COMPARATIVE STUDY OF CONSUMER POLICY

COMPARATIVE STUDY OF CONSUMER POLICY for DTI CONSUMER AND COMPETITION POLICY DIRECTORATE by Professor Geoffrey Woodroffe M.A. (Cantab), Solicitor Professor and Director of the Centre for Consumer and Commercial Law, Brunel University Dimitrios Giannoulopoulos MPhil, D.E.A., LLM Research Fellow, Centre for Consumer and Commercial Law, Brunel University Advocate, Athens Bar Association GENERAL CONTENTS Introductory Note .............................................................................................. 3 COMPARATIVE TABLES .................................................................................. 11 COUNTRY TABLES United Kingdom Denmark France Germany Italy .................................................................................. 41 .................................................................................. 42 .................................................................................. 46 .............................................................................................. 55 .............................................................................................. 63 .......................................................................................................... 71 .............................................................................................. 82 .............................................................................................. 96 .............................................................................................. 107 ...................................................................... 119 Netherlands Australia Canada United States of America Japan .......................................................................................................... 132 2 INTRODUCTORY NOTE When, in December 2002, we were asked by the Consumer and Competition Policy Directorate of the Department of Trade and Industry to engage in comparative research, which would cover the consumer law of ten different countries, we considered the project ambitious to say the least. Nevertheless, we were enthusiastic at the prospect of participating in an initiative that could highlight and emphasise interest in consumer protection which some commentators have suggested is on the wane. The comparative nature of the project was also a factor, which had a substantial weight in our decision to undertake the demanding task of examining the consumer law of so many countries in a period of only four months. The mere listing of their names suffices to expose the complexity of the research: six European countries (Denmark, England, France, Germany, Italy, Netherlands), the Commonwealth countries of Australia and Canada, the United States of America, as well as Japan. The research in such distinct legal traditions may have been complex, but it has been extremely interesting at the same time. It could not have been anything else, as it required parallel research in both Anglo-Saxon and Continental traditions as well as the distinctive element of Asia. The interest of this research is in the presentation itself of the differences and similarities between the consumer policies of the various countries studied. The aim of any comparative study should be to pinpoint alternatives possibly not envisaged 3 before. Looking at solutions promoted by others may offer a new understanding of issues which otherwise one would take for granted. What is perhaps undesirable, or indeed impossible, is to attempt the judgment of Solomon by deciding which other national model is the best. It was exactly with the above aim in mind that this research was drawn, which is apparent in the way it is presented. The information gathered is demonstrated in tables, which enable the reader to have an immediate feeling regarding the similarities and differences between the various consumer regimes. The aim not being an in depth analysis of the consumer law in the above countries, there is no academic writing to be found here. In any event, an academic article on the comparison of ten different countries would be impossible to write; it would also be contrary to the scientific rules of comparative law to compare so many countries. Further, the very strict time limits of the research, running from December to March, inevitably restricted the depth of the research. A short comment may be helpful on the methodology of the research. First of all, we have to mention that we have not been alone in this study. In fact, we joined an existing research group of more than ten people from very diverse backgrounds. The majority of the researchers were from Consumer and Competition Policy Directorate of the DTI, but the Office of Fair Trading and the Treasury also participated. These "in house" researchers were assigned one country each with the initial aim of writing a general report answering a specified number of questions, as they were developed in the research proposal. It was at that stage that we agreed to take part in 4 the research ourselves. Our first task was to elaborate a questionnaire that would partly consider the issues already identified by the DTI, but would also seek to add to these questions, so that the final questionnaire could cover the most interesting issues for both consumers and business. An extensive review of the general bibliography on consumer law was considered to be the most efficient way to undertake that first task. The completed questionnaire was submitted to the DTI before the end of December. During that first stage of the research, we mostly worked on the basis of the initial reports of the researchers on each country. We intended to complete the comparative tables with the information gathered by them so as to identify any gaps, before we could add our own research material. This led to preliminary comparative tables being submitted to the DTI on 23 January 2003, just before the researchers set off abroad on their individual research trips. In order to facilitate their work, we decided it would be helpful to provide each of them with more detailed tables focusing on the country they were intending to visit. This demanded a very intense co-ordinated effort until mid-February. Most of the work was completed in the library of the Institute of Advanced Legal Studies, where all the bibliography on consumer law was carefully examined. Likewise, we made extensive use of internet resources. Although we had only fifteen days when nearly all the visits took place, we managed to prepare the preliminary country-by-country tables and send them to the researchers before they set off on their visits, so that they could try to complete them themselves during their meetings abroad. 5 Our next task was to fill any gaps drawing on any additional information the researchers brought back from their journeys. This happened during the latter part of February. Subsequently, we entered the last stage of the research, during which we had to construct the final comparative tables. To do that, we had first to break down the country tables, which were very detailed. Then we proceeded to prepare the final comparative tables. These final comparative tables are general and intended to facilitate immediate comparisons between the ten countries and appear in the first part of this report. The individual country reports, which contain all the detailed information, follow in the second part. Ideally, readers should start from the general comparative tables. In that way, they can gain a general impression about comparative consumer law today. Then they may proceed to the country tables in order to find the detailed information on any area mentioned in the general comparative table. Nevertheless, we did not find answers to all the questions. We were not surprised that despite the whole work being completed, numerous gaps still appear. This may be explained by the complexity of this research that did not focus on specific issues, but tried to explore everything connected to consumer law, within strict time limits and more wide-ranging than traditional comparative research. However, these gaps may equally reveal some issues which have not been discussed or analysed in some of the countries. 6 This brings us to our last point. The essence of this study is a search for innovation beyond the national borders. The recognition that our way of handling things is not necessarily the only way can lead to progress. It would therefore be beneficial if similar efforts were undertaken at regular intervals. This research can obviously be developed. More work needs to be done to fill the existing gaps. Both the comparative tables and the country tables can be refined with library research. Likewise, contact could be made again - even via the internet - with the persons interviewed during the research trips, who could be asked to fill in any gaps regarding their country. Other foreign academics could be asked to do the same thing too. Although it may be an ambitious proposal, the same work could be undertaken regarding yet other countries, which could eventually lead to a database being constructed. Such a database could be finally made available to other countries via consumer websites, national and international, which would allow it to benefit from an interactive and continuous refinement. Professor Woodroffe will prepare a short paper with our general conclusions as agreed. Its aim will be to underline the main differences or gaps between English law and the law of the other nine countries. In any event, it is with great enthusiasm that we undertook this research and we would like to thank the DTI for entrusting such an exciting project to us. 7 Geoffrey Woodroffe Dimitrios P. Giannoulopoulos We would like to thank our graphic designer, Fani Rizava, for her invaluable help with the layout of the report. 8 NOTE ON SOURCES Citation in accordance with the academic standards was impossible as the reports of the DTI researchers - on which much of the report was based - did not contain any as such. Moreover, the format of tables, exclusively followed in this report, is not very suitable for citing references. However, it can be noted that the following books have been considered when preparing the tables: HARVEY, B., and PARRY, D., The Law of Consumer Protection and Fair Trading HODGES, C., Product Safety, 1996 LOWE, R. and WOODROFFE, G., Consumer Law and Practice, 1999 McLEOD, Consumer Sales Law, 1989 MILDRED, M., Product Liability, 2000 MILLER, Consumer and Trading Law, 1998 RAMSEY, I., Consumer Law We also used extensively the books below when completing the Australian, Canadian and United States tables: KEETON, W., Products Liability and Safety, 1989 TURNER, C., Australian Consumer Law VERMESSH, R., Business Law in Australia, 2001 WADDAMS, S., Products Liability, 1993 9 We also used various Internet resources, which we have cited when possible. Finally, in a non-related matter, we would like to mention that instead of following an alphabetical order, we preferred to cite the countries on the basis of their common interest, rather than alphabetically, i.e. Europe, Commonwealth, North America, Asia. 10 COMPARATIVE TABLES 11 OBJECTIVES/ POLICIES United Kingdom The Department of Trade and Industry sets policy See Modern Markets, Confident Consumers Product safety Denmark More information Co-operation between consumers-businesses Equilibrate relations between professionals and consumers France Focus on consumer protection Germany Consumer policy to be treated as an integral part of the general economic policy. Focus on information. Italy Implementation of EU policies. Informed choice for consumers Netherlands Importance given to the existence of sound rules to support and protect the consumers, without placing an undue burden on business Australia Promotion of competition and fair trading Canada Provide a fair and efficient marketplace Consumer information USA Prevent fraud, deception and unfair business practices in the marketplace FTC’s primary mission: protection of consumers’ interests Ensure consumer protection and economic development at the same time. Change of consumer policy: there is a move from pre-regulation to post-surveillance and active consumer participation. Focus on safety and disclosure of information, e-commerce, establishment of efficient market rules, education, fair and free competition. Japan 12 INSTITUTIONS – Central Government and Government Agencies United Kingdom - Department of Trade and Industry - Office of Fair Trading - Lord Chancellor’s Department - Danish Ministry of Economic and Business Affairs Agencies under the Ministry: - The National Consumer Agency of Denmark - Danish Competition Authority - Patent Office - Commerce and Companies Agency - Maritime Authority - Directorate General for Competition, Consumer Affairs and the Suppression of Fraud (DGCCRF) ] - Directorate General for Customs and Excise - Service of Health Inspection - Service of metrology - Federal Ministry of the Economy: (substituted by the) Federal Ministry of Consumer Protection, Nutrition and Agriculture: established in January 2001 Political responsibility dispersed between Consumer/ Environmental, Economy, Judicial and Health Ministries Several ministries deal with consumer affairs After 1997, Ministry of Industry responsible: - Directorate General for Harmonisation and Protection of the Market - Office of Weights and measures at the Ministry of Industry - Competition and Market Supervisory Authority However, The Ministry for Productive Activities (Ministero delle Attivita' Produttive) seems to have recently replaced the Ministry of Industry - The Directorate responsible for consumer policy is the Directorate General for the harmonization of the market and consumer protection (5 areas) : • C area: consumer affairs. • D area: product safety and quality. Other organisations: - Ministry of Health - Ministry of Agriculture - Ministry of the Environment - Ministry of Finance Customs Service - Ministry of Transport - Ministry of Education - Ministry of Public Works - Presidency of the Council - Ministry of the Interior - The Ministry of Economic Affairs (Ministerie van Economische Zaken (EZ)) - Ministry of Justice (Ministerie van Justitie) - Economic Monitoring Service (Economische Controlendienst) - Ministry of Public Health, Welfare and Sport (Ministerie van Volksgezondheid, Welzijn en Sport. - Two supervisory authorities are part of the Ministry of Public Health. • the Inspectorate for Health Protection. • the Inspectorate of Public Health. - The Inspectorate for Health Protection, Commodities and Veterinary Public Health (Inspectie Gezondheidsbescherming Waren in Veterinaire Zaken (Inspectie W&V)) It consists of 5 Regional Inspectorates and a General Inspectorate. Denmark France Germany Italy Netherlands Australia - Treasury 13 Federal Government: responsible for consumer issues that are a consequence of its more general powers to regulate certain industries - Ministry of Industry: Office of Consumer Affairs (OCA) • Minister of Health (through Health Canada): responsible for safety of non-electrical consumer products, medical devices and pharmaceuticals, • Minister of Agriculture and Agri-Food Canada (through Canadian Food Inspection Agency): responsible for food safety and labelling Standards: Standards Council of Canada (SCC): Consumer and Public Interest Committee(created by SCC) Standards Development Organisations - Bureau de normalisation du Québec - Canadian General Standards Board - CSA International (Canadian Standards Association) - Underwriters' Laboratories of Canada Federal Trade Commission: main federal government agency USA Bureau of Consumer Protection (under FTC): The Bureau of Consumer Protection is divided into six divisions and programs: • The Division of Advertising Practices. • The Division of Enforcement. • The Division of Financial Practices. • The Division of Marketing Practices. • The Division of Planning and Information. • The Consumer and Business Education Program. Department of Transportation Food and Drug Administration Department of Treasury Federal Energy Regulation Commission Federal Communications Commission US Consumer Product Safety Commission Cabinet Office – Quality of Life Policy Bureau: General co-ordination Japan Government Ministries and Agencies: Implementation of various policies Consumer Protection Council Japan Fair Trade Commission (JFTC) (Ministry of Finance) National Consumer Affairs Centre of Japan (NCAC) Consumer Product Safety Association Canada 14 INSTITUTIONS – 1. 2. Local Government Coordinating Bodies 1. Trading Standards Departments LACOR United Kingdom Denmark France 1. Lander Governments 1. Provincial offices of the Ministry of Industry, Commerce and Craft Trades 2. Presidency of the Council of Ministers: Conference of the State and Regions (Conferenza Stato-Regioni) "Conferenza di Servizi" 1. Inspectorate for Health protection: regional Inspectorates 1. State departments, e.g. Victoria Consumer and Business Affairs (within Department of Justice) 2. - Ministerial Council on Consumer Affairs: - Standing Committee of Officials of Consumer Affairs: • Fair Trading Operations Advisory Committee – deals with enforcement • Consumer Products Advisory Committee – product safety officers • Trade Measurement Advisory Committee • Uniform Consumer Credit Code Management Committee – credit officers from consumer agencies. - Consumer Consultative Committee (instituted by ACCC) 1. Provincial governments 2. - Consumers Measures Committee: federal-provincial-territorial forum - Federal, provisional and territorial ministers: cooperate on consumer protection in e-commerce, education and enforcement - Consumer Product Division 1. Consumer Affairs Division (in State Governments) 2. National Association of Consumer Agency Administrators Germany Italy Netherlands Australia Canada USA 1. Japan Local government: responsibility for planning policies paralleling those of the state Local consumer centres: product testing, handling complaints 15 INSTITUTIONS 1. Government sponsored bodies 2. Consultative organizations 3. Consumer cooperatives 1. - National Consumer Council - British Standards Institute - Citizens' Advice Bureaux, members of Citizens Advice (formerly NACAB) 2. 3. Dozens of separate Co-operative Societies 1. 2. 3. - COOP Denmark FDB (Danish Co-operative Retail and Wholesale Society) - The Independent Grocers - The Danish supermarkets 1. - National Consumer Institute (INC) - National Test Laboratory 2. - National Consumer Council (CNC) - Departmental Consumer Committees (CDC) - Unfair Contract Terms Commission (Commission des clauses abusives) - Commission of consumers’ security - National Council of Alimentation 3. √ 1. 2. - Federal/ Lander Committee meeting every six months - Local Consumer Advice Centres: 300 all over Germany: handle consumer complaints 3. 1. 2. Fairly numerous, active, broad based, but sometimes lacking resources: National level: - National Council of Consumers and Users (Ministry of Industry) - National Council on the Economy and Employment: representatives of consumer organisations participate - Interministerial Committee for Economic Planning - Price Observatory - Consumer associations Local level: - Councils - Consumer associations - Collegiate bodies - Local chambers of commerce 3. 1. 2. " Warenwet " advisory Commission 3. United Kingdom Denmark France Germany Italy Netherlands Australia 1. - Competition Bureau: Canada Protection against fraud, misleading advertising and certain areas of packaging and product labelling - Measurement Canada: ensures that goods and services traded on the basis of measure are inspected to ensure they are measured accurately 2. 3. USA Japan 16 INSTITUTIONS 1. Consumer associations 2. Independent organisations 1. - Consumers’ Association - National Consumer Federation 2. 