach, issues related to the regulatory and commercial aspects of products and evolving the practice of law in Mexico. services, with a focus on consumer protection matters, both from the advi- The firm is driven by the commitment of doing things differently, having a sory and legal defence standpoint. deep knowledge of the Mexican legal ecosystem, its behaviour and interac- www.gcsc.com.mx tion with today’s globalised business environment. Our services are designed to help our clients solve the toughest and most complex legal issues while finding the best solution for each case. By understanding clients’ business culture and strategy, we establish a close and strategic alliance to enable them to achieve more. Our client roster is well diversified, as we represent a blend of local and multinational corporations across regulated and non-regulated industries, such as domestic and international financial institutions, governmental entities and individuals, including a substantial number of Fortune 500 companies, in a wide variety of legal matters.

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Azeezah Muse-Sadiq

Banwo & Ighodalo Mavis Abada

12 General 1.2 What is the definition of “consumer” (i.e., who does consumer protection law protect)?

1.1 What legislation, regulations and guidelines are relevant to consumer protection in your jurisdiction? The FCCPA defines a consumer in section 167(1) to include any person: (a) who purchases or offers to purchase goods other than for The Federal Competition and Consumer Protection Act, 2018 the purpose of resale, but does not include a person who (“ ”) is the primary legislation which governs and protects FCCPA purchases any goods for the purpose of using them in the the rights of consumers in Nigeria. The FCCPA established the production or manufacture of any other goods or articles Federal Competition and Consumer Protection Commission for sale; or (“FCCPC” or “Commission”) to, amongst others: (b) to whom a service is rendered. (a) protect and promote consumers’ interest and welfare by providing consumers with a wider variety of quality products at competitive prices; and 1.3 Who is/which entities are required to comply with (b) prohibit restrictive or unfair business practices which consumer protection law? prevent, restrict or distort competition or constitute an abuse of a dominant position of market power in Nigeria. The FCCPA applies to and binds all undertakings (that is, any Prior to the enactment of the FCCPA, the principal legisla- person involved in the production of or the trade in goods, or tion that protected the rights of consumers in Nigeria was the the provision of service) and all commercial activities within, or Consumer Protection Council Act, 2004 (“CPA”) which estab- having effect within Nigeria, including: lished the Consumer Protection Council (“CPC”); however, the (a) a body corporate or agency of the Government of the FCCPA repealed the CPA and the FCCPC assumed all rights, Federation or of a sub-division of the Federation, if the interests, obligations, assets, and liabilities of the CPC. body corporate or agency engages in commercial activities; To aid the FCCPC in discharging its functions and duties, (b) a body corporate or agency in which the Government of the the FCCPA empowers the FCCPC in section 163 to make rules Federation or Government of a State, or a body corporate or and regulations for the effective implementation and operation agency of the Government of the Federation or any State or of the provisions of the FCCPA. The provisions of the FCCPA Local Government, has a controlling interest, where such a body corporate engages in economic activities; and further stipulate that any regulation, order, bye-law or notice (c) all commercial activities aimed at making profit and geared that was issued by, or for the purpose of, the CPC under the CPC towards the satisfaction of demand from the public. Act shall be deemed to have been made or issued by, or for the In addition, the provisions of the FCCPA apply to certain purpose of, the FCCPC and shall continue in force until revoked conducts occurring outside Nigeria where such conduct is by: or amended by the FCCPC. Thus, in addition to the provi- (a) a citizen of Nigeria or person ordinarily resident in Nigeria; sions of the FCCPA, there are: (i) the FCCPC (Sales Promotion) (b) a body corporate incorporated in Nigeria or carrying out Registration Regulations, 2005; (ii) the FCCPC Guidelines for business within Nigeria; and Sales Promotion Registration; and (iii) the FCCPC Business (c) any person in relation to the supply or acquisition of goods Guidance Relating to COVID-19 on Business Co-Operation/ or services by that person into or within Nigeria. Collaboration and Certain Consumer Rights Under the FCCPA, 2020 (“Business Guidance”). Further, the FCCPC adopted the Guiding Principles for Sustainable Consumption proposed 1.4 Which agency/agencies is/are responsible for enforcing consumer protection law (i.e., who is the at the annual World Consumer Day of 2020 (“ Sustainable investigator and who is the adjudicator)? Consumption Principle”). Please refer to the answer to question 1.5 for other legislation, regulations and guidelines that are relevant to consumer protec- Enforcement/Regulatory Agency tion in Nigeria. The FCCPC, as stated in the answer to question 1.1, is established by the FCCPA to administer and enforce the provisions of the FCCPA.

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Adjudicatory Authority to, amongst others, ensure: (i) that the prices charged by The Competition and Consumer Protection Tribunal (“CCPT”) electricity supply/distribution licensees are fair to those was established pursuant to section 39 of the FCCPA to adjudi- consumers; and (ii) the safety, security, reliability and quality cate conduct prohibited under the FCCPA. of service in the production and delivery of electricity to The CCPT (as it relates to the protection of consumers) has, consumers. The NERC issued the NERC Customer Service amongst others, the powers to: Standards of Performance for Distribution Companies, (a) hear appeals from or review any decision of the FCCPC 2007 and the Customer Complaints Handling: Standards taken in the course of implementation of any of the provi- and Procedure, 2006 in order to establish an expected sions of the FCCPA; standard of performance, as it relates to consumers, for (b) hear appeals from, or review any decision from, the electricity distribution companies and also to establish a exercise of the powers of any sector-specific regulatory procedure for the handling of customers’ complaints. authority in a regulated industry, in respect to consumer (d) National Agency for Food and Drug Administration and protection matters; and Control (“NAFDAC”): (c) issue such orders as may be required of it under the The NAFDAC Act, 2004 established NAFDAC, an agency FCCPA. under the Nigerian Federal Ministry of Health, which For the purpose of proceedings of the CCPT, the CCPT is to ensures consumer protection by regulating and controlling be constituted into panels of at least three members and its deci- the manufacture, importation, advertisement, distribution, sion will be taken by a majority of the members of the panel. sale and use of food, drugs, cosmetics, medical devices, The order, ruling, award or judgment of the CCPT is binding chemicals and packaged water and beverages in Nigeria. on the parties and must be registered with the Federal High (e) Standards Organisation of Nigeria (“SON”): Court of Nigeria solely for the purposes of enforcement. Appeal The SON, which was established by the SON Act, 2015, of an order, ruling, award or judgment of the CCPT is to be is empowered by the legislation to amongst others, ensure made within 30 days to the Court of Appeal of Nigeria, the that: (i) locally manufactured products in Nigeria give the second-highest court in Nigeria. required degree of satisfaction to consumers; and (ii) prod- Please note, however, that all appeals or requests for review ucts imported into Nigeria are safe and import conditions of the exercise of the power of any sector regulator, as it relates are met. to consumer protection, shall be heard and determined by the (f ) Nigerian Broadcasting Commission (“NBC”): FCCPC before such appeals can lie before or be determined by The NBC was established by virtue of the NBC Act, the CCPT. 2004, and as part of its regulatory role, it is vested with the responsibility to, amongst others, receive, consider and investigate complaints of consumers in respect of broad- 1.5 Are there any specific bodies that regulate/enforce consumer protection law in specific sectors? casting services. (g) Nigerian Civil Aviation Authority (“NCAA”): By virtue of the Civil Aviation Act, 2006, the NCAA There are other sector regulators who, by virtue of their estab- has regulatory oversight over the aviation industry in lishing/enabling laws in addition to their primary responsi- Nigeria. As part of its regulatory role, the NCAA created bilities, have responsibilities to protect consumers in Nigeria. a Consumer Protection Department which ensures that all Although the FCCPA recognises other consumer protection consumers in the aviation industry obtain the best services legislation, rules and regulations, they are to be read with such in air transportation, and issued the Nigeria Civil Aviation modifications as are necessary to bring them into conformity to Regulations, 2015, which broadly address consumer the provisions of the FCCPA. protection issues including compensation for denied In addition, the FCCPA states that other sector regulators boarding, delays and cancellation of flights. with consumer protection oversight shall be deemed to have a Accredited consumer protection groups may also commence concurrent jurisdiction with the FCCPC, and in the event of actions to protect the interest of consumers. conflict between the FCCPC and a sector regulator, the FCCPC In addition, the Securities and Exchange Commission and will have precedence over the said sector regulator. all self-regulatory organisations have regulatory oversight over Such sector regulators include: capital market operators in relation to complaints by their clients. (a) The Central Bank of Nigeria (“CBN”): Pursuant to powers conferred on it by the CBN Act (as 22 Protections in Relation to the Quality and amended) and the Banks and Other Financial Institutions Act, 2020, the CBN issued the Consumer Protection Function of Goods and Services Regulations, 2019 to guide the effective regulation of consumer protection practices of financial institutions 2.1 Please describe any protections regarding the under the regulatory purview of the CBN. quality and function of goods and services acquired by (b) Nigerian Communications Commission (“NCC”): consumers. The NCC, as the apex regulator of the Nigerian communications industry, is vested with powers to protect and The FCCPA provides that the consumer has a right to services promote the rights and interests of communication services performed in a manner and quality that reasonable persons are consumers against unfair practices in Nigeria. The NCC generally entitled to expect. issued the General Consumer Code of Practice, 2018, In relation to the quality of goods, the FCCPA states, amongst which has detailed provisions on the protection of the others, that every consumer has a right to goods that are of good rights and interests of communication services consumers. quality, in good working order, free from defects, and which (c) Nigerian Electricity Regulatory Commission (“NERC”): comply with any applicable standards set by the industry sector The NERC, which was established by the Electric Power regulator. In addition, there is an implied warranty in any Sector Reform Act, 2005, is empowered by the legislation transaction that the goods comply with the applicable quality

standards set out in the FCCPA, and the customer has a right Furthermore, a consumer can file a complaint in accordance to return the goods within a prescribed period for failure to with the provisions of the FCCPA. Please refer to the answers comply with the foregoing. to questions 6.1 and 7.1 for further details. Please note that other sector consumer regulations have In addition, where a damage is caused wholly or partly by provisions similar to the foregoing. defective goods or the supply of a service, the undertaking that supplied the goods or service is liable for the damage. Such damage may include personal injury and damage to the consum- 2.2 Please outline the substantive tests for these er’s property. protections.

The reasonability test is used in determining whether or not 2.6 Who has or which agencies have standing to initiate proceedings for a breach? the goods or services are of the intended quality. The FCCPA provides that the consumer has the right to receive goods that are “reasonably suitable” for the intended purpose whilst the An aggrieved consumer, an accredited consumer protection quality of service must be such that a “reasonable person” is group, an industry sector regulator, and the FCCPC can all generally entitled to receive. Further, where the consumer has initiate proceedings for a breach. specifically informed the seller of the particular purpose for which the consumer intends to use the product and the supplier 2.7 Describe at least two examples of public or private ordinarily offers such goods or acts in a manner that suggests enforcement of these protections in the last five years, that he has knowledge, the consumer has a right to expect that including the conduct/alleged conduct, result and the goods are reasonably suitable for the specific purpose he penalties imposed. has indicated. Where there is an allegation of defective goods or service, the onus of proof is on the undertaking that supplied the goods or service. Within the last 12 months, the FCCPC has been investigating In addition, the FCCPC has the power to order quality tests to companies/businesses operating in Nigeria for anti-consumer be conducted on consumer goods as it deems necessary and seal up violations. any premises on reasonable suspicion that such premises contain, In May 2020, the FCCPC in furtherance of a reasonable suspi- harbour, or are being used to produce or disseminate goods or cion of illegal activities, sealed (pending further inquiry) Med services that are fake, substandard or inimical to consumers’ Contour Ltd (a plastic surgery centre) and assisted in bringing a five-count charge against the surgeon based on contravention welfare, in collaboration with relevant sector regulations. of sections 33(3)(a) and 113(4)(a) of the FCCPA. Furthermore, there is an ongoing investigation against a multinational tobacco 2.3 What types of goods and services are covered company operating in Nigeria for anti-consumer protection, by the protections relating to the quality of goods and public health and anti-competition violations. services? In March 2018, prior to the enactment of the FCCPA, the CPC (the hitherto consumer protection agency) issued a warning The provisions of the FCCPA relating to the quality of goods and to power companies across Nigeria to desist from the imposition services include almost all types of products, goods and services. of arbitrary charges on consumers. The warning was as a result For instance, the definition of goods as provided for in the of reported cases of arbitrary billing and unlawful disconnection FCCPA includes ships, aircraft, vehicles, minerals, trees and crops of customers’ electricity without due process, which amounted – whether attached to land or not – as well as gas and electricity. to acts of sabotage and a gross abuse of consumer rights. Service is defined broadly to include service of any descrip- Moreover, on June 17, 2018, the CPC filed an action against tion, whether industrial, professional or any other service, and MultiChoice Nigeria Limited (“Company”), for breaching a the sale of goods, where the goods are sold in conjunction with consent order that dealt broadly with consumer protection the rendering of a service. and service responsiveness/quality issues. The consent order provided that no material terms of the subscription agreement between the Company and its consumers would change 2.4 Are there any exceptions to these protections? during an agreed period of supervision by the CPC. However, the Company proceeded to arbitrarily increase its subscription There are no exceptions to the protections available to a rates. In an action commenced by the CPC, the court granted an consumer in relation to the quality of goods under the FCCPA. interim injunctive relief against the Company; however, the suit However, the FCCPA seems to exempt from liability any under- was struck out on May 16, 2019. Notwithstanding, the FCCPC taking in the regulated industry that has violated any provision on June 13, 2019 issued a final order mandating the Company to of the FCCPA, where such undertaking is able to demonstrate observe the rules laid down therein. that the violation was ordered or required by a regulatory agency possessing jurisdiction over the regulated industry. 32 Protections/Prohibitions in Relation to the Safety of Goods and Services 2.5 What remedies are available for a breach of the protections in relation to the quality and function of 3.1 Please describe any protections regarding the goods and services? safety of goods and services acquired by consumers.

The available remedies include penalties/fines, monetary restitu- Please refer to the answer to question 2.1. tion or compensation (for an aggrieved consumer) and/or term Additionally, where an undertaking or distributor becomes of imprisonment. More specifically, the consumer has a right aware of any unforeseen hazards arising from the use of goods to return defective goods within three months, and the under- placed in the market, it shall immediately notify the general taking is expected to repair or replace such goods or return a public of such risk or danger and cause such goods to be with- portion of the purchase price. drawn from the market.

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Furthermore, where the FCCPC has reasonable grounds In addition, other sector regulators have directed manufac- to believe that any goods may be unsafe, or there is a poten- turers to recall unsafe products and issued warnings to consumers tial risk to the public from the continued use of or exposure in that regard. For instance, on June 30, 2019, NAFDAC directed to the goods, and the undertaking that produced, distributed Nigerian Bottling Company Limited to recall Eva Premium Table or imported those goods has not taken any steps required by Water 75cl as a precautionary step, pending investigation by the an applicable code contemplated in the FCCPA, the FCCPC, by agency following a voluntary report by the company on June 20, written notice, may require the undertaking to recall the goods 2019 about a change in colour of the product from colourless to in any terms required. light green and the presence of particles in two lots.

3.2 Please outline the substantive tests for these 42 Prohibitions Relating to “Conduct” protections. Against Consumers

Please refer to the answer to question 2.2. 4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., manufacturers/retailers) which sell or supply goods 3.3 What types of goods and services are covered and services to consumers (“Conduct”). For example, by the protections relating to the safety of goods and misleading and deceptive conduct, unconscionable services? conduct, etc.

Please refer to the answer to question 2.3. The FCCPA prohibits business practices/conducts that are misleading, fraudulent, unconscionable or generally anti-com- 3.4 Are there any exceptions to these protections? petitive. Some of such conducts include the following, amongst others: (a) issuing a false or wrong advertisement; Please refer to the answer to question 2.4. (b) altering, defacing, covering, removing or obscuring a trade description, or trade mark applied to any goods in a 3.5 What remedies are available for a breach of the manner calculated to mislead consumers; protections in relation to the safety of goods and (c) giving false, erroneous, misleading or likely to be services? misleading in any material respect, fraudulent or deceptive representations concerning any material fact for the Please refer to the answer to question 2.5. purpose of promoting or marketing a product; (d) giving representations in the form of a statement, warranty or guarantee of the performance, efficacy or length of life 3.6 Are there mandatory reporting requirements with respect to the safety of goods or services? of products which are not based on an adequate and proper test of the goods or services; and (e) offering to supply, supplying or entering into an agreement Although the FCCPA does not provide for mandatory reporting to supply any goods or services on unfair, unreasonable or requirements, by the provision of the FCCPA, the FCCPC may unjust contract terms. compel manufacturers, suppliers, dealers, importers, wholesalers, retailers or other undertakings, where appropriate, to certify that their goods and services satisfy all standards and give public notice 4.2 Please outline the substantive tests for the above- of any health hazards associated with their goods and services. mentioned protections/prohibitions.

A transaction, agreement, term or condition will be deemed to 3.7 Describe any voluntary or mandatory product safety recall regimes. be unfair, unreasonable or unjust if: (a) it is excessively one-sided in favour of any person other than the consumer or other person to whom goods or Please refer to the answer to question 3.1. services are to be supplied; In addition, the SON Act provides that the supplier of a (b) the terms of the transaction or agreement are so adverse to defective product may be required by the Honourable Minister the consumer as to be inequitable; of Industry, Trade and Investment (upon the recommendation (c) the consumer relied upon a false, misleading or deceptive of the SON) to, among other things, recall the product or notify representation or a statement of opinion provided by or the public of the nature of the defect in the commodity, the on behalf of the undertaking that supplied the goods or circumstances in which the use of the commodity is dangerous, services concerned, to the detriment of the consumer; or as well as procedures for the disposal of the commodity. (d) the fact, nature and effect of a term, condition or notice was not drawn to the attention of the consumer. 3.8 List at least two examples of public or private enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties 4.3 Are there any exceptions/exemptions to the imposed. protections/prohibitions relating to Conduct?

The provisions of the FCCPA are yet to be fully tested by the The FCCPA provides a few exceptions to some of the prohib- FCCPC; in the past five years, however, the then consumer ited conducts under the FCCPA. For instance, a business can protection regulator (CPC pursuant to the CPA) issued notices be exempted from the general prohibition against “tying and in respect of recall of unsafe products that originated outside of bundling” where it demonstrates that: Nigeria and worldwide recall.

(a) the convenience to the consumer in having those addi- consumer of the class of persons for whom the notice or tional/bundled goods or services outweighs the limitation representation is intended, with average literacy skills and of the consumer’s right to choice; or minimal experience as a consumer, can understand the content. (b) the bundling of those goods or services results in an The FCCPC is empowered to publish guidelines on methods economic benefit for the consumer. for assessing whether a notice complies with the provisions of the FCCPA. 4.4 What remedies are available for a breach of the Prices are deemed to be adequately displayed if written price protections/prohibitions relating to Conduct? indication, expressed in Nigerian Naira, written, printed or stamped, is annexed or affixed to the goods or services or to any shelf or item used in connection with the goods or service. The available remedies include penalties/fines, monetary restitution or compensation (for an aggrieved consumer) and term of imprisonment. 5.3 Are there any exceptions/exemptions? Please refer to the answers to questions 3.1 and 3.7 for more information. There are no exemptions. Specifically, the provisions of the FCCPA (see section 52) empowers the CCPT to make an order directing any under- 5.4 What remedies are available for a breach of these taking to sell any portion or all of its shares, interest or assets if protections? the prohibited practice or conduct cannot adequately be remedied under any other provision of the Act, or is substantially a repeat by that undertaking of conduct previously found by the Please refer to the answer to question 4.4. CCPT to be a prohibited practice. 5.5 List at least two examples of public or private enforcement of these protections in the last five years, 4.5 List at least two examples of public or private including the breach/alleged breach, result and penalties enforcement of the protections relating to Conduct in imposed. the last five years, including the breach/alleged breach, result and penalties imposed. There are no available public records in respect of this. In 2020, the FCCPC launched an investigation against companies following allegations of discriminatory practices and conducts. 62 Investigation of Potential Breaches The investigation has thus far resulted in the temporary shutdown of an outlet. 6.1 What powers does/do the consumer authority/ In September 2018, the CPC and NCC launched a joint regu- authorities in your jurisdiction have to investigate latory investigation into the Nigerian telecommunication sector potential breaches of consumer law? Describe the key steps in a typical investigation. to ensure the rights of consumers in the telecommunication industry were adequately protected. This was due to the inces- sant and persistent complaints by consumers of practices such The FCCPC is conferred with investigative powers to carry out as call masking, unsolicited subscriptions, etc. By December investigations or inquiries it considers necessary or desirable in 2018, plans were made to, amongst others, sanction telecommu- connection with any matter falling within the purview of the nication operators involved in the forceful subscription to value- FCCPA (see section 17(e)). Additionally, the FCCPA specifically added service and illegal airtime deduction of up to NGN36 empowers the FCCPC to: (i) summon and examine witnesses; billion. However, the extent of FCCPC and NCC’s enforcement and (ii) call for and examine documents, etc. (see section 18(4)). is yet to be made public. The key steps in a typical investigation, as set out in sections 148–150 of the FCCPA, are as follows: 52 Other Protections/Prohibitions (a) a complaint is initiated or received by the FCCPC; (b) upon receipt of the complaint, the FCCPC may: (i) issue a notice of non-referral (for frivolous complaints or complaints 5.1 Does consumer law in your jurisdiction have any other prohibitions/protections not covered by which do not entitle such consumer to any remedy in the the questions above? If so, please describe these FCCPA); (ii) refer the complaint to the applicable industry prohibitions/protections. sector regulator for investigation or resolution of the complaint; or (iii) direct an inspector to investigate the In addition to the conducts in answer to question 4.1, the FCCPA complaint; also imposes an obligation on manufacturers to ensure that the (c) where an inspector is directed to investigate the complaint, notice on any product must be in accordance with the prescribed upon completion, the inspector will submit a report to the form or in plain language, where no form is prescribed for that FCCPC; notice. Furthermore, an undertaking is obliged to adequately (d) the FCCPC will determine whether to: (i) issue a notice of display the prices of goods and services on sale. non-referral to the complainant; (ii) make an order; or (iii) issue a compliance notice to the erring undertaking; and (e) where the FCCPC decides to make an order and the erring 5.2 Please outline the substantive tests for the above- undertaking agrees to the terms of the order, such consent mentioned protections/prohibitions. order will be made by the FCCPC and it can be registered with a competent court. A notice, document or visual representation is deemed to be in plain language if it is reasonable to conclude that an ordinary

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6.2 How is an investigation triggered (e.g., ex officio, can enforce consumer laws. With respect to the FCCPC, it can whistleblower or complaint)? enforce the provisions of the FCCPA as set out below: (a) by making an order against an erring undertaking, which includes consent orders, compensation for injury suffered Investigation can be triggered based on a complaint filed by and award of damages in favour of the complaining an aggrieved consumer, an accredited consumer protection consumer; group, and an industry sector regulator. The FCCPC can also (b) by issuing a compliance notice which will state the details commence an investigation on its own motion. and nature of the non-compliance, steps to be taken to rectify the non-compliance and the penalty that will be 6.3 Describe any complaints procedure for (i) imposed if the necessary steps are not taken; consumers, and (ii) businesses. (c) by obtaining a satisfactory written assurance from an undertaking that has persisted in a course of conduct which is detrimental to consumers; and Please refer to the answers to questions 6.1 and 6.2. (d) where the FCCPC is unable to obtain the written assur- Furthermore, an aggrieved consumer may elect to have direct ance, or the undertaking has failed to comply with its recourse to lodge a complaint to the undertaking he/she has a written assurance or breach of compliance notice, the grievance against for a resolution of such complaint. FCCPC may: (i) institute an action against the undertaking As an alternative to initiating a complaint with the FCCPC or in a competent court; or (ii) order temporary closure of any the undertaking, an aggrieved consumer may elect to lodge his/ premises or facilities where the contravention takes place. her complaint with an industry/sector regulator who exercises regulatory control over such undertaking. Such complaint(s) will be resolved in accordance with the rules and regulations 7.2 Is/are the consumer protection authority/ applicable in that industry. authorities bound by a time limit to commence proceedings on breaches?

