Law Reform Commission
Review of Aspects of Consumer Laws
Presentation of Findings
and Recommendations
Pierre Rosario DOMINGUE
Chief Executive Officer
12 January 2011
1
(A) Background and Scope
of Review
Request from MINISTRY to review aspects of consumer
laws
• Consumer Protection Act [1991]
• Consumer Protection (Price and Supplies Control) Act [1998]
• Essential Commodities Act [1991]
• Fair Trading Act [1979]
• Hire Purchase and Credit Sale Act [1964]
• Prices and Consumer Protection Advisory Committee Act [1983]
And the subsidiary legislation made under those Acts as well as
regulations made under the repealed Supplies Control Act No. 20 of
1974
2
(B) Methodology
(1)
(a) Benchmarking of current law with
best international practices
(+) International Standards
(+) Laws and Practices in various jurisdictions
International Trends and Strategies evolved for fair markets and for
enhancing consumer confidence [Consumer Empowerment]
[Government intervention to correct market failures and to redress
inequalities of information and power in the context of a dynamic
market environment characterized by trade liberalization and
globalization, increased reliance on technology and a faster pace of
innovation]
3
(B) Methodology
(2)
(+) International Standards
=UN Guidelines for Consumer
Protection (1985, amended in 1999)
*Framework for Governments to use in elaborating
consumer protection policies and legislation
*Recognition of the following consumer rights: (a) Right to
Satisfaction of Basic Needs, (b) Right to Safety, (c) Right to
Choice, (d) Right to Information, (e) Right to Consumer
Education, (f) Right to Redress, (g) Right to
Representation, and (h) Right to a Healthy Environment. 4
(B) Methodology
(3)
= UNCTAD’s Work
= EU law (Consumer Directives)
= Standards laid down by other regional
organizations [such as Council of Europe, CARICOM, InterAmerican System]
= Standards laid down by OECD Committee
on Consumer Policy [eg OECD Recommendation on
Consumer Dispute Resolution & Redress (2007)]
= NGOs: Consumers International
[Model Law
for Africa: Protecting the African Consumer (1996)]
5
(B) Methodology
(4)
(+) Laws and Practices in various
jurisdictions
[Examination of Current legislation, Government policy documents,
as well as Government/NGO proposals for reform and reflections of
law reform agencies, whilst bearing the economic, social and
environmental circumstances of those countries and the needs of
their population]
• India [Consumer Protection Act 1986 (amended in
•
•
2002)]
Malaysia [Consumer Protection Act 1999]
Singapore [Consumer Protection (Fair Trading) Act 2004]6
(B) Methodology
(5)
• Australia [Australian Consumer Law (cif 1 January
•
•
•
•
•
2011)]
New Zealand [Consumer Guarantees Act 1993]
UK & Jersey [Consumer Safety (Jersey) Law 2006,
Distance Selling (Jersey) Law 2007, and Supply of Goods
and Services (Jersey) Law 2009]
EIRE [Consumer Protection Act 2007]
France [Code de la Consommation]
Barbados [Consumer Protection Act 2003 and Consumer
Guarantees Act 2003]
7
(B) Methodology
(6)
• South Africa [Consumer Protection Act 2008]
• Jamaica [Consumer Protection Act 2005]
• Other Jurisdictions [Canada, US, Trinidad & Tobago,
Argentinean and Brazilian Consumer Protection,
Denmark Consumer Protection legislation, Latvia
Consumer Rights Act 2001, Sarajevo Consumer
Protection Act 2001]
8
(B) Methodology
(7)
(b) Consultations with
Stakeholders/Empirical Studies
• Administrative Cadre & Officers of Consumer Protection
•
•
Unit
NGOs: ICP (Institute for Consumer Protection) & ACIM
(Association des Consommateurs de l’ile Maurice)
Field Assessment of Consumer Awareness and
Experience of Consumer Legislation
9
(C) Findings: Some of the
Lacunas in the Current
Framework (1)
(a) Safety Standards are laid down only in
respect of goods [Consumer Protection Act
and Reg (toys, laser pointers, plastic and
polyethylene pipes and fittings], not in
respect of services