1. 2. - Danish Consumer Information Centre, - Danish Consumer Council 1. √ - Huge success in general 2. United Kingdom Denmark France Germany 1. Main consumer associations: - VZBV – Federation of German Consumer Organisations - Arbeitsgemeinschaft der Verbraucherverbände e. V. - AgV (Union of Consumer Associations) - Verbraucherschutzverein E. V. (Consumer Protection Association) - the Stiftung Warentest (the foundation for testing of goods) - the Stiftung Verbraucherinstitut (the consumers’ institute foundation) - Die Verbraucher Initiative (the consumers’ initiative) - several organisations at regional level There are also approximately 300 consumer advice centres. Not a national consumer council/ organizations meeting the criteria for a national consumer council: - Consumer Consultative Committee at the Federal Ministry of the Economy - Consumer Council at the German Standards Institute (DIN) - Technical Equipment Committee. 2. 1. 15 national consumer organisations recognised by the Italian Government These 15 consumer org. form the National Consumer Council 2. - Autorita' Garante della Concorrenza e del Mercato (Authority for Competition and the market) - Autorita' per l'energia elettrica ed il gas (Authority for energy and gas) - Garante per la protezione dei dati personali (Authority for data protection) 1. - The Dutch Consumers’ Association (Consumentenbond) 2. 1. 2. - Australian Competition and Consumer Commission (ACCC) 1. - Consumers’ Association of Canada (CAC) 2. 1. - Consumers’ Union, - Consumer Policy Institute, - Council on Consumer Interests 2. Italy Netherlands Australia Canada USA Japan 17 LEGAL FRAMEWORK Contract and commercial law, encompassing consumer law, is essentially a common law subject. However, legislation covers many important areas, both in civil and criminal law spheres: United Kingdom - Sale of Goods Act 1979: sales of goods - Supply of Goods and Services Act 1982: hire, work and materials, services - Trade Descriptions Act 1968: goods and services Also much legislation since 1980s implementing EC Directives. - The Danish Price Marking and Display Act - The Danish Marketing Practices Act - Act on Product Safety - Act on the Consumer Complaints Board - Act on a Travel Guarantee Fund - Act on Action for Injunctions for the Protection of Consumers’ Interests - Act on Certain Payment Instruments - Act on Danish Consumer Information - Bill on Information Society Services, including Certain Aspects of Electronic Commerce (e-commerce Bill) Denmark France Various texts covering specific issues of consumer law: hidden defects, fraud/adulteration, doorstep selling, small commerce/ supermarkets, constructors’ responsibility for “ouvrages immobiliers”, credit, pricing, information on prices, distance selling, comparative advertising, holidays, defective products, product safety… Most of these laws contained in Code of Consumer Law Also, collective consumer agreements Germany Excessive regulation not desirable. No specific legal framework to protect economic rights of consumers through official procedures System of self-regulation by business and consumer bodies working through the courts on a civil law basis - Unfair Competition Act 1909 – UWG: most important legislation Italy Mostly EU directives textually transposed. - Law no 281 of 30 July 1998: General consumer legislation: Netherlands Many of the consumer protection regulations in the Netherlands are now based on European directives. - New Dutch Civil Code (Nieuw Burgerlijk Wetboek) of 1992 - Specific Acts - Door-to-Door Act (Colportagewt) - Price Indications Decree (Besluit prijsaanduiding goederen) 18 LEGAL FRAMEWORK Australia Trade Practices Act 1974 (TPA) Warranties legislation: various statutes Canada Acts administered by the National Consumer Agency: - Product Safety Act - Price Marking and Display Act - Payment Cards etc. Act - Consumer Complaints Board Act - Loi sur la protection du consommateur of Québec Federal Trade Commission Act (FTC): prevents unfair or deceptive acts FTC enforces section 5(a) of the FTC Act FTC equally enforces specific statutes USA Many federal acts of great importance on consumer credit - Most important: Consumer Credit Protection Act 1968 (Congress continuously amended CCPA adding specific legislation) Uniform Commercial Code: treats consumer transactions equally to commercial transactions Consumer important sections of UCC: - §2-302: Unconscionability - § 2312-2317: Warranty provisions Until late 60’s most regulation at state level Since early 60’s role of Federal Government became much more significant - Consumer Contract Act 2001 - Consumer Protection Fundamental Act - Product Liability Act - Consumer Product Safety Law - Specific product safety laws: - Electrical Appliance and Material Safety Law - Law for the Control of Household Products Containing Harmful Substances. - Industrial Standardisation Law - The Household Goods Quality Labelling Law - Product Liability Act - Consumer Product Safety Law - Industrial Standardisation Law Japan 19 FAIR CONSUMER PRACTICES – Duty to Trade Fairly United Kingdom Under discussion, in view of recent European Commission initiatives. Denmark Section 1 of the Marketing Practices Act France Germany UWG – Act Against Unfair Competition: contains the basic rules of fair trading Italy Netherlands Principle of good faith and fair dealing (“reasonableness and equity”) Australia General (catch-all) provision: section 52, TPA Canada USA Section 5(a) of the FTC Act: “unfair or deceptive practices are declared unlawful” There are three broad categories of unlawful conduct: (a) unfair methods of competition (b) deceptive acts or practices (c) unfair acts or practices Japan Article 3 (Chapter I) of the Consumer Contract Act 2001 See also article 4 20 FAIR CONSUMER PRACTICES – Protection against unfair practices United Kingdom Fair Trading Act 1973, Enterprise Act 2002 The common law also includes principles enabling the courts to interfere in some cases of undue influence, duress, and unconscionability. Denmark France Germany UWG provides that parties can seek court injunctions to stop unfair behaviour and claim for damages for actions contrary to honest business practice But no right of consumer to terminate agreements concluded on the basis of unfair practices Competition and Market Supervisory Authority can issue an order banning misleading advertising Italy In the case of radio and TV commercials and press advertising, the Radio and Press Supervisory Body (Garante per la Radiodiffusione e l’Editoria) is responsible. Consumer organisations can apply to a special court, requesting a ban on the use of unfair terms Netherlands Australia Not criminal sanctions/ Only civil remedies: Sections 53 to 65 Part V – Div 1 TPA: misleading or deceptive representations Canada Eight Provinces have enacted legislation against unfair practices: Business Practices Act – Trade Practices Act: different names/ same regime in most Provinces Authorities can open investigation They can prosecute as well FTC’s Bureau of Consumer Protection – Division of Marketing Practices is mainly responsible for consumer protection against unfair practices Main responsibilities: The Division files actions in federal district courts Areas of responsibility: internet, telemarketing, pyramid schemes… Unfair practices: those that cause or are likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition, e.g. bait advertising The Consumer Contract Act 2001 provides for the avoidance of a declaration of intent from a consumer, if there is misrepresentation etc by the seller USA Japan Misleading representations are prohibited by section 4 of the “Act against Unjustifiable Premiums and Misleading Representations” 21 FAIR CONSUMER PRACTICES – Unfair terms Unfair Contract Terms Act 1977 covers consumers and business United Kingdom The Unfair Terms in Consumer Contracts Regulations 1999 implement the EC Directive Overlap between 1977 Act and 1999 Regulations Denmark EC unfair terms in consumer contracts directive applies France French law more comprehensive than EC directive: - protection of non-professionals - coverage of all contracts Definition of unfair terms very broad Authorised bodies (representative associations that promote commercial interests, including chambers of commerce) can bring court actions against firms using unfair contract terms and conditions (Prohibitory Injunctions Act 2001 implementing EC Prohibitory Injunctions Directive) Germany Italy Local chambers of commerce establish mechanisms for identifying unfair terms: - summons - interim injunction EC Directive applies A term in a contract concluded with a consumer must be regarded as unreasonably onerous if – in breach of good faith – it significantly upsets the balance between the parties. EC Directive applies. Netherlands Australia Canada USA Japan The Consumer Contract Act 2001 prohibits exemption clauses (clauses excluding liability) in consumer contracts 22 PRODUCT LIABILITY – Producers’ Liability United Kingdom Producers and Distributors: Consumer Protection Act 1987, Part I (implementing EC directive) makes producers strictly liable for unsafe goods causing death, injury of damage to private property. Importers and distributors are liabile too in limited circumstances. Repairers and distributors may also be liable under the common law tort of negligence Denmark 1985 EC directive on liability for defective products applies. EC Directive implemented imposing strict liability. Articles 1386-1 to 1386-18 of the Civil Code France Who is liable: - Producer/ manufacturer (EU Directive). - the retailer/ the lender/ the provider * In that regard, French law takes consumer protection much further than the EU Directive. When is there strict liability: article 1386-1 Civil Code: The producer is liable for the damage caused by a defect of his product. When is a product defective: when it does not offer the safety to which one has a legitimate expectation (article 1386-4). Product Liability Act 1990 (implementing EC Directive): manufacturers, some importers and suppliers are liable for the safety of products they supply Compensation up to 160mDMs is available for personal injury and for damage to property (adopting cap permitted by EC Directive). Italy Decree-Law No 224 of 24-5-88 implementing EC Directive. Germany Netherlands EC Directive 1985 implemented Law of 13-9-1990 A manufacturer of defective (unsafe) goods is strictly liable Australia Canada Liability in tort – negligence must be proved for the manufacturer to be liable for damages Manufacturer has a duty of care towards purchasers of a product and third parties. USA Wherever damage or injury is caused by a defective product that is unreasonably dangerous to the user or consumer. Strict Liability Defences Japan Product Liability Act: came into force in July 1995 23 PRODUCT LIABILITY – Producers’ Liability 1. Strict Liability 2. Proof 3. Defences 1. √ 2. normal evidential rules 3. development risks: √ 1. √ 2. 3. 1. √ 2. The consumer must prove (in accordance with EC Directive): - the damage; - the defect; - a causal link between defect and damage. 3. - articles 1386-11, 1386-12 and 1386-13 of the Civil Code 1. √ 2. 3. - Development risks: √ United Kingdom Denmark France Germany Italy 1. √ 2. 3. - Development risks: × 1. √ 2. 3. Development risks: √ 1. × 2. The victim has to prove: - there was duty of care; - there was negligent breach of that duty; - there was damage. 3. 1. √ 2. The consumer need only prove that: - a product was defective; - the defect existed at the time the product left the defendant’s control; - the defect caused the plaintiff's injury. 3. √ 1. √ 2. √ 3. √ Netherlands Australia Canada USA Japan 24 PRODUCT QUALITY – Retailers’ Liability Sale of Goods Act 1979, s. 14(2) implies conditions of satisfactory quality in sales by businesses United Kingdom Similar terms implied: Supply of Goods and Services Act, 1982: work and materials and hire contracts Supply of Goods (Implied Terms) Act 1973: HP contracts Strict liability is imposed in the above cases Denmark France Ante 1990 Contractual Liability (Implied Warranties) Post 1990 New jurisprudence, in accordance with the EC directive was developed by the French Cour de Cassation (Supreme Court): the retailer, in addition to being responsible for the violation of the implied contractual warranties, equally became liable for any damages due to the use of the defective product sold. Germany Italy Netherlands Manufacturer concurrently liable with the seller Australia Liability for breach of implied warranties - Sale of Goods Act: For most of the provinces - Book Five of the Civil Code of Québec. - Warranty provisions contained in the Consumer Protection Act - extensive consumer warranty legislation: New Brunswick's Consumer Product Warranty and Liability Act (S.N.B. 1978, c. C-18.1) and Part III of Saskatchewan's Consumer Protection Act (S.S. 1996, c. C-30.1). Liability for breach of implied warranties: √ - Implied warranty of merchantability: goods must be of merchantable quality - Implied warranty of fitness for particular purpose: if goods are bought for a particular purpose, then the manufacturer is liable if they are not fit for that purpose Liability for breach of implied warranties: √ They establish the controlling quality standards that goods must meet - Implied warranty of merchantability – usage of trade - Implied warranty of fitness for a particular purpose Canada USA Japan 25 PRODUCT SAFETY – Responsible Authorities United Kingdom - Trading Standards Departments - DTI - National Consumer Agency: - Danish Emergency Management Agency: - Business and Housing Agency: - Danish Government Gas Institute - The Electricity Council - Road Safety and Transport Agency - Danish Veterinary and Food Administration - Ministry of Justice - The Danish Medicines Agency - Danish Environmental Protection - The National Board of Health - Danish Maritime Authority - National Telecom Agency Enforcement of the regulation regarding the EMC-directive. - Consumer Information Centre's laboratory: conducts laboratory investigations France Denmark Germany - Chemical research offices and institutes and the veterinary offices - Federal Insurance Surveillance Office and Federal Securities Surveillance Office - Federal Health Education Centre: promotes education on healthy nutrition and consumer education - Ministry for Trade and Industry - Health Ministry - Ministry for Labour and Social Welfare - Ministry of the Interior - Finance Ministry - Transport Ministry Inspectorate for Health Protection responsible for the enforcement of most of the regulation on product safety Italy Netherlands Australia Government, industry and consumers share responsibility for product safety. - Federal Government: national standards - Provincial governments: contractual matters - Product Safety Programme: It applies where the hazard is chemical, mechanical, electrical, or fire related. Consumers’ Products Division: responsible for certain products Standards: developed by National Standards Council and the four standards development organisations recognised by it - Transport Canada's Safety and Security Group: focusing on consumer safety USA FTC: enforcement of standards, recalling of products etc, information to the public, issues regulations regarding labelling. Consumer Product Safety Commission Japan Canada 26 PRODUCT SAFETY – Regulations United Kingdom Consumer Protection Act 1987, Part II, enables specific safety regulations to be made. The General Product Safety Regulations 1994 make it a criminal offence for a producer or distributor to supply dangerous goods (implementing 1989 EC Directive on General Product Safety). Services are not covered Denmark France - Regulations concerning fraud and adulteration (L-213-1 ss Code de la Consommation) - Safety norms: describe products’ characteristics: imprisonment if not observed (L-213-1) - Specific law of 1978 modified in 1983: today L 221-1 to L 225-1 of Consumer Code. For certain goods: - Limited or prohibited advertising : i.e. medical products, alcoholic drinks, cigarettes etc - Regulation of the fabrication and commercialisation of particular products: alimentary products, pharmaceuticals, cosmetics, chemicals, drugs, cars, games, elevators, garage doors, guns and ammunition… Germany - LBMG (Act on product safety): covers food and articles in everyday use Italy 1995 Decree 115-95 implemented EC Directive. Netherlands - Food and Commodities Act (Warenwet) implemented EC Directive on general product safety (92/59/EEC) Australia Trade Practices Act regulates this area. Canada USA Japan - Federal Hazardous Products Act and related regulations: nationwide standards of safety - Federal Motor Vehicle Safety Act: safety standards for automobile manufacturers. - The Federal Consumer Packaging and Labelling Act :food packaging/ description FTC issues regulations Apart from FTC regulations, there are numerous regulations in all fields: e.g. regarding agricultural and animal products, energy, food and drugs, alcohol, tobacco products and firearms etc. Product safety standards - Articles 7 and 9 of the Consumer Protection Fundamental Act: - A mandatory quality labelling standards system, and a voluntary Japanese Agricultural Standards (JAS) system exist. - Industrial Standardisation Law: aims to improve the quality of mineral and industrial products. To achieve this aim Japan Industrial Standards (JIS) have been established. - Household Goods Quality Labelling Law: regulates the labelling of the quality of household goods. 27 MARKETING PRACTICES 1. Advertising 2. Prices United Kingdom 1. Control of Misleading Advertising Regulations 1988 (implementing 1984 EC Misleading and Comparative Advertising Directive) 2. Consumer Protection Act 1987, Part III Denmark 1. Specific provisions apply, which are part of the Radio and Television Broadcasting Act 2. - General provisions contained in the Marketing Practices Act - Specific provisions contained in the Price Marking and Display Act France 1. EC Directive 2. 1. EC Directive 2. Germany Italy 1. EC Directive Implemented by Legislative Decree no. 74 of January 25th, 1992 2. 1. - Book 6 of the Civil Code: special provisions on deceptive or misleading advertising. However, advertising largely controlled by self-regulation by the industry. Netherlands - Dutch Advertising Code (Nederlandse Reclame Code): general advertising rules/ restricts deceptive and derogatory advertising. - Equally, special advertising codes exist 2. Prices Act 1961 in connection with the Price Indication of Goods Decree Australia Canada USA 1. Protection against false advertising is provided by the common law action for deceit, the FTC Act and state legislation. 