6.4 What is the timeline for a typical investigation? The FCCPA does not stipulate a time limit to commence action/ compliance, and as such, the prescribed period in a relevant limi- The FCCPA does not stipulate a specified timeline for an inves- tation law will apply. Generally, the limitation laws in Nigeria tigation but provides that an investigation by an inspector (a key provide for six years’ limitation period for tortious and contrac- step in the investigation process) should be carried out “as quickly tual actions. as practicably possible”. The FCCPC states that it is committed to providing speedy redress to valid complaints and puts its redress time between one (1) to forty-five (45) days. Nonetheless, this is 7.3 Describe the enforcement powers/tools available to these bodies (civil, administrative, criminal). determined on a case-by-case basis and could exceed the given timeframe. With respect to the FCCPC, in addition to the answer to question 7.1, the FCCPC in enforcing the provisions of the FCCPA may: 6.5 Are there criminal penalties for non-compliance (a) shut down or close the premises of a defaulting under- with a consumer law investigation? If so, provide taking until such undertaking complies with a compliance examples where such penalties have been imposed. notice; (b) commence and prosecute a suit against a defaulting under- There are prescribed criminal offences in the FCCPA and crim- taking in a competent court; and inal penalties which range from a fine and term of imprison- (c) impose an appropriate administrative penalty on a ment, in the case of an individual, to fines, in the case of a defaulting undertaking. corporate body. The prescribed criminal offences include: (i) Where its Orders or Summons are disobeyed, the FCCPC failure to comply with a compliance notice issued by the FCCPC can make referral to the Office of the Attorney General for with regard to an investigation process; (ii) failure to appear as prosecution. a witness to give evidence or produce a requested document or information; and (iii) obstruction of an employee of the FCCPC. 7.4 Where regulators/enforcement bodies have a choice of enforcement tools/powers, what 6.6 Can investigations be resolved by way of considerations do they take into account in determining commitments or undertakings? which tools/powers to use?

The FCCPA provides for resolution of complaint and investiga- Generally, by virtue of section 51(3) of the FCCPA, the CCPT may tion in the form of a consent order (with the erring undertaking). impose administrative penalties for prohibited conduct, and when The consent order can be registered with a competent court. determining an appropriate penalty, the CCPT shall consider: (a) the nature, duration, gravity and extent of the contravention; 72 Enforcement (b) any loss or damage suffered as a result of the contravention; (c) the behaviour of the defaulting party; 7.1 How does/do the consumer authority/authorities (d) the market circumstances in which the contravention took seek to enforce consumer law (for example, by place and the level of profit derived from the contravention; administrative decision or by commencing proceedings (e) the degree to which the defaulting party has cooperated in court)? with the FCCPC and CCPT; or (f) whether the defaulting party has previously been found to be in contravention of any of the provisions of the FCCPA. The Nigerian consumer laws, including the FCCPA, provide for various methods by which the relevant regulatory authority The FCCPC will likely take into consideration factors similar to the foregoing.

7.5 Describe the relevant rules and procedures that 82 Appeals must be followed by such bodies (e.g., administrative, judicial). 8.1 Describe any appeal processes. The FCCPC is required to comply with the provisions of the FCCPA and its regulations, rules and guidelines in exercising its Any party aggrieved with the decision of the FCCPC should file powers and functions. Furthermore, other industry sector regu- an application with the CCPT. Following the decision of the lators must adhere to the laws establishing them and other appli- CCPT, if such party is still aggrieved it may within 30 days of cable regulations, rules, and guidelines. the judgment/order/decision of the CCPT appeal to the Court of Appeal (see sections 49–55 of the FCCPA).

7.6 Is there a right to a stand-alone action and follow on right of action within consumer law? Who has 8.2 Can consumers or retailers/manufacturers appeal standing to bring these actions? decisions made by the consumer authority/authorities or by a court? The FCCPA provides for a right to a stand-alone action and follow on right of action, as an aggrieved consumer can initiate a Please refer to the answer to question 8.1. complaint with the FCCPC and has the right to directly institute an action in a competent court to seek redress. 8.3 Does an appeal suspend the effect of any penalty/ Additionally, where a complaint was first initiated with the the requirement to pay any fine (if applicable)? FCCPC, upon the conclusion of an investigation by the FCCPC where it is proved that the consumer’s rights have been violated Although the FCCPA is silent on this, generally under Nigerian or any wrongdoing has been committed, the consumer has a law an appeal does not operate as an automatic stay of execution right to institute a civil action for compensation or restitution in of a judgment. In order to suspend the effect of any penalty or a competent court. requirement, an order of the court directing a stay of execution of the judgment appealed against, pending the determination of 7.7 Is there a statute of limitations for bringing stand- the appeal, must be obtained. alone or follow on actions? 92 Current Trends and Anticipated Reforms Please refer to the answer to question 7.2. 9.1 What are the recent enforcement trends in your jurisdiction? 7.8 Describe any international or regional cooperative mechanisms (e.g., MOUs) in which your jurisdiction is involved in the enforcement of consumer protection. As an immediate aftermath of the COVID-19 pandemic in the first quarter of 2020, some suppliers and retailers took undue In October 2020, the FCCPC signed an updated tripartite advantage of the pandemic and engaged in unacceptable trade Memorandum of Understanding (“MOU”) with the Nigerian practices, including price gouging of basic safety and protec- Economic and Financial Crimes Commission, and the United tive apparel and personal hygiene products. The FCCPC, in States Federal Trade Commission (“USFTC”) for the purpose prompt response, issued warnings and compliance notices of strengthening cooperation and collaboration in addressing to retailers, suppliers and online platforms as detailed in the mutual cross-border consumer protection/fraud concerns and FCCPC’s Release of February 28, 2020 and March 23, 2020. problems. The updated MOU seeks to reaffirm the parties’ The FCCPC also issued the Business Guidance which reiterates intention to work together and establish a Joint Implementation certain consumer rights, and generally aims at ensuring compli- Committee to develop joint training programmes and provide ance with consumer protection laws. assistance on specific investigations. Moreover, the FCCPC recently opened investigation and Moreover, the FCCPC participated in the African Consumer temporarily sealed businesses (pending detailed inquiry) on Protection Dialogue Conference (“Conference”) which is a reasonable suspicion of illegal activities. Likewise, the FCCPC joint initiative of African Competition and Consumer Protection had assisted in the prosecution of: (i) some retail pharmaceutical regulators and the USFTC. The Conference provides a plat- outlets which refused to comply with its warnings and notices; form to promote consumer protection and cross-border cooper- and (ii) business owners allegedly involved in illegal activities. ation as well as to discuss ongoing work on consumer complaint In addition, the FCCPC has indicated interest in enforcing sharing, business education and consumer protection. consumer protection related orders from other regulators. An Once more, the FCCPC participates in the activities of and example is the NERC order to cap the amount that certain cate- has served on technical committees to review relevant guidelines gories of unmetered electricity consumers in Nigeria would pay of the United Nations Conference on Trade and Development for their monthly electricity consumption. The FCCPC has in which is the focal point in the United Nations for competition this regard indicated that it will launch a billing capping order law and policy, and consumer protection issues. enforcement; however, enforcement actions are yet to commence.

Consumer Protection 2021 © Published and reproduced with kind permission by Global Legal Group Ltd, London Banwo & Ighodalo 101

Another recent enforcement trend is the FCCPC inauguration that there will be major reforms within the next 12 months, beyond of the Task Force on Sustainable Consumption charged with addressing any gap that exists in the current regulatory regime, developing an enforceable framework from the self-regulatory particularly with respect to enforcement actions by FCCPC. and public regulation perspectives. However, the Task Force is However, we expect that the FCCPC will issue several guidance yet to issue the enforcement framework. notes and regulations to fill some of the gaps in the FCCPA and Information on the website of the FCCPC indicates that it has provide more clarity on the provisions of the FCCPA, whilst also successfully protected consumers who have lodged complaints addressing consumer protection challenges arising from unprece- against banks, electricity service providers as well as telecom- dented events like the COVID-19 pandemic. munication providers. Acknowledgments 9.2 Are there any proposed reforms to consumer law or The authors would like to thank Esther Adeniji, Tosin Oyebanjo, policy within the next 12 months? Thelma Okorie and Tobi Ojuri for their contributions to this chapter. As the introduction of the FCCPA is still a major reform recently implemented in consumer law and policy in Nigeria, it is less likely

Azeezah Muse-Sadiq is a partner in the Corporate, Securities & Finance (“CSF”) group of the firm, and one of the firm’s partners leading the Capital Markets, Mergers & Acquisitions and Competition and Consumer Protection practice areas. Azeezah advises companies in the Fast Moving Consumer Goods sector, Banks, Pharmaceutical companies, Agriculture and other consumer-facing companies. She acts as a resource person in capacity development trainings and has delivered presentations on diverse subjects within her core practice areas. She is also a member of the Nigerian Bar Association.

Banwo & Ighodalo Tel: +234 906 000 3561 2 / 805 087 5883 / 48, Awolowo Road 809 271 4452 / 902 052 4921 South West Ikoyi Email: [email protected] Lagos URL: www.banwo-ighodalo.com Nigeria

Mavis Abada is an associate in the Corporate, Securities & Finance (“CSF”) group of the firm and a pioneer member of the firm’s Competition and Consumer Protection Practice Group, a sub-practice group in the firm’s CSF group. She has experience in Mergers & Acquisitions and Banking & Finance, and co-taught Corporate Law Practice at the Nigerian Law School in the 2017/2018 academic session as an adjunct lecturer. She is qualified to practise in Nigeria and the State of New York.

Banwo & Ighodalo Tel: +234 906 000 3561 2 / 805 087 5883 / 48, Awolowo Road 809 271 4452 / 902 052 4921 South West Ikoyi Email: [email protected] Lagos URL: www.banwo-ighodalo.com Nigeria

Banwo & Ighodalo (“B&I”) is a foremost Nigerian legal services and business Investment & Divestment, Shipping, Aviation & International Trade, Energy solution provider, delivering high-quality services. The firm was established & Natural Resources and Intellectual Property. We also have a tested and on February 1, 1991 and is renowned for providing innovative, competent, dependable track record in Commercial Litigation. cost-effective and well-timed solutions. www.banwo-ighodalo.com B&I is structured as a partnership and is a fairly large Nigerian firm, presently comprising about 80 solicitors. We undertake work for public and private companies, governments, Nigerian and foreign investors, financial institutions, foreign law firms and international consultancy firms. Our lawyers are often called upon to serve as resource persons at local and international seminars/workshops and as public and private sector office holders and advisers. We are consistently ranked tier one in The Legal 500 and are ranked in the top three in Nigeria, in areas of Capital Markets, Securities, Mergers & Acquisitions, Corporate Finance & Restructuring, Project Finance, Foreign

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Russia Russia

ALRUD Ksenia Erokhina

12 General not limited to first buyers or users; any other national who uses the goods (work or services) on a legal basis (for example, an heir, or a subsequent purchaser, etc.) can also rely upon the rules 1.1 What legislation, regulations and guidelines are prescribed by Russian consumer laws. relevant to consumer protection in your jurisdiction? Self-employed entrepreneurs, being legal entities, can also enjoy protection under Russian consumer laws if they order, Russian legislation on the protection of consumer rights is very purchase or use goods or services for personal, family, house- complex and consists of a set of regulatory legal acts that are hold and other needs not related to the entrepreneurial diverse in their nature (collectively – “Russian consumer activity. Excluding the above, legal entities are not considered laws”). The main pillars of Russian consumer laws are the “consumers” under the Consumer Rights Protection Act. Civil Code of the Russian Federation (“Russian Civil Code”) and the Consumer Rights Protection Act No. 2300-1-FZ of 1.3 Who is/which entities are required to comply with February 7, 1992 (“ ”). Consumer Rights Protection Act consumer protection law? Also essential to the protection of consumers’ rights are the norms of the business, administrative, civil procedure, municipal and criminal laws. Here we can specifically identify the The Consumer Rights Protection Act regulates relations arising Criminal Code of the Russian Federation No. 63-FZ of June between consumers and manufacturers, performers of works or 13, 1996, the Code of Administrative Offences of the Russian services, importers, sellers and owners of aggregators of infor- Federation No. 195-FZ of December 30, 2001 and particular mation on goods (services) when selling goods, performing Federal laws including the Federal law on technical regulation works, or rendering services. No. 184-FZ of December 27, 2002, the Advertising Act No. Thus, legal entities (both companies and self-employed entre- 38-FZ of March 13, 2006, and the Federal Competition Act No. preneurs) being manufacturers, performers of works or services, 135-FZ of July 26, 2006. importers, sellers, or owners of aggregators of information Along with Federal laws, the protection of consumers’ rights on goods (services) must respect the Russian Civil Code, the is also ensured by Government Decrees such as the Decree “On Consumer Rights Protection Act and the related legislation. approval of the Rules for the sale of goods under a retail sale and It is important to emphasise that Russian consumer laws purchase agreement” (established by the Government Decree belong to the category of mandatory norms of the Russian legis- No. 2463 of December 31, 2020) as well as the legislation imple- lation, and therefore apply to foreign companies operating in mented within specific Russian regions. Russia or directing their activities to the Russian market, even in It is also worth mentioning the technical regulations enforced the absence of a legal presence in Russia. There are a couple of within the Eurasian Economic Union (“EAEU”), of which exceptions; namely, the mentioned general rule does not apply to Russia is a member. Most of the related regulations concern the particular types of carriage contracts and works/services agree- quality and safety of certain types of goods intended for import ments if the work must be performed or the services must be and sale on the markets of the EAEU member countries. rendered exclusively in a country other than Russia.

1.2 What is the definition of “consumer” (i.e., who does 1.4 Which agency/agencies is/are responsible for consumer protection law protect)? enforcing consumer protection law (i.e., who is the investigator and who is the adjudicator)?

According to the Consumer Rights Protection Act, a consumer is: “a national (an individual) who has the intention to order or purchase The Federal Service for Surveillance on Consumer Rights or ordering, purchasing or using goods (work, services) exclusively for Protection and Human Wellbeing (“Rospotrebnadzor”) is a key personal, family, household and other needs not related to entrepreneurial regulator responsible for enforcing consumer protection law. activity.” Within each region of the Russian Federation, the highest exec- The Supreme Court of the Russian Federation further utive body of the region as well as local government bodies also confirmed that along with Russian nationals, the Consumer have certain powers in that regard. Additionally, there are public Rights Protection Act applies to foreign nationals and state- associations of consumers that actively monitor the protection less persons. Furthermore, the Court has stressed that this is of the relevant rights.

1.5 Are there any specific bodies that regulate/enforce particular goods (works), which after a certain period may pose consumer protection law in specific sectors? a danger to the life or health of the consumer, or cause harm to his property or the environment, the manufacturer must set the relevant service life or shelf life. Yes; in particular, economic sectors have specific authorised The manufacturer is obligated to ensure that a good can be bodies and organisations, which support the activities of the used during the entirety of its service life. For this purpose, the Rospotrebnadzor in the field of consumer protection. Additionally, manufacturer shall provide the repair and maintenance services in the financial services market there is the Bank of Russia and the and produce necessary spare parts. In the absence of a deter- Deposit Insurance Agency of Russia. While the Rospotrebnadzor mined service life, the manufacturer must comply with the works directly with nationals, the Bank of Russia supervises the above regulations for 10 years from the date of transfer of the activities of local banks and insurance agencies, and the Deposit goods to the consumer. Insurance Agency of Russia makes compensation payments to The manufacturer (contractor) can also set a warranty period depositors in connection with insured events, etc. for the goods (works or services) – i.e., a period during which, if the goods (works) are found to be deficient, the manufacturer 22 Protections in Relation to the Quality and (contractor), seller, authorised third party, or importer are obliged Function of Goods and Services to satisfy consumer claims. The seller has the right to establish a warranty period for the goods if the manufacturer does not set it. 2.1 Please describe any protections regarding the Both the manufacturer and the seller can accept additional obli- quality and function of goods and services acquired by gations to the consumers beyond the warranty period. consumers. It is worth mentioning that despite the fact that the warranty period can be of any duration, Russian consumer law vests The Russian Civil Code (Articles 469 and 721) and the Consumer consumers with the right to file complaints regarding the quality Rights Protection Act (Article 4) prescribe that a seller (performer of goods (works) within two years after their acceptance, subject or contractor) must only transfer goods (render services or to distribution of the burden of proof with respect to the iden- perform works) that comply with quality requirements prescribed tified defects. by law and by consumer contracts. In the absence of quality requirements in law or in a contract, a 2.3 What types of goods and services are covered seller (performer or contractor) is obliged to transfer goods (render by the protections relating to the quality of goods and services or perform works) that are suitable for the purposes for services? which the goods (works or services) of this kind are usually used. If a consumer communicates to a seller (performer or By default, Russian consumer laws apply to any relations arising contractor) specific goals of acquiring goods (performing between consumers and business entities that are manufac- works, rendering service), a seller (performer or contractor) is turers, performers, contractors, importers, sellers and owners obliged to transfer the goods (perform works, render services) of aggregators of information on goods (services) in connection suitable for use in accordance with these goals. with the sale of goods, or the performance of works or services. Furthermore, if goods are sold according to a sample and/ A general exception from said rule are gratuitous contracts or description, a seller is obliged to transfer to a consumer the (including free apps). There are also some other exceptions goods that correspond to the relevant sample and/or description. either directly mentioned in law or elaborated in case law; for example, relations which have arisen in connection with a loan 2.2 Please outline the substantive tests for these agreement concluded between a credit cooperative (being a protections. non-profit organisation) and an individual shareholder.

The Russian consumer laws distinguish two types of shortages 2.4 Are there any exceptions to these protections? in goods, works or services: 1. Regular defects – whereby goods (works or services) do A manufacturer, seller, importer, performer or contractor is not not comply with: mandatory legal requirements; contrac- responsible for the defects in the goods, works or services for tual terms; the purposes for which the goods (works or which the warranty period is not established, if the consumer services) of this kind are usually used; or with the purposes fails to prove that such defects arose before the goods, works or of a particular consumer if such purposes were communi- services were accepted by the consumer or due to reasons arising cated to the seller (contractor). up to this point. 2. Essential defects – whereby the defects in goods (works Furthermore, a manufacturer, seller, importer, performer or services) which are: irreparable; cannot be eliminated or contractor shall be released from liability in connection with without disproportionate costs or time; are detected defects in goods, works, or services if it can prove that such defects repeatedly; appear again after their elimination; or other arose after the consumer accepted the goods, works, or services, as similar defects. a result of a violation of the rules for using the goods or a result of In summary, a regular defect does not impede further use of the works (services), actions of third parties or force majeure. the goods, works or services (for example, a defect in the rear window heating in a new car), while in the case of an essential defect, the goods, works or services cannot be used for their 2.5 What remedies are available for a breach of the intended purpose (for example, a broken engine in a new car). protections in relation to the quality and function of For goods (works) intended for long-term use, a manufacturer goods and services? (contractor) can set a service life – the period during which the manufacturer (contractor) undertakes in order to provide a We have divided our answer into three parts: (1) remedies avail- consumer with an opportunity to use the goods (works) for the able in case of defective goods; (2) remedies available in case of intended purpose and will be liable for essential defects. For defective works or services; and (3) general remedies.