-Protection afforded is far from being comprehensive: need for
enactment of safety standards in respect of a wider range of goods
10
(C) Findings: Some of the
Lacunas in the Current
Framework(2)
Regulations badly drafted [eg First Schedule to Laser Pointers (Safety)
Regulations 2007, which was meant to contain the essential safety
requirements had not been enacted]
11
(C) Findings: Some of the
Lacunas in the Current
Framework (3)
(b) The manner in which the Consumer
Protection (Price and Supplies Control) Act
[aimed at providing protection to the
consumer against abusive trade practices,
by regulating trade, supply and price of
goods] and the regulations made there
under, is administered give rise to
constitutional problems
12
(C) Findings: Some of the
Lacunas in the Current
Framework (4)
(Responsibility for administration/enforcement of Act to
two different Ministers/Ministries unconstitutional)
(Fixing of price of goods in Rodrigues is the responsibility
of RRA, not that of the Minister)
(Regulations made ultra vires the Act: eg Consumer
Protection (Maximum Recommended Retail Price) (Code of
Practice) Reg 2008]
13
(C) Findings: Some of the
Lacunas in the Current
Framework (5)
(c) The provisions as to consumer
guarantees in respect of the supply of
goods and services, as to unfair business
practices, are insufficient.
(Existing provisions in Fair Trading Act need to be
complemented by more elaborate provisions; consumer
guarantees to be expressly laid down in our law)
(Sections 3 and 10 of Fair Trading Act in breach of section
68 of the Constitution)
(Many of the Regulations made under Fair Trading Act
drafted in a very unsatisfactory manner)
14
(C) Findings: Some of the
Lacunas in the Current
Framework (6)
(d) There is no provision as to unfair
contract terms in consumer agreements.
15
(C) Findings: Some of the
Lacunas in the Current
Framework (7)
(e) Distance selling, doorstep selling and
unsolicited consumer transactions are not
regulated.
16
(C) Findings: Some of the
Lacunas in the Current
Framework (8)
(f) The enforcement framework relating to
consumer transactions and agreements
needs to be strengthened; need to develop
a mechanism for consensual resolution of
disputes
17
(D) Recommendations for
Reform of the Law (1)
The overall objectives of the New Consumer Regime should
be to promote and advance the social and economic
welfare of consumers by establishing a legal framework for
the achievement and maintenance of a consumer market
that is accessible, fair, efficient, responsible and
sustainable for the benefit of consumers generally, and
which provides adequate safeguards to vulnerable
consumers.
18
(D) Recommendations for
Reform of the Law (2)
The consumer law should protect both natural persons and
legal entities when goods and services are supplied to
them, as well as (a) any user of such goods, or (b) any
beneficiary of such services. However, goods acquired or
the services availed of must not have been for a
commercial purpose.
19
(D) Recommendations for
Reform of the Law (3)
(a) Provision should be made for consumer
rights, including the freedom of consumers
to associate and form groups to advocate
and promote their common interests
• Right to be protected against products, production
•
•
processes and services, which are hazardous to health or
life;
Right of access to basic goods and services;
Right to true, sufficient, clear and timely information
concerning goods and services;
20
(D) Recommendations for
Reform of the Law (4)
• Right to choose and to return unsafe or defective goods;
• Right to fair, nondiscriminatory treatment by suppliers of
•
•
•
•
goods and services;
Right to prompt, timely and adequate compensation for
any damages caused by the supply of goods and
services;
Right to be heard and to make complaints to the
appropriate authority for redress against unfair
practices;
Right to associate and join or form consumer unions and
associations;
21
Right to consumer education.