2. Price cutting and price discrimination actionable at common law, when they pursue a predatory purpose. Besides common law, price cutting may equally violate anti-trust legislation, state statutes as well as the Robinson-Patman Act, which prohibits sales at unreasonably low prices. Enforcement for price discrimination is through the FTC and by private civil actions. Japan 28 MARKETING PRACTICES - Distance Selling/ e-commerce United Kingdom Consumer Protection (Distance Selling) Regulations 2000 implementing EC Distance Selling Directive Denmark - Bill on Information Society Services, including Certain Aspects of Electronic Commerce (E-commerce Bill) - Unsolicited telephone calls to private households: prohibited France EC Directive Germany EC Directive Italy EC Directive - Code for Telemarketing: instructions on how to conduct telephone advertising. - The Telecommunications Act 1998: use of automatic calling systems permitted if consent. - The Distance Contracts Directive: similar to the regulations above. - No specific e-commerce legislation exists - E-commerce directive (2000/31/EC) in the process of being implemented. Netherlands Australia Canada - Canadian Online Trust Project: "Canadian Code of Practice for Consumer Protection in Electronic Commerce” - Revision of legislation - harmonized consumer protection legislation in e-commerce. Internet Sales Contract Harmonisation Template - Federal and provincial governments have worked with the Canadian Association of Internet Providers to inform business and consumers on the Consumer Protection in Electronic Commerce Guidelines. - The Office of Consumer Affairs has published an “online shopping assistant”. - Internet Surveillance Project “Fairnet”: monthly surveillance of Internet advertising by the Competition Bureau. - Specific websites give advice on online shopping: - Media Awareness Network - Canadian Marketing Association - Advertising Standards Canada Telemarketing fraud of great extent despite specific legislation. Consumers very concerned and irritated with telemarketing. A “National-Do-Not-Call” Registry is under construction by the FTC. The Registry will contain the telephone numbers of consumers unwilling to receive telemarketing calls. Similar programmes already apply in two-dozen states where consumers can place their numbers in so called “do-not-call” registers. USA Japan 29 MARKETING PRACTICES – Doorstep Selling United Kingdom Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987 implementing 1985 EC Directive on Contracts negotiated away from business premises. Denmark - Doorstep Sales Act: door to door sales prohibited. - Specific data protection provisions apply also France EC Directive Germany EC Directive Italy EC Directive Netherlands - Door-to-Door Act (Colportagewt) - Price Indications Decree (Besluit prijsaanduiding goederen) Australia - written contract: √ - cooling-off period: √ - licencing required - cooling off period: √ Canada USA Cooling-off period rule (16 C.F.R. § 429): right to cancel sale within 3 days of sale and other protections Japan 30 REDRESS – Redress in civil proceedings United Kingdom Primarily small claims track in County Court Denmark × No court practice with regard to restitution or compensation for consumers France Germany Italy √ Citizens may apply to ordinary courts if their rights have been infringed and they wish to obtain compensation for non-fulfilment of contractual obligations However, procedures unacceptably long, prohibitively expensive and complex √ Article 112 of the Dutch Fundamental Law and Article 6:236 of the new Dutch Civil Code Netherlands Australia √ Difficulty or impracticality of enforcing court redress mechanisms significantly limits, in most instances, the value of any of remedies Canada USA Most states have Unfair and Deceptive Practices Acts which allow consumers to sue for damages or to obtain other relief Japan 31 REDRESS – Small Claims Procedure United Kingdom √ In County Court - small claims track, where claim for £5,000 or less. Denmark France Germany Italy √ Mostly at local level: Chambers of commerce Civil Code (1993 Amendment): local justices of the peace: jurisdiction for small claims up to the value of £11000, but no legal representation allowed √ - claims not exceeding NLG 5,000 - claims concerning rent of housing or hire purchase, regardless of amount Netherlands Australia √ Magistrates courts Canada USA √ Widely used across country Japan 32 REDRESS – Class Actions United Kingdom × Denmark × Not recognized in Danish law However, if a number of consumers have equal claims of compensation connected to a violation of the law the Consumer Ombudsman can claim their compensation collectively The Consumer Council is fighting for class actions to be permitted France √ Germany × Consumer bodies cannot seek damages for loss or disappointment on behalf of consumers through court actions: Class actions not possible Italy √ Netherlands √ New DUTCH CIVIL CODE Australia Canada Possible in British Columbia, Ontario and Québec USA Class actions play a very important role in consumer redress. They can be very effective. However, there is also a rising concern for abusive class actions, where attorneys are the only benefactors. Japan 33 REDRESS ALTERNATIVE DISPUTE RESOLUTION – Mediation/ negotiation practices United Kingdom Codes of Practice include conciliation practices, but they cover only some industry sectors. Denmark A few cases have been solved through negotiation ADR organizations : - “La Commission de Règlement de litiges de Consommation” - “La Boîte Postale 5000” - “Les Conciliateurs de Justice” (The Conciliators of Justice) - Consumer Committees France Germany Several ADR schemes exist in Germany An attempt is made to reach an out-of-court settlement in the preliminary phases of court proceedings. Italy Professional voluntary supervisory bodies (difensore civico or mediator): Mediator mitigates citizen v administration disputes Arbitration committees set by chambers of commerce (1993 Act) Conciliation procedures agreed with consumer organisations at national, regional, provincial and local level Netherlands Most disputes settled by alternative dispute resolution Australia Redress system is ADR orientated There are mediation procedures They do not have a binding effect Canada Consumer Services Bureau mediates written complaints between consumers and businesses USA Mediation – Arbitration: two most popular forms of ADR Japan Most consumer complaints regarding goods and services are handled through negotiations between consumers and businesses 34 REDRESS ALTERNATIVE DISPUTE RESOLUTION – Ombudsman Schemes United Kingdom British and Irish Ombudsman Association: various UK members including Financial Ombudsman Service. Denmark The Consumer Ombudsman: Nordic Consumer Ombudsman France Financial Schemes: Germany Binding effect: √ Italy Banking Ombudsman Consumer Complaints Boards (Geschillencommissis) Netherlands Binding effect: √ Other Ombudsman schemes mainly in the financial sector: - The Life Insurance Ombudsman. - The Damages Insurance Ombudsman. - The Savings Banks Ombudsman. - The Pensions Ombudsman. - The Care Insurance Ombudsman. The Reforming Canada’s Financial Services Sector Act 2001 provides for a new Financial Services Ombudsman for all federally regulated financial institutions Australia - Canadian Code of Practice for Consumer Protection in Electronic Commerce: Canada - The Office of Consumer Affairs (OCA) has published a Guide on the Development and Implementation of Voluntary Codes, an Evaluative Framework for Assessing Voluntary Codes, and research papers on the subject There are state and local ombudsmen across USA, but most of them investigate solely complaints against governmental agencies. USA Japan 35 ENFORCEMENT - Public regulation Generally enforcement by local authority Trading Standards Department United Kingdom Also, OFT has role, e.g. Stop Orders, advertising Denmark The National Consumer Agency of Denmark France State enforcement concentrated on product safety and quality Germany VZBV may take legal action on behalf of consumers but under restricted circumstances Warnings issues to manufacturers and traders; decisions to seek injunctions are made by a joint body of the consumer centres Self-regulation also exists - Chambers of Commerce - The Competition and Market SupervisoryAuthority (Autorità Garante della Concorrenza e del Mercato Italy Netherlands - Inspectorate for Health Protection - Prosecutions are taken by the Public Prosecutor Australia State consumer offices Canada Overlap between federal and regional agencies Main problem: lack of resources FTC enforces a variety of consumer protection and regulations through both administrative and judicial processes. Enforcement takes place through Bureau of Consumer Protection – Division of Enforcement: Equally, State Attorney-Generals enforce state consumer protection laws JFTC has powers of enforcement under the Consumer Protection Fundamental Act USA Japan Self-regulation: Efforts underway to persuade businesses create “Corporate Codes of Conduct” 36 INFORMATION/ EDUCATION – Public Bodies United Kingdom OFT has duty to provide information to public under Fair Trading Act 1973 Denmark National Consumer Agency's web site Consumer Information Centre Econsumer.gov Legal Yearbook INC (National Institute of Consumer law) produces specialised consumer programmes Information: - Federal Ministries and Länder Government - VZBV (Ministry of Economy) - Stiftung Warentest (foundation for testing goods) Education: - the Länder Ministries of Culture are responsible for consumer education in the schools. - At regional level, education is the responsibility of the Länder Ministries - At national level consumer education is provided either by the Ministry, the Federal Health Education Centre or the Federal Health Office. - Chambers of commerce - Public administrations - Public bodies operating at central or local level - The European Consumer Information Agency France Germany Italy Netherlands Australia - Fair Trading Office - Western Australia Department of Consumer and Employment Protection - Information - Canadian Consumer Information Gateway (CCIG) - Consumer Connection: website of OCA. - ‘Straight goods’: online independent source of news. - Education/ research - The Contributions Program for Consumer and Non-Profit Organizations FTC: 83 consumer publications from May 2001 to March 2002/ millions of pages in the internet Promotion of consumer information through the Bureau of Consumer Protection – Division of Planning and Information: The Division has the following programs and centres: - Consumer Response Centre - Identity Theft Data Clearinghouse - Consumer Sentinel - International Consumer Protection. - Operations Education is pursued through the Bureau of Consumer Protection – Consumer and Business Education Program. Hundreds of other consumer agencies at federal, state and local level offer information to the public State focus on education and information. National Institute on Consumer Education: Consumer education included in the new Courses of Education to be implemented in 2002 at the elementary level and lower secondary level and 2003 at the upper secondary level Local agencies: 455 consumer centres in Japan Canada USA Japan 37 INFORMATION - media United Kingdom "Watchdog" and other TV and radio programmes and journals, e.g. “Which?” published by Consumers' Association. Denmark 3 TV programmes All weekend papers have a consumer section France Through minitel the DGCCRF provides information regarding regulations, policies etc “Centres techniques régionaux de la consommation” make tv programmes on consumer topics Germany The Federal Health Education Centre (Bundeszentrale für gesundheitliche Aufklärung) participates in the production of films and series mainly concerning health. Italy A number of consumer programmes are regularly broadcast on Italian television Netherlands Australia Australian Consumers Association (magazine “Choice”) Canadian Consumer Handbook: CD-R / internet Canada CBC (main tv channel): consumer advice/ news on its website USA Consumer issues do not seem to attract the media’s interest. Japan 38 CONSUMER CONFIDENCE United Kingdom Consumers regularly complain via Citizens' Advice Bureaux, Trading Standards department, ombudsmen, trade associations, OFT Denmark Consumer awareness appears to have increased in all areas over the last 10-15 years France Germany Both Government and consumer bodies see the UWG as the best available tool to protect consumers’ interests, provided it can be updated Italy Netherlands Australia Consumers make significant number of complaints Canada Weak consumer movement in Canada, especially if judged by American, Australian or British standards. USA Americans very demanding: consumers not afraid to assert their rights Japanese consumers have very high expectations of product/service quality. Japan Japanese consumer policy is quite distinctive in that it emphasises the responsibilities of consumers to adequately educate themselves 39 INTEGRATION WITH COMPETITION POLICIES United Kingdom DTI and OFT both have such responsibilities. Denmark Consumer responsibility is separate from competition Policy Initiatives to bring together the Consumer Agency and the Competition Authority failed France Close interdepartmental cooperation Germany A whole range of effective methods are available to strengthen the position of consumers, which are closely linked to competition policy Italy Netherlands Consumer policy much lower priority than competition policy Australia Integration/ complementary nature TPA covers both Canada Industry Canada responsible for both USA FTC responsible for both/ coordination Japan The Cabinet Office is responsible for coordinating consumer policy with others and has a specific aim to ensure consumer protection policies fit well within the program of regulatory reform being proposed by the government 40 41 COUNTRY TABLES COMPARATIVE STUDY OF CONSUMER POLICY for DTI CONSUMER AND COMPETITION POLICY DIRECTORATE by Professor Geoffrey Woodroffe M.A. (Cantab), Solicitor Professor and Director of the Centre for Consumer and Commercial Law, Brunel University Dimitrios Giannoulopoulos MPhil, D.E.A., LLM Research Fellow, Centre for Consumer and Commercial Law, Brunel University Advocate, Athens Bar Association UNITED KINGDOM 42 UNITED KINGDOM* OBJECTIVES/ POLICIES INSTITUTIONS Central government and government agencies The DTI sets policy See Modern Markets, Confident Consumers Department of Trade and Industry (DTI) Office of Fair Trading (OFT) Local Government Co-ordinating bodies Government sponsored bodies Consultative organisations Consumer cooperatives Consumer associations Independent organisations Trade associations Ombudsmen Lord Chancellor’s Department - the courts Trading Standards Departments National Consumer Council British Standards Institute Dozens of Co-operative Societies, but no consumer role beyond retailing. Consumers’ Association National Consumer Federation Various associations have codes of practice. Various members of British and Irish Ombudsman Association. Contract and commercial law, encompassing consumer law, is essentially a common law subject. But some areas covered by legislation (see below), especially since the 1980s with the transposition of EC Directives. Until the intervention of Brussels, consumers were protected by the same law which protected business customers. This is still true of much legislation, e.g. - Sale of Goods Act 1979 - Supply of Goods and Services Act 1982 - Trade Descriptions Act 1968 LEGAL FRAMEWORK FAIR CONSUMER PRACTICES Duty to trade fairly Protection against unfair practices Unfair terms Under discussion because of recent EC initiative. Fair Trading Act 1973 Enterprise Act 2002 The Unfair Contract Terms Act 1977 covers not only consumers, but also business customers. It applies only to exemption clauses, and covers contractual and tortious liability. The Unfair Terms in Consumer Contracts Regulations 1999 (amending 1994 Regulations and implementing the EC Directive) protect consumers only. But they are not limited to exemption clauses and are more wide-ranging than the Act. Consumer Protection Act 1987, Part I (implementing 1985 EC directive) makes producers strictly liable for unsafe goods causing death, injury or damage to private property. It applies in limited circumstances to importers and distributors. PRODUCT LIABILITY (civil law) (producers’ liability) Repairers and distributors may also be liable under the common law tort of negligence. Joint and several Third party action Durability * Most of the law outlined here applies throughout the UK. However, the law differs in some respects in Northern Ireland and Scotland. Here the position in England and Wales is explained. 43 PRODUCT QUALITY (civil law) (retailers’ liability) Retailer Sale of Goods Act 1979, s. 14(2) implies conditions of satisfactory quality and fitness for purpose in sales by businesses. Similar terms implied in other contracts for the supply of goods: Supply of Goods and Services Act 1982: work and materials and hire contracts Supply of Goods (Implied Terms) Act 1973: HP contracts Strict liability is imposed in above cases 1982 Act implies a term of care and skill against business suppliers Services Guaranties EC Directive on Sale of Goods and Associated Guaranties implemented by Sale and Supply of Goods in Consumer Contracts Regulations 2002 - in force 31.03.2003. PRODUCT SAFETY (criminal law and regulations) Regulations and preventive measures The General Product Safety Regulations 1994 make it a criminal offence for a producer or distributor to supply dangerous goods. The Consumer Protection Act 1987, Part II, enables specific safety regulations to be made. Services are not covered Yes. Enforced by Trading Standards Departments. Criminal sanctions DESCRIPTION Goods Civil sanctions (correspondence with description) Criminal sanctions (misdescription) Services Civil sanctions Criminal sanctions 1979, 1982 and 1973 Acts imply conditions that goods comply with description Trade Descriptions Act 1968 makes it a criminal offence for a business to supply goods with a false trade description No statutory duty, but express contractual terms must be adhered to, e.g. tour operators' brochures. TDA 1968, s. 14, makes it an offence for trader knowingly or recklessly to make false statement about provision of services. MARKETING PRACTICES Advertising Prices Distance selling/ ecommerce Doorstep selling Control of Misleading Advertising Regulations 1988, implemented 1984 EC Directive. Enforced by OFT. Consumer Protection Act 1987, Part III Consumer Protection (Distance Selling) Regulations 2000 Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987 give consumers seven day cancellation period. REDRESS Consumers’ awareness – advice & assistance O.F.T. publications Citizens' Advice Bureaux provide advisory centres in towns all over the country. They are members of Citizens Advice, a national co-ordinating body. 44 Redress in civil proceedings - small claims - class actions Alternative Dispute Resolution - Ombudsman schemes - Codes of practice - Mediation/ negotiation practices Redress in criminal proceedings Criminal sanctions Yes, in County Court. The small claims track covers claims of less than £5,000. No The British and Irish Ombudsman Association (not statutory) validates ombudsman schemes. The largest is the Financial Ombudsman Service, a statutory scheme. Few voluntary schemes, e.g. estate agents. New OFT regime to approve sectoral codes of practice. Codes of Practice include conciliation usually, and arbitration often. Powers of Criminal Courts Act 1973 empowers the courts, on conviction of defendants, to order them to pay compensation to victims. Yes, see below ENFORCEMENT Court remedies Public regulation Self regulation Individuals Generally by local authority Trading Standards Department. Also, OFT has role, e.g. advertising, codes, unfair terms. Codes of Practice and ombudsman - see above. INFORMATION Public bodies Businesses Media OFT has duty to provide information to public under Fair Trading Act 1973. Codes of practice often oblige trade association members to publicise complaints procedures. TV and radio programmes (e.g. "Watchdog") and magazines (e.g. "Which?": Consumers' Association monthly). National Consumer Council Consumers’ Association Consumers regularly complain via CABx, trading standards, OFT, ombudsmen, trade associations. ADVOCACY CONSUMER CONFIDENCE INTEGRATION WITH OTHER POLICIES Consumer protection and competition policies DTI and OFT both have responsibilities in both areas. CASE STUDIES Travel Agents/ Holiday law Plumbers Clothing Used cars Hotels Package Travel, Package Holidays and Package Tours Regulations 1992. Association of British Travel Agents (ABTA) Codes of Conduct. No special law No special law. But shoes covered by Footwear Distributors Federation Code of Practice. Motor Industry Code of Practice. See Holidays above, as the Regulations and Code may apply. 