1. Defective goods – applicable remedies the Rospotrebnadzor and its territorial bodies; other authorised According to Article 18 of the Consumer Rights Protection bodies in cases of prescribed law; local authorities; and public Act, in case of defects in goods (if a consumer was not consumer associations which have the status of a legal entity. aware of such defects), a consumer may choose one of the following remedies: 2.7 Describe at least two examples of public or private i. replacement of the defective goods with goods of the enforcement of these protections in the last five years, same or a different brand (model, article) with a corre- including the conduct/alleged conduct, result and sponding adjustment to the purchase price (if applicable); penalties imposed. ii. corresponding reduction in the purchase price; iii. gratuitous elimination of the defects or recovery of Illustration No. 1 expenses incurred by the consumer in connection with Year: 2019 the elimination of such defects; or Parties: consumer and legal entity (large electronic household iv. unilateral termination of a sale-purchase contract with appliances store) a respective refund. The essence of the dispute: the plaintiff purchased a juicer At his sole discretion, a consumer can apply, with the listed product as part of a promotion held in the defendant’s stores, claims, to a manufacturer, seller, importer, or any author- which provided for additional opportunities for the buyer to ised third party within a warranty period declared by the exchange goods of proper quality, an increase in the exchange manufacturer. If the warranty is not determined, or if the period in comparison with the established Law of the Russian warranty period is less than two years, then the claims can Federation “On Consumer Rights Protection”, as well as the be made within a two-year period. exchange of goods in respect of which the buyer is not enti- In relation to technically complex goods, a list of which tled to make such a claim by law. However, the plaintiff filed is determined by the Decree of the Government of the claims for a refund of the amount of money paid for the goods Russian Federation of November 10, 2011 No. 924, the in connection with the return of the goods. rules are slightly different. Namely, in case of revealed Decision: the court refused to satisfy the claim for the protec- defects in such goods, a consumer can terminate a contract tion of consumer rights, since the rights of the consumer when with a full refund or require a replacement. These claims exchanging and returning goods within the framework of the should be made within 15 days, but may be made later in Law of the Russian Federation “On the Protection of Consumer the case of essential defects. Rights” are limited by the exchange period, the possibility of 2. Defective works or services – applicable remedies exchanging only for a similar product, as well as the list of goods According to Article 29 of the Consumer Rights Protection not subject to exchange. At the same time, the plaintiff did not Act, in case of revealed defects in works or services (if a exercise the right to exchange the goods for any other goods of consumer was not aware of such defects), a consumer may equal or greater value, granted to him by the said Law and the choose one of the following remedies: terms of the promotion, but made claims for the return of the i. gratuitous elimination of the defects in the works amount of money paid for the goods in connection with the performed (services rendered); return of the goods. The court also noted that the juicer is an ii. corresponding reduction in the price of the works electrical household appliance and refers to technically complex performed (services rendered); household goods. These types of goods are included in the list iii. repetition of the works or services at no additional of products that are not subject to exchange. cost; or iv. recovery of expenses incurred by the consumer in Illustration No. 2 connection with the elimination of shortcomings in Year: 2019 the works performed (services rendered). Parties: consumer and legal entity (clothing store) Should a contractor or performer fail to satisfy the claims The essence of the dispute: the consumer purchased a fur of a consumer, or in case of essential defects in the works product of an inappropriate size, in connection with which she or services, a consumer might unilaterally terminate the tried to exchange the purchased goods within the time limit contract. established by law and with the preservation of the presenta- A consumer can make claims related to the shortcomings tion, but the store refused to exchange the fur product. The of the works performed (the services provided) if they are consumer filed a claim for recovery from the defendant in revealed during the warranty period, and in the absence of connection with the refusal to perform the contract of sale, a warranty period, within two years from the day the works recovery of compensation for moral damage, compensation for or services were accepted by the consumer, or within five the provision of legal services and a fine for refusing to satisfy years if there are defects in a real estate object. the requirements of the consumer voluntarily. 3. General remedies Decision: the court satisfied the claim for consumer protection In addition to the specific remedies listed above, a partially, since the plaintiff appealed to the defendant with an consumer is also entitled to full compensation of losses application for the exchange of the purchased goods (fur prod- incurred in connection with the sale of defective goods ucts) within the established 14-day period, the product was not or provision of defective works or services. Moreover, a in use, and seals, labels and control identification marks were consumer can also require compensation for moral harm. retained. Thus, the defendant had no grounds to refuse to replace the goods with a similar product of the required size. 2.6 Who has or which agencies have standing to As a result: initiate proceedings for a breach? ■ compensation for damages was satisfied in full; ■ the penalty for refusing to voluntarily meet the customer’s requirements was fully met; The following parties can appeal to the state court in connection ■ the amount of compensation for non-pecuniary damage with the violation of consumer laws: consumers (i.e. Russian and was reduced in comparison with the claims initially stated foreign nationals, as well as stateless persons); the prosecutor; by the plaintiff; and

■ the reimbursement of court costs for the services of a subject to compliance with the Food Quality and Safety Act No. representative was reduced in comparison with the orig- 29-FZ of January 2, 2000 and Technical Regulations No. 880 of inal claims made by the plaintiff. December 9, 2011 “On Food Safety”.

32 Protections/Prohibitions in Relation to 3.4 Are there any exceptions to these protections? the Safety of Goods and Services A manufacturer or seller (performer or contractor) is exempted 3.1 Please describe any protections regarding the from liability if he proves that the damage caused to the safety of goods and services acquired by consumers. consumer is due to force majeure or violation by the consumer of the established rules for the use, storage or transportation of the Pursuant to Article 7 of the Consumer Rights Protection Act, goods (works or services). consumers have the right to ensure that the goods (works or services) – under normal conditions of use, storage, transpor- 3.5 What remedies are available for a breach of the tation and disposal – are safe regarding the life and health of protections in relation to the safety of goods and the consumer, as well as the environment. Moreover, the goods services? (works or services) should not harm the consumers’ property. Particular types of goods (including food products, clothes, Please refer to question 2.5. etc.) are also subject to compliance with specific procedures of Additionally, Article 14 of the Russian Consumer Protection conformity with mandatory safety requirements. Compliance Act and Article 1095 of the Russian Civil Code prescribe that of the goods shall be confirmed by a certificate, declaration sellers and manufacturers, as well as performers and contrac- of conformity, or a registration certificate. The details of the tors, must reimburse consumers for any damage caused to their relevant procedures are stipulated in the technical regulations life, health or property due to constructive, prescriptive or other enforced within the EAEU. defects of goods, works or services. There are also administrative and criminal penalties associ- 3.2 Please outline the substantive tests for these ated with selling goods (works) which do not comply with the protections. mandatory safety requirements.

The manufacturer (contractor) must ensure the safety of the 3.6 Are there mandatory reporting requirements with goods (works or services) during the determined service life or respect to the safety of goods or services? shelf life of the goods (works or services), or within 10 years from the date of production (if the manufacturer or contractor does not A manufacturer (contractor, seller, person performing the func- determine service life or shelf life for its goods, works or services). tions of a foreign manufacturer) who becomes aware of the If it is necessary to observe special rules in order to ensure the non-compliance of goods with the requirements of technical safe use of the goods (works or services), as well as their storage, regulations is obliged to inform a competent state authority transportation and disposal, the manufacturer (contractor) must within 10 days. indicate these rules in the accompanying documentation for the A seller (performer, person performing the functions of a goods (works or services), either on the label or by other means, foreign manufacturer) upon receiving said information, must and the seller (contractor) is obliged to bring these rules to the bring it to a manufacturer within 10 days. attention of the consumer. Any third party who is not a manufacturer (contractor, If it is established that, despite observance of all prescribed seller, person performing the functions of a foreign manu- rules, the goods (results of works) may still cause harm to the facturer) may also report to a competent state authority about life, health and property of the consumer, or the environment, the non-compliance of goods with the requirements of tech- the manufacturer (contractor, seller) must immediately suspend nical regulations. Upon receipt of such information, the state production (sale) of such goods (results of works), and, if neces- authority must notify the manufacturer (seller, person acting as sary, take measures to remove such goods (results of works) a foreign manufacturer) of its receipt within five days. from circulation and recall them from the consumer(s). The manufacturer (seller, person acting as a foreign manufac- If the cause of harm cannot be eliminated, the manufacturer turer) must verify the accuracy of the received information and (contractor) is obliged to remove such goods (works or services) undertake the necessary measures to ensure that the possible from production. If the manufacturer (contractor or performer) damage associated with the goods does not increase until the fails to do so, Russian public authorities shall take measures to verification is completed. If, upon the result of the verification recall the relevant goods from the domestic market and/or from procedure, it is confirmed that the goods do not comply with the consumers. mandatory requirements, the manufacturer (seller, person acting Any damage caused to consumers in connection with the as a foreign manufacturer) must develop a programme of meas- recall of goods (works or services) shall be compensated by the ures to prevent potential harm and confirm such programme manufacturer or contractor. with a competent state authority. If the developed programme does not eliminate possible 3.3 What types of goods and services are covered harm, the manufacturer (seller, person acting as a foreign manu- by the protections relating to the safety of goods and facturer) must immediately suspend the production and sale of services? the goods, recall the goods and reimburse buyers, including consumers, with the relevant losses. Please refer to question 2.3. In case the manufacturer (seller, person acting as a foreign For certain types of goods, there are specific statutory laws manufacturer) fails to comply with the above requirements, the as well as technical regulations of the EAEU stipulating safety state authority can apply to the court with a claim for forced requirements and criteria; for example, food products are recall of the goods.

3.7 Describe any voluntary or mandatory product services) at a higher price than indicated on a price tag, on safety recall regimes. the labelling of the goods (works or services), or what was determined by state authorities; 4. misrepresentation regarding consumer properties or the Please refer to questions 3.1 and 3.6. quality of goods (works or services) – sale or transfer of goods (performance of works, provision of services) in 3.8 List at least two examples of public or private violation of the requirement to indicate consumer prop- enforcement of these protections in the last five years, erties and provide accurate information about consumer including the breach/alleged breach, result and penalties properties or the quality of goods (works or services), as imposed. well as abuse of consumer confidence; and 5. other consumer fraud – violation of other conditions of Illustration No. 1 contracts; for example, sales of counterfeit goods or sales Year: 2020 of goods wherein the information about the country of Parties: Rospotrebnazor and individual entrepreneur origin is not true. The essence of the dispute: The Rospotrebnadzor carried out labo- ratory tests in relation to the defendant’s products sold, namely liquids for refueling electronic cigarettes, as part of the admin- 4.2 Please outline the substantive tests for the abovementioned protections/prohibitions. istrative investigation. It turned out that the use of these products, accompanied by the release into the environment of various chemicals identified in liquids, poses a threat of harm to the life According to Article 10 of the Consumer Rights Protection and health of citizens. As a result, the samples do not correspond Act, a manufacturer (seller, contractor or performer) must, in to the information for the consumer printed on the label. a timely manner, provide the consumer with necessary and reli- Decision: the Court found that the guarantees related to the able information about the goods (works or services), ensuring safety of the goods were violated. The individual entrepre- the possibility of their correct choice. neur was brought to administrative responsibility, and a fine of The list of information includes, inter alia, information on the 30,000 RUB (approx. 396 USD) was imposed. basic consumer properties of the goods (works or services), total purchase price (in Russian rubles), warranty period – if estab- Illustration No. 2 lished, etc. Year: 2019 The relevant information shall be brought to the attention of Parties: The Rospotrebnadzor and legal entity consumers in the technical documentation attached to the goods The essence of the dispute: it was found that the defendant (works or services), on labels, or in any other way accepted for sells children’s shoes, during the wearing of which children certain types of goods (works or services). The relevant infor- experienced pain and allergic reactions. According to the mation must be provided in the Russian language and in a read- results of the examination, the products pose a threat to the life able format. and health of consumers. Nevertheless, there is an indication In relation to specific types of goods (works or services), the of 100% polyester in the shoes on the marking on the lining list and methods of bringing information to the consumer are side. The Rospotrebnadzor imposed an administrative penalty in established by the Government of the Russian Federation. the form of a fine, the total amount of which was 410,000 RUB If the manufacturer (seller, contractor or performer) does not (approx. 5,412 USD). fulfil these obligations, he shall be liable as specified at ques- Decision: the court agreed with the position of the Rospotrebnadzor tion 4.4 below. establishing that the products sold by the company do not meet the requirements of technical regulations and pose a threat to the 4.3 Are there any exceptions/exemptions to the life and health of children. The court also rejected the compa- protections/prohibitions relating to Conduct? ny’s arguments that since these are children’s sports shoes, they assume short-term wear. Thus, the guilt of the legal entity was proved. The manufacturer (seller, contractor or performer) may be exempted from liability for damages if it is proved that the 42 Prohibitions Relating to “Conduct” missing information on the goods (works or services) is classified as well-known data that the consumer should know about Against Consumers and does not require special knowledge.

4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., 4.4 What remedies are available for a breach of the manufacturers/retailers) which sell or supply goods protections/prohibitions relating to Conduct? and services to consumers (“Conduct”). For example, misleading and deceptive conduct, unconscionable According to Article 12 of the Consumer Rights Protection conduct, etc. Act, if the consumer is not provided with necessary and reliable information, he is entitled to claim damages or may unilaterally Russian law prevents manufacturers, sellers and performers terminate the contract and request a refund. (contractors) from misleading and deceptive conduct. Additionally, should the lack of necessary information lead to There are several forms of such conduct, namely: defects in the goods (works or services), the consumer shall also be 1. false measurement – sales of goods of a smaller volume entitled to the remedies stipulated at question 2.5 of this chapter. than determined by a contract; Failure to provide necessary and reliable information to the 2. false weight – sales of goods of less weight (volume) than consumer may also lead to administrative liability for the manu- determined by a contract; facturer (seller, contractor or performer) in accordance with the 3. cheating in accounts – charging at a higher price than Code of Administrative Offences of the Russian Federation. determined by a contract, or sales of goods (works or

4.5 List at least two examples of public or private legislation, dietary supplements are included in the list of enforcement of the protections relating to Conduct in products that are considered unsuitable for their intended the last five years, including the breach/alleged breach, use after the expiration date. Evidence confirming that result and penalties imposed. the necessary information was brought to the attention of the plaintiff was not provided. Illustration No. 1 As a result, the court partially satisfied the plaintiff’s claims: Year: 2016 ■ compensation for damages in full; Parties: consumer and legal entity ■ reimbursement of legal expenses; The essence of the dispute: the consumer signed a contract ■ the amount of compensation for non-pecuniary damage for the purchase and sale of a Biomedis device at the suggestion was reduced; and of a representative of the company who arrived at the apartment ■ the penalty and fine were refused. at the location of the plaintiff. A few days later, the plaintiff received a call from another representative of the legal entity, who Illustration No. 2 introduced himself as a doctor and offered to undergo a medical Year: 2021 examination at the private clinic. According to its results, the Parties: consumer and legal entity consumer was informed about the possibility of having cancer The essence of the dispute: the consumer had entered into a and recommended treatment. Being under the impression of the contract for the provision of legal services with the defendant. information, a contract for the purchase and sale of a number She believed that the services under the contract were not fully of drugs was signed with the company’s courier who arrived at rendered, and she was misled about the scope and cost of the legal the apartment of the plaintiff. The consumer assumed that he services provided to her. The consumer appealed to the court with was buying medicines. Later it turned out that he was prescribed a claim for termination of the contract, recovery of funds paid dietary supplements. After visiting the state hospital, the plain- under the contract and compensation for non-pecuniary damage. tiff became aware of the absence of grounds for making the above Decision: the court refused to satisfy the claims. The services diagnosis, performing procedures using the Biomedis device and under the contract were rendered by the defendant in full, as using drugs purchased under the influence of deception, which evidenced by the act of services performed, signed by the plain- was immediately reported to the company with an offer to volun- tiff. The consumer did not send any comments, including those tarily return the money and get the goods back. related to the quality and volume of services rendered, within 10 The plaintiff asked the court to recover the 414,800 RUB days from the date of receipt of the act, and therefore accepted (approx. 5,476 USD) paid for the goods, the penalty for refusing the volume and quality of services performed in full. The court to satisfy the buyer’s claims voluntarily in the amount of 400,000 found no grounds for misleading the consumer. RUB (approx. 5,280 USD), compensation for non-pecuniary damage for 70,000 RUB (approx. 924 USD) as well as court costs. 52 Other Protections/Prohibitions Decision: the Court pointed out the following: ■ In the contracts for the purchase and sale of drugs and the 5.1 Does consumer law in your jurisdiction have device, it was stated that the seller provided the buyer with any other prohibitions/protections not covered by information about the main consumer properties of the the questions above? If so, please describe these product before entering into the contract. However, the prohibitions/protections. defendant did not provide evidence of what information was brought to the consumer, and whether the plaintiff The Consumer Rights Protection Act also prevents a business could conclude from the complex of information provided from committing the following actions: that it was necessary to purchase this product. 1. It is prohibited to include terms that infringe the consumers’ ■ The method of selling the goods during a visit to the rights, in comparison with the rules established by laws or plaintiff’s apartment deprived the consumer, taking into other legal acts of the Russian Federation, in the contracts account his elderly age (95 years), of the opportunity to with consumers. A consumer may apply before the court to obtain information about consumer qualities and charac- declare such terms void and require a business to compen- teristics before entering into a contract of sale. There is no sate all losses incurred by the consumer due to the above. certainty that the choice was reasonable and free. 2. It is prohibited to condition the purchase of particular ■ It did not follow that the consumer was informed about goods (works or services) by the purchase of other goods the consumer properties of the product, ensuring the (works or services). For violation of this rule, a consumer possibility of its correct choice. The defendant had not shall be entitled to compensation of his losses in full. provided any evidence confirming the proper perfor- 3. It is prohibited to condition the satisfaction of the mance of the obligations under the contract of purchase consumers’ claims made during the warranty period with and sale of the device. any other condition not related to the defects in the goods ■ Furthermore, the plaintiff had no intentions to purchase (works or services). the above-mentioned goods and did not perform any inde- 4. A seller (contractor) is also not entitled to perform addi- pendent actions aimed at searching for similar goods tional works or services for a fee, unless there is explicit and visiting places of sale before receiving information written consent from the consumer. Otherwise, the about the threat to life and health. When signing sales consumer has the right not to pay for such works (services). contracts, the consumer was guided by the recommenda- It is also worth mentioning that the Consumer Rights tions received by phone that the drugs necessary for treat- Protection Act stipulates specific terms for performing works ment are medicines. and services under a consumer contract, and the corresponding ■ The shelf life of dietary supplements, taking into account statutory penalties for violation of the terms. The law also stip- the fact that the plaintiff was intended to take 180 ulates a penalty for refusing to satisfy consumers’ claims volun- capsules, went beyond its limits. According to the Russian tarily, and this fine is equal to 50% of the amount of consumers’ claims subsequently satisfied by the court.

5.2 Please outline the substantive tests for the above- the insurance service in rubles is not specified in the loan agree- mentioned protections/prohibitions. ment, and this information is not included in the documents that are integral parts of the loan agreement. The plaintiff believed that the bank thereby violated the Law of the Russian Federation Please see question 5.1. “On Protection of Consumer Rights”, according to which the consumer, as a person who does not have special knowledge, 5.3 Are there any exceptions/exemptions? should not make mathematical calculations to set the price of a service or product. General exceptions apply. Decision: the court refused to satisfy the claims. Within the meaning of the law, the case was deemed a refusal to perform the contract, because it was concluded without providing the 5.4 What remedies are available for a breach of these necessary information that allowed the plaintiff to evaluate all protections? the conditions and make the right decision about whether he was ready to enter into an insurance contract with a particular Please refer to question 5.1 of this chapter. company, or wanted to apply to another, or did not want to Along with consumers’ claims, any mentioned violation of insure the risks at all, possibly within a reasonable time. The the Consumer Rights Protection Act may lead to administrative consumer used the presented package of insurance services for liability for the business. 24 months, with the validity period of the loan agreement and the insurance contract for 36 months, and the claims for refusal 5.5 List at least two examples of public or private to perform the insurance contract and refund of the insurance enforcement of these protections in the last five years, premium were declared much later. Accordingly, the criterion of including the breach/alleged breach, result and penalties a reasonable time for refusal of the contract by the plaintiff was imposed. not met and the court had no grounds for collecting funds and satisfying derivative claims. Illustration No. 1 Year: 2018 62 Investigation of Potential Breaches Parties: consumer and legal entities The essence of the dispute: the consumer entered into a 6.1 What powers does/do the consumer authority/ contract for the provision of services for the implementation of authorities in your jurisdiction have to investigate a tourist trip to Italy in the manner and on the terms set out potential breaches of consumer law? Describe the key in the contract. However, the services were not provided to steps in a typical investigation. him, since the tour to Italy did not take place, due to the refusal of the Consulate of the Italian department to grant him a visa. Like many other Russian public authorities, the Rospotrebnadzor The consumer believed that the tour operator did not ensure the is entitled to conduct examinations (inspections) of business proper processing of visa documents with the justification of the entities aimed at ensuring compliance of their activity with the purpose and conditions of the planned stay, which resulted in applicable laws. The Rospotrebnadzor and its territorial bodies the refusal to grant him a visa and causing losses. carry out such activities in the field of compliance with Russian Decision: the court found that the tour operator was respon- consumer laws. sible for providing services of inadequate quality in case of The Rospotrebnadzor carries out: failure to provide the consumer with the necessary informa- 1. regular inspections of businesses every three years (or tion on the preparation of documents under the contract for more frequently in certain cases), in accordance with a the sale of a tourist product, which resulted in the refusal to pre-approved schedule, which is publicly available; and issue a tourist visa. The consumer has the right to demand full 2. unscheduled inspections (investigations) in cases stipu- compensation for the losses caused to him in connection with lated by law, for example upon a consumer’s complaint. the lack of the rendered service, including the failure of the Inspections could be further divided into the categories of contractor to provide the consumer with necessary and reliable documentary and field. information on the preparation of documents for obtaining a Generally, any inspection carried out by the Rospotrebnadzor visa to enter the country of temporary residence timely. As a consists of the following steps: result, the plaintiff’s claims were partially satisfied: 1. Preparatory stage (plan approval, getting necessary ■ full compensation for damages; approvals from the prosecution office, notification of ■ interest was collected for the use of other people’s funds; the businesses (within 24 hours to three days before the ■ fine collected; inspection) and briefing the businesses with an order on ■ recovery of compensation for non-pecuniary damage (the the inspection and related information, if required by law). amount was reduced); and 2. Stage of inspection (review of documents, examination ■ compensation for legal expenses for legal services was of the territories, buildings, and structures, sampling and refused. testing, expert examinations and investigations aimed at establishing a causal link between the revealed violation of Illustration No. 2 mandatory requirements and the inflicted harm). Year: 2016 3. Reporting the results of the inspection (preparing an Parties: consumer and legal entity (bank) inspection report and sending it to the inspected entity The essence of the dispute: a contract was concluded between and the prosecution office (if required by law). In case the consumer and the bank, under the terms of which the plain- violations are identified as a result of the inspection, the tiff was granted a loan. On the day of its conclusion, the borrower Rospotrebnadzor and its territorial bodies take measures was charged a fee for connecting a package of personal insur- aimed at holding the responsible business entity liable in ance services. The amount of the payment for the activation of accordance with the current legislation).