(D) Recommendations for
Reform of the Law (5)
(Prohibition of Retaliatory measures against a consumer
who exercises his rights)
(When a consumer’s rights have been infringed, impaired
or threatened, or that prohibited conduct has occurred or is
occurring, not only the consumer may seek redress but
also any of the following persons:
• an authorized person acting on behalf of another person who
cannot act in his own name;
• a person acting as a member of, or in the interest of, a group or
class of affected persons;
• an association acting in the interest of its members; or
• a person acting in the public interest, with leave of the Court.)
22
(D) Recommendations for
Reform of the Law (6)
(b) Responsibilities of the State towards
consumers to be spelled out
= To disseminate consumer education and information in
conjunction with consumer associations and appropriate
NGOs.
= To provide or facilitate the provision of requisite financial
and logistical support for the operation of consumer
groups and associations.
23
(D) Recommendations for
Reform of the Law (7)
(c) The consumer regime should provide for
“information standards” to be complied
with by any supplier
Requirement for very supplier to provide consumers with
true, sufficient, clear and timely information on goods and
services offered to enable consumers to make proper and
reasonable choices
24
(D) Recommendations for
Reform of the Law (8)
(d) The consumer regime should provide for
guarantees to consumers in respect of the
supply of goods and services
= In respect of Supply of Goods
* An implied guarantee as to title
* An implied guarantee as to acceptable quality
* An implied guarantee as to fitness for a particular
purpose, where the consumer makes known, expressly
or by implication, to the supplier the purpose for which
the goods are being acquired
25
(D) Recommendations for
Reform of the Law (9)
* An implied guarantee that goods comply with description
when they are supplied by description to a consumer
* An implied guarantee that goods comply with sample
when they are supplied to a consumer by reference to a
sample or demonstration model
* An implied guarantee as to price: that the consumer shall
not be liable to pay to the supplier more than the
reasonable price of the goods
*An implied guarantee as to Repairs and Spare Parts (that
the manufacturer and the supplier will take reasonable action to ensure
that facilities for the repair of the goods and the supply of spare parts
for the goods are reasonably available for a reasonable period after the
goods are so supplied, unless the consumer has otherwise been
26
notified)
(D) Recommendations for
Reform of the Law (10)
Need for provisions as to availability of redress against
suppliers and manufacturers where goods fail to comply
with the guarantees (including the right to reject the
goods)
27
(D) Recommendations for
Reform of the Law (11)
= In respect of Supply of Services
* An implied guarantee that the services will be carried out
with reasonable care and skill;
*An implied guarantee as to fitness for any particular
purpose where the consumer makes known to the supplier,
before or at the time of the making of the contract for the
supply of the services, the particular purpose for which the
services are required or the result that the consumer
desires to achieve;
*An implied guarantee as to completion within a
reasonable time;
28
(D) Recommendations for
Reform of the Law (12)
* An implied guarantee as to price: that the consumer shall
not be liable to pay to the supplier more than the
reasonable price for the services.
Need for provision as to availability of
redress against suppliers where services or
product resulting from the services fail to
comply with any of the implied guarantees
29
(D) Recommendations for
Reform of the Law (13)
(e) Provision for Safety standards that have
to be complied with when goods and
services are supplied
(Power conferred to Minister to prescribe safety standards
in respect of any goods or class of goods, any services or
class of services)
(Courts empowered to grant ancillary relief to any person
who has suffered loss or damage as a result of a breach of
safety standards)
(Provision for liability in respect of defective products
supplied to consumers)
30
(D) Recommendations for
Reform of the Law (14)
(f) The consumer regime must make
provision for unfair contract terms in
consumer agreements
(Contractual terms or conditions which are unfair,
unreasonable or unjust, to the consumers should be null
and void)
(Courts to be vested with sufficient powers for them to
ensure fair and just conduct, terms and conditions, in
respect of consumer transactions)
31
(D) Recommendations for
Reform of the Law (15)
(g) The consumer regime should prohibit in
a comprehensive manner unfair
commercial/business practices
(A commercial practice should be regarded as unfair when (1) it is
contrary to the general principle of good faith in the trader’s field of
activity and/or the standard of skill and care that the trader may
reasonably be expected to exercise in respect of consumers; and (2) it
would be likely to cause appreciable impairment of the average
consumer’s ability to make an informed choice in relation to the
product concerned, and cause the average consumer to make a
transactional decision that the average consumer would not otherwise
make)
32
(D) Recommendations for
Reform of the Law (16)
=Misleading commercial practices, as well as misleading
marketing or advertisement, should be prohibited
[Eg omission or concealment of material information, provision of false
information or information likely to deceive the average consumer]
= Aggressive commercial practices, such as harassment,
coercion or undue influence which would likely cause
significant impairment of the average consumer’s freedom
of choice or conduct and cause the average consumer to
make a transactional decision that the average consumer
would not otherwise make, should also be prohibited
33
(D) Recommendations for
Reform of the Law (17)
=Other unfair practices, such as referral selling, pyramid
promotional schemes, bait advertising, would also have to
be prohibited.