45 DENMARK 46 DENMARK OBJECTIVES/ POLICIES Main objectives: - consumer protection and product safety - give consumers greater choice by providing information and transparency - promote active co-operation between consumers and business: selfregulation/legislate if necessary. Ensure that Danish consumers do not have to pay more for identical goods than consumers in other comparable European countries. Consumer policy to be revised: - 50 new proposals for change, the main one regarding the Consumer Complaints Board. INSTITUTIONS Central government and government agencies * There is criticism that most consumer organisations, with the exception of the Ombudsman and the Consumer Council, are like bureaucrats, as they do not oppose Ministry wishes. The National Consumer Agency of Denmark: Agency of the Danish Ministry of Economic and Business Affairs. Also secretariat of the Consumer Complaints Board and the Consumer Ombudsman - General authority of product safety and coordinator - Represented on national as well as international committees working to secure a high level of consumer protection, e.g. the agency holds the presidency of the Consumer Committee in the OECD. - There is a telephone hotline at the agency, which is the main contact for consumer complaints. Danish Ministry of Economic and Business Affairs: In addition to the National Consumer Agency, the following are all government agencies under the Ministry of Economic and Business Affairs: • Danish Competition Authority • Commerce and Companies Agency The Ministry delegates daily responsibility to the National Consumer Agency, but the Ministry is responsible for the overall coordination. Ministry’s most important rule is to ensure that policies are carried out. Consumer Complaints Board: - It has a supervisory role of the private complaints boards. - Deals only with complaints that are not covered by the private complaints boards concerning consumer goods and services. - It settles most civil cases in the fields of textiles, furniture and carpets, radio and television sets, kitchen hardware, and second hand cars. Local Government Co-ordinating bodies Government sponsored bodies Public services Consultative organisations Consumer cooperatives COOP Denmark FDB Danish Co-operative Retail and Wholesale Society) - Denmark's largest retail enterprise: 1200 stores making up nine different retail chains/ 20000 employees/ 850000 consumers visit the coop’s stores every day/ 38% of daily goods market. - 1.3 million Danes are members (equivalent to every second household). - Founded more than 100 years ago as a consumer-owned co-operative enterprise. - Aim: to ensure consumers the best goods at the lowest prices. • Denmark's most widely read magazine, Samvirke, is published by FDB for its members and has some 1.2 million readers. ( : 47 • Own laboratory, where 40 people do tests to ensure product safety and quality/ some 50000 samples are analysed to monitor the quality of the good/ no other Danish retail enterprise has a similar department. • FDB have set up a new measurement system in order to measure consumer satisfaction/ they have recently sent out two questionnaires, the last of which had 60000 responses. The other two main cooperatives are: The Independent Grocers. The Danish supermarkets. Consumer associations Independent organisations Danish Consumer Information Centre: Independent, private foundation - object: to provide impartial consumer information on the basis of own surveys, product tests in the Consumer Information’s test laboratories and collection of information. - laboratory investigations in the areas of household equipment, food, textiles, hygiene, as well as other subjects concerning nutrition, safety, consumer rights, etc. of current interest to consumers - Consumer Information Centre should provide information to consumers in order to provide them with a better basis for purchasing, using and disposing of goods and services, etc. Danish Consumer Council: - independent of public authorities and commercial interests - represents the interests of consumers…in councils, on boards and committees and vis-à-vis the Government and the Parliament - represented on more than 200 committees, boards and councils dealing with matters important to consumers - involved in a wide range of consumer issues: food quality, environmental protection, health services, financial and legal services and issues connected with media, telecommunications, universal services, etc. - Consumer Council has no power to block decisions. - consists of representatives from 26 national organizations, such as household and women's organizations, organizations representing youth and the elderly, environmental organizations, trade unions and educational organizations. Local consumer groups are also represented on the council - a secretariat of about 50 staff members: policy advisers and staff involved in the “Think and Test” magazine. - sources of income: consumer magazine Tænk+Test ("Think and Test") which they publish in collaboration with the Danish Consumer Information Centre, and an annual subsidy under the Finance Act. ► Consumer Council considers that the liberalisation of utility markets (first telecoms and now electricity) has created a new market has created new vulnerable consumers. Trade associations Ombudsmen The Consumer Ombudsman: see under redress Acts enforced by the Danish National Consumer Agency: ■The Danish Price Marking and Display Act • framework legislation with certain detailed rules. • aim: to ensure transparency about prices by committing traders (retailers) to mark and display prices. • rules on the necessity to display signs which indicate special discounts offered by the individual retailer. ■ The Danish Marketing Practices Act • framework legislation regulating marketing by private companies. • omnibus clause stating that all marketing must be carried out in accordance with good marketing practices, as well as prohibiting the passing of incorrect or misleading information. • special bans: i.e., a ban on quantitative restrictions, trading stamps etc. • some of the provisions of the Act implement EU-regulation. LEGAL FRAMEWORK 48 • also contains rules on the Consumer Ombudsman and his activities. ■ Act on Product Safety • framework legislation, which implements an EU directive. • purpose of the Act is to ensure that only safe products are placed on the Danish market, i.e. products which do not present any risk to the health and safety of people or property when used for the assumed purpose or in a way which it is expected to be used. ■ Act on the Consumer Complaints Board • framework legislation which defines the model for settling disputes out of court and provides a basis for establishing industry based approved complaints boards through selfregulation by the trade. ■ Act on a Travel Guarantee Fund • contains detailed rules on the activities of the Fund ■ Act on Action for Injunctions for the Protection of Consumers’ Interests • object: ensure effective enforcement of the EU regulation in the consumer area. • foreign authorities and organisations entered in the list published by the Commission in the Official Journal of the European Community can bring actions before Danish courts for an injunction in pursuance of the Danish Administration of Justice Act. • an action for an injunction may be brought against Danish companies, which have carried out illegal marketing in the home country of the authority. ■ Act on Certain Payment Instruments • regulates electronic payment instruments such as Dankort, international credit cards, petrol cards, cards for department stores, telephone cards, Danmøntkort, etc. • the object of the Act is to ensure reasonable rules of responsibility, high security and consumer trust in the field of electronic payment instruments. • when the Act was last amended, a balance was struck between technological development, the interests of businesses and society in general and the need for consumer protection. • the Act contains detailed rules, which are not based on EU regulation. • Consumer Ombudsman administers the Act. ■ Act on Danish Consumer Information see supra under Institutions ■ Bill on Information Society Services, including Certain Aspects of Electronic Commerce (ecommerce Bill) • object of the bill is to ensure free mobility in the Single Market for information society services. • framework legislation. FAIR CONSUMER PRACTICES Duty to trade fairly Section 1 of the Marketing Practices Act - Very wide clause. Covers very wide areas of interest, such as discrimination/ covers a wider area than simply economic interest. - This section is extensively used. - Imposition of a fine is not possible under the general clause. EC unfair terms in consumer contracts directive Protection against unfair practices Unfair terms 49 PRODUCT LIABILITY (civil law) (Producers’ liability) Joint and several liability Third party action Time limits 1985 EC directive on liability for defective products PRODUCT QUALITY (civil law) (retailers’ liability) Retailer Services Guarantees PRODUCT SAFETY (criminal law and regulations) National Consumer Agency: - - general authority on product safety - co-ordinating product safety and responsible for enforcement of the toy safety regulation and the product safety act. Other product safety organisations: • National Working Environment Authority: - Enforcement of regulation concerning personal protective equipment (PPE) apart from bicycles and crash helmets. - supervises pressure equipment, machines, e.g. household machines, and contractors’ supplies and tools. Aerosols. • Danish Emergency Management Agency: Enforcement of the legislation on fireworks, including approval and marking • Business and Housing Agency: Enforcement of the building legislation, including the regulations on products which are used in connection with building construction and playground equipment. • Danish Government Gas Institute Enforcement of regulations for all types of gas installations, gas components and gas appliances, including gas lighters. • The Electricity Council responsible for electricity safety enforcement in Denmark. The Secretariat of the Council enforces regulation on the power stations, electrical wiring and material including safety requirements for electrical properties of toys and electrical equipment and other appliances that is not mainly electrical. • Road Safety and Transport Agency Enforcement of the regulation on road safety, e.g. the regulations on safety for motor vehicles, bicycles and their safety equipment e.g. Bicycles and crash helmet. Car seats. • Danish Veterinary and Food Administration Enforcement of health and safety of foodstuff including labelling and marking packaging. The authority can refer to the local authorities. • Ministry of Justice - responsible for the regulations on weapons and explosives - product safety authority with regard to public entertainment's parks. • The Danish Medicines Agency Enforcement of the regulations on medical equipment/medical product, e.g. thermometers, baby sleeping pillows, thermometer comforters, glasses and contact lenses etc. • Danish Environmental Protection Agency Enforcement of the regulation on the chemical properties of products, e.g. the chemical properties of toys, batteries and cosmetics. Oil for oil lamps. Hygiene. 50 • The National Board of Health Expert authority in questions concerning health risks. Administration of medical equipment belongs to the Danish Medicines Agency. • Danish Maritime Authority Enforcement of the regulation on navigation e.g. safety. Including the safety of leisure boats and safety equipment, which is used at sea and in connection with diving. • National Telecom Agency Enforcement of the regulation regarding the EMC-directive. Consumer Information Centre's laboratory: - delivers the results of laboratory investigations in the areas of household equipment, food, textiles, hygiene, as well as other subjects concerning nutrition, safety, consumer rights, etc. of current interest to the consumers and the Danish Consumer Council. - The test results are then to be published in the consumer magazine "Tænk + Test" (Think + Test) - hot line, where consumers can get answers to telephone calls and personal inquiries about consumer and household affairs. ► There is a proposal that consumer safety must be placed under a new “security agency” along with the safety work of the gas and electricity councils. MARKETING PRACTICES Advertising Prices Distance selling/ ecommerce Specific provisions apply, which are part of the Radio and Television Broadcasting Act. General provisions contained in the Marketing Practices Act Equally, there are specific provisions contained in the Price Marking and Display Act. Bill on Information Society Services, including Certain Aspects of Electronic Commerce (ecommerce Bill: See supra under Legal Framework. Unsolicited telephone calls to private households are prohibited (s. 2 of the Consumer Contracts Act) The prohibition does not apply to sales offers of books, subscriptions to newspapers and magazines or services like insurance. Advertising through the Internet No specific rules apply to advertising through the Internet But advertising through internet is subject to the general provisions of the Marketing Practices Act. ♦Doorstep Sales Act: door to door sales are generally prohibited. Door to door means personal visits to consumers at their residence, and at their work, clubs, schools, hospitals etc. as well. However, the Act does not apply to market research activities. ♦Specific data protection provisions Plans are afoot to make improvements in consumer complaints procedures. Doorstep selling REDRESS Consumers’ awareness – advice & assistance Redress in civil proceedings - small claims - class actions There is no court practice with regard to restitution or compensation for consumers. Class action is not recognized in Danish law, but if a number of consumers have equal claims of compensation connected to a violation of the law the Consumer Ombudsman can claim their compensation collectively. The Consumer Council is fighting for class actions to be permitted. Consumer Complaints Board: - administrative and less expensive alternative to real court action Alternative Dispute Resolution 51 - deals with consumers' complaints concerning consumer goods and services. - Settles most civil cases in the fields of textiles, furniture and carpets, radio and television sets, kitchen hardware, and second hand cars - A complaint may be referred to the Board only if it has already been addressed to the business concerned - Even if it is a matter of concrete decisions, they have a generally reconstructive effect on the branch, due to the fact that the organizations of all types of business encourage their members to adjust their procedures according to the decisions made. - organisation: a chairman together with members representing the interests of consumers and trade and industry. The chairman must fulfil the general conditions necessary for appointment as a judge and may not have any special interest in consumer organisations or trade and industry organisations. Maritime and Commercial Court of Copenhagen: - The court is composed of a legal judge and representatives from business and trade and consumer representatives. - Appeals from this court go directly to the Supreme Court. The Consumer Ombudsman: Aim: protect the consumers on basis of an average norm. Role: - keeps an eye on commercial communications in the broadest sense taking into account the interests of consumers, business and society. - shall make sure that private and public business activities are conducted in accordance with good marketing practices. - The Ombudsman is independent. No one can interfere in his cases except the court. - Consumer Ombudsman observes the Marketing Practice Act. - The Ombudsman is not concerned with specific complaints (individual cases) (these are dealt with by the Consumer Complaints Board or the 11 private boards). He is mostly interested in cases that deal with the infrastructure and the general functions of the market, such as the behaviour of banks, insurance companies etc. - If the Ombudsman wants to stop something, he can go to the commercial court. If there is a penalty involved he must ask the police to start an investigation. He can also put down intermediate injunction. - organisation: a staff of 10 who work in the office (compared to 25 ten years ago) (In Nordic law the word "Ombudsman" is commonly used about an official whose task is to protect the ordinary citizens against misuse of political or administrative power, a guardian of the civil rights.) - Ombudsman schemes If business and trade will not comply with the statements, suggestions or recommendations of the Danish Consumer Ombudsman, the ombudsman could be forced to ask the courts to issue injunctions. If for instance the prohibition of misleading advertising in the Marketing Practices Act is violated, the Consumer Ombudsman can act as Public Prosecutor and ask the court to sentence the companies that violate the law. 52 Nordic Consumer Ombudsman: The Consumer Ombudsman in Denmark and in Sweden, Norway and Finland is the dynamic public but independent element in market supervision with the task to actively influence development in the area of marketing practice. The Nordic Consumer Ombudsmen have no powers to make binding decisions as to how the law should be interpreted and complied with. - Codes of practice - Mediation practices Redress in criminal proceedings Criminal sanctions Other a few cases have been solved through negotiation. Legal Aid: The Danish Consumer Council has set up a scheme which offers the consumers financial support and guidance in leading consumer cases. Purpose: to promote judicial decisions in cases of particular interest to the consumers, including cases which may be of importance to the legislative development in the consumer area. The National Consumer Agency of Denmark: See above under institutions Product safety: The Consumer Agency carries out the monitoring of the market either by means of spot checks or through testing of special types of products. Danish Consumer Ombudsman: See above under redress Consumer Complaints Board: See above under redress Consumer Ombudsman’s proposals for stronger enforcement. ENFORCEMENT Individuals Independent organisations Public regulation Self regulation INFORMATION/ ADVOCACY/ EDUCATION Public bodies The Government’s goal is that information on goods and services in Denmark are among the best in the OECD area, by 2010. National Consumer Agency's web site: - has grown into an expansive channel of current information where the business community and consumers can help themselves to a vast array of consumer related subjects - At the beginning of year 2000, it was extended with electronic complaint forms, from which the Consumer Complaints Board has received new cases on a daily basis - also a central tool to the Consumer Ombudsman, who informs on current problems, attitudes, guidelines, and more - informational material is released simultaneously in hard copy and electronically - The Agency has had an extensive dialogue with consumers through the site. There are approximately 5,700 electronic inquiries per year from the sites debate page and by e-mail. www.fs.dk was visited by approximately 310,000 people and received a total of 15.5 million hits. Consumer Information Centre: - mission: to provide up to date consumer information… - main areas of activity: ○ testing of goods in the centre’s laboratories. ○ provision of information. 