6.2 How is an investigation triggered (e.g., ex officio, 6.6 Can investigations be resolved by way of whistleblower or complaint)? commitments or undertakings?

In accordance with the Rospotrebnadzor order No. 764 of July 16, The Rospotrebnadzor and the defendant can conclude a settlement 2012 establishing an administrative regulation of inspections, agreement, but it must be approved by the court. The settle- territorial bodies of the Rospotrebnadzor shall conduct regular ment agreement must not contradict the law or violate the rights inspections based on the annual scheduled plan. and interests of others. Further, the court will not support the The bases for an unscheduled investigation are the following: agreement if there is no proper expression of the will of the i. expiry of the term for elimination of violations revealed parties or it contains uncertain and unenforceable conditions. during the previous inspections; ii. complaints submitted by individuals (consumers), legal 72 Enforcement entities, or self-employed entrepreneurs, or information from state authorities, local authorities, or the media about 7.1 How does/do the consumer authority/authorities the following facts: seek to enforce consumer law (for example, by a. a threat of harm to the life and health of consumers, as administrative decision or by commencing proceedings well as a threat of emergency situations of a natural or in court)? man-made environment; b. infliction of harm to the life and health of consumers, The Rospotrebnadzor has a whole set of mechanisms and tools with as well as the occurrence of emergency situations of a which it can ensure the enforcement of consumer law including natural or man-made environment; or through both administrative decision and by commencing c. violation of consumer rights (upon complaint of the proceedings in court. consumer whose rights were violated); iii. an order (instruction) from the head of the Rospotrebnadzor issued in accordance with instructions from the President 7.2 Is/are the consumer protection authority/ of the Russian Federation or the Government of the authorities bound by a time limit to commence Russian Federation; and proceedings on breaches? iv. a request from the prosecution office. There is a two-month statutory limitation period to commence the enforcement proceedings in connection with violations 6.3 Describe any complaints procedure for (i) consumers, and (ii) businesses. of Russian consumer law if such proceedings are initiated by the territorial bodies of the Rospotrebnadzor, and a three-month period if the relevant proceedings are initiated by the court. A consumer or business may file a written complaint to the In case of a continuing administrative offence, the terms are Rospotrebnadzor in person, by post, by fax or electronically through calculated from the day the administrative offence was revealed. the official website. The claims should be considered within a 30-day period in accordance with the Law on the Procedure for Considering Applications to State Agencies No. 590-FZ of May 7.3 Describe the enforcement powers/tools available to 2, 2006. In exceptional cases, the term of consideration can be these bodies (civil, administrative, criminal). prolonged for an additional 30 days. The Rospotrebnadzor may bring business entities to administrative liability for violations of Russian consumer law. In particular, 6.4 What is the timeline for a typical investigation? the Rospotrebnadzor may apply the following sanctions: warnings; fines; suspension of business activities; and confiscation. By default, an investigation should be completed within 20 Consumers and the Rospotrebnadzor can apply to the court, working days. In certain cases, the term can be longer or shorter. which can oblige the infringer to pay penalties and compensate for damages, moral harm, other harm caused by defective goods 6.5 Are there criminal penalties for non-compliance (works or services) and other violations of Russian consumer law. with a consumer law investigation? If so, provide There are also criminal penalties prescribed by the Criminal examples where such penalties have been imposed. Code of the Russian Federation, which could be applied by the state courts in connection with particular violations of Russian Yes, in Russia, criminal penalties for non-compliance with a consumer law. The respective penalties could involve: fines; consumer law investigation may be imposed. Criminal liability deprivation of engagement in certain activities; compulsory, for violation of consumer rights is provided, in particular: corrective, or forced labour; a legal sentence; or imprisonment. ■ for violation of sanitary and epidemiological rules; ■ for the production, storage, transportation or sale of 7.4 Where regulators/enforcement bodies have goods, performance of works or provision of services that a choice of enforcement tools/powers, what do not meet safety requirements; and considerations do they take into account in determining ■ for the circulation of counterfeit, substandard and unreg- which tools/powers to use? istered medicines, medical products and the turnover of falsified dietary supplements. According to the Code of Administrative Offences of the Russian For these crimes, a wide variety of punishments are provided Federation and the Criminal Code of the Russian Federation, (from a fine to imprisonment). when imposing an administrative or criminal punishment, the nature of the violation, the identity of the perpetrator, his property status (if this is an individual), the mitigating circumstances and the aggravating circumstances are taken into account.

7.5 Describe the relevant rules and procedures that ■ there are 10 days from the date of delivery or receipt of must be followed by such bodies (e.g., administrative, a copy of the resolution (the period can be restored on judicial). certain occasions); and ■ the complaint can be sent either immediately with Please refer to questions 6.1–6.3 of this chapter. all the materials of the case to the higher body of the Rospotrebnadzor, or to the official who made the initial decision on the case so that he/she by his/herself will 7.6 Is there a right to a stand-alone action and follow forward the materials up to the instance (he/she has on right of action within consumer law? Who has three days for that). standing to bring these actions? 2. If there is an appeal against decisions and actions (inac- tion) of officials of the Rospotrebnadzor in the exercise of Russian law does not recognise such concepts in the field of state control, then: consumer law. ■ a complaint is filed; Based on the Consumer Rights Protection Act, a consumer ■ there are 15 days from the date of receipt of the inspec- can independently appeal to the court to initiate civil proceed- tion report; ings against businesses in connection with the violation of ■ the objection is considered by a higher structure; and consumer rights, or appeal to a competent state authority ■ the total period of consideration is no more than 30 (including the Rospotrebnadzor), which will either conduct the calendar days from the date of registration of the investigation and bring the business to administrative liability, complaint. However, sometimes the deadline may be or apply before the court to protect the consumer’s rights extended by more than 30 days, and the applicant must through legal proceedings. be notified of that.

7.7 Is there a statute of limitations for bringing stand- The appeal process within the court alone or follow on actions? As a general rule, the appeal takes place in the arbitration court. There are three months to appeal from the date of making decisions or performing actions by officials of the Rospotrebnadzor Depending on the nature of the particular claim, a consumer is during the exercise of state control or from the day when entitled to apply before the court within the warranty period, consumers became aware of the violation of their rights, free- service life, or within general statutory limitation periods, which doms and/or legitimate interests. could be one or three years. In relation to the statutory limitation terms to apply administrative penalties, please refer to question 7.2. 8.2 Can consumers or retailers/manufacturers appeal decisions made by the consumer authority/authorities or by a court? 7.8 Describe any international or regional cooperative mechanisms (e.g., MOUs) in which your jurisdiction is involved in the enforcement of consumer protection. Yes, that is possible (please see question 8.1 above).

Russia participates in the following international structures 8.3 Does an appeal suspend the effect of any penalty/ actively: the requirement to pay any fine (if applicable)? ■ the United Nations (“UN”) including the World Health Organization (“WHO”) and the United Nations Conference The appeal process within the consumer authority on Trade and Development (“UNCTAD”); Suspension of the term of execution of the order is possible. ■ the Organisation for Economic Co-operation and Development (“OECD”); The appeal process within the court ■ the International Financial Consumer Protection The orders are automatically suspended until the decision on the Organisation (“FinCoNet”); case comes into force, and during this period the supervisory ■ the International Consumer Protection and Enforcement authority has no right to check the execution of the contested Network (“ICPEN”); order, even if it is recognised as legal. ■ the G20; When appealing a part of an order, the non-contested part of ■ the Shanghai Cooperation Organization; the order is subject to control, and the execution of the appealed ■ BRICS; points is suspended. ■ the Advisory Council on Consumer Rights Protection of the CIS participating States; and 92 Current Trends and Anticipated Reforms ■ the Advisory Committee on Consumer Rights Protection of the Member States of the Eurasian Economic Union. 9.1 What are the recent enforcement trends in your jurisdiction? 82 Appeals Every year, the Rospotrebnadzor publishes state reports on the 8.1 Describe any appeal processes. protection of consumer rights in the Russian Federation. At this point, there is no report for 2020. Moreover, the information The appeal process within the consumer authority for the previous year is not entirely indicative due to the global 1. If there is an appeal against decisions in cases of adminis- COVID-19 pandemic, as the associated decline in law enforce- trative offences, then: ment is obvious. ■ a complaint is filed;

If we focus on 2019, before COVID-19, the following trends ■ Draft law on the protection of consumer rights in the in law enforcement practice should be distinguished: conclusion of credit agreements is currently being consid- ■ The trend of the last three years (before 2019) of a slight ered. Banks will be prohibited from signing agreements increase in the receipt of complaints to the Rospotrebnadzor with borrowers where there will be pre-printed marks of on consumer protection issues continued (by 13.1% more consent to the terms of lending or the purchase of addi- than in 2018). tional services. Moreover, all the provisions must be spec- ■ The trend towards an increase in the number of requests ified directly in the concluded agreement, without sending from state authorities and local self-government bodies them to the bank’s website for review. continued, which indicates the strengthening of interac- ■ The Rospotrebnadzor proposes making a number of changes. tion between all the links forming the national system of If goods or services do not have a warranty period, the consumer protection (18.6% more than in 2018). seller or manufacturer will be responsible for their quality ■ In 2019, 359,664 appeals were considered, 15,084 reports during the year. If they do not want to change the goods on administrative offences were drawn up on the facts of with a defect or return money for poorly performed identified violations (in 2018, 319,456 appeals were consid- services, then the seller or manufacturer will have to prove ered, 15,036 reports on administrative offences were that the buyer has just damaged the goods. drawn up), 3,436 claims (applications) were filed with the ■ It is also proposed that other laws may provide additional judicial authorities (in 2018 – 3,411 claims), and 105 mate- guarantees of consumer rights; however, the reduction of rials related to violations of mandatory requirements were the guarantees of consumer rights established by the Law sent to resolve the issue of initiating a criminal case (in “On the Protection of Consumer Rights” is not permitted. 2018 – 70 materials). Rules on the rights of consumers that worsen the situation ■ The Rospotrebnadzor conducted 85,213 inspections in 2019 of consumers or establish lesser guarantees in comparison (41.4% more than in 2018). However, despite the increase with the rules established by this law are not subject to in the number of inspections in 2019 compared to 2018, application. general statistics show a steady decline in the total number ■ Some amendments provided by the Rospotrebnadzor relate of inspections over the past 10 years. to the rules on service life and warranty periods. ■ Among the violations qualified under the provisions of the ■ It is also proposed as a general rule to fix the law to ensure Law “On Consumer Rights Protection”, a high proportion that the penalty for late performance by the seller (manu- of violations of consumer rights to information remains, facturer, authorised organisation or authorised sole propri- namely 64% (in 2018 – 58.9%). etor, importer) of consumer requirements in respect of In 2019, 38 materials were sent to law enforcement agencies to goods may not exceed the total price of the goods. In initiate criminal cases (in 2018 – 41). case of a long-term violation, the consumer will be able to claim a penalty in the amount of five times the price of the product for each month of delay. 9.2 Are there any proposed reforms to consumer law or policy within the next 12 months? ■ There is a proposal to oblige business entities to inform consumers about the address of their website and email (if available). Yes, which are as follows: ■ Finally, there is a proposal to introduce a condition ■ Draft law on alternative settlement of consumer claims. for the release of an economic entity from a fine for In particular, the Draft law provides for the creation of non-compliance with the requirements of the consumer an online dispute resolution service for consumer protec- voluntarily (currently, there are no such conditions). For tion which would provide a process for filing, examining example, if the seller proves that he could not satisfy the and settling consumer claims in pre-trial settlements of consumer’s claim due to the consumer’s fault or force majeure. disputes relating to the sale of goods (works, services) via the internet.

Ksenia Erokhina is a Senior Associate of Commercial Practice at ALRUD Law Firm. Ksenia advises clients on various aspects of commercial and contract law, including e-commerce, consumer protection, and procurement law (including State procurement). In addition, Ksenia represents clients in commercial disputes, as well as at the stage of pre-trial settlement and during the mediation processes. Ksenia also has extensive experience in advising and representing clients in anti-dumping investigations, initiated by the Eurasian Economic Commission, in relation to foreign suppliers of goods, for various purposes.

ALRUD Tel: +7 495 234 96 92 17 build. 2, 6th Floor Email: [email protected] Skakovaya Street URL: www.alrud.ru Moscow 125040 Russia

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12 General consumer protection law.

1.1 What legislation, regulations and guidelines are 1.4 Which agency/agencies is/are responsible for relevant to consumer protection in your jurisdiction? enforcing consumer protection law (i.e., who is the investigator and who is the adjudicator)?

There is general legislation for the entire Spanish territory and specific legislation for each Autonomous Community, which only Consumer and user associations that meet the requirements of applies to that territory. In addition, some rules by sector and national law, or the requirements of Autonomous Communities European Union legislation must be added. that have autonomous law, are in charge of defending the By way of national legislation, there is the Spanish Constitution legitimate rights and interests of consumers, including their of 1978 and the Consumer Law approved by Royal Legislative information, training and education, either generally, or in rela- Decree: tion to certain products or services. They are also the only ones ■ The Spanish Constitution of December 27, 1978, in authorised to act on behalf of and represent consumers and users. article 51 sections 1 and 2, establishes: “The public powers will guarantee the defense of consumers and users, protecting, through effec- 1.5 Are there any specific bodies that regulate/enforce tive procedures, their safety, health and legitimate economic interests. consumer protection law in specific sectors? They will promote the information and education of consumers and users, they will promote their organizations and will listen to them in matters that may affect them, in the terms established by law.” Yes. There are specific bodies for: banks and financial entities; ■ Royal Legislative Decree 1/2007 of November 16 investments and insurance; telecommunications; air transporta- approved the consolidated text of the General Law for the tion; supply companies; protection of personal data; and certain Defense of Consumers and Users, and other complemen- other sectors. tary laws. In January 2021, the updated Consumer Law states that in ■ Royal Decree-Law 1/2021 of January 19, on the protec- relation to commercial practices related to financial services and tion of consumers and users against situations of social real estate, and in the fields of telecommunications or energy, and economic vulnerability. legal or regulatory standards may be established in order to offer greater protection to the consumer or user.

1.2 What is the definition of “consumer” (i.e., who does consumer protection law protect)? 22 Protections in Relation to the Quality and Function of Goods and Services According to article 3 of the Consumer Law: “Consumers or users are individuals who act for a purpose other than their commercial, business, 2.1 Please describe any protections regarding the trade or profession. Consumers for the purposes of this rule are also legal quality and function of goods and services acquired by persons and entities without legal personality that act non-profit in an area consumers. unrelated to a commercial or business activity.” The new update to the Consumer Law added a new category, There is cooperation in matters of quality control with the Public “vulnerable consumers”, referring to individuals who, individu- Administration, through information, studies, surveys, etc. ally or collectively, due to their characteristics, needs or personal, Before the consumer and user is bound by a contract and and economic, educational or social circumstances, are, even corresponding offer, the entrepreneur must provide them, in a if territorial, sectoral or temporarily, in a special situation of clear and understandable way unless it is evident by the context, subordination, defencelessness or have a lack of protection that with relevant, truthful and sufficient information on the main prevents them from exercising their rights as consumers under characteristics of the contract, in particular on its legal and equal conditions. economic conditions. Without prejudice to the sectoral regulations that may be 1.3 Who is/which entities are required to comply with applicable, the terms in which said information is provided, consumer protection law? mainly in the case of vulnerable consumers, in addition to being clear, understandable, truthful and sufficient, will be provided in an easily accessible format, guaranteeing where appropriate the It is mainly companies who are required to comply with

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necessary assistance in such a way to ensure the consumer has an acquire it in those establishments that guarantee correct and complete adequate understanding and to allow optimal decision-making information on food. TO THE SECTOR: It is necessary that the for their interests. sector involved in the commercialization of olive oil, especially virgin and extra virgin olive oil, has an exhaustive knowledge of the regulations applicable to the activity carried out for the purpose to observe 2.2 Please outline the substantive tests for these strict compliance with existing requirements. Likewise, from their protections. responsibility as a professional, they are obliged to carry out correct practices, providing the consumer with properly labeled products, as a As examples: means of guaranteeing appropriate information.” ■ For secure online purchases, there are checks as to whether ■ On March 2, 2020, the Provincial Court in Valencia declared the store has the “https” protocol page. the expense clause null (within the blacklist of abusive ■ For toys, there are checks as to whether they have the CE clauses of consumer law). The financial institution is obliged symbol on the label. These requirements must be accred- to return what was charged for the appraisal/valuation of the ited by companies deserving of state quality awards or mortgaged property, as it is an abusive clause. distinctions. All goods and services made available to consumers and users 32 Protections/Prohibitions in Relation to must be easily accessible and understandable and in any case the Safety of Goods and Services incorporate, accompany or allow to obtain in a clear and understandable way, truthful, effective and sufficient information on its essential characteristics. 3.1 Please describe any protections regarding the safety of goods and services acquired by consumers.

2.3 What types of goods and services are covered Goods or services are required to be safe. Goods or services by the protections relating to the quality of goods and that, under normal or reasonably foreseeable conditions of use, services? including their duration, do not present any risk to people’s health or safety, or only the minimum risks considered safe and The protections cover those that are offered in the market to compatible with the use of the good or service, are considered users and consumers. safe. They are admissible within a high level of protection of human health and safety. 2.4 Are there any exceptions to these protections? 3.2 Please outline the substantive tests for these Data obtained at the request of another Public Administration protections. cannot be published if there is express opposition to their publication. The substantive tests are as follows: a) A prohibition on having or storing products that are not legally permitted or are prohibited, in the premises or 2.5 What remedies are available for a breach of the facilities of production, transformation, storage or trans- protections in relation to the quality and function of goods and services? portation of food or beverages. b) Maintaining the necessary control so that the origin, distribution, destination and use of potentially unsafe goods, See question 3.5 below. those containing substances classified as dangerous or those subject to traceability obligations can be quickly and 2.6 Who has or which agencies have standing to efficiently verified. initiate proceedings for a breach? c) The prohibition of home sales of beverages and food, without prejudice to the delivery, distribution or supply of those acquired or ordered by consumers and users in The recipient of damages has standing to initiate such proceed- commercial establishments authorised to sell to the public, ings. Please also see question 8.2. and the authorisation regime for direct home sales that are traditionally practised in certain areas of the national 2.7 Describe at least two examples of public or private territory. enforcement of these protections in the last five years, d) Compliance with the regulations established by local enti- including the conduct/alleged conduct, result and ties or, where appropriate, the Autonomous Communities penalties imposed. on the cases, modalities and conditions under which the street sale of beverages and food may be carried out. The following are examples of the aforementioned protections e) A prohibition on supplying goods that lack the mandatory being enforced: security marks or the minimum data that allow for identi- ■ In 2018, there was a national campaign to review compli- fication of the person responsible for the property. ance with regulations for virgin and extra virgin olive oil, f ) The obligation to withdraw, suspend or recover from which involved a review of its label and commercial cate- consumers and users, through effective procedures, any gory analysis. goods or services that do not meet the required conditions The result was as follows (“information note from the and requirements or that, for any other reason, pose a fore- Consumer Cooperation Commission”): seeable risk to the health or safety of consumers. “TO THE CONSUMER: The consumer must know the rights g) A prohibition on importing products that do not comply that assist him in the matter of labeling of olive oil, with special atten- with the provisions of this standard and the provisions tion to virgin and extra virgin olive oil, in order to be able to choose to that develop it.

h) The control requirements of manufactured products that 3.8 List at least two examples of public or private may affect the physical safety of consumers, paying due enforcement of these protections in the last five years, attention in this regard to repair and maintenance services. including the breach/alleged breach, result and penalties i) A prohibition on using ingredients, materials and other imposed. elements that may generate risks to consumers’ health and safety. In particular, there is a prohibition on using such An example of these protections being enforced, regarding materials or elements in the construction of houses and health, involved the withdrawal of COVID-19 tests that did not premises for public use. pass the quality tests. There was a new batch request to the same Chinese company during the state of alarm, and the new order 3.3 What types of goods and services are covered was received without problems. by the protections relating to the safety of goods and An order was published on April 19, 2020, which guaran- services? teed that all consumers in Spain would have access to means of protection (masks, gloves, gels) and that the maximum market Food or beverages, security-branded goods, imported products, prices would be set. The content description would also be manufactured goods and health products are covered by these entered on their labels. protections. 42 Prohibitions Relating to “Conduct” 3.4 Are there any exceptions to these protections? Against Consumers

Cosmetic and personal care products are governed by their 4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., own regulations. However, in case of serious risks regarding manufacturers/retailers) which sell or supply goods cosmetic products, they would be included in the European and services to consumers (“Conduct”). For example, Rapid Information Exchange System (RAPEX) for the knowl- misleading and deceptive conduct, unconscionable edge of the European Commission and the competent authori- conduct, etc. ties of other Member States. The following protections include any conduct that is contrary 3.5 What remedies are available for a breach of the to good faith, taking the average consumer as a reference. protections in relation to the safety of goods and Among others, these protections include: “[ T]he introduction services? of abusive clauses in contracts, unjustifiably limiting the consumer’s right to end the contract for the provision of services or the supply of products of Please see question 3.7 below. a continuous successive tract, hindering the exercise of such consumer right through the agreed procedure, not foreseeing this procedure, not communicating to the user the procedure to unsubscribe from the service, refusing to 3.6 Are there mandatory reporting requirements with satisfy the requests of the consumer or user whatever their nationality, place respect to the safety of goods or services? of residence, when it is within the availability of the employer, as well as any discrimination in relation to consumer requests, the use of unfair commercial In the event of a risk to safety or health, the Public practices with consumers or users, discriminatory behaviour in the access of Administration may provide consumers with information goods and the provision of services, obstruction or refusal to give the general regarding the product, the nature of the risk and the measures contracting conditions.” adopted. At European Union level, there is the RAPEX system The rights of vulnerable consumers will enjoy special atten- between the other Member States. Specifically, the State and the tion, which will be collected by regulation and the sectoral regu- Autonomous Communities will establish collaboration, cooper- lations that are applicable in each case. The public authorities ation and coordination mechanisms to guarantee the application will promote policies and actions aimed at guaranteeing their of the duty to put on the market and distribute only safe prod- rights under conditions of equality according to the specific ucts. In addition, there is a state system for the rapid exchange situation of vulnerability in which they find themselves, trying of information, in the form of a network, integrated into the to avoid, in any case, procedures that may hinder the exercise of RAPEX system, with the aim of facilitating rapid communica- these rights. tion and exchange of information on actions taken in the event of serious risk. In relation to the security of services, there are also studies 4.2 Please outline the substantive tests for the above- through campaigns which require the consent of the employer mentioned protections/prohibitions. to participate in their publication. According to the Consumer Law, “the regime of verification, claim, guarantee and possibility of waiver or return established in the contracts, must allow 3.7 Describe any voluntary or mandatory product safety recall regimes. the consumer and user to ensure the nature, characteristics, conditions and utility or purpose of the good or service; can claim effectively in case of error, defect or deterioration; can make effective the guarantees of quality or level of service The Public Administration, in the case of a sanction, may agree offered, and obtain the fair return of the market price of the good or service, to the confiscation of any adulterated, deteriorated, falsified, totally or partially, in the event of non-compliance or defective compliance”. fraudulent or unidentified merchandise, or merchandise that may pose a risk to the consumer or user. All expenses will be paid by the offender, plus transportation, distribution and 4.3 Are there any exceptions/exemptions to the destruction expenses. protections/prohibitions relating to Conduct?