= Protection should be afforded to recipients of unsolicited
goods or of invoices in respect of unordered goods or
services.
= Agreements with persons lacking legal capacity would be
treated as void or voidable
=Discriminatory business practices to be prohibited
34
(D) Recommendations for
Reform of the Law (18)
(h) Distance selling (and doorstep) selling
needs to be regulated
(Distance selling regulations would inter alia contain provisions
• regulating the advertising and marketing (including advertising and
marketing by mail-order or doorstep selling) of business that is to be
conducted by way of distance contracts;
• with respect to the information that must be supplied to persons to whom
distance contracts are offered;
• with respect to the transparency, clarity and fairness of distance contracts;
• requiring information to be given to any such person as may be determined
by or under the regulations for the purpose of enabling that person to
exercise any function conferred on him by the regulations;
• for the resolution of disputes and differences between parties to distance
contracts, including resolution of such disputes and differences otherwise
35
than by a court.)
(D) Recommendations for
Reform of the Law (19)
(i) Provision should be made in respect of
consumer credit for responsible lending
conduct
(No dealer, under the Hire Purchase and Credit Sale Act,
should enter into a credit contract with a consumer unless
he has ascertained the credit contract will meet the
consumer’s requirements and that the consumer has the
capacity to fulfill his obligations under the contract)
36
(D) Recommendations for
Reform of the Law (20)
(j) Establishment of a National Consumer
Council, which would encourage consumer
participation in decision-making processes
concerning the marketplace and the
interests of consumers
(Composed of representatives of Government, consumer organizations
or groups and NGOs, and business; Its functions would include:
advising the Minister on research to be conducted on consumer issues,
formulating Policy and legislative proposals in the interest of
consumers, and advising the Minister on consumer education programs
and activities.)
37
(D) Recommendations for
Reform of the Law (21)
(k) Provision for an effective enforcement
framework: The Consumer Protection Unit
to be given the necessary powers to enable
it to perform its functions effectively and
efficiently
(Power to obtain information, search premises, and seize incriminating
materials)
(Power to accept and enforce undertakings)
(Power to seek an injunction to restrain a person from engaging in conduct
that constitutes or would constitute a breach of consumer law)
(Protection from civil and criminal liability for actions taken in good faith in
performance of functions)
38
(D) Recommendations for
Reform of the Law (22)
(l) Provision for an accessible, effective,
efficient system of redress for consumers
(Courts empowered to award compensation, where appropriate, and to issue
any appropriate order)
(Alternative dispute resolution mechanisms, as well as forms of “collective
actions”, by or on behalf of consumers, should be available as redress
mechanisms for consumer grievances)
39
(E) The Way Forward: LRC’s
Views
Formulation of a Consumer Protection Policy
Provision for a New Consumer Regime (Drafting Instructions)
Role of Ministry to be reassessed: Need for research on consumer
issues (Surveys) so as to effectively combat consumer detriment
Operational Capability enhanced: the knowledge and skills of
Administrative Cadre at the Ministry and of Officers of Consumer
Protection Unit should be enhanced by training locally and overseas
40