53 - organisational structure: 33 committee members + 10 board members + secretariat with over 50 staff. - no power to fine companies. - Self-owned institution independent of authorities, commercial business or political interest. - telephone hot line, where consumers can get answers to telephone calls and personal inquiries about consumer and household affairs. - internet: quite a substantial amount information on the website. Econsumer.gov: - Together with 12 other countries Denmark in April 2001 established a co-operation regarding nonserious marketing on the Internet. - Provides a formula accessible to the public, where consumers all over the world may complain online, if they have dealt with an Internet dealer who did not comply with the rules of the consumer legislations. - General consumer information and addresses of the national organizations who take care of consumer interests also available. Legal Yearbook: Covers a wide range of principle matters settled by the Consumer Complaints Board and the Consumer Ombudsman. No common curriculum for consumer education in schools. However, it can be noted that the Ministry for agriculture, food and fisheries run campaigns on food safety. Businesses Independent organisations Media - 3 TV programmes - All weekend papers have a consumer section. Consumer awareness appears to have increased in all areas over the last 10-15 years. CONSUMER CONFIDENCE INTEGRATION WITH OTHER POLICIES Consumer protection and competition policies Consumer responsibility is separate from competition Policy. Although both the National Consumer Agency of Denmark and the Danish Competition Authority are both agencies under the same Danish Ministry, they are separate agencies dealing with things. They still cooperate on some projects, such as the well functioning markets work. Initiatives to bring together the Consumer Agency and the Competition Authority failed. CASE STUDIES Travel Agents/ Holiday law Travel Guarantee Fund: - a private independent institution, which provides cover for customers of package holidays when the organiser is not able to fulfil his obligations because of financial difficulties. - Received 536 complaints in 2000. - 98% of the complaints complied with. - the fund covers travels marketed and sold in Denmark - Not seen as a problem sector. - Consumers satisfied with the waiting time, quality of service and price. - Plumbers have their own complaints’ board. - Consumers Complaints Board received 158 complaints in the year 2000. Complaint is possible only for the car/ not for the servicing, for which you have to go to court. - A new private complaints board is targeted for this sector under the new proposals for consumer reform. - CCB received 248 complaints in 2000. CCB received 33 complaints in 2000. - Plumbers Clothing Used cars Hotels 54 CREDIT CARDS Legal framework Act on Certain Payment Instruments (See under Legal Framework supra) 55 FRANCE 56 FRANCE OBJECTIVES/ POLICIES - Make consumers responsible economic players - Protect consumers’ economic interests - Risk prevention - Equilibrate relations between professionals and consumers “Human, Citizen, Consumer”: This is how the government sees the consumer – Economic policy should focus on consumers during 2003 observes J.P. Raffarin, Prime Minister of France (interview in “Le Figaro magazine”, January 4, 2003). INSTITUTIONS Central government and government agencies - Directorate General for Competition, Consumer Affairs and the Suppression of Fraud (DGCCRF) [most important] - Directorate General for Customs and Excise - Service of Health Inspection - Service of metrology - National Consumer Institute (INC) - National Test Laboratory - National Consumer Council (CNC) - Departmental Consumer Committees (CDC) - Unfair Contract Terms Commission (Commission des clauses abusives) - Commission of Consumers’ Safety - National Council of Alimentation √ They are regulated by the law of 1977, which is incorporated in the Code de la Mutualité. √ Huge success in general But consumer assoc. less efficient than labour-unions Most important: UFC, FFF, FNFR, CSCV, UFCS, AFOC, rural families Approval necessary: only certain associations can represent their members in court Conditions for approval: See L. 411-1 Consumer Code, L. 412-1, R. 411-4: Representativeness, duration of activity, independence… To bring criminal actions they must have, as a specific purpose, the defence of consumer interests: L421-1. Independent organisations Trade associations Ombudsmen Local Government Co-ordinating bodies Government sponsored bodies Consultative organisations Consumer cooperatives Consumer associations LEGAL FRAMEWORK Various texts covering specific issues of consumer law: hidden defects, fraud/adulteration, doorstep selling, small commerce/ supermarkets, constructors’ responsibility for “ouvrages immobiliers”, credit, labeling of alimentary products, pricing, information on prices, long-distance selling, landlord/ tenant, comparative advertising, holidays, defective products, product safety… Most of these laws contained in Code of Consumer Law 5 books on: 1. Information and making of contracts 2. Conformity and product safety 3. Debt 4. Consumer associations 5. Institutions 57 However, the Code does not cover everything. Various specific laws cover particular goods or services: Pharmaceutical/ medical products, domestic apparatus, cars, tenancies, insurance, travel Other regulations are to be found in the Civil Code (hidden defects, product liability), the Penal Code (injury and killing) or the Civil Procedure Code. Collective consumer agreements FAIR CONSUMER PRACTICES Duty to trade fairly Protection against unfair practices Unfair terms See Article L212-1 See Article L213-1 on fraud. French law more comprehensive than EU directive: it predated it in the law of 1978. - protection of non-professionals - coverage of all contracts It is the courts that strike down unfair terms: overall economic circumstances surrounding the disputed contract considered. Some decrees also cover prohibited unfair contract terms. Definition of unfair terms very broad: courts may rely upon guidelines in: - the list in the EU directive - the recommendations of the Unfair Terms Commission (CCA) CCA is an independent authority: its recommendations can be relied upon in actions seeking the injunction of unfair terms Consumer associations can bring an action for the injunction of unfair terms, even if no consumer has been harmed. PRODUCT LIABILITY (civil law) (producers’ liability) Strict Liability EU Directive, July 25 1985: implemented by an act of May 19 1998 (France was the last country of the EU to implement the directive into national law). That act introduced articles 1386-1 to 1386-18 to the Civil Code • For what damages: - Damages to personal integrity. - Damages to goods other than the defective product. • Who is liable: - Producer/ manufacturer/ importer (EU Directive) . - the retailer/ the lender/ the provider * In that regard, French law takes consumer protection much further than the EU Directive. But France was penalised by the Court of Justice, in a decision of April 2002, which criticised the extension to distributors. • When is there strict liability: article 1386-1 Civil Code: The producer is liable for the damage caused by a defect of his product. • When is a product defective: when it does not offer the safety to which one has a legitimate expectation (article 1386-4). ► The defect here does not have the same meaning with the defect, as it is interpreted in the fields of implied warranties. The defect under the strict liability regime concerns the safety of the product, whilst the defect in the terms of an implied contractual warranty concerns fitness for use. • What does the consumer have to prove: 58 The consumer must prove: - the damage; - the defect; - a causal link between defect and damage. * The victim/ consumer does not have to prove the defect existed at the time the product was sold. But if the defendant/ manufacturer proves it was not, he is exonerated. There are other defences enumerated in the articles 1386-11, 1386-12 and 138613 of the Civil Code. Joint and several Third party action Durability PRODUCT QUALITY (civil law) (retailers’ liability) Ante 1990 The courts applied the traditional laws of contract and tort ● The retailer is responsible if he knew the product was defective at the time he was selling it. ● The retailer is presumed to know the defective nature of a product he is selling. He cannot be exonerated by proving he did not know of the product’s defects. ● So, he is liable for any damage caused by the defective product. ● A defect must be a defect that renders the product unfit for the use it is destined for or that diminishes that use significantly. ► The disadvantage of a contractual liability regime was that the consumer had to prove that: - the defect was present at the time of the transaction; - the defect was latent. Equally, the consumer had to act within very brief time limits. Post 1990 A new jurisprudence, in accordance with the EU directive was developed by the French Cour de Cassation (Supreme Court). In that direction, the retailer, in addition to being responsible for the violation of the implied contractual warranties, equally became liable for any damages due to use of the defective product sold. According to the French Supreme Court: “the retailer is obliged to provide goods deprived of any default susceptible of causing a danger for the persons or goods, which means a product that offers the security to which we have a legitimate expectation”. This obligation for providing safe goods is distinct from the implied warranties seen above. There is liability not only for damages to the integrity of the person, but for damages to goods as well (i.e. liability for the damage to an apartment that is destroyed due to the explosion of a tv set). The retailer can only be exonerated if he manages to prove “force majeure”, which means that the defect was a result of a cause “étrangère, imprévisible et irresistible”. Joint and several liability: All the successive retailers until the manufacturer may be held liable for damages caused by a product sold by them. 59 Time Limits 10 years Services Guaranties PRODUCT SAFETY (criminal law and regulations) Regulations and preventive measures - Regulations concerning fraud and adulteration (L-213-1 ss Code de la Consommation, first issued under law of 1905): DGCCRF administrative control: power to seize dangerous products. - Security norms: describe products’ characteristics: imprisonment if not observed (L-213-1) - Specific law of 1978 modified in 1983: today L 221-1 to L 225-1 of CC Security and precaution principles legitimate public intervention ↵ For such intervention to take place, reliable information must be gathered ↵ DGCCRF: power to conduct searches. If product considered dangerous, “dossier” opened and sent to “préfet”; in 15 days, dossier sent to minister, who can take various measures. - Measures taken by decree of the Conseil d’Etat: (1) Minister submits a decree project to Consumers’ Safety Committee (2) Businesses heard by Committee/ adversarial process (3) Opinion of the Committee generally followed by Ministers (4) Government issues decree regarding a certain category of products measures taken: - Obligation to inform - Regulation of labeling and circulation - Hygiene - Regulation of manufacture, import, export, offer, sale, distribution etc - recall of products and prohibition of imports - products returned for modification/ reimbursement/ substitution - destruction Principle of proportionality Control of the Conseil d’Etat Decree contains criminal sanction: pecuniary sanction The Commission of Consumer Safety can deal with urgent cases, on complaint by a consumer, tribunal or trade organisation, by making a public decision on the danger of a product. Urgent measures taken by “arrêté”: Grave/ immediate danger I-(1)Decision taken by the préfet (2) Information of ministers, who can take action II- Decision at national level by ministers, without consultation of Consumers’ Safety Committee / businesses heard/ limited duration (up to one year) 100 arrêtés between 1984-2000 60 For certain goods: Limited or Prohibited advertising : i.e. medical products, alcoholic drinks, cigarettes etc Regulation of the fabrication and commercialisation of particular products: alimentary products, pharmaceuticals, cosmetics, chemicals, drugs, cars, games, elevators, garage doors, guns and ammunition… Crime (délit) committed if person endangered: no need for corporal damage. Criminal sanctions Consumer Code: Principal sanctions: Aggravated fraud, falsification and misleading advertising: 4 years imprisonment + 500000 FR fine Contravention of regulations: fines: from 3000 FR to 10000 FR Complementary sanctions: - Information of the public regarding the imposition of a criminal sanction - Prohibition of commercialisation - Confiscation Criminal Code “Mise en danger”: 223-1 Code Criminel: deliberate violation of a particular obligation of security or prudence which directly exposes someone to an immediate risk of death or serious injuries… 1 year imprisonment + 100000 FR fine Involuntary corporal damages - Homicide: 3 years imprisonment + 300000 pecuniary sanction - Involuntary harm to personal integrity 2 years imprisonment + 200000 FR pecuniary sanction or only 10000 – 1000 FR pecuniary sanction depending on time victim is totally incapable of working MARKETING PRACTICES Advertising Prices Distance selling/ e-commerce Doorstep selling E.C Directive E.C Directive E.C Directive REDRESS Consumers’ awareness – advice & assistance Redress in civil proceedings - small claims - class actions Alternative Dispute Resolution - Ombudsman schemes - Codes of practice - Mediation/ negotiation practices Consumer associations may represent the collective interest of consumers or the personal interests of particular consumers. ADR organizations “La Commission de Règlement de litiges de Consommation” 61 a commission is geographically competent in the department where it is set up. - For the moment, commissions exist only in Rennes and Perpignan. - If other specialized ADRs exist, the Commission does not deal with the complaint. - Procedure ○ The assessors prepare the cases and make a proposal for an amicable settlement. ○ If the parties cannot accept the proposal, then commission meets on the convocation of the president. ○ The parties are invited to participate in the commission meeting and can be represented by a lawyer. ○ If a settlement is reached, then a conciliation agreement is adopted. ○ If an agreement cannot be reached, then the commission makes another conciliation attempt. ○ Any decisions are not binding and not enforceable. “La Boîte Postale 5000” - The “post-box” is a public scheme run by the departments under the competition, consumer and prevention of fraud unit. - The scheme is to provide a single address to which a consumer may file a complaint. - The service provides information to the consumers and refers the consumers to the competent ADR body for the dispute. - First a letter is sent to the consumer and professional organization in the department where the business is located. - Then the competent consumer organization attempts mediation - In case of failure, conciliation follows/ a conciliation commission will then be competent... “Les Conciliateurs de Justice” (The Conciliators of Justice) - The conciliators are appointed by order of the first judge of the Court of Appeal and have their office at the town hall. - They help the parties find an amicable solution to their dispute. - Decisions are not prima facie binding. However, they can be binding with the two parties’ consent. Consumer Committees - They consist of an equal number of consumer and business representatives. - They are the result of agreements between consumer organizations and professional sectoral organizations. - Only the consumer organizations can refer a case to the committee. Redress in criminal proceedings Criminal sanctions - ENFORCEMENT Court remedies Public regulation Self regulation Individuals 62 INFORMATION Public bodies Businesses Media INC (National Institute of Consumer law) produces specialised consumer programmes. Others include the Commission of Consumer Safety and the Commission of Unfair Terms. Through minitel the DGCCRF provides information regarding regulations, policies etc. “Centres techniques régionaux de la consommation” make tv programmes on consumer topics. ADVOCACY CONSUMER CONFIDENCE INTEGRATION WITH OTHER POLICIES Legislative and regulatory texts prepared on the basis of close interdepartmental cooperation. Consumer protection and competition policies CASE STUDIES Travel Agents/ Holiday law Plumbers Clothing Used cars Hotels EC Directive CREDIT CREDIT CONTRACT OFFER ● Written offer/ 2 copies must be given. ● Offer must comply with legal standard contracts. ● Period of reflection after offer: 15 days. ● Or there may be a cancellation deadline. RATE ● There is a ceiling fixed periodically. CREDIT CHECK ● There is a file held by the bank of France. It contains negative information. Its consultation by the credit institutions is obligatory. INFORMATION ● Monthly statement as long as credit relationship exists. ● New rate must be reported to customer before it can apply. CREDIT CARDS Neither the bank nor the credit card company is liable, if the card is lost or stolen or debited too much. 63 GERMANY 64 GERMANY OBJECTIVES/ POLICIES In Germany, consumer policy is an essential part of the Federal Government’s economic policy, because consumers, as the purchasers of goods placed on the market, have a key role to play in the social market economy. There is no “action programme” as such, but objectives have been laid down for consumer policy, which is treated as an integral part of general economic policy. In May, 2001, however, an ‘action plan’ was published. In its annual economic report, the Federal Government defines the broad outlines of the policy it intends to implement in this area. INSTITUTIONS Central government and government agencies The administrative structure mainly responsible for consumer policy is the Federal Ministry of the Economy (Bundesministerium für Wirtschaft). At Länder level, it is also the economics ministries that are generally responsible for consumer policy. The more specific aspects - judicial policy, social and family policy, environmental policy, food and health policy - are dealt with by the competent ministries. The Federal Government and the Länder regularly discuss consumer affairs at the Federation/Länder Committee which meets approximately twice a year, with participation of the new Länder since 1991. Federal Ministry of Consumer Protection, Nutrition and Agriculture : established in January 2001 Previously, consumer policy rested with the Economy Ministry. Change is said to have given consumer issues a higher political profile Political profile of aspects other than safety and food quality still remains low, although the newly established Ministry is trying to aggregate competence in the field of the protection of the economic interests of consumers Political responsibility dispersed between Consumer/ Environmental, Economy, Judicial and Health Ministries. Lander governments also have roles Each Land has its own Verbraucherzentrale (consumer advice centres). In the bigger Länder the consumer advice centres have field offices. Federal/ Lander Committee meeting every six months. 