This is not applicable.

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4.4 What remedies are available for a breach of the ■ The right for self-employed workers, who have ceased their protections/prohibitions relating to Conduct? activity or have reduced their turnover, to receive their social bonus. Self-employed or professional consumers who demonstrate, after March 14, 2020, the total cessa- A cessation action to obtain a sentence that orders the defendant to cease the conduct and prohibit its future repetition is avail- tion of professional activity or for having a billing prior able as a remedy. to the month in which the social bonus is requested, of at Among others, the action for annulment, breach of obliga- least 75% in relation to the billing average of the previous tions and compensation for damages can also be added. semester, are entitled to the benefit. This protection lasts six months; if a worker needs more time, they must make a request following other regulation. 4.5 List at least two examples of public or private ■ The supply of electrical energy, petroleum products, natural enforcement of the protections relating to Conduct in gas and water are all guaranteed. During the state of emer- the last five years, including the breach/alleged breach, gency, supplies – including manufactured gases and lique- result and penalties imposed. fied gases from petroleum, natural gas and water – may not be suspended to individuals in their habitual residence. The following are two examples of these protections being ■ The right of consumers and users to terminate certain enforced: contracts without penalisation within 14 days is estab- ■ Doctrine of the Supreme Court, sentence of the civil lished if, as a consequence of the measures adopted during chamber, dated January 20, 2020. A bank was in charge the validity of the state of emergency, compliance is not of returning the totality of the amounts unduly collected possible for purchase and sale contracts for goods or provi- by virtue of ground clauses from the date of their applica- sion of services, and those of successive tract. If compli- tion, plus the legal interests of each collection. The ground ance is impossible, the employer must return the sums paid clause was declared null in a mortgage loan. by the consumer or user in the same way that payment was ■ Doctrine of the Supreme Court, judgment of the civil made within a maximum period of 14 days. chamber, dated November 25, 2015. This was resolved in In the case of contracts for the provision of services of succes- favour of the recurring individual: “The appeal raises the ques- sive tract, the company can offer recovery options for the service tion of the usurious nature of a ‘revolving credit’ granted by a finan- at a later time. Only if the consumer is unable or unwilling will cial institution to a consumer at a remunerative interest rate of 24.6% the company return the amounts already paid, and they will not TAE. The appellant invokes as violated the first paragraph of art. 1 charge new monthly payments until the service returns to normal. of the Law of July 23, 1908 on the Repression of Usury, which estab- Regarding combined travel contracts cancelled due to lishes: any loan contract stipulating a significantly higher interest than COVID-19, the organiser can give the consumer or user a normal money will be void.” voucher to be used within one year from the end of the emergency status and its extensions, for an amount equal to the 52 Other Protections/Prohibitions refund. If the consumer or user does not use the voucher after the year, they may request a full refund of the amount. The 5.1 Does consumer law in your jurisdiction have organiser or retailer will do so within 60 days from the termina- any other prohibitions/protections not covered by tion of the contract. the questions above? If so, please describe these There are very specific sectors that have their own institu- prohibitions/protections. tions to claim and with a much easier method for the consumer than going to court. For example, the air sector in terms of Spain, as a result of the COVID-19 pandemic, dictated a series cancellation of flights due to COVID-19 (AESA), in the case of temporary measures in various areas to control it. of land transportation such as vehicle rental ( Juntas Arbitrales All of these protections have the backing of the Government, de Transportes), and in the case of the stock market (the National which has given some level of support to the companies and Securities Market Commission – CNMV) among others. financial entities involved. Among others, the following are included: 5.2 Please outline the substantive tests for the above- ■ The suspension of obligations derived from credit agree- mentioned protections/prohibitions. ments without mortgage guarantee, derived from loans or credits without mortgage guarantee, that are in force as of The definition of a vulnerable consumer is regulated in RD March 31, 2020, when the contractor is a natural person who 897/2017, from October 6. is economically vulnerable. The guarantors of the main In the assumption of the state of the air service, constant debtor in which the vulnerability is present are included. surveys are carried out to keep an up-to-date record of any issues The suspension will last three months during the state of and remedies to resolve possible incidents. The user can also alarm, extendable by the Council of Ministers. use the channels for complaints or suggestions in writing at the The debtor can request this even a month after the end AESA electronic headquarters. of the state of alarm. The creditor, once the documenta- If there is a change of an energy or natural gas supplier, the tion of the debtor and the request have been received, will consent and gratuitousness of the change by the new company automatically suspend it. This does not need agreement is regarded as necessary within a maximum period of 21 days. between the parties. From that moment, the creditor will not be able to demand the payment of the instalment – neither total nor partial – 5.3 Are there any exceptions/exemptions? nor any type of interest, whether ordinary or late interest, nor amortisation of capital. Power supply can be suspended during the state of emergency The contract date will be modified; however, the rest of its in cases regarding the security of supply, people and facilities. conditions will not.

5.4 What remedies are available for a breach of these 6.3 Describe any complaints procedure for (i) protections? consumers, and (ii) businesses.

A claim may be entered at the office for consumers or through Employers will make available to consumers and users informa- the judicial route. tion on the postal address, telephone number, fax (where appropriate), and email address where the consumer and user, whatever their place of residence, can file their complaints and claims or 5.5 List at least two examples of public or private request information regarding the goods or services offered or enforcement of these protections in the last five years, contracted. Employers will also communicate their legal address including the breach/alleged breach, result and penalties imposed. if it does not match the mailing address. As of March 1, 2021, a new encrypted chat has just been approved in order to communicate an anti-competitive prac- A national review by the Spanish Ministry of Consumer Affairs is tice to the CNMC anonymously and confidentially. This can ongoing through a study of 2019 and 2020, pending results, of the be carried out by both a citizen and a company. Furthermore, following products and services, among others: breakfast cereals; the complaint can be made by phone or by email anonymously cheeses; wines; honey; commercial electronics; abusive clauses in following a few steps. contracts; language courses abroad; parking lots; kindergartens; funeral services; footwear; toothbrushes; car rental; laundries; events websites; and “unofficial technical assistance services 6.4 What is the timeline for a typical investigation? brands” of mobile phone equipment repair. In March 2021, the National Commission on Markets and The company/trade has one month to respond from the moment Competition (CNMC) imposed a fine of 155,000 euros on the claim is received. Endesa, Iberdrola, Gas natural for having entered into contracts with seven clients without their consent. 6.5 Are there criminal penalties for non-compliance with a consumer law investigation? If so, provide 62 Investigation of Potential Breaches examples where such penalties have been imposed.

6.1 What powers does/do the consumer authority/ Submission to arbitration by the business or company is volun- authorities in your jurisdiction have to investigate tary. If the company rejects the consumer’s claim, this proce- potential breaches of consumer law? Describe the key dure ends and the affected party can go to court, which may steps in a typical investigation. entail criminal consequences if the judgment is disobeyed. These consequences include fines, obligations to perform or The consumer authority is self-governed and can impose not perform, etc. economic sanctions and/or restore a situation to its previous state, with compensation for damages where appropriate. The 6.6 Can investigations be resolved by way of investigation is not like a judicial investigation although, as it is a commitments or undertakings? free procedure for the parties, this makes it easier for anyone to be heard in their claim. The instructor communicates by certi- Yes, before going to court it should be reviewed whether the fied letter, requesting that they provide evidence, generally in company or professional is publicly and voluntarily adhering writing (proof of payment, receipts, invoices, delivery notes, to a code of conduct. They will be asked to cease or rectify etc.). If it is considered that there is no administrative consumer this business practice and give a commitment to refrain from offence, the investigation entailing the possibility of going to carrying out such unfair act or practice, when these have not court will be closed. yet occurred. It is easier to get a positive response to a consumer complaint when many people have been affected or where there is a 72 Enforcement previous study by a consumer association of a similar violation of consumer law. 7.1 How does/do the consumer authority/authorities seek to enforce consumer law (for example, by 6.2 How is an investigation triggered (e.g., ex officio, administrative decision or by commencing proceedings whistleblower or complaint)? in court)?

Generally, an investigation is triggered by a consumer complaint The competent Public Administrations exercise the sanctioning from filling in one of the complaint forms that must be made power for an infraction in the defence of consumers and users available to the public in shops, although an investigation may through an administrative decision, without closing the channel also be triggered by a complaint from an authority. to the judicial route. An establishment may demonstrate its adherence to the The moment that an investigation is started for the same facts consumer arbitration system by displaying the following logo: before the court, for civil, criminal or other liability, the administrative sanction file is paralysed. The “ne bis in idem” principle applies – not to impose a double sanction for the same facts.

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7.2 Is/are the consumer protection authority/ prescribed by law. It is resolved by an award and there is a register authorities bound by a time limit to commence of companies adhering to consumer arbitration and awards. proceedings on breaches? The principles by which the procedure of consumer arbitration is governed are those of audience, contradiction, equality In general, the procedure is subject to the principle of expedi- between the parties and gratuitousness. The arbitrators, medi- ency and will be promoted, ex officio, in all its procedures and ators, parties and those who serve in the Consumer Arbitration through electronic means, respecting the principles of transpar- Boards are obliged to maintain confidentiality. ency and publicity. If the sanctioning procedure adopted is the simplified one, 7.6 Is there a right to a stand-alone action and follow considering that it is a minor offence, the competent body must on right of action within consumer law? Who has respond within 30 days. standing to bring these actions? It can also end immediately if, once the sanctioning procedure has started, the offender acknowledges their responsibility. Yes, there is a right to this in disloyal competition law. The National Institute of Consumer Affairs, consumer and 7.3 Describe the enforcement powers/tools available to user associations, the Public Prosecutor and some others all these bodies (civil, administrative, criminal). have standing to bring these actions.

The competent administrative body may restore the situa- 7.7 Is there a statute of limitations for bringing stand- tion altered by the infringement to its original state and, where alone or follow on actions? appropriate, demand compensation for proven damages. In fact, in the civil, criminal and administrative spheres, Yes, there is a statute of limitations. they can make use of pressure on patrimony through forced or subsidiary execution if there is an obligation to give this. If there is a very personal obligation to do so and the obliged will 7.8 Describe any international or regional cooperative mechanisms (e.g., MOUs) in which your jurisdiction is not carry it out, then they must compensate for the damages and involved in the enforcement of consumer protection. demand the collection through the administrative channel.

At the national territory level, there is cooperation with the 7.4 Where regulators/enforcement bodies have Autonomous Communities through the Consumer Sector a choice of enforcement tools/powers, what Conference and the Consumer Cooperation Commission. In considerations do they take into account in determining addition, there is communication and preparation of docu- which tools/powers to use? ments with other Units of the General State Administration, the Bank of Spain and the National Securities Commission. The In the case of the Public Administration requiring a person to Municipalities and Provinces, through the Spanish Federation perform a very personal obligation or to support it, it can only of Municipalities and Provinces, distribute relevant information do so in cases where the law expressly authorises it and always to the municipal consumer offices. with due respect to their dignity and the rights recognised in the Outside of Spain, consumer law provides for cessation actions Constitution. in other Member States of the European Union, among other mechanisms. 7.5 Describe the relevant rules and procedures that must be followed by such bodies (e.g., administrative, 82 Appeals judicial). 8.1 Describe any appeal processes. First consumers must complain to the supplier of the product or service; if they do not get a satisfactory answer, then there are In consumer protection appeals, the interested parties can file two types of procedures: the appeal and can appeal before the competent administrative ■ the extrajudicial one, which is made before the consumer body within the established period, after having received a reli- offices of the city council or of the Autonomous able notification. Community; and The writing of the appeal must contain: ■ the judicial procedure, which is before the courts or a) The name and surname of the appellant, as well as his tribunals. personal identification. Consumer arbitration is the extrajudicial procedure for b) The act being appealed and the reason for its challenge. resolving conflicts between consumers and companies without c) The place, date, signature of the appellant, identification special formalities and with a binding and executive nature for of the medium and, where appropriate, the place to receive both parties, provided that the conflict refers to poisoning, the notifications. injury or death, or there are rational signs of criminal activity. d) The organisation, centre or administrative unit to which it The procedure is through equity arbitration, which must be is addressed. motivated according to the legal regulations applicable to the con- e) Any additional specifics required, where appropriate, by tract. The parties must expressly opt for the arbitration decision the relevant provisions.

An error or the absence of qualification of the resource by the 8.3 Does an appeal suspend the effect of any penalty/ appellant will not be an obstacle to its processing, provided its the requirement to pay any fine (if applicable)? meaning can be deduced. The vices and defects that make an act voidable cannot be Yes, it does. alleged by those who caused them. If the business or professional is part of the consumer arbitration system and accepts the invitation to resolve the matter by 92 Current Trends and Anticipated Reforms arbitration, then the arbitration award issued by the body has the force of res iudicata as judgment. The award can be appealed to 9.1 What are the recent enforcement trends in your the Provincial Court within two months. jurisdiction?

8.2 Can consumers or retailers/manufacturers appeal Recent enforcement trends include new regulations as a result decisions made by the consumer authority/authorities or of the consequences of Brexit. by a court? 9.2 Are there any proposed reforms to consumer law or Yes. The following are legitimate parties to do so before the policy within the next 12 months? civil jurisdiction: the injured party; consumers; and user associations, and they can defend the interests of their associates or Yes. The rights of vulnerable consumers will enjoy special atten- their association, as well as the general interests of consumers tion, which will be collected by regulation and by the sectoral and users. The Public Prosecutor’s Office is also entitled to exer- regulations that are applicable in each case. cise an action in defence of the interests of consumers and users.

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Marla Vanessa Bojorge Zúñiga has been recognised by Corporate INTL, ACQ Global Awards, Legal Comprehensive (including recognition in its Top 100 list), Lawyer Monthly (as winner of the Women in Law Award), Acquisition International, Lawyers World, Lawyers Worldwide Awards, Worldwide Financial, Advisor Awards, Corporate Vision (as winner of a European Corporate Excellence Award), Corporate Live Wire, Global Leading Lawyers, Finance Monthly, AI Global Media, Global Business Awards, Corporate Insider (as winner of a Business Excellence Award), Global 100 Awards, ICFM Global Awards, Global Business Insight, and Thought Leaders: Brexit (2017 and 2018). She has also been recognised in the 50 Most Admired Companies of the Year 2019 published by Silicon Review, the 50 Most Innovative Companies to Watch 2020 and Some of the Most Inspiring Women in Business 2020, in Exeleon Magazine and Who’s Who Legal.

Bojorge & Associates Tel: +34 96 105 9311 Navarro Cabanes, no. 6 Email: [email protected] 1st floor – door 2 URL: www.visalawspain.com 46018 Valencia Spain

Marla Vanessa Bojorge Zúñiga is the owner of Bojorge & Associates, an international corporate and immigration law firm located in Valencia, Spain. The firm specialises in finding the right legal solution for each client’s unique circumstances. Primarily, we practise immigration law and assist with Spanish visas and travel, but we are diverse in capacity. MB Marla Bojorge Zuñiga Lawyer, legal services MARCA NACIONAL Nº 3,666,588, Spanish Patent and Trademark Office 2017. www.visalawspain.com

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Nigel Parr

Ashurst LLP Christopher Eberhardt

12 General 1.4 Which agency/agencies is/are responsible for enforcing consumer protection law (i.e., who is the investigator and who is the adjudicator)? 1.1 What legislation, regulations and guidelines are relevant to consumer protection in your jurisdiction? The primary agencies responsible for the enforcement of consumer protection law are: The majority of rights and protections for UK consumers can ■ the Competition and Markets Authority (‘CMA’), which is be found in the Consumer Rights Act 2015 (‘CRA’). The CRA, also the primary competition law regulator in the UK; and which came into force on 1 October 2015, consolidated and clar- ■ Trading Standards Services (‘TSS’). TSS are accountable ified various existing UK consumer protection legislation. to local authorities and therefore have primary responsi- Other key sources of consumer protection in the UK include bility for enforcement at a local level. However, Trading the: Standards agencies can also have responsibility for regional ■ Consumer Protection from Unfair Trading Regulations and national-level cases under the control of the National 2008 (‘CPRs’), which include a general duty on traders not Trading Standards Board in England and Wales, and to trade unfairly, and prohibit misleading and aggressive Trading Standards Scotland in Scotland. practices. These set out a ‘blacklist’ of practices which are In England and Wales, representatives from TSS and the considered unfair and banned in all circumstances; CMA are all members of the National Tasking Group, which ■ Consumer Contracts (Information, Cancellation and assigns investigations and enforcement work. Whilst most cases Additional Charges) Regulations 2013, which impose are led by TSS in the relevant local area, the CMA is more likely various information and other requirements on traders to take the lead role in cases which involve market-wide issues, when selling to consumers; and raise issues affecting consumer choice or involve unfair contract ■ consumer health and safety protections found in the term issues (in relation to which the CMA is the lead enforcer). Consumer Protection Act 1987 (‘CPA’) and General Consumers may also bring direct actions to enforce consumer Product Safety Regulations 2005 (‘GPSR’). rights and protections through the courts.

1.2 What is the definition of ‘consumer’ (i.e., who does 1.5 Are there any specific bodies that regulate/enforce consumer protection law protect)? consumer protection law in specific sectors?

A consumer is an individual (a natural person rather than a The CMA and TSS share enforcement powers with a number of small business or legally incorporated organisation) acting for other regulators, including the sectoral regulators (such as the purposes that are wholly or mainly outside that individual’s Office of Communications (‘Ofcom’), the Financial Conduct trade, business, craft or profession (CRA s.2(3)). The burden Authority (‘FCA’), the Office of Gas and Electricity Markets of proof lies with the trader (defined in question 1.3 below) to (‘Ofgem’) and the Office of Rail and Road (‘ORR’)). The CMA prove that an individual is not a consumer. chairs the Consumer Concurrencies Group, which coordinates the activities of all consumer law enforcement agencies in the 1.3 Who is/which entities are required to comply with UK. consumer protection law? 22 Protections in relation to the Quality and Traders are required to comply with the CRA. A trader is a Function of Goods and Services person (natural person, company or organisation) acting for purposes relating to that person’s trade, business, craft or profes- 2.1 Please describe any protections regarding the sion (CRA s.2(2)). Government departments as well as local quality and function of goods and services acquired by and government authorities must also comply with consumer consumers. protection requirements (CRA s.2(7)). The CRA specifies a number of statutory protections which are deemed to be included as terms in relevant contracts. The CRA also contains equivalent provisions relating to digital content.