16 Consumer Advice Centres in the Länder: all in all 300 centres (the 16 consumer advice centres of the Länder together with their field offices) all over Germany handle consumer complaints. Consumer co-operatives Consumer associations Main consumer organisation: VZBV – Federation of German Consumer Organisations: (“Umbrella” organisation for consumer organisations of the 16 Lander.) set up in November 2000 merging three other organisations: ■ Arbeitsgemeinschaft der Verbraucherverbände e. V. - AgV (Union of Consumer Associations) – mission political representation ■ Verbraucherschutzverein e. V. (Consumer Protection Association), mission combating unfair terms and unfair/misleading advertising ■ Stiftung Verbraucherinstitut (foundation on consumer eduction and training) mission education and training The newly established Federation of German Consumer Organisations (VZBV) unites the major fields of activities and is responsible for: - representing the interests and rights of consumers to the general public and to Local Government Co-ordinating bodies Government sponsored bodies Consultative organisations 65 legislators, administrations, courts, suppliers and economic organisations at national, European and international levels, in particular regarding the protection of consumers’ economic interests, the protection of their health and of the environment, as well as ensuring that this self-help is supported and promoted by consumer information, consumer advice and consumer training in relation to the social market economy. - informing consumers and supporting and coordinating the activities of the consumer advice organisations and institutions. - combating of unfair commercial practices and misleading advertising, as well as unfair contract terms. - education and training of consumer advisers. The VZBV has 36 affiliates, i.e. most German consumer organizations: • associations which are fully devoted to consumer protection, such as the 16 consumer advice centres at Länder level • associations with a social mission such as the housewives’ associations • the largest tenants’ rights association - the Deutscher Mieterbund • some scientific institutions. Other consumer organisations: ◘ the Stiftung Warentest (the foundation for testing of goods) ◘ Die Verbraucher Initiative (the consumers’ initiative), the only membership based consumer organization in Germany (ca. 5000), largely independent of public funding ◘ several organisations at regional level There is not a national consumer council which would represent consumers’ interests at the various governmental organizations. Nevertheless, there are five bodies meeting the criteria for a consumer council: ■ Until 1997 Consumer Consultative Committee at the Federal Ministry of the Economy - Mission: to represent consumer opinion, to deliver opinions and to table suggestions to the Federal Government on basic consumer policy issues. - Its members are personally appointed by the Minister and selected for their knowledge of the present situation in consumer protection (representatives of consumers associations, trade unions, journalists etc.). - the Consumer Consultative Committee ceased working in 1997. Its workload has been taken over by the newly established Scientific Committee for Consumer Protection at the Federal Ministry of Consumer Protection, Food and Agriculture ■ Consumer Council at the German Standards Institute (DIN) - Advises and assists the Institute’s management and working groups in questions concerning non-industrial final consumers. - It is responsible for defending the interests of these consumers in international, regional and national standardisation, within the DIN. (It collaborates in technical work, challenges draft standards, and mounts conciliation and arbitration procedures. It does not develop standards and is not attached to any administrative structure). ■ Scientific Committee on Consumer and Agricultural Policy at the Federal Ministry for Consumer Protection, Food, Agriculture and Forestry (BML) - Consists of 12 consumer affairs experts from various disciplines, mainly from the academic environment. - It advises the Ministry for Consumer Protection, Food and Agriculture in consumer protection and food policy matters which concern consumers and their general interests. ■ Technical Equipment Committee. - It deals with the safety of technical equipment, sport and leisure installations, toys, and household appliances. - It consists of representatives of the competent authorities at Länder level, accident insurance bodies, consumer associations, the German Standardisation Institute, and 66 employers’ and trade union organisations. ■ German Food Code Commission. - It consists of representatives of the scientific community, food inspection services, consumer associations and food producers. - It prepares guidelines on food manufacture and quality of other key characteristics of food. - It is managed by the Federal Health Ministry in conjunction with the Federal Ministry of Food, Agriculture and Forestry and the Ministry of the Economy. Independent organisations Trade associations Ombudsmen LEGAL FRAMEWORK Since 1998 the Federal Government is putting more emphasis on integrating consumer interests into legislative measures. However, no specific legal framework to protect economic rights exists (such as a Consumer Protection Act). Consumer legislation is broken down in various specific acts and regulations. The 2001 Act on the Modernisation of the German Civil Code has integrated all major pieces of consumer protection legislation (doorstep selling, distance selling, e-commerce, consumer sales, consumer credit, time sharing). Self-regulation does not play an important role. Litigation in the courts plays a major role, be it on the basis of individual complaints or on collective action. Most important legislation: The 2001 Act on the Modernisation of the German Civil Code FAIR CONSUMER PRACTICES Duty to trade fairly Protection against unfair practices UWG – Act Against Unfair Competition: contains the basic rules of fair trading. UWG provides that parties can seek court injunctions to stop unfair behaviour and claim for damages for actions contrary to honest business practice. But no right of consumer to terminate agreements concluded on the basis of unfair practices. However, the German Government has introduced a proposal granting consumer and trade organisations the right to claim collective action from those traders who have intentionally violated the law. Prohibitory Injunctions Act 2001(implementing EU Injunctions Directive): it enables authorised bodies, i.e. consumer organisations and representative associations that promote commercial interests, including chambers of commerce, to bring court actions against firms using illegal marketing practices (so called Rechtsbruchklage – traders who violate acts and regulation aiming inter alia at consumer protection shall not benefit from violating the law). The only sanction, however, is the claim for injunction. Product Liability Act 1990 (implementing EC Directive). The Product Liability Act is the only piece of legislation in civil law that exists apart from the civil code. Under the Act manufacturers, some importers and suppliers are liable for the safety of products they supply. - There is only one single decision by the German Supreme Court ruling on the interpretation of the EC Directive (BGH Vers 1995, 924), despite the very serious concerns of the industry at large and in the insurance world during the late eighties about the commercial impact of the directive. - Compensation up to 160mDMs is available for personal injury and for damage to property -Germany is the only EC country to opt for a cap on liability. - The practical importance of the Product Liability Act is limited due to the lack of compensation for pain and suffering. Therefore injured parties usually tend to sue the tortfeasor under the general rule of tort law as laid down in the civil code. Unfair terms PRODUCT LIABILITY (civil law) (producers’ liability) 67 Development risks is defence available. Joint and several Third party action Germany has implemented the consumer sales’ directive in the civil code. The concept of the directive has served as a model to re-shape the sales’ law independent of the parties. PRODUCT QUALITY (civil law) (retailers’ liability) Retailer Under the new sales law, the final seller of a consumer product has been given a mandatory right to claim recourse in the chain of supply for the compensation he has paid to the consumer for the defective product Services Guaranties PRODUCT SAFETY (criminal law and regulations) Regulations and preventive measures Guaranties exist only on a voluntary basis The product safety directive has lead to the adoption of the Produktsicherheitsgesetz (Product Safety Act), which functions like a safety net so as to cover all those products which are not regulated by more specific pieces of law, such as the Lebensmittel- and Bedarfsgegenständegesetz (Food and Utilities Act) and the Gerätesicherheitsgesetz (Act on Technical Appliances) Standard trading Offices (Gewerbeaufsichtsämter) - Competent for the enforcement of the product safety act and the act on technical appliances Chemical research offices and institutes and the veterinary offices - Responsible for the official testing of food. - These and the public health and safety monitoring services are responsible for hearing consumer complaints. - All of these institutions are public services. Federal Insurance Surveillance Office and Federal Securities Surveillance Office - Responsible for the safety of services - These authorities also deliver opinions. Safety of Services Regulation on the construction and management of places of assembly: (Versammlungsstättenverordnung). - Safety of sports and leisure events - This Regulation lays down various measures to ensure the safety of assemblies, such as emergency exits, fire prevention measures, the mandatory attendance, training and tasks of supervisory officials, rules governing halls and stadiums, and organisational measures before, during and after the events. - Specific provisions apply to “mobile constructions”, i.e. installations which are regularly assembled, used and dismantled in different places. - children’s playgrounds: there is a specific standard for design and safe use (DIN 18 034 “Spielplätz und Freiflächen zum Spielen”). It is similar to the standard on Rules governing the safety of playground devices (DIN 79 26). Criminal sanctions 68 MARKETING PRACTICES Advertising Prices Distance selling/ ecommerce Doorstep selling Most of the marketing practices come under the Fair Trading Act (Gesetz gegen den unlauteren Wettbewerb) Fair Trading Act (UWG) Regulation on price labelling of products and services The civil law obligations have been integrated into the civil code, the marketing practices regulations into the Teledienstegesetz, the UWG (as possibly revised) respectively The civil law obligations have been integrated into the civil code. No particular rules exist on direct marketing outside the UWG REDRESS Consumers’ awareness – advice & assistance Most of the consumers do not use the ADR schemes. This may be due to the simplified court procedure that allows disputes concerning money to be dealt with quickly – at comparatively low costs. ADR appears to work only for high value disputes, such as cars. However, ADR plays an important role in medical malpractice and dry cleaing. Redress in civil proceedings - small claims - class actions Alternative Dispute Resolution - Ombudsman schemes - Codes of practice - Mediation/ negotiation/ conciliation practices No, Consumer bodies cannot seek damages for loss or disappointment on behalf of consumers through court actions. However, the so called Verbandsklage group action provides consumer and business organisations with the right to claim for injunction in the courts to attack unfair/misleading advertising and unfair contract terms. Since 2001 it is also possible for individual consumers to transfer their rights to consumer organisations who may initiate a test claim (Musterklage) or a collective claim (Sammelklage). So far the last means does not play a role. Several ADR schemes exist in Germany: - 203 Schemes were reported by Germany in a research supported by the Nordic Council of Ministers: 3 with national coverage and the rest with regional or local geographical competences. - The structure of the schemes differs, but mostly they are a result of industrial branches setting up a complaint mechanisms of a more or less formal character. Financial Schemes: - An Ombudsman can deal with any dispute between a consumer and a private bank or a private mortgage bank. - status: appointment is for three years. Only persons qualified as judges can become Ombudsmen. - nature of decision: the decision is binding on the bank if the dispute is less than £5000, but it is not enforceable. Do not play an important role. Conciliation Boards in civil cases - They deal with civil disputes concerning pecuniary claims which do not come under the jurisdiction of the labour court. - There is no limit on the value of the dispute. - The conciliator does not take action if the procedure concerns a matter for which trade associations or other similar bodies have set up conciliation or settlement bodies. - The hearings before the conciliator are oral. - The parties can be accompanied by a legal adviser. - A small fee is charged depending on the circumstances. - Enforcement: the conciliator cannot deliver a judgement. He can only submit a nonbinding proposed settlement. - If a settlement is accepted, it must be recorded and can then be enforced by the local court. - There is no publication of any decision. 69 The Chambers of Industry and Commerce and of Craft - Competence: commercial disputes/ disputes between traders and customers. - oral hearing - before the conciliator. - some boards charge fees/ the fees can be considerable depending on the value of the dispute. - most of the boards do not publish their decisions. [source: Nordic Council of Ministers, “A study on alternative dispute resolution and cross-border complaints in Europe”, TemaNord 2002: 569]. Redress in criminal proceedings Criminal sanctions Except food and safety this is not regarded as an appropriate means of consumer protection ENFORCEMENT Court remedies Public regulation In Germany there are usually an important number of cases to be reported. This is true for individual as well as for collective claims. State enforcement concentrated on product safety and quality. The Produktsicherheitsgesetz provides powers for the public authorities to take action against manufacturers and traders to warn the public and to order withdrawal of dangerous products from the market. The control of unfair contract terms and unfair/misleading advertising marketing practices is put in the hands of consumer and trade organisation. They may seek injunction in the courts. Individual consumers cannot take action under the UWG (in contrast to individual traders). Independence of consumer information is a centrepiece of consumer policy. Following reunification, the emphasis was put on informing consumers in the new Länder as to their rights and opportunities in the market economy and on creating consumer centres and consumer advice centres in the new Länder. As the process of unification is becoming ever deeper, the differences between the Länder are gradually disappearing. For many years, consumer associations have published information concerning various subjects such as food and nutrition, pharmaceuticals, questions concerning travel law, financial services, new media, environment, hints for buying and renovating houses and many other issues. However, there is no statutory right of consumers to claim information from the public authorities or from business. The initiative to adopt a Verbraucherinformationsgesetz (consumer information act) failed in 2002. A new project is under way. Information: Insofar as it comes within their remit, the Federal Ministries and the Länder Ministries inform consumers in the context of their public relations work or through the intermediary of subordinated services. Federal and Lander Government provide information on specific issues. Stiftung Warentest (foundation for testing goods) Education: - the Länder Ministries of Culture are responsible for consumer education in the schools. - At regional level, education is the responsibility of the Länder Ministries. - At national level consumer education is provided either by the Ministry, the Federal Health Education Centre or the Federal Health Office. Businesses Media The Federal Health Education Centre (Bundeszentrale für gesundheitliche Aufklärung) participates in the production of films and series which are broadcast during Self-regulation Individuals INFORMATION/ EDUCATION/ ADVOCACY Public bodies 70 Other entertainment programmes, mainly concerning health education. Most information is provided by non-State bodies such as: - the federation of consumer advices centres - the foundation for testing of goods (Stiftung Warentest) - the consumers initiative (die Verbraucherinitiative) - the consumer advice centres in the Laender (Verbraucherzentralen). Specialised organizations providing information Responsibility for consumer education in general: ♦The Federation of consumer advice centres ♦The Länder consumer advice centres ♦ The Stiftung Warentest Consumer information is the paramount mission of these institutions. Other organizations: ♦ The Verbraucherinitiative (the consumers initiative) particularly active in the field of ecological, social and health-related aspects of consumer protection. Both Government and consumer bodies see the UWG as a suitable tool to protect consumers’ interests, provided it can be updated. The intergration of the consumer protection legislation into the civil code is regarded as a major step forward to realise a fully-fledged level of protection. Consumer interests are taken into account in other policies through consultation mechanisms and, where necessary, special meetings of the Interministerial Committee for Consumer Affairs. The newly established Ministry for Consumer Protection, Food and Agriculture has been given the right to take an initiative in consumer matters (Initiativrecht) A whole range of methods are available to strengthen the position of Consumers, which are closely linked to competition policy. However, consumers, neither individually nor collectively are granted rights to participation and/or to take action against unfair competition. CONSUMER CONFIDENCE INTEGRATION WITH OTHER POLICIES Consumer protection and competition policies CASE STUDIES Travel Agents/ Holiday law Package Tours Act 1994 led to particular rules in the German civil code. Since the adoption of the package tour directive in 1990, package tour operators are required to take out insurance or bank guarantees to protect customers’ advance payments against loss arising from insolvency. There is an endless chain of cases to be reported from the field of package tour contracts. There is even a particular journal devoted to these issues (Reiserecht Aktuell). . Standard business conditions play an important role. They have given rise to numerous collective actions taken by consumer organisations against the organisations of dry cleaners who recommends to their members the use of standard business conditions registered at the German cartel office. The same field is subject to relatively well working ADR system. Traditionally the regulation of used cars has been a major field of activities of the German automobile club (ADAC). With the adoption of the consumer sales directive, the situation has changed as liability in contracts between a consumer and trader can no longer be completely excluded. Plumbers Clothing Used cars Hotels CREDIT Credit Contract The consumer credit act, the former Verbraucherkreditgesetz has now been integrated into the civil code. There is a right to withdrawal for consumers in 14 days after the conclusion of the contract. 71 ITALY 72 ITALY OBJECTIVES/ POLICIES Policies drawn at national level Consultation with representative organisations is important Construction of policy is the responsibility of various ministries President of the Council of Ministers has a coordinating role Conference of the State and Regions (Conferenza Stato-Regioni) has the same role European Commission paper dated 10 July 1998 comparing consumer policy in Italy with that of the other Member States of the European Union states that “the broad outline of Italian consumer protection policy is practically identical to that of the Community programmes, notably as set out in the second three-year action plan for consumer policy (1993-1995)”. In developing consumer policy, particular importance is attached to information. In this field, a general law has been promulgated (Act No 126 of 10 April 1991, “Standards concerning consumer information”) and corresponding implementing provisions are currently in the pipeline. This broad outline takes the form of an evolving “corpus” of standards. INSTITUTIONS Central government and government agencies Several ministries deal with consumer affairs After 1997, Ministry of Industry responsible: Directorate General for Harmonisation and Protection of the Market Office of Weights and measures at the Ministry of Industry Competition and Market Supervisory Authority * However, The Ministry for Productive Activities (Ministero delle Attivita' Produttive) seems to have recently replaced the Ministry of Industry, Trade and Craft Trades (Ministero dell’ Industria, del Commercio e dell’ Artiginato (MICA)). This Ministry plays the major role in co-ordination and formulation of consumer protection policy in Italy. The Directorate responsible for consumer policy is the Directorate General for the harmonization of the market and consumer protection (Direzione Generale per l'armonizzazione del mercato e la tutela dei consumatori (DGAMTC)) - This Directorate was established (originally as the Directorate General for Harmonisation and Protection of the Market) in July 1977, as part of the restructuring process involving the Ministry of Industry. - Aim: consolidate and coordinate consumer policies in cooperation with the European Union and with a view to reforming the Italian public administration in accordance with the principles of geographical decentralisation of powers and functions. - Responsibilities (previously shared by various Directorates-Generals): • • • • • price monitoring; links with the Competition and Market Authority; protection of consumers’ economic interests; organisation of weights and measures and analysis services for precious metals; monitoring procedures and activities for the certification of products and equipment; 73 • safety checks and conformity of products with Community legislation. - The Directorate liaises with the various public and sectional bodies and with consumer associations. - It is also called upon to contribute to measures and proposals concerning other sectors which in one way or another affect consumer interests. - It monitors activities related to the preparation and adoption of consumer protection rules at Community level and also monitors their transposition into national law. The Directorate General is divided into 5 areas: areas A to D and the National Consumer Council (CNCU). The C Area deals with consumer affairs (except product safety, metrology and precious metals which fall to area D) and is subdivided into 4 offices: • Office C1 - Coordination for consumer policies (it deals with the promotion of consumer rights and interests. It supports the General Director in the definition stage of consumer policies and initiatives); Office C2 - European and international activities (it cooperates in elaborating consumer policies at EU level, it coordinates the work for the European Consumer Council, it maintains institutional links with consumer bodies of EU member states, with international organizations, it implements international agreements to promote consumer protection, it provides consultancy for consumer protection on European legislation); Office C3 - National policies and consumer rights (it ensures the implementation of Italian law n.281 of 1998 on the discipline of consumer rights; it deals with consumer association members of CNCU, with Italian legislation to implement European legislation, and with economic interests and consumer rights at national level); Office C4 - Running of the National Consumer Council (provides secretariat to the Consumer Council and maintains relations with consumer associations). • • • The D area of the Directorate General deals with product safety and quality: Other Consumer Protection structures: • Ministry of Industry: Division II: certification/ product safety procedures and controls - Division III: consumer protection - Energy Resources D-G: surveys needs public services’ users • Ministry of Health: consumer protection re food hygiene, medical products/ liaison with Min. of Industry-Div III over the European Home and Leisure Accident Surveillance System •Min. of Agriculture: - Inspectorate for the Suppression of Fraud and National Nutrition Institute • Ministry of the Environment: applies EU legislation/ regulations • Ministry of Finance Customs Service: monitors product safety at border • Min. of Transport: road, bus, train and car safety • Min. of Education: consumer education •Ministry of Public Works: housing safety •Presidency of the Council: tourism/ Social-family affairs •Min. of the Interior: 74 Local Government Coordinating bodies various consumer protection duties, i.e. fire brigade. Provincial offices of the Ministry of Industry, Commerce and Craft Trades Presidency of the Council of Ministers: It plays a coordinating role usually through the individual Ministries or other bodies concerned. Conference of the State and Regions (Conferenza Stato-Regioni) "Conferenza di Servizi" - It is an organisation created specifically by decree no 115/95 to coordinate the activities of the various Ministries in terms of product safety. - It has to convene at least twice a year in the premises of the Ministry for Trade and Industry, which constitutes the responsible authority. - Problems which might emerge with the co-ordination of tests are settled through this official body. Government sponsored bodies Consultative organisations Fairly numerous, active, broad based, but sometimes lacking resources. National level: National Council of Consumers and Users (Ministry of Industry): consulted on main issues, proposals for EU directives included. National Council on the Economy and Employment: representatives of consumer organisations participate. Interministerial Committee for Economic Planning Price Observatory Consumer associations Local level: Councils: consist of representatives of associations, individual sectors and the public administration. Consumer associations Collegiate bodies: representatives from consumer associations (national/local), industry, provincial price committees experts and chambers of commerce. Local chambers of commerce Consumer cooperatives Consumer associations 15 national consumer organisations recognised by the Italian Government Funding: own resources from membership fees-voluntary work and supplements by project grants from national/ local bodies and European Commission These 15 consumer org. form the National Consumer Council (budget: £1.1 million - Dec 98) Consumer orgs have links with trade-unions, consumer coops… Membership may include: voluntary sector representatives, political activists and the less well-off: so, potential to be a source of cultural integration * For the Consumer Council see further http://www.tuttoconsumatori.it This includes contacts for all the consumer associations (under the Consumer Council). 75 Independent organisations Italian independent authorities - They have the task to monitor the markets. - During recent years independent authorities have often been involved in consumer policy to ensure the protection of consumer rights. The following are the most important: ♦Autorita' Garante della Concorrenza e del Mercato (Authority for Competition and the market) http://www.agcm.it/ ♦ Autorita' per l'energia elettrica ed il gas (Authority for energy and gas). Law 481/98 entrusts the Authority with the task of protecting and guaranteeing consumers’ and users’ rights and interests through regulation or individual procedures. http://www.autorita.energia.it/ ♦ Garante per la protezione dei dati personali (Authority for data protection) http://www.garanteprivacy.it/garante/HomePageNs ♦ Autorita' per l'informatica nella Pubblica Amministrazione (Authority for IT in Public Administration) http://www.aipa.it/ ♦ Istituto superiore per la Vigilanza sulle Assicurazioni Private e di interesse collettivo (Supervisory body for private insurance) http://www.isvap.it/. Trade associations ♦Local Chambers of Commerce - support and promote general interests of businesses as well as the administrative and economic functions related to the business sector, subject to the competences attributed by the Constitution and laws of the State to Government and Regional Administrations. - Local membership to local Chambers is obligatory for companies. The number of member businesses is therefore about 5 million covering all sectors of enterprise. ► There are 103 local Chambers of Commerce Ombudsmen Other Higher Institute for Accident Prevention and Safety at work LEGAL FRAMEWORK Italy mostly applies EU directives, which it generally transposes textually. In addition, a general legislative framework governing consumer protection rights is in force in Italy. This is Law no 281 of 30 July 1998 which is Italian legislation’s first step towards a uniform and organic regulation of consumer rights. Amongst other things it: • • gives consumers rights to public services; gives legal standing to consumer associations before the courts, to act in defence of consumers’ collective interests; gives such associations the opportunity of instituting conciliation proceedings through Chambers of Commerce, Industry, Craft and Agriculture (CCIAAs) under para 2(iv)(a) of Law 580 of 29 December 1993. 76 Law no 281/98 also reformed the administration to establish contact points at the Chambers of Commerce to interact with the central administration, and also to carry out consumer information activities in line with EU policy. The functions previously carried out by the provincial weights and measures offices and the provincial offices for industry, commerce and craft trades have been transferred to the Chambers of Commerce. FAIR CONSUMER PRACTICES Duty to trade fairly Protection against unfair practices Unfair terms Local chambers of commerce establish mechanisms for identifying unfair terms: Summons Under Law no 52 of 6 February 1996, Consumer associations, professional associations, Chambers of Commerce may summon to court the seller or supplier or the professional association using general contract conditions and ask the competent judge to prohibit the use of terms deemed to be unfair. Interim Injunction - An interim injunction may be granted where there are justified reasons for urgency under Articles 669a) ff. of the Code of Civil Procedure. - The judge may order that the measure be published in one or more newspapers, of which at least one shall have a national circulation. PRODUCT LIABILITY (civil law) (producers’ liability) Joint and Several Third party action Durability The EC Directive on Liability for Defective Goods 1985 applies. PRODUCT QUALITY (civil law) (retailers’ liability) Retailers Services Guaranties PRODUCT SAFETY (criminal law and regulations) AUTHORITIES Government focus on improving product safety. Authorities responsible for ensuring product safety: ● Ministry for Trade and Industry ● Health Ministry ● Ministry for Labour and Social Welfare ● Ministry of the Interior ● Finance Ministry ● Transport Ministry. The relevant areas of responsibilities of these organizations are: • Ministry of Industry: beside a general competence, it is responsible for the protection of specific products, toys for example. • Health Ministry: it is competent when the circumstances of the risk affect health. • Ministry for Labour: its competence covers either products used in the professional sector, or those intended for consumers. • Ministry of the Interior: safety with regard to fires. • Ministry of Finance: tax matters and customs controls. 77 • Ministry for Transport: cars, ships, boats. The above organisations, in order to guarantee product safety: • arrange, even after a product has been put onto the market as a safe product, appropriate checks of its safety features up to the time of use or consumption and carry out inspections at production and packaging plants, in warehouses or sales outlets; • demand all the necessary information from the parties involved; • take samples of a product or range of products for testing and analysis in order to see if it meets the criteria in the implementing decree, and draw up a report on this work, a copy of which must be sent to those concerned; • impose prior conditions for placing the product on the market in order to ensure that it is safe and that it bears appropriate warnings on the risks which it may cause; arrange for persons who might be exposed to the risk arising from a product to be warned of such a risk in good time and in a suitable form, including by the publication of specific notices; introduce a ban - for as long as is necessary to carry out checks and, in any event, for a period not exceeding 60 days - on supplying, proposing to supply or displaying a product or a batch thereof if there is any specific information pointing to an impending risk to public health and safety; the duration of the suspension must be specified in the measure; introduce a ban on putting a dangerous product or a batch thereof onto the market and adopt the necessary measures to ensure compliance with the ban; order that the product or batch thereof that has already been put onto the market be made to conform, within a mandatory period, with the safety requirements laid down in the implementing legislative decree, provided that there is no impending risk to public health and safety; order the withdrawal from the market and, where necessary, destruction by the producer, or, in any event, at his expense, of a product or batch thereof if the required rectification has not been carried out or if the product or batch thereof does not meet the standards laid down in the safety criteria set out in Article 4 of the implementing legislative decree or if it is established that, even though the product meets the standards, it is dangerous and constitutes a serious, direct risk to the health and safety of consumers. • • • • • Provincial offices of the Ministry of the Ministry of Industry, Commerce and Craft Trade deal with product safety ► Italian product safety legislation is largely the result of the implementation of European Directives. For example, Italy transposed directive 59/92/EEC on general product safety through decree 115-95 of 17 March 1995, which repeats the text of the directive almost textually. Penalties and fines for breaches of food safety in cafes and bars and foodstuffs labelling can be imposed by the Provincial offices of the Ministry of the Ministry of Industry, Commerce and Craft Trade. Regulations Criminal sanctions MARKETING PRACTICES Advertising EC Directive Legislative Decree no. 74 of January 25th, 1992 (as amended by Legislative Decree no. 67 of 25 February 2000) Enactment of directive 84/450/EEC as amended by directive 97/55/EC concerning misleading and comparative advertising 78 Banning Order Decree No 74 of 25 January 1992 (transposing Directive EEC 84/450 on misleading advertising) lays down that competitors, consumers, their associations and organisations, the Ministry of Industry, Trade and Craft Trades, as well as any other organisation with a legitimate interest, may in the course of their institutional duties or following a complaint from the public, apply to the Competition and Market Supervisory Authority for an order banning misleading advertising and eliminating its continuing effects. ○ If the Authority considers that the advertising is misleading it accepts the complaint and orders: - the prohibition of the advertising before it is published or; - prohibits its continuation if it has already been published. ○ The acceptance of the complaint may be accompanied by publication of the decision in full or in part, and in appropriate cases of a corrective statement In the case of radio and TV commercials and press advertising, a different authority is responsible, namely the Radio and Press Supervisory Body (Garante per la Radiodiffusione e l’Editoria). Misleading and comparative advertising Definitions: Misleading advertising/ section 2(1)b: 'misleading advertising' shall mean any advertisement which, in any way whatsoever, including its presentation, misleads or is likely to mislead any natural or legal person to which it is directed or which it reaches, and which by virtue of being misleading is capable of adversely affecting their economic behaviour or, for this same reason, harms or may harm a competitor; Comparative advertising/ section 2(1)b bis: 'comparative advertising' shall mean any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor; Conditions under which comparative advertising is permitted by section 3 bis(1) are the usual ones set out in the EC Directive. Prices Distance selling/ e-commerce Doorstep selling EC Directive EC Directive REDRESS Consumers’ awareness – advice & assistance Redress in civil proceedings Citizens may apply to ordinary courts if their rights have been infringed and they wish to obtain compensation for non-fulfilment of contractual obligations. Nevertheless, despite the several reforms taken in the 1990s, which attempted to simplify and expedite matters, the court procedure in Italy is unacceptably long, prohibitively expensive and complex: For example, the average length of a civil case pending before trial court is above three and a half years. Also, Italy has the highest number of cases in which it has been found guilty for infringement of Article 6 (right to a fair trial) of the European Convention on Human Rights, mostly because the delay of civil cases did not meet the requirement of “a reasonable time” imposed by Article 6 of the Convention. Mostly at local level: Chambers of commerce. Civil Code (1993 Amendment): local justices of the peace: jurisdiction for small claims up to the value of £11000, but no legal representation allowed. - small claims 79 - class actions - Law 281 of 30 July 1998 gives legal standing to [consumer] organizations before the courts to act in defence of consumers’ collective interests. - Decree No 224 of 23 April 2001 implements Directive 98/27/EC on injunctions for the protection of consumers’ collective interests. Banking Ombudsman ● Set up in May 1993 as one of a series of initiatives promoted by the Italian Association of Banks to improve customers’ relationships with their banks by making information more freely available and improving the level of consumer protection. ● Structure: a collegiate body made up of five members chosen for their qualifications and expertise in economics, banking and law: Alternative Dispute Resolution - Ombudsman schemes ○ a Chairman, appointed by the Governor of the Bank of Italy; ○ two members, appointed by the President of the Italian Association of Banks; ○ one member appointed by the National Bar Council (Consiglio Nazionale Forense); ○ and one member appointed by the President of the National Council of Graduates in Economics and Commerce (Consiglio Nazionale dei Dottori Commercialisti). ● Jurisdiction: The Banking