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As regards goods: (i) they must be of satisfactory quality 2.4 Are there any exceptions to these protections? (CRA s.9); (ii) they must be fit for their purpose, including any particular purpose the consumer made known to the seller The CRA applies only to contracts between a trader and a (expressly or by implication) before agreeing the contract (CRA consumer for the supply of goods, digital content, or services; s.10); and (iii) they must match the description given to them by therefore, consumers are not protected under the Act when the trader (CRA s.11) or, where sold by reference to a sample or entering into agreements which are not contracts, e.g. agree- model, must match that sample/model unless any differences ments without consideration. Contracts for goods are also were brought to the consumer’s attention (CRA ss 13 and 14). exempt from the CRA if: (i) the goods are second-hand goods The Consumer Contracts (Information, Cancellation and sold at public auction; and (ii) the individuals have the opportu- Additional Charges) Regulations 2013 specify certain infor- nity of attending the sale in person (CRA s.2(5)). mation which traders must provide to consumers, with the Consumer protections under the CRA also do not apply to specific requirements depending on whether the contract is anything that renders the quality of goods or digital content made ‘on-premises’, ‘off-premises’ or as a distance contract. unsatisfactory: (i) which is specifically drawn to the consumer’s These include, for example, requirements to describe the main attention before the contract is made; (ii) where the consumer characteristics of the goods, the identity and contact details of examines the goods or digital content before the contract is the trader, the total price (including all taxes) and charges, the made, and that examination ought to have revealed anything trader’s complaint handling policy and whether any after-sales unsatisfactory; or (iii) which would have been apparent on a services or guarantees are available, and the applicable condi- reasonable examination of the sample, in the case of a contract tions. Under CRA s.12, these informational requirements (with to supply goods by sample. the exception of the main characteristics of the goods) must be treated as a term of the contract. In relation to contracts for services, the CRA provides that: 2.5 What remedies are available for a breach of the protections in relation to the quality and function of (i) the service must be performed with reasonable care and skill goods and services? (CRA s.49); (ii) if no price is agreed, the consumer must pay a reasonable price and no more (CRA s.51); and (iii) if no time for the service to be performed has been agreed, the trader For each of the statutory rights provided under the CRA, the must perform the service within a reasonable time (CRA s.52). Act specifies a number of statutory remedies which are avail- Informational requirements similar to those for goods also able to consumers. These complement remedies available under apply to service contracts. general law, including damages and specific performance. In relation to goods, the main statutory remedies under the CRA include: 2.2 Please outline the substantive tests for these ■ the right to reject the goods – if the goods do not meet the protections. statutory requirements, the consumer is entitled to reject them within 30 days of taking ownership of the goods Goods or digital content are satisfactory if they meet the (CRA ss 20 and 22); standard that a reasonable person would consider satisfactory, ■ the right to a repair or replacement – if the consumer taking account of: (i) any description of the goods; (ii) the price chooses not to reject the goods, they are entitled to claim a or other consideration for the goods (if relevant); and (iii) all repair or replacement, to be provided within a reasonable other relevant circumstances, including public statements time, without significant inconvenience to the consumer, (unless withdrawn or corrected), advertising and labelling (CRA and with the trader bearing any necessary costs (including s.9(2)/34(2)). The quality of goods may also include their state postage) (CRA s.23); and and condition, whether they are fit for purpose, appearance and ■ the right to a price reduction and the right to reject – if, finish, and safety and durability (CRA s.9(3)). following the repair or replacement, the goods no longer The CRA does not define ‘reasonable care and skill’ under conform to the contract, or if the repair or replacement is CRA s.49, in order to allow the standard to be flexible between not provided within a reasonable time or caused significant sectors and industries. Similarly, the threshold for when a price inconvenience to the consumer, the consumer has the right or time for performance will be considered ‘reasonable’ is a to either: (i) keep the goods, in which case they can claim question of fact (CRA ss 51(3) and 52(3)). a price reduction (up to the full amount paid depending on the circumstances); or (ii) return the goods and claim a refund (CRA s.24). 2.3 What types of goods and services are covered If the consumer chooses a repair, replacement, price reduction, by the protections relating to the quality of goods and or to finally reject the goods in respect of a defect discovered services? within six months of delivery, it is assumed that the fault existed at the time of the delivery, unless the trader can prove other- Under the CRA, goods refers to any tangible and moveable wise. If more than six months have passed, the burden is on the items, including water, gas and electricity if, and only if, they consumer to prove that the defect existed at the time of delivery. were put up for supply in a limited volume or set quantity Similarly, as regards services, the available statutory remedies (CRA s.2(8)). Digital content refers to data that is produced include: and supplied in digital form (CRA s.2(9)). Chapter 4 of the ■ the right to require repeat performance of the service, to CRA (Services) applies only to a contract for a trader to supply the extent necessary to fulfil the contract (CRA s.55); and a service to a consumer (CRA s.48(1)) and does not include a ■ the right to a price reduction (including the right to receive contract of employment or apprenticeship, or specific services a refund), for example, if repeat performance is impos- which may be specified by the Secretary of State. sible, or cannot be carried out within a reasonable time and without causing significant inconvenience. A refund must be provided without undue delay (CRA s.56).

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2.6 Who has or which agencies have standing to In considering these factors, the normal or reasonably foresee- initiate proceedings for a breach? able conditions of use must be examined, including the duration of use. This should be considered for all stages of engaging with a product (i.e. installation, maintenance, putting into service). Consumers may seek to enforce breaches of their statutory rights The CPA also provides that producers will be liable for damage directly with traders, or by taking action through the courts or caused by a product that is not of the standard of safety which alternative dispute resolution. A consumer must bring any claim persons are generally entitled to expect (CRA ss 2 and 3). The to court within six years after the breach of the contract arose following factors will be considered in assessing product safety: (usually the delivery date under the contract). ■ the purpose of the product and how it was marketed; Consumers may also complain to Trading Standards, who ■ the use of any ‘marks’; can take enforcement action against the trader; however, they ■ instructions and warnings; cannot assist a consumer in enforcing the statutory remedies ■ the reasonably expected use of the product; and (e.g. to a replacement or refund). ■ the time of supply. Any terms excluding or restricting the statutory rights or Regulation 3(1) of the GPSR provides that UK provisions remedies (e.g. attempts to restrict a consumer’s right to return shall only apply insofar as there are no equivalent enactments faulty goods) are blacklisted and may be the subject of enforce- or obligations under the NI Protocol covering the same point. ment action as unfair terms. Types of risks protected against 2.7 Describe at least two examples of public or private The concept of ‘risk’ is defined in terms of risks of damage to enforcement of these protections in the last five years, property, risks of death and personal injury (CPA s.3(1)). including the conduct/alleged conduct, result and penalties imposed. Product-specific standards and regulations Specific legislation exists for products such as toys and tobacco, As most cases are dealt with directly between the consumer and and is often accompanied by safety standards. In the UK, the Toys (Safety) Regulations 2011 apply alongside a Europe- the trader, there are limited examples of enforcement of the wide toy safety standard (EN71) overseen by the European protections relating to the quality or function of goods. In prac- Committee for Standardization (‘CEN’). The UK remains an tice, public enforcement action in this area is generally limited individual member of the CEN, and the standard governs the to cases giving rise to unfair trading, or misleading terms or safety of all toys sold in the UK and within the other National conduct (on which see question 4.5 below). Members of CEN, including the countries of the European While enforcers cannot bring actions on behalf of the consumer Union, European Free Trade Association states, and other indi- (e.g. to secure a replacement or refund), they may bring actions vidual members. following a consumer complaint, which may encourage the trader Specific regulations also exist for a wide range of prod- to take remedial action. For example, in 2019, the Warwickshire ucts, including medical devices, electrical equipment, lifts and County Council’s Trading Standards Service brought a prosecu- machinery. tion against Aspi Specialist Cars, after a consumer complained that it had been sold an unroadworthy vehicle. Aspi Specialist Cars pleaded guilty to an offence under the CPRs and was fined 3.2 Please outline the substantive tests for these protections. £2,000 plus costs. In order to mitigate its conduct, Aspi Specialist Cars also refunded the consumer (https://news.warwickshire. gov.uk/blog/2019/09/16/owner-of-stratford-upon-avon-garage- Producers (importers, manufacturers, own-branders, re-con- fined-for-selling-unroadworthy-vehicle/). ditioners, etc.) are obliged to provide instructions and warnings to consumers; however, the mere issuance of a warning does not absolve producers from other obligations under the GPSR 32 Protections/prohibitions in relation to (regulation 7(2)). the Safety of Goods and Services Similarly, distributors (wholesalers, retailers, etc.) are obliged to not supply or agree to supply dangerous products (regulation 8). 3.1 Please describe any protections regarding the ‘Dangerous’ products are defined as products that are not safe safety of goods and services acquired by consumers. products (see question 3.1 above for a definition of ‘safe product’).

Under regulation 5 of the GPSR, producers cannot place (or offer 3.3 What types of goods and services are covered to place) a product on the market or supply a product, unless the by the protections relating to the safety of goods and product is safe. services?

What is a safe product? The CPA defines a ‘product’ as any goods or electricity. This Regulation 2 of the GPSR defines a product as safe if it does not includes component parts or raw materials (CPA s.1(2)(c)). present a risk (or only a minimum risk). The following factors The GPSR defines a ‘product’ as a product that will be used will be considered: or is likely to be used by consumers (under reasonably foresee- ■ product characteristics including composition and pack- able conditions), and will have been supplied in the context of aging, as well as instructions for assembly, installation and a commercial activity. Products need not be new – used or maintenance; reconditioned products are included (regulation 2). The defi- ■ effect on other products, where it is reasonably foreseeable nition also extends to products supplied or made available that it will be used with other products; to consumers for their own use in the context of providing a ■ presentation of the product, including labelling, and any service; for example, a hair dryer in a gym that a consumer uses. warnings and instructions for its use and disposal; and By contrast, equipment used by service providers themselves to ■ categories of consumers at risk when using the product; in supply a service to consumers are not included; for example, a particular, children and the elderly. hair dryer in a hair salon. Equipment on which consumers ride

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or travel, which is operated by a service provider, are also specif- Breaching a suspension notice can lead to imprisonment of three ically excluded; for example, cars used by taxi drivers, or lifts months or to a fine not exceeding level 5 on the standard scale. It is used by an office space provider. possible to bring an appeal against a suspension notice (CPA s.15).

3.4 Are there any exceptions to these protections? 3.8 List at least two examples of public or private enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties Protection will not be granted under s.4(1) of the CPA where: imposed. ■ the product was never supplied; ■ the product was not supplied in the course of business; ■ there is a defect which is attributable to compliance with Product recalls are commonplace and can be seen on the UK other enactments or which did not exist at the relevant time; government’s webpage (http://www.gov.uk/government/news/ ■ the defect could not have been discovered according to product-recall) and on more product-specific webpages (see, for technology available at the time of supply; or example, the webpage on electrical goods – http://www.electrical- ■ the product formed part of a subsequent product that was safetyfirst.org.uk/product-recalls/ – which lists a number of goods defective. that have been recalled, including baby monitors and hair dryers). Regulation 29.1 of the GPSR further provides that if a person Similarly, the UK government’s webpage refers to a separate site can show that all reasonable steps were taken and all due dili- for vehicles (http://www.gov.uk/check-vehicle-recall). gence was exercised in the supply of the product, this can be The Chartered Trading Standards Institute contains a used as a defence. further list of recalls. By way of example, the Food Standards Agency imposed a recall on Revels chocolate pouches on 3.5 What remedies are available for a breach of the 2 March 2020, due to potential contamination with metal protections in relation to the safety of goods and elements (http://www.tradingstandards.uk/consumers/product services? -recalls-and-safety-notices).

A prison sentence of up to 12 months or a fine not exceeding 42 Prohibitions relating to ‘Conduct’ against £20,000 (or both) may be imposed (regulation 20(1) of the GPSR). Consumers An enforcement authority can recover full costs of enforcement from an offender (regulation 27 of the GPSR) and may 4.1 Please describe any protections/prohibitions apply to the court for forfeiture of the product. relating to the conduct of persons or businesses (e.g., manufacturers/retailers) which sell or supply goods and services to consumers (‘Conduct’). For example, 3.6 Are there mandatory reporting requirements with misleading and deceptive conduct, unconscionable respect to the safety of goods or services? conduct, etc.

If producers or distributors become aware of a product posing The CRA also governs unfair contract terms. Unfair contract a risk to consumers, they must notify an enforcement authority terms are not binding on consumers (CRA s.62(1)) and may be in writing, outlining the action taken to prevent any risk to the the subject of enforcement action. The Act provides an indic- consumer (regulation 9 of the GPSR). This rule is subject to ative list of terms which may be regarded as unfair (the ‘Grey exceptions, including antique products. List’), as well as a list of blacklisted terms which are automatically unenforceable. Blacklisted terms include terms which 3.7 Describe any voluntary or mandatory product exclude or restrict liability for death or personal injury resulting safety recall regimes. from negligence, or terms which seek to exclude or restrict statutory rights and remedies. Under the GPSR, producers and distributors are obliged to These protections in the CRA also apply to ‘consumer notices’ (i.e. any notice that relates to rights or obligations between a inform the relevant market surveillance authority (‘MSA’) if they discover that they have put an unsafe product on the trader or consumer); in particular, which purport to exclude or market, including actions they have taken to remove the risk. A restrict a trader’s liability to a consumer. voluntary agreement with the MSA may be reached on how to Unfair marketing or trader activity before and at the time of remove the risk. However, if no such agreement exists, compul- entering into a contract are covered by the CPRs. The CPRs sory measures can be taken: contain a general duty not to trade unfairly, prohibit misleading ■ a ‘Suspension Notice’ can be issued, temporarily removing actions, omissions and aggressive practices which are likely to the product from sale while tests are carried out – under cause the average consumer to take a different decision, and s.14 of the CPA, an enforcement authority can serve includes a ban on 31 specified commercial practices which are suspension notices prohibiting the person on whom it is considered unfair in all circumstances, including: served from (i) supplying the goods, (ii) offering to supply ■ falsely claiming to be a signatory to a code of conduct or them, (iii) agreeing to supply them, or (iv) exposing them displaying a trust or quality mark; for supply; ■ falsely stating that the availability of a product will be ■ a ‘Requirement to Mark and Requirement to Warn’ (marking limited or that particular terms will only be available for the product with warnings); a very limited time, or passing on materially inaccurate ■ a ‘Withdrawal Notice’ (to permanently prevent the further information on market conditions; supply of a product); or ■ falsely stating or giving the impression that a product can ■ a ‘Recall Notice’ can be issued when a product is already be legally sold; on the market and there is reasonable evidence that it is ■ promoting a product similar to a product made by a manu- dangerous – mandatory product safety recall notices are facturer, so as to mislead the consumer; contained in regulation 15 of the GPSR. ■ falsely claiming that a product is able to cure illnesses, dysfunction or malformations;

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■ falsely describing a product as ‘free’ or ‘without charge’; and 4.4 What remedies are available for a breach of the ■ creating the impression that the consumer cannot leave the protections/prohibitions relating to Conduct? premises until a contract is formed. Contravention of many of the requirements of the CPRs is a Consumers are not bound by unfair contract terms. Unfair terms criminal offence. Under the Consumer Contracts (Information, Cancellation may also be subject to civil or criminal enforcement by regulators. and Additional Charges) Regulations 2013, traders are required to provide certain pre-contract information to consumers and to 4.5 List at least two examples of public or private do so in a clear and comprehensible manner. enforcement of the protections relating to Conduct in In addition to the statutory protections, consumers may be the last five years, including the breach/alleged breach, able to claim civil remedies on the contractual law tortious result and penalties imposed. grounds, including breach of contract, misrepresentation, fraud and negligence. Throughout 2020, the CMA has been investigating a number of sectors for potential breaches of consumer law arising as a 4.2 Please outline the substantive tests for the above- result of COVID-19 and has secured commitments from, in mentioned protections/prohibitions. particular, package holiday companies to provide refunds to affected customers (see further the response to question 9.1 below). In 2018, the CMA opened an investigation into Apple, Unfair contract terms due to concerns that some of its practices may have been in A term or notice is unfair if ‘contrary to the requirement of good faith, it breach of consumer law; in particular, in relation to consumers causes a significant imbalance in the parties’ rights and obligations under the not being warned clearly that their phone’s performance could contract to the detriment of the consumer ’ (CRA s.62(4)): slow down following a software update. The CMA accepted ■ ‘Significant imbalance’ assesses whether a term is so certain undertakings from Apple that it would maintain trans- weighted in favour of the business that it tilts the rights parency regarding its phone’s battery health, unexpected shut- and obligations under the contract in its favour. This is downs and performance management (http://www.gov.uk/ not limited to an assessment of the financial burden. For cma-cases/apple-iphones-consumer-protection-case). example, an imbalance is likely to arise where terms restrict In 2016, the CMA launched an investigation into potential or exclude the consumer’s normal legal rights or their breaches of consumer law in the online gambling industry. The ability to assert remedies. CMA identified particular concerns in relation to a lack of fair- ■ The ‘requirement of good faith’ is a requirement for ness and transparency in promotions offered and play restric- ‘fair and open dealing’, including that terms should be tions, as well as restrictions on withdrawing deposit winnings expressed fully, clearly and legibly, that sufficient prom- and unspent deposit funds. The CMA considered that such inence should be given to disadvantageous terms, and conduct might breach the CPRs (misleading conduct, unfair that traders should not take advantage of the consumers’ commercial practice, breach of professional diligence) and the circumstances to their detriment. These concepts have CRA (breach of requirements of transparency and good faith, been considered, in particular, by Lord BinGham Cornhill unfair terms). The CMA launched enforcement action against in The Director General of Fair Trading v First National Bank plc certain operators in 2017 and 2018, which resulted in six opera- [2001] UKHL 52. tors entering into undertakings with the CMA (http://www.gov. ■ Whether a term is fair depends on the nature of the subject uk/cma-cases/online-gambling). matter, the circumstances existing when the term was agreed, In 2017, the CMA launched an investigation into care home and all of the other terms of the contract (CRA s.62(5)). providers in relation to large upfront fees and fees charged after In addition to the requirement of fairness, the CRA also a resident’s death. In 2019 and 2020, the CMA issued court requires that terms be transparent, i.e. that they are clear and proceedings against Care UK and Barchester under s.217 of the intelligible to consumers. Terms should be drafted to ensure Enterprise Act for breaches of the CRA and CPRs. Whilst these that consumers are able to make an informed choice about providers had stopped charging the upfront ‘administration’ whether or not to agree to them, or to enter into the contract. fees, they did not agree to refund the upfront fees paid. The CMA has therefore sought a court order to secure refunds for Unfair trading residents. At the time of writing, the proceedings against Care As explained above, there are 31 commercial practices under UK are scheduled to be heard in the High Court in May 2021. the CPRs which are prohibited in all circumstances. As regards Separately, the CMA announced in October 2020 that Care UK other unfair trading practices, including misleading or aggressive had agreed to refund a ‘shortfall’ amount paid by certain NHS practices, the practice must have, or be likely to have, an effect funded residents, who were told that they needed to make up the on the behaviour of the average customer (i.e. a consumer who is difference between their NHS funding and the Care UK resi- reasonably well-informed and reasonably observant and circum- dential fee, contrary to CRA, CPRs and NHS rules. Several spect, taking into account social, cultural and linguistic factors). other providers entered into acceptable undertakings with the CMA, including one provider agreeing to pay £2m in compen- 4.3 Are there any exceptions/exemptions to the sation to resolve the CMA’s concerns (http://www.gov.uk/ protections/prohibitions relating to Conduct? cma-cases/care-homes-consumer-protection-case). In 2016, the CMA opened an enforcement investigation into There are a number of exemptions from the fairness assess- the online secondary tickets market, in relation to consumers ment under the CRA. In particular, a contract term may not be not getting the full range of required information when buying assessed if it specifies the main subject matter of the contract or tickets (including, for example, who the seller is). In 2017, the relates to the adequacy of the price, in each case provided it is CMA announced it would be taking enforcement action against transparent and prominent. four providers. Three of these providers provided undertakings to the CMA, and the CMA issued court proceedings against the

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fourth provider, viagogo. In 2018, the CMA secured a court ■ The power to enter premises without a warrant. An order against viagogo, requiring it to make certain changes to its enforcer may enter commercial premises, without giving business to increase transparency for consumers (http://www. notice and without requiring a warrant, to ascertain gov.uk/cma-cases/secondary-ticketing-websites). compliance with consumer law (including where it reasonably suspects an infringement). Where enforcers enter 52 Other protections/prohibitions premises as part of a routine inspection, they must provide at least two days’ written notice. On the premises, the enforcer may take actions, including inspecting products, 5.1 Does consumer law in your jurisdiction have testing equipment, seizing and detaining goods, breaking any other prohibitions/protections not covered by open containers and accessing electronic devices. the questions above? If so, please describe these prohibitions/protections. ■ The power to require persons on the premises to provide assistance, including to provide information or product documents. Officers may also seize documents. This is not applicable in the UK. ■ If access to premises is refused, or if it is likely that products or documents would be concealed or interfered with, 5.2 Please outline the substantive tests for the above- the enforcer may apply for a warrant to permit entry mentioned protections/prohibitions. (including by using reasonable force). An enforcer also requires a warrant to enter a residential dwelling. This is not applicable in the UK. 6.2 How is an investigation triggered (e.g., ex officio, whistleblower or complaint)? 5.3 Are there any exceptions/exemptions?

An investigation may be started when an enforcer has infor- This is not applicable in the UK. mation which leads it to suspect that there may have been an infringement of consumer law. 5.4 What remedies are available for a breach of these protections? 6.3 Describe any complaints procedure for (i) consumers, and (ii) businesses. This is not applicable in the UK. Enforcers will have their own complaints policy. For example, a 5.5 List at least two examples of public or private complaint may be made to the CMA in connection with its conduct enforcement of these protections in the last five years, and how it is handling an investigation, in accordance with its including the breach/alleged breach, result and penalties published policy: http://www.gov.uk/government/publications/ imposed. competition-and-markets-authority-cma-complaints-policy/ cma-complaints-policy. This is not applicable in the UK. 6.4 What is the timeline for a typical investigation? 62 Investigation of potential breaches There is no set timeline for an investigation, and timing will 6.1 What powers does/do the consumer authority/ vary depending on the nature of the investigation and the issues authorities in your jurisdiction have to investigate potential breaches of consumer law? Describe the key involved. steps in a typical investigation. 6.5 Are there criminal penalties for non-compliance The general powers of investigating civil and criminal breaches with a consumer law investigation? If so, provide of consumer law are set out in Schedule 5 to the CRA. examples where such penalties have been imposed. Different investigative powers are available to the various enforcers depending on the legislation they are enforcing. For If the recipient of a notice requiring the production of infor- example, the powers available to an enforcer in an unfair terms mation fails to comply with its requirements, the enforcer may case under the CRA may differ from those available to the same apply to the courts to make an order requiring that the notice be enforcer investigating potentially criminal conduct, such as a complied with. breach of the CPRs. It is a criminal offence for an individual to intentionally The main powers available to an enforcer such as the CMA obstruct an investigation or fail to comply with a requirement include: imposed by an enforcer using its statutory investigative powers ■ The power to require the production of information. An under the CRA. It is also an offence to intentionally or recklessly enforcer may require the production of information and/ make a statement to an enforcer which is false or misleading in or documents by way of a written notice. The notice must a material respect. The maximum penalty is a fine of £1,000. specify the purpose for which the information is required. Information received following a notice issued under the CRA can only be used in civil proceedings against the 6.6 Can investigations be resolved by way of recipient (see section 7, ‘Enforcement’, below). commitments or undertakings? ■ The power to make test purchases. Yes – see question 7.1 below.

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72 Enforcement 7.4 Where regulators/enforcement bodies have a choice of enforcement tools/powers, what considerations do they take into account in determining 7.1 How does/do the consumer authority/authorities which tools/powers to use? seek to enforce consumer law (for example, by administrative decision or by commencing proceedings in court)? The CMA’s guidance states that it will generally use its criminal powers when civil enforcement is unlikely to be effective in achieving a change in behaviour, and/or the breach is consid- Depending on the provision which has been infringed, an ered sufficiently serious to merit a criminal prosecution; for enforcer may bring either civil actions or criminal prosecu- example, in order to provide wider deterrence. tion in relation to infringements of consumer law. While the Enforcers seeking to use criminal powers must also satisfy the most serious infringements are subject to criminal prosecutions, two stages set out in the ‘Code for Crown Prosecutors’: (i) the many suspected breaches are dealt with through civil action. evidence stage – is there sufficient evidence to provide a real- Civil action typically results in undertakings being accepted or istic prospect of a conviction; and (ii) the public interest stage – the imposition of a court order. is bringing the prosecution in the public interest?

7.2 Is/are the consumer protection authority/ 7.5 Describe the relevant rules and procedures that authorities bound by a time limit to commence must be followed by such bodies (e.g., administrative, proceedings on breaches? judicial).

Criminal prosecutions under the Enterprise Act must be An enforcer which suspects an infringement of consumer law brought within three years of the commission of the offence, or will initially seek to consult with the businesses concerned in 12 months from the date of discovery of the offence by the pros- order to bring the offending conduct to an end and ensure it is ecutor, whichever is earlier. not repeated. Under Part 8 of the Enterprise Act, an enforcer must typically allow a minimum of 14 days for consultation with 7.3 Describe the enforcement powers/tools available to businesses, except in urgent cases. these bodies (civil, administrative, criminal).

7.6 Is there a right to a stand-alone action and follow Civil action on right of action within consumer law? Who has An enforcer may accept undertakings from businesses to change standing to bring these actions? their behaviour. Undertakings can be offered and accepted even where the business does not admit the alleged infringement of Affected consumers may bring claims through the courts in rela- consumer law. Details of the case and any undertakings that are tion to breach of consumer laws. For example, a breach of one accepted will typically be published by the enforcer. of the statutory implied terms under the CRA can be enforced As well as undertakings to stop or not repeat behaviour, busi- through a claim for breach of contract. nesses may also include ‘enhanced consumer measures’. These There is no formal follow-on right of action (enforcers do not measures may include: take ‘decisions’). However, undertakings and/or a court order ■ provision of compensation or other redress for consumers may include consumer redress mechanisms, which can provide who have suffered loss; for compensation or other redress where consumers have ■ compliance measures to prevent or reduce the risk of suffered loss, and in principle, an action for breach of statutory future breaches; and duty may be available. ■ measures to enable greater customer choice. Non-compliance with undertakings is likely to result in further enforcement action, and will be taken into account by 7.7 Is there a statute of limitations for bringing stand- alone or follow on right of actions? the courts. If a business is not willing to offer undertakings, or if the undertakings are considered insufficient, the enforcer may In England and Wales, breach of contract claims are subject to a apply to the High Court or County Courts for an enforcement limitation period of six years from the date of the breach. Under order. An enforcement order may also be sought in urgent cases Scottish law, the limitation period is five years. without prior consultation. A court order may impose the same In respect of claims in relation to defective products, under requirements that may be offered by an undertaking (including the CPA claims, the limitation period is three years from the any enhanced consumer measures). The court may also accept date when the damage occurred or when it came to the knowl- an undertaking instead of making an enforcement order. Breach edge of the claimant. However, no claim can be brought more of an enforcement order or an undertaking given to a court may than 10 years after the date the product was put into circulation. result in proceedings for contempt of court. 7.8 Describe any international or regional cooperative Criminal prosecutions mechanisms (e.g., MOUs) in which your jurisdiction is Breaches of certain consumer legislation, including the CPRs, involved in the enforcement of consumer protection. may be enforced through criminal prosecution. A wide range of penalties are available to the courts, including: After the end of the transition period, the UK ceased to be a ■ an unlimited fine; member of the Consumer Protection Cooperation (‘CPC’) ■ imprisonment not exceeding two years; Network, which allows cooperation between the enforcers of ■ confiscation orders under the Proceeds of Crime Act 2002; EU Member States and the European Commission, including and by alerting Member States to national trends and enforcement ■ disqualification of directors for up to 15 years. action and through coordinated cross-border action.

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Whilst post-Brexit cross-border coordination between the Another area of focus has been in relation to unjustifiable EU and UK (as a third country) will be a matter for negotiation price increases. The CMA released a joint statement with trade under the CPC Regulation, the CMA is reported to continue bodies including the British Retail Consortium condemning to seek to work with EU enforcers as far as possible. They are price gouging and has written to a large number of firms also seeking to develop relationships with other international about price rises for essential products. The CMA launched a counterparts (such as the International Consumer Protection Competition Act investigation in June 2020 into four pharma- and Enforcement Network (‘ICPEN’)), which could include cies in relation to excessive prices for hand sanitisers; however, sharing intelligence or evidence. For example, in November all four of these investigations were closed without any enforce- 2020, the CMA announced an investigation into ‘greenwashing’ ment action. alongside the Dutch Authority for Consumers and Markets, as Alongside its COVID-19 work, the CMA has been increas- part of a wider project with ICPEN. ingly active in consumer protection in the online review space. In May 2020, the CMA launched a consumer enforcement 82 Appeals investigation into several major websites that display online reviews, to establish whether they are taking sufficient action to 8.1 Describe any appeal processes. protect shoppers from fake and misleading reviews. They have secured commitments from Instagram, Facebook and eBay to tackle misleading online reviews. As an area which has grown Criminal penalties and civil court orders may be appealed through in importance for consumers during the 2020–2021 lockdowns, the courts. with people increasingly reliant on online shopping, it is likely to A decision to accept undertakings from a company could also remain of interest to the CMA. be subject to an application for judicial review.

9.2 Are there any proposed reforms to consumer law or 8.2 Can consumers or retailers/manufacturers appeal policy within the next 12 months? decisions made by the consumer authority/authorities or by a court? As explained in the opening Expert Analysis Chapter to the 2020 edition of this guide, a number of reforms have been suggested See the answers above. which would have a significant impact on the enforcement of consumer protection legislation in the UK. In particular, the 8.3 Does an appeal suspend the effect of any penalty/ CMA has requested greater enforcement powers, akin to those it the requirement to pay any fine (if applicable)? has under the competition law regime. It has been proposed that: ■ the CMA should be empowered to investigate and decide This is not applicable in the UK. whether consumer protection law has been broken, publish this fact, require businesses to cease the rele- 92 Current Trends and Anticipated Reforms vant conduct, and impose fines (both for the infringement itself and for subsequent breach of any undertakings provided to the CMA); 9.1 What are the recent enforcement trends in your ■ the CMA should also be able to order the cessation of prac- jurisdiction? tices it suspects may be harming consumers on an interim basis, pending the outcome of its investigation; A key focus of the recent consumer protection work in the UK ■ there could be reforms to improve personal respon- has been on issues arising as a result of the COVID-19 pandemic. sibility for breaches of consumer protection law (e.g. In March 2020, the CMA established a COVID-19 taskforce to director disqualification) and potentially a requirement on monitor market developments and coordinate its response. By companies to appoint a board director with responsibility mid-May 2020, the CMA had received over 60,000 complaints for assessing and reporting on risks to competition and in relation to COVID-19-related issues, the majority of which consumer law compliance; and concerned unfair practices in relation to cancellations and ■ a turnover-based fines regime should be introduced for refunds. The CMA commenced investigations into four sectors non-compliance with information notices. of particular concern: weddings and private events; holiday The UK government has previously stated that it intends to accommodation; package holidays; and nurseries and childcare adopt these proposals and the CMA stressed that it will continue providers. to advocate for them in its 2020–2021 Annual Plan. In February The CMA issued a number of open letters to these sectors, 2021, John Penrose MP published an independent report (enti- as well as issuing warning letters to specific firms. Over the tled Power to the People) on how the UK’s approach to compe- past year, the CMA has secured commitments from a number tition and consumer issues could be improved. The report of holiday firms (including Lastminute.com, TUI and Virgin echoed the calls for the CMA’s consumer enforcement powers Holidays) to refund customers whose package holidays were to be enhanced, in order to bring them in line with its compe- cancelled due to COVID-19. In February 2021, the CMA sent tition law enforcement powers, and recommended that the role a letter before action to Lastminute.com in relation to its failure of local Trading Standards bodies be expanded and that they be to meet its refund commitments. allocated increased resources. The conclusions of the Penrose In December 2020, the CMA commenced an investigation Report have been welcomed by the CMA. However, the timing into whether airlines had similarly breached consumers’ legal and precise scope of any reforms remains unclear. rights by failing to offer customer cash refunds for flights they could not lawfully take due to COVID-19.

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Ashurst LLP Tel: +44 20 7859 1763 London Fruit & Wool Exchange Email: [email protected] 1 Duval Square URL: www.ashurst.com London E1 6PW United Kingdom

Christopher Eberhardt is a Senior Associate in the competition and consumer protection practice in London and practises all aspects of UK and EU competition law and consumer law. He has experience in dealing with the European Commission, UK regulators and the UK Competition Appeal Tribunal in relation to competition law investigations and merger control. Key matters on which Christopher has advised recently include acting for IHS Markit in connection with its $44 bn merger with S&P Global, Circle Health Group in relation to its acquisition of BMI Healthcare, and Royal Mail in relation to an abuse of dominance investigation by Ofcom and subsequent appeals to the Competition Appeal Tribunal and Court of Appeal. Furthermore, he has experience in advising companies on consumer law investigations work in the UK, including in relation to a recent investigation by the CMA.

Ashurst LLP Tel: +44 20 7859 2712 London Fruit & Wool Exchange Email: [email protected] 1 Duval Square URL: www.ashurst.com London E1 6PW United Kingdom

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USA USA

Michael W. McTigue Jr.

Meredith C. Slawe

Cozen O’Connor Marie Bussey-Garza

12 General however, sweep more broadly. For example, under the Texas Deceptive Trade Practices and Consumer Protection Act (“DTPA”), the definition of consumer includes “an individual, 1.1 What legislation, regulations and guidelines are partnership, corporation, this state, or a subdivision or agency relevant to consumer protection in your jurisdiction? of this state who seeks or acquires by purchase or lease, any goods or services”. Tex. Bus. & Com. Code § 17.45(4). Consumer protection is effected through a patchwork of federal and state laws and regulations. Some key federal consumer 1.3 Who is/which entities are required to comply with protection statutes include the Federal Trade Commission consumer protection law? Act (“FTC Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Gramm- Leach-Bliley Act (“GLB Act”), the Truth in Lending Act Entities governed vary by statute. For example, the FTC Act (“TILA”), the Fair Credit Reporting Act (“FCRA”), the Fair applies to “persons, partnerships, or corporations, except banks, Debt Collection Practices Act (“FDCPA”), the Equal Credit savings and loan institutions [...], Federal credit unions [...], Opportunity Act, the Identity Theft and Assumption Deterrence common carriers [...], and persons, partnerships, or corpora- Act, the Children’s Online Privacy Protection Act (“COPPA”), tions insofar as they are subject to the Packers and Stockyards the Telephone Consumer Protection Act (“TCPA”), the Video Act”. 15 U.S.C. § 45(a)(2). The Dodd-Frank Act applies to “any Privacy Protection Act (“VPPA”), the Consumer Product Safety person that engages in offering or providing a consumer finan- Act (“CPSA”), and the Federal Food, Drug, and Cosmetic Act cial product or service”, as well as affiliates of such persons. 12 (“FD&C Act”). In addition, most states recognise common U.S.C. § 5481(6). State consumer protection laws often provide law tort claims and have adopted statutes that prohibit unfair broad prohibitions that apply to anyone engaged in commercial or deceptive business and/or debt collection practices. Some conduct. For example, the Connecticut Unfair Trade Practices states have also enacted privacy laws. Perhaps the best-known Act provides that “[n]o person shall engage in unfair methods examples are the Illinois Biometric Information Privacy Act of competition and unfair or deceptive acts or practices in the (“BIPA”) and the California Consumer Privacy Act (“CCPA”), conduct of any trade or commerce”. Conn. Gen. Stat. § 42-110b(a). the latter of which took effect on January 1, 2020. Many such statutes, however, carve out specific exceptions. For example, the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) does not apply to media entities 1.2 What is the definition of “consumer” (i.e., who does that publish deceptive advertisements in good faith and without consumer protection law protect)? knowledge of the deception. See 73 P.S. § 201–3.

The definition of consumer is statute-specific and varies signif- 1.4 Which agency/agencies is/are responsible for icantly. For example, under the Dodd-Frank Act, “[t]he term enforcing consumer protection law (i.e., who is the ‘consumer’ means an individual or an agent, trustee, or repre- investigator and who is the adjudicator)? sentative acting on behalf of an individual”. 12 U.S.C. § 5481(4). Under FCRA, the term simply “means an individual”. 15 U.S.C. § 1681a(c). And, under the FDCPA, the term “means any natural Consumer protection law is enforced by various federal agen- person obligated or allegedly obligated to pay any debt”. Id. § cies, including the Federal Trade Commission (“FTC”), the 1692a(3). Notwithstanding the term “consumer” in the title of Consumer Financial Protection Bureau (“CFPB”), the Federal the TCPA, that statute has been deemed to apply to businesses Communications Commission (“FCC”), the Consumer as well as natural persons. Product Safety Commission (“CPSC”), the Food and Drug Under state laws, the definition is often limited to a “natural Administration (“FDA”), and the United States Department of person who buys goods or services for personal, family or Agriculture (“USDA”). At the state level, each state’s Attorney household use”. See, e.g., Ala. Code § 8-19-3(2). Some statutes, General typically has responsibility for investigations and

enforcement with respect to consumer protection laws. In including meat, eggs, fruits, and vegetables. See, e.g., 21 U.S.C. § some states, such as California, District Attorneys also have the 606 (relating to the inspection of meat products). authority to prosecute consumer protection claims. In addition, many consumer protection laws include a private right of action. 2.4 Are there any exceptions to these protections?

1.5 Are there any specific bodies that regulate/enforce Exceptions are sometimes available and vary by law or regula- consumer protection law in specific sectors? tion. For example, the UCC generally applies to all commercial sales of goods; however, parties may contractually modify the The FTC has eight divisions: (1) Privacy and Identity Protection; (2) protections available. See, e.g., UCC § 2-316 (relating to the exclu- Advertising Practices; (3) Consumer and Business Education; (4) sion or modification of warranties). Enforcement; (5) Marketing Practices; (6) Consumer Response and Operations; (7) Financial Practices; and (8) Litigation Technology 2.5 What remedies are available for a breach of the and Analysis. The CFPB regulates entities that provide consumer protections in relation to the quality and function of financial products or services. The FCC implements and enforces goods and services? federal communications laws. The CPSC enforces federal laws intended to protect the public from hazardous consumer products. The FDA regulates specific consumer products, including food, When a defective product regulated by the FDA has entered the drugs, biologics, medical devices, cosmetics, and tobacco. In addi- marketplace, the agency can issue a recall. See, e.g., 21 U.S.C. tion, the USDA regulates certain agricultural products. § 350l. Similarly, the USDA has authority to detain and seize defective products for which it has regulatory authority. See id. §§ 22 Protections in Relation to the Quality and 672–73. Violations of FDA or USDA regulations may also result in criminal or civil penalties. See, e.g., id. §§ 333 & 335b. Under Function of Goods and Services the UCC, “[t]he measure of damages for breach of warranty is the difference at the time and place of acceptance between the 2.1 Please describe any protections regarding the value of the goods accepted and the value they would have had quality and function of goods and services acquired by if they had been as warranted”. UCC § 2-714(2). At common consumers. law, remedies may include replacement of the defective product, damages, or contractually agreed-to liquidated damages in At the federal level, agencies such as the FDA and USDA prom- circumstances where damages are difficult to calculate. ulgate regulations regarding the quality of goods and services. At the state level, many states have adopted the Uniform 2.6 Who has or which agencies have standing to Commercial Code (“UCC”), which contains provisions relating initiate proceedings for a breach? to express and implied warranties. See UCC §§ 2-313–2-315. Many states also recognise common law claims for breach of warranty with respect to goods and services. The FDA and USDA have authority to remove defective products from the marketplace. In addition, the FDA may coordinate with the United States Department of Justice (“DOJ”) to 2.2 Please outline the substantive tests for these bring an enforcement action that may result in civil or crim- protections. inal penalties. See 21 U.S.C. §§ 333, 335b(b), & 337. The Food Safety Inspection Service (“FSIS”) of the USDA may also bring Under federal regulations, the substantive tests for quality vary an enforcement action that results in a food establishment’s loss depending on the goods or services and the regulations or guide- of ability to produce, sell, or distribute its products in commerce. lines at issue. Under the UCC, if the seller makes any promise See 9 C.F.R. § 500.6. For breaches of warranty under the UCC or or provides a description or model relating to the goods, they common law, the injured party may bring a civil action to seek must conform. See UCC § 2-313. The goods must also: “pass damages or injunctive relief. without objection in the trade”; “in the case of fungible goods, [be] of fair average quality”; be “fit for the ordinary purposes”; 2.7 Describe at least two examples of public or private “run, within the variations permitted by the agreement”; be enforcement of these protections in the last five years, “adequately contained, packaged, and labeled”; and “conform including the conduct/alleged conduct, result and to the promise or affirmations of fact made on the container or penalties imposed. label if any.” Id. § 2-314(2). Furthermore, if the seller had reason to know that the buyer was acquiring the goods for a particular On June 28, 2020, Pilgrim’s Pride Corporation recalled approx- purpose, the goods must be fit for that purpose. See id. § 2-315. imately 60,000 pounds of chicken nuggets due to possible contamination with “flexible rubber material”. See https://www. 2.3 What types of goods and services are covered fsis.usda.gov/recalls-alerts/pilgrims-pride-corporation-recalls- by the protections relating to the quality of goods and chicken-breast-nugget-products-due-possible. Similarly, on services? January 24, 2020, Amity Packing Company, Inc. issued a recall for approximately 2,000 pounds of ground beef due to the possible The goods and services covered depend on the source of presence of thin, pliable plastic. See https://www.fsis.usda.gov/ protection. For example, the UCC applies to commercial recalls-alerts/amity-packing-company-inc.-recalls-raw-ground- goods. See UCC § 2-102. The FDA promulgates Current Good beef-products-due-possible-foreign. The health risk associ- Manufacturing Practice (“CGMP”) regulations for the quality ated with both recalls was classified as low, but quality-related of drug products. See 21 C.F.R. Part 210; 21 C.F.R. Part 211. The recalls often involve safety concerns, which are discussed in the USDA sets quality standards for various agricultural products, following section.

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32 Protections/Prohibitions in Relation to products or services are excluded from safety protections when the full spectrum of legal doctrines is considered. the Safety of Goods and Services

3.5 What remedies are available for a breach of the 3.1 Please describe any protections regarding the protections in relation to the safety of goods and safety of goods and services acquired by consumers. services?

At the federal level, the CPSA exists: “(1) to protect the public Remedies include product recalls or seizures and civil or crim- against unreasonable risks of injury associated with consumer inal penalties. In addition, individuals may seek injunctive relief products; (2) to assist consumers in evaluating the comparative and/or compensatory and punitive damages through a private safety of consumer products; (3) to develop uniform safety stand- civil action. ards for consumer products and to [minimise] conflicting State and local regulations; and (4) to promote research and investigation into the causes and prevention of product-related deaths, 3.6 Are there mandatory reporting requirements with illnesses, and injuries.” 15 U.S.C. § 2051(b). The Motor Vehicle respect to the safety of goods or services? Safety Act “prescribe[s] motor vehicle safety standards”. 49 U.S.C. § 30101(1). The FD&C Act seeks to ensure the safety of Yes. Under the CPSA, for example, a manufacturer of a food, drugs, medical devices, and cosmetics. See 21 U.S.C. §§ consumer product must immediately report to the CPSC if it 301 et seq. There are also numerous federal laws dealing with the “obtains information which reasonably supports the conclu- safety of various agricultural products. See, e.g., 21 U.S.C. §§ 451 sion that such product: (1) fails to comply with an applicable et seq. (relating to poultry inspection and safety); 21 U.S.C. §§ 601 consumer product safety rule or with a voluntary consumer et seq. (relating to meat inspection and safety). In addition, there product safety standard [...]; (2) fails to comply with any other are various state laws to ensure the safety of consumer goods and rule, regulation, standard, or ban under this Act or any other Act services. See, e.g., 16 Tex. Admin. Code § 82.1 et seq. (relating to enforced by the Commission; (3) contains a defect which could barber shop regulations); id. § 83.1 et seq. (relating to cosmetology regulations). State and federal laws also affect safety through create a substantial product hazard [...]; or (4) creates unrea- labelling and disclosure requirements. For example, California sonable risk of serious injury or death”. 15 U.S.C. § 2064(b). Proposition 65 provides that “[n]o person in the course of doing In addition, a manufacturer must report to the CPSC if it has business shall knowingly and intentionally expose any individual three civil actions for death or grievous bodily injury within a to a chemical known to the state to cause cancer or reproductive 24-month period that involve the same product and result in a toxicity without first giving clear and reasonable warning to such settlement or judgment for the plaintiff. See id. § 2084. individual”. Cal. Health & Saf. Code § 25249.6. Many states also recognise relevant common law claims, including, for example, 3.7 Describe any voluntary or mandatory product product liability and negligence. safety recall regimes.

3.2 Please outline the substantive tests for these When a business realises that a product it has manufactured, protections. distributed, or sold is hazardous, it may conduct a voluntary recall pursuant to the regulations promulgated by the CPSC. The substantive tests vary depending on the governing law or A voluntary corrective action plan sets forth specific details regulation and can be incredibly specific. For example, the CPSC regarding the company’s plan to repair or replace the defec- determined that it is a substantial hazard for “[c]hildren’s upper tive item, including the product at issue, a description of the outerwear in sizes 2T to 16” to “hav[e] one or more drawstrings”. hazard, details regarding the company’s plan to provide notice 16 C.F.R. § 1120.3(b)(1). The related “standard prohibits draw- to the public and affected persons (e.g., a letter, press release, strings at the hood and neck area of children’s upper outerwear” or advertisements), and a statement regarding reasonable steps and imposes specific limitations on the use of drawstrings in the the company will employ to avoid recurrence. See 16 C.F.R. § waist or bottom of children’s upper outerwear. See ht t p s :// 1115.20. When a mandatory product recall is necessary, the www.cpsc.gov/Business--Manufacturing/Business-Education/ CPSC will either issue an adjudicated Commission Order “after Business-Guidance/Drawstrings-in-Childrens-Upper-Outerwear parties and interested persons have had an opportunity for a /Frequently-Asked-Questions-FAQs. hearing” or “may apply to a U.S. district court [...] for a preliminary injunction to restrain the distribution in commerce of a 3.3 What types of goods and services are covered product” it believes to be hazardous. 16 C.F.R. § 1115.21(a)–(b). by the protections relating to the safety of goods and Similarly, consumer products subject to FDA oversight may be services? recalled through either voluntary or mandatory processes. See 21 C.F.R. §§ 7.40, et seq.; id. §§ 810.10, et seq. The patchwork of federal, state, and local laws, regulations, guidelines, and ordinances covers a wide range of consumer 3.8 List at least two examples of public or private products and services. With the availability of common law enforcement of these protections in the last five years, claims, as well, few – if any – consumer products or services are including the breach/alleged breach, result and penalties excluded from safety protections. imposed.

3.4 Are there any exceptions to these protections? On March 11, 2021, Melaleuca issued a voluntary recall for certain soy candles after receiving reports of high flames and the wax catching fire. Although no injuries or property damage were Individual statutes, regulations, and ordinances may specify reported, the recall was issued out of concern that the candles exceptions, and in some cases, federal law may pre-empt state pose fire and burn hazards. The recall instructs consumers to law; however, as set forth in question 3.3, few – if any – consumer

immediately stop using the candles, cut the wicks as short as 4.3 Are there any exceptions/exemptions to the possible to prevent their use, discard the product, and contact protections/prohibitions relating to Conduct? the company for a full refund. See https://www.cpsc.gov/ Recalls/2021/Melaleuca-Recalls-Three-Wick-Revive-Candles- Exemptions vary by statute. For example, the FTC Act does Due-to-Fire-and-Burn-Hazards-Recall-Alert. not apply to banks, savings and loan institutions, federal credit On April 2, 2020, Manhattan Toy Company issued a voluntary unions, and common carriers. See 15 U.S.C. § 45(a)(2). recall of its Musical Lili Llama toy after receiving seven reports of loose screws falling off the toy, including two reports of children putting the screws in their mouths. The recall instructed 4.4 What remedies are available for a breach of the protections/prohibitions relating to Conduct? customers to immediately take the toy away from children and contact Manhattan Toy for a free repair kit. See https://www. cpsc.gov/Recalls/2020/manhattan-toy-recalls-musical-lili-lla- Remedies vary by statute and may include civil or criminal penal- ma-due-to-choking-hazard. ties. In addition, some laws allow private actions for injunctive relief and/or compensatory and punitive damages. Consumers 42 Prohibitions Relating to “Conduct” may also be entitled to reasonable attorneys’ fees and costs if their claim is successful. Against Consumers

4.5 List at least two examples of public or private 4.1 Please describe any protections/prohibitions enforcement of the protections relating to Conduct in relating to the conduct of persons or businesses (e.g., the last five years, including the breach/alleged breach, manufacturers/retailers) which sell or supply goods result and penalties imposed. and services to consumers (“Conduct”). For example, misleading and deceptive conduct, unconscionable conduct, etc. In March 2020, the FTC reached a $6.6 million settlement agreement with BoostMyScore LLC, a purported credit repair company. See Both federal and state statutes take aim at unfair or deceptive https://www.ftc.gov/news-events/press-releases/2020/03/credit business conduct. The FTC Act prohibits “unfair methods of -repair-company-settles-ftc-charges-it-deceived-consumers. According to the FTC, the company violated numerous federal competition in or affecting commerce and unfair or deceptive laws, including the FTC Act, by charging upfront fees for credit acts or practices in or affecting commerce”. 15 U.S.C. § 45(a) repair services, which they falsely guaranteed would increase (2). The FDCPA prohibits the use of “unfair or unconscionable consumers’ credit scores by 100 to 120 points in two to six weeks. means to collect or attempt to collect any debt”. Id. § 1692f. TILA See id. The company and its CEO “will be prohibited from selling mandates consumer disclosures “to protect the consumer against fake access to another consumer’s credit as an authorized user”, inaccurate and unfair credit billing and credit card practices”. “from collecting advance fees for credit repair services”, “from Id. § 1601(a). Furthermore, state laws, such as the Pennsylvania misrepresenting a product or service as being legal”, and “from UTPCPL, often broadly prohibit “[u]nfair methods of competi- misrepresenting the terms of a refund or return policy”. Id. Based tion and unfair or deceptive acts or practices in the conduct of any on demonstrated inability to pay, all but $65,000 of the judgment trade or commerce”. 73 P.S. § 201–3. For example, the California was suspended. Unfair Competition Law (“UCL”) targets “any unlawful, unfair In September 2020, the FTC reached a settlement agreement or fraudulent business act or practice and unfair, deceptive, with Ponte Investments, LLC, which allegedly misrepresented untrue or misleading advertising”. Cal. Bus. & Prof. Code § an affiliation with the U.S. Small Business Administration 17200. Similarly, the California Consumers Legal Remedies Act (“SBA”) during the early months of the COVID-19 pandemic. (“CLRA”) aims “to protect consumers against unfair and decep- See https://www.ftc.gov/news-events/press-releases/2020/09/ tive business practices”. Cal. Civ. Code § 1760. company-charged-posing-sba-lender-settles-ftc-charges-ceases. According to the FTC, the company misled “small businesses to think [it] had an affiliation with the SBA and could offer 4.2 Please outline the substantive tests for the above- companies access to the coronavirus relief programs adminis- mentioned protections/prohibitions. tered by the agency”. Id. Under the terms of the settlement, the company and its owner are prohibited from “(1) misrepre- The substantive test varies by statute. Under the FTC Act, a prac- senting that they are authorized to accept or process applications tice is unfair if it “causes or is likely to cause substantial injury for SBA loans and (2) misrepresenting that they are the SBA or to consumers which is not reasonably avoidable by consumers are otherwise affiliated or associated with the SBA or the U.S. themselves and not outweighed by countervailing benefits to Government”. Id. In addition, the company and its owner are consumers or to competition”. 15 U.S.C. § 45(n). State statutes barred from “disclosing, using, or benefitting from information collected in connection with the marketing of any SBA-related often provide lists of specific conduct that are considered unfair products or services unless they obtain the consumer’s express or otherwise prohibited. See, e.g., 73 P.S. § 201–2(4) (defining informed consent”. Id. unfair and deceptive acts under the UPTCPL); Tex. Bus. & Com. Code § 17.46(b) (defining deceptive acts or practices under the DTPA). These lists typically include conduct such as selling 52 Other Protections/Prohibitions counterfeit items, misrepresenting an affiliation with goods or services, selling old items as new, and misrepresenting the quality 5.1 Does consumer law in your jurisdiction have of the items or services for sale. See, e.g., 73 P.S. § 201–2(4). any other prohibitions/protections not covered by the questions above? If so, please describe these prohibitions/protections.

Local health departments also play a key role in ensuring consumer safety. For example, the New York City Health

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Department, like many local health departments, “conducts 62 Investigation of Potential Breaches unannounced inspections of restaurants at least once a year”. See https://www1.nyc.gov/site/doh/services/restaurant-grades. page; see also https://www.phila.gov/media/20181003164012/ 6.1 What powers does/do the consumer authority/ Food_Facility_Inspections_in_the_City_of_Philadelphia.pdf authorities in your jurisdiction have to investigate potential breaches of consumer law? Describe the key (describing food facility inspections in Philadelphia). steps in a typical investigation.

5.2 Please outline the substantive tests for the above- The FTC has the power “[t]o gather and compile information mentioned protections/prohibitions. concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any The specific tests vary by jurisdiction, but health departments person, partnership, or corporation engaged in or whose busi- often inspect food establishments at least annually, provide a ness affects commerce”. 15 U.S.C. § 46(a). The FTC also has the public report regarding the health and safety practices of the “power to require by subpoena the attendance and testimony of establishment, and, when necessary, are empowered to shut witnesses and the production of all such documentary evidence down the business until appropriate remedial actions are taken. relating to any matter under investigation”. Id. § 49. Similarly, the CPSC has the authority to conduct inspections and investigations and to employ subpoenas and depositions in connection 5.3 Are there any exceptions/exemptions? therewith. See 16 C.F.R. § 1118.1. In addition, State Attorneys General typically have investigatory powers. Available exemptions vary by jurisdiction. In San Francisco, for example, there are a number of exemptions to the city’s Food Safety Program, including an exception that a “[food service] 6.2 How is an investigation triggered (e.g., ex officio, permit is not required for non-potentially hazardous food and whistleblower or complaint)? beverage given away as a courtesy to waiting customers where the primary business does not involve food service”. See ht t p s :// Investigations may be triggered in various ways, including ex www.sfdph.org/dph/EH/Food/Permits/permitFeeExempt.asp. officio or subsequent to information provided by an internal whistleblower or consumer complaint.

5.4 What remedies are available for a breach of these protections? 6.3 Describe any complaints procedure for (i) consumers, and (ii) businesses. Remedies vary by jurisdiction, but health departments typically give restaurants a public health inspection score, can require The FTC encourages consumers to file a complaint whenever remedial action, and, in severe cases, can shut down the food they have been the victim of fraud, identity theft, or other unfair establishment. or deceptive business practices. Consumers can file complaints online at https://www.ftccomplaintassistant.gov or by calling 1-877-FTC-HELP. Consumers may report an unsafe product to 5.5 List at least two examples of public or private the CPSC at http://www.SaferProducts.gov or by calling (800) enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties 638-2772, or (301) 595-7054 for the hearing- and speech-impaired. imposed. See https://www.cpsc.gov/Safety-Education/Safety-Guides/Gen- eral-Information/Who-We-Are---What-We-Do-for-You. On August 23, 2019, the New York City Health Department inspected Smiley Bagel & Grill in Manhattan. See ht t p s ://a 816 - 6.4 What is the timeline for a typical investigation? health.nyc.gov/ABCEatsRestaurants/#/Search/50089296. The Health Department noted numerous violations, including A typical FTC investigation may take more than a year, and often holding foods at unsafe temperatures, failing to maintain a longer. CPSC investigations often result in recalls of poten- required certification, and storing foods improperly. Id. The tially hazardous products and thus, in many instances, proceed restaurant scored 94 points, where 0–13 points is an “A”, 14–27 quickly. The CPSC also relies on companies conducting their points is a “B”, and 28 or more points is a “C”. Id. On October own investigations and complying with reporting requirements. 25, 2019, the Health Department conducted a follow-up inspec- A company must report to the CPSC within 24 hours of learning tion and closed down the establishment after noting violations that it may have manufactured, distributed, or sold an unsafe sufficient to yield a score of 56. Id. product. See https://www.cpsc.gov/Business--Manufacturing/ On October 1, 2020, the Florida Department of Business and Recall-Guidance/Duty-to-Report-to-the-CPSC-Your-Rights- Professional Regulation cited Canal St. Chicken & Seafood in and-Responsibilities. Jacksonville, Florida for 19 violations, including two high priority violations, “which could contribute directly to a foodborne illness or injury and include items such as cooking, reheating, 6.5 Are there criminal penalties for non-compliance cooling and hand-washing”. See https://www.myfloridalicense. with a consumer law investigation? If so, provide examples where such penalties have been imposed. com/inspectionDetail.asp?InspVisitID=7433116&id=6329638. The Department required remediation efforts and conducted a follow-up inspection on October 19, 2020, during which no Although non-compliance with a consumer law investiga- violations were identified. See https://www.myfloridalicense. tion may result in criminal penalties, such measures are rarely com/inspectionDetail.asp?InspVisitID=7435381&id=6329638. employed.

6.6 Can investigations be resolved by way of that a person injured by an unfair or deceptive act or prac- commitments or undertakings? tice “may bring a private action to recover actual damages or one hundred dollars ($100), whichever is greater”. 73 P.S. § 201-9.2(a). Similarly, the California CLRA allows an injured Yes, investigations are often resolved through settlement or, in consumer to “bring an action [...] to recover or obtain [...] [a] the case of consumer goods, a voluntary recall programme. ctual damages, [...] [a]n order enjoining the methods, acts, or practices[,] [...] [r]estitution[,] [...] [p]unitive damages”, and/or 72 Enforcement “[a]ny other relief that the court deems proper”. Cal. Civ. Code § 1780(a). The California UCL also provides that an action may 7.1 How does/do the consumer authority/authorities be brought “by a person who has suffered injury in fact and has seek to enforce consumer law (for example, by lost money or property as a result of the unfair competition”. administrative decision or by commencing proceedings Cal. Bus. & Prof. Code § 17204. State common law claims, such in court)? as negligence, fraud, or product liability, may also be raised by individual consumers. Enforcement may be achieved through either administrative or judicial action, or both. 7.7 Is there a statute of limitations for bringing stand- alone or follow on actions? 7.2 Is/are the consumer protection authority/ authorities bound by a time limit to commence proceedings on breaches? Private actions typically have statutes of limitations, which vary depending on the specific claim. Many consumer law claims have statutes of limitations that vary from one to four years. Neither the FTC Act, nor the CPSA, contains its own statute of limitations. Accordingly, the five-year statute of limitations provided in Section 2462 typically applies to such enforce- 7.8 Describe any international or regional cooperative ment actions where the government seeks monetary penalties mechanisms (e.g., MOUs) in which your jurisdiction is involved in the enforcement of consumer protection. or disgorgement. See 28 U.S.C. § 2462; Kokesh v. SEC, 137 S. Ct. 1635, 1639 (2017). “The FTC works with more than 100 foreign competition and consumer protection authorities around the world, and coop- 7.3 Describe the enforcement powers/tools available to erates with foreign authorities on enforcement and policy these bodies (civil, administrative, criminal). matters.” See https://www.ftc.gov/policy/international/international-consumer-protection. Pursuant to the US Safe Web Act, The FTC and CPSC typically enforce their powers through “the FTC relies on 4 key tools: (1) information sharing; (2) inves- administrative or civil actions. However, they may coordinate tigative assistance; (3) cross-border jurisdictional authority; and with the Department of Justice to seek criminal penalties in (4) enforcement relationships”. Id. In addition, the FTC partic- certain cases. ipates in numerous international consumer protection groups and initiatives. See id. Similarly, the CPSC works with foreign 7.4 Where regulators/enforcement bodies have governments and organisations “to improve manufacturing and a choice of enforcement tools/powers, what regulatory coordination and to encourage alignment of U.S. considerations do they take into account in determining product safety requirements at a high level of safety”. See ht t p s :// which tools/powers to use? www.cpsc.gov/Business--Manufacturing/International.

Administrative enforcement is typically the first step, with the 82 Appeals agencies seeking further relief through the judicial process when needed. Criminal proceedings are typically reserved for egre- 8.1 Describe any appeal processes. gious cases. When the FTC pursues enforcement through the administra- 7.5 Describe the relevant rules and procedures that tive process, an initial decision is issued by an administrative must be followed by such bodies (e.g., administrative, law judge, following a hearing. Either party may appeal that judicial). decision to the full Commission. A respondent may appeal to the United States Court of Appeals if an order is issued against Federal agencies may act pursuant to their statutory authority it by the full Commission. See https://www.ftc.gov/about-ftc/ only. Accordingly, they may not exceed the scope of that what-we-do/enforcement-authority. The process for appealing authority. In addition, when the judicial process is involved, the an enforcement decision by the CPSC is similar. See 16 C.F.R. parties must follow all court rules and procedures. §§ 1025.1 et seq. For consumer claims brought in state or federal court, appeals are also generally available.

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8.3 Does an appeal suspend the effect of any penalty/ 9.2 Are there any proposed reforms to consumer law or the requirement to pay any fine (if applicable)? policy within the next 12 months?

The effects of an appeal vary based on circumstances, but, in Consumer protection law in the United States is constantly evolving many cases, the appeal would suspend the requirement to pay through proposed rulemakings and changing laws. In June 2020, a penalty. If damages have been awarded, interest may accrue the FTC issued a proposed rulemaking that would prohibit busi- while the obligation to pay is suspended. nesses from using “Made in the USA” on product labels unless all significant processing of the product occurs in the United States 92 Current Trends and Anticipated Reforms and “[a]ll or virtually all ingredients or components of the product are made and sourced in the United States”. See https://www.ftc. 9.1 What are the recent enforcement trends in your gov/news-events/blogs/business-blog/2020/06/ftc-wants-your- jurisdiction? feedback-about-proposed-made-usa-rule. In the area of consumer privacy, numerous states have introduced privacy statutes since the CCPA was enacted in 2020. See, e.g., https://malegislature. FTC enforcement actions over the past year have been heavily gov/Bills/192/SD1726. On March 2, 2021, Virginia enacted its influenced by the ongoing COVID-19 pandemic. The agency own privacy law, known as the Consumer Data Protection Act, has sent hundreds of warning letters and pursued enforcement which will take effect in 2023. See https://lis.virginia.gov/cgi-bin/ actions in relation to companies making unsubstantiated claims legp604.exe?212+sum+HB2307. In November 2020, California regarding products that purportedly prevent, treat, or cure voters approved the California Privacy Rights Act, which takes COVID-19; scam websites established to trick individuals into effect in 2023 and amends the CCPA. See https://oag.ca.gov/ believing they were purchasing sanitiser, disinfecting products, news/press-releases/california-officials-announce-california-pri- and personal protective equipment that was never delivered; and vacy-protection-agency-board. In addition, a bill has been intro- businesses that falsely promised to obtain federal stimulus funds duced in the Illinois General Assembly that would amend BIPA for unsuspecting consumers. See https://www.ftc.gov/reports/ to, among other things, provide businesses with a 30-day notice- annual-highlights-2020/enforcement. In fact, “under a new and-cure period before consumers could bring private civil federal law, the COVID-19 Consumer Protection Act, the FTC claims under the statute. See https://www.ilga.gov/legislation/ has the authority to obtain first-time civil penalties for scams BillStatus.asp?DocNum=559&GAID=16&DocTypeID=HB&- related to COVID-19”. Id. In 2020, the FTC also pursued its SessionID=110&GA=102. first enforcement action related to “scientifically unsupported claims” made by companies selling cannabidiol (“CBD”) products. See id. As the market for CBD products is relatively new and growing, further enforcement in this area is likely to follow.

Michael W. McTigue Jr. is co-chair of Cozen O’Connor’s Class Actions Practice Group. A premier class actions strategist, Mike represents leading companies in the defence of class actions and complex civil litigation in jurisdictions across the country, at both the trial and appellate levels. For more than 25 years, Mike has defended high-stakes litigation for Fortune 500 companies and other businesses across various industries. He also assists clients with class action and litigation due diligence in connection with corporate transactions and represents global businesses in international arbitration proceedings in the United States and abroad.

Cozen O’Connor Tel: +1 215 665 2093 One Liberty Place Email: [email protected] 1650 Market Street, Suite 2800 URL: www.cozen.com Philadelphia, PA 19103 USA

Meredith C. Slawe is co-chair of Cozen O’Connor’s Class Actions Practice Group and co-chair of the firm’s Retail Industry Group. Meredith is a recognised authority in the national class actions defence Bar. She represents businesses in a range of industries in class actions across the country. Her cases often implicate cutting-edge privacy and consumer protection issues under federal and state statutes. She has been the architect of strategies to prompt plaintiffs to voluntarily dismiss their claims, to compel arbitration, to obtain dismissals on the pleadings and at summary judgment, to strike class allegations, to defeat class certification, and to prevail on the merits in arbitration proceedings. Meredith is also a thought leader on the issue of consumer arbitration, and drafts, revises, interposes, and enforces arbitration agreements and class action waivers in consumer contracts. Meredith’s proven record of success, combined with her practical, accessible, and business-oriented approach, have made her the go-to class actions lawyer for several of the country’s leading businesses.

Cozen O’Connor Tel: +1 215 665 4175 One Liberty Place Email: [email protected] 1650 Market Street, Suite 2800 URL: www.cozen.com Philadelphia, PA 19103 USA

Marie Bussey-Garza is an associate in Cozen O’Connor’s Class Actions Practice Group. Marie represents clients in complex litigation matters, with a particular focus on defending class actions. She represents leading businesses across industries, including retail, financial services, hospitality, communications, and manufacturing, in cases in courts across the country. Many of these cases raise claims challenging business practices, including advertising, marketing, pricing, the collection/retention/dissemination of consumer data, credit reporting, pricing, and marketing and informational telephone calls and text messages. Marie also assists companies with privacy compliance, including efforts related to the California Consumer Privacy Act, and counsels clients on best practices with respect to state-of-the-art terms and conditions, arbitration provisions, privacy policies, and other consumer contracts. In addition, Marie maintains an active pro bono practice, with an emphasis on assisting survivors of commercial sexual exploitation with their complex and varied legal needs.

Cozen O’Connor Tel: +1 214 462 3085 1717 Main Street, Suite 3100 Email: [email protected] Dallas, TX 75201 URL: www.cozen.com USA

Our Class Actions Practice Group has extensive experience repre- peers, adversaries, and judges. We successfully defend cases prosecuted senting clients in class actions and other aggregate litigation. We have by the most formidable opponents in the most plaintiff-friendly jurisdic- an outstanding record of success defending some of the most signifi- tions in cases that challenge key business practices. cant class actions in courts across the country by employing strategies www.cozen.com grounded in deep knowledge of consumer protection statutes and Rule 23. We work together with our clients to devise effective exit strategies early on in litigation. We repeatedly obtain early dismissals with no payments to plaintiffs and, where appropriate, successfully move to compel individual arbitration, transfer venue, dismiss actions on the pleadings and at summary judgment, strike class allegations, and defeat certification. We pursue thoughtful and creative approaches aimed at prevailing on the merits, eliminating class exposure, and avoiding protracted and costly litigation. Our skill, experience, and professionalism have been cited by our

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