Ombudsman has the power to resolve any consumer dispute concerning banking transactions or services except those of a professional or business nature provided that: a) the dispute has not yet been examined by a court or arbitration body; b) the amount at stake is no greater than ITL 10 million; c) a complaint was lodged with the bank’s Customer Complaints Office, but no reply was provided within the prescribed time limit, or the complaint was wholly or partly rejected, or the complaint was accepted, but the bank failed to comply. Importance attached to information regarding consumers’ rights ● An attempt is made to reach an out-of-court settlement in the preliminary phases of court proceedings. Articles 183, 185 and 350 of the Code of Civil Procedure (which cover judicial conciliation) require judges (of first instance, or at the first level of appeal) to take steps to assess whether in practice the conditions exist for terminating the case by means of an agreement: a document embodying the terms of the parties’ reconciliation would then be given the status of a court order. ● Mediator mitigates citizen v administration disputes, provides assistance/advice, consults regional bodies, examines case files in order to settle disputes ● Arbitration committees set by chambers of commerce (1993 Act) - Chambers of Commerce play a very important role in arbitration and conciliation. - Successive laws (as well as draft laws under consideration) make attempts at arbitration and conciliation through Chambers of Commerce, compulsory ● Conciliation procedures agreed with consumer organisations at national, regional, provincial and local level. Redress in criminal proceedings Criminal sanctions - Codes of practice - Mediation/ negotiation practices 80 ENFORCEMENT Generally, enforcement of consumer protection laws in Italy is the responsibility of all those bodies responsible for monitoring compliance with the law. In practice most enforcement is done at local level, primarily by Chambers of Commerce, with policy guidance coming from the centre and following consultation with representative organisations. Court remedies Public regulation Chambers of Commerce The functions previously carried out by the provincial weights and measures offices and the provincial offices for industry, commerce and craft trades (UPICA) have been transferred to the Chambers of Commerce. The functions of the latter included product safety, planning laws, and verification of product worthiness. They could also impose penalties and fines for breaches of food safety in cafes and bars, safety installations and foodstuff labeling. The Competition and Market Supervisory Authority (Autorità Garante della Concorrenza e del Mercato Responsible for administrative and judicial control of misleading advertising. Self regulation INFORMATION No coordinated consumer information programme But numerous consumer education measures have been implemented Consumer education is a key priority In developing consumer policy, particular importance is attached to information. In this field, a general law has been promulgated (Act No 126 of 10 April 1991,“Regulations concerning consumer information”) together with relevant implementing provisions: law decree no. 101 dated February 1997 “Enforcement regulations”. This broad outline is believed to take the form of an evolving “corpus” of standards. ■ Chambers of commerce ■ Public administrations in the framework of their specific powers; ■ Public bodies operating at central or local level, such as the regions, provinces, municipalities and Local Health Units ■ The European Consumer Information Agency - Based in Turin, it was established in 1994 and is co-funded by the European Commission and the Piedmont Region. - The agency has a wide range of tasks in informing, advising and helping consumers; it has: ○ a documentation centre on consumer law and consumer economics in Europe. ○ an information office open to associations, groups and private individuals ○ a Centre for Comparative Research, which publishes studies, brochures and documents in the field. Public bodies 81 Businesses Media Other ADVOCACY A number of consumer programmes are regularly broadcast on Italian television. Private bodies, notably consumer organisations. The public authorities very often ask the organisations to participate in studying consumer related problems, or request their views and suggestions when designing and/or implementing measures concerning them. The central-level consumer associations participate actively thanks to their regular contacts with the Directorate General for the harmonization of the market and consumer protection. They are consulted on the main problems with which it deals, notably in the context of work with a view to adopting EU Directives or transposing them into national law. CONSUMER CONFIDENCE IMPACT ON MARKETS INTEGRATION WITH OTHER POLICIES The necessary link between consumer policy and other policies is currently assured through a series of general legal instruments, which provide for coordination between the various authorities and bodies involved in the different sectors: ■ the Conference of the State and Regions (Conferenza Stato-Regioni), whose job is to ensure coordination and liaison between the activities of the central government and the regional bodies. ■ the Conferences of Services (conferenze di servizi) provided for in Article 14 of Act No 241 of 7. Consumer protection & competition policies CASE STUDIES Travel Agents/ Holiday law Plumbers Used cars Clothing Hotels 82 NETHERLANDS 83 NETHERLANDS OBJECTIVES/ POLICIES The most important principle for Dutch consumer policy is that of ‘mature consumers’, i.e. that consumers guide the market by making choices, not the other way round. The aim is to help consumers to make these choices in a responsible way, as far as possible (see Netherlands' response to the Green Paper on EU Consumer Protection). The Netherlands places importance on the existence of sound rules to support and protect the consumer’s position in the market for goods and services, without placing an undue burden on business. INSTITUTIONS Central government and government agencies ♦The Ministry of Economic Affairs (Ministerie van Economische Zaken (EZ)) Leader on consumer and competition policy in the Netherlands. - Consists of four Directorates-General, eight directorates and a number of agencies. - Main task: ensure an efficient economy with a strong and dynamic private sector. It encourages the free market in two ways. Firstly through competition policy, designed to create maximum scope for competition between companies. Secondly by keeping regulation at a minimum. ♦ Ministry of Justice (Ministerie van Justitie) - co-operates with the Ministry of Economic Affairs on the Competition, Deregulation and Legislative Quality (MDW) project. - This project, which was launched at the start of the first Kok cabinet (1994), aims to revise outdated legislation. The project recognises that regulation is necessary in the public interest, but these regulations must do as little as possible to disrupt competition and economic dynamism. ♦ Economic Monitoring Service (Economische Controlendienst) - It operates within the Ministry of Economic Affairs - It has investigative and enforcement powers in certain areas of consumer law but reputedly gives this work low priority. ♦ Ministry of Public Health, Welfare and Sport (Ministerie van Volksgezondheid, Welzijn en Sport), - It appears to lead on most aspects of public safety, including food and product safety. - Within the Ministry of Public Health, the Food, Behaviour and Product Safety Directorate is responsible for product safety. This policy directorate is responsible, inter alia, for drawing up proposals for legislation, implementing European directives, formulating policy outlines, managing and coordinating activities and implementing policy research. - Two supervisory authorities are part of the Ministry of Public Health: • the Inspectorate for Health Protection • the Inspectorate of Public Health, which is responsible for medical matters, pharmaceuticals and medical equipment. ♦ The Inspectorate for Health Protection, Commodities and Veterinary Public Health (Inspectie Gezondheidsbescherming Waren in Veterinaire Zaken (Inspectie W&V)) - Part of the State Public Health Monitoring Authority (Staatstoezicht op de Volksgezondheid). - It results from the recent merger of the Inspectorate for Health Protection (Keuringsdienst Van Waren) with the Veterinary Inspectorate (Veterinaire Inspectie). - The Inspectorate for Health Protection is responsible for ensuring compliance with safety rules in respect of all products which come into contact with consumers, with 84 some exceptions, e.g. ○ cars and motor cycles (competence of the Inspectorate for Traffic within the Ministry for Traffic) ○ medicines and medical instruments (competence of the Inspectorate for Public Health within the Ministry of Public Health, Welfare and Sport), ○ electromechanical conformity of products, i.e. interference between electrical equipment (competence of the Radio Inspectorate) ○ the safety of services. - The Inspectorate for Health Protection consists of 5 Regional Inspectorates and a General Inspectorate. * The Netherlands is divided into 5 regions and the Regional Inspectorates are responsible for all the enforcement activities in their region. A Regional Inspectorate consists of an enforcement department and a laboratory where most of the samples are tested. Each Regional Inspectorate has a specialized function or area of expertise. Two of these specialize in product safety. The Regional Service for the North specializes in chemical product safety, and the Regional Service for the Southwest specializes in physical/mechanical/electrical product safety. Local Government Coordinating bodies Government sponsored bodies Consultative organisations - The Inspectorate for Health Protection employs approximately 900 persons and is the most important supervisory authority in the Netherlands. Approximately 300 are inspectors doing fieldwork, of which 40 inspectors work on non-food products. - The General Inspectorate is located in the Hague and supervises the work of five Regional Inspectorates; it employs approximately 100 persons. Planning of the monitoring of the market, strategic discussions and coordination are done within the General Inspectorate and within the Board of Management, involving the directors of the regional inspectorate and central authorities. See supra Inspectorate for Health Protection: regional Inspectorates ♦ " Warenwet " advisory Commission - Instituted with article 24 of the Food and Commodities Act. - It delivers opinions on the matters referring to the implementation of the Food and Commodities Act to the Minister for Public Health, Welfare and Sport, to the Minister for Economic Affairs and the Minister for Agriculture and Fisheries. - The Commission is composed of more than 30 members, a third of which are nominated on recommendation of professional organizations and a third on recommendation of consumer organizations. - Two sections are created within the Commission, one dealing with topics related to foodstuffs and the other with those relating to goods; each section is composed of a maximum of 15 of the Members of the Commission. - The Commission has to hear the " professional bodies of public law " (produktschap, bedrijfschap, hoofdbedrijfschap) which it considers relevant, before expressing an opinion; it can also hear other organizations. This involves professional organizations. - The Commission is very appreciated by authorities, by consumer organizations and professional organizations. It encourages trust, mutual respect and broadmindedness between the actors of the market. It also allows for an exchange of information. - Article 24 of the Food and Commodities Act has since been repealed but its provisions have been incorporated into general legislation on administrative law without modifications. ♦ The Dutch Consumers’ Association (Consumentenbond); - It is a membership based, non-profit association, dedicated to promoting consumer interest in the marketplace. It has approximately 650,000 members. - main activities consist of: • Promoting social interests: standing up for the interests of the consumer against politics and industry, so that consumers can enjoy – and continue to enjoy – freedom of choice; Consumer cooperatives Consumer associations 85 • Choice supporting information: providing independent information about products and services on the basis of tests or other evaluations, so that consumers can make an informed choice; Consumer rights: offering legal assistance or advice to members when suppliers fail to fulfil their obligations. • - The Association’s magazine “Consumentengids” is sent to members through the post each month. Members can also make use of a telephone Helpline if they have queries about tested products, financial matters, or about their legal position as a consumer. - Other regular publications from the Association include ConsumentenGeld (Consumer & Money) and Consumenten Reisgids (Consumer and Travel). - The Association also publishes and sells books and CD-ROMs about a wide range of consumer issues. These items can also be purchased by non-members. - The Association’s website provides a host of free consumer information. Members of the association can consult the results of any of the tests. - The Association works closely with other international consumer protection organisations and the European Commission. Independent organisations Trade associations Ombudsmen/ Complaints Boards Foundation for Consumer Complaints Boards (Stichting Geschillencommissies voor Consumentenzaken (SGC)) Established in 1970 to provide a low cost dispute resolution mechanism for complaints between consumers and suppliers of goods and services. SGC is a cooperation between trade associations, businesses, Dutch Consumers’ Association and the ANWB (Royal Dutch Touring Club). The Foundation itself does not resolve disputes. There are 27 Complaints Boards operating under the SGC. The Complaints Boards (which are recognized by the Dutch Government) and the trade organizations that cooperate with them are: automobiles; banking matters; central aerial installations; Code of Conduct for Mortgage Financing; dating agencies; dry-cleaning; electrical goods; funeral services; furniture removals; home furnishings; hospitals; horticulture; installation technicians; laundry services; leisure; mail order; odd-job companies; ophthalmic matters; painting and decorating; parquet floorings; post; public transport; public utility companies; telecommunications; textiles; travel; water sports. For a Complaints Board to be able to function under the umbrella of the SGC certain conditions must be satisfied: - ○ It has to satisfy the conditions laid down in the Recognition Rules published by the Ministry of Justice. ○ Members of the trade association must not use unfair terms in their standard contracts with consumers. Therefore before a Complaints Board is set up branch and consumer organisations must review contract terms used by its members for fairness. The SGC does not take part in these negotiations. ○ Trade associations must give a guarantee of compliance with the binding decision of its members of the Boards. The aim of these requirements is to guarantee due process of law and impartial decisions. Almost all the Complaints Boards of the SGC consist of three members: a 86 - - chairman, a member nominated by the trade association concerned, and a member nominated by the Consumers' Association or the ANWB. Some Complaints Boards have a secretary. Where necessary, experts can be called in. Chairmen, members and experts are appointed by the SGC Board. They are completely independent and impartial. They are appointed for a period no longer than four years. They are then immediately eligible for reappointment. The costs of the SGC are covered by the subsidy given by the Ministry of Justice. The costs of the Complaints Boards are covered by the trade associations, the Dutch Consumers’ Association and the ANWB. Consumers pay a complaints fee when lodge their case. Other LEGAL FRAMEWORK EC Directives Many of the consumer protection regulations in the Netherlands are now based on European directives, which provide uniform, minimum level of consumer protection throughout the EU. New Dutch Civil Code (Nieuw Burgerlijk Wetboek) of 1992 - The DCC is influenced by German, French and English laws - It is the outcome of thorough comparative studies. - It consists of nine Books. A tenth Book, concerning private international law, will be presumably added in the future. - One of the underlying ideas is that all private law (civil law, commercial law, consumer law, labour law) shall be in the Civil Code. - An important feature of the DCC is its strict pattern of general rules preceding more detailed rules, sometimes in various layers. - Book 6 of the Civil Code: ○ Includes regulations on general contractual conditions (art 6:231-247) ○ It also contains special provisions on deceptive or misleading advertising stemming from the general provision on tort. - Book 7 of the Civil Code: ○ It deals with the specific contracts, like contracts for the sale of goods, leasing, building contract, etc. ○ Some of the contents of this Book are derived from European directives, like the ones on timeshare, distance contracts and the travel contract. - Book 8 of the Civil Code: it is concerned with transport law, and is strongly influenced by international treaties. Specific Acts ♦Door-to-Door Act (Colportagewt) ♦Price Indications Decree (Besluit prijsaanduiding goederen) See under marketing practices: door to door selling. FAIR CONSUMER PRACTICES Duty to trade fairly Principle of good faith and fair dealing (expressed by the complementary notions of “reasonableness and equity”) - This principle permeates all branches of the Dutch law of obligations and contract law (and other branches of law as well - For example, contracts must be concluded, interpreted and performed in good faith and reasonably and fairly. - Article 6:233 provides that a stipulation in general conditions may be 87 annulled (either through an informal declaration by a party to the contract addressed to the other party or by a court judgement) if, taking into consideration all the circumstances of the case, it is unreasonably onerous to the other party. This applies both to business to consumers and business to business contracts. Protection against unfair practices Unfair terms Consumer organisations can apply to a special court, requesting a ban on the use of unfair terms. ○ A term in a contract concluded with a consumer must be regarded as unreasonably onerous if – in breach of good faith – it significantly upsets the balance between the parties. - The general contractual conditions regulations set out in Book 6 of the DCC offers the consumer more extensive protection than Article 3 of the Directive on unfair terms in consumer contracts (93/13/EEC), because the regulations apply not only to general contractual conditions “which have not been individually negotiated”, but also to terms which have been individually negotiated. - Moreover, the “derogating” function of good faith is not limited to the clauses of the contract, that is to say the rights and obligations deriving from those clauses. The rule applies to all rules binding on the parties as a result of the contract. This includes all relevant statutory rules which govern the parties’ relationship, irrespective of whether those rules are of a supplementary or mandatory character. So the courts may derogate from a mandatory rule of law, e.g. in the law of lease or consumer law, where the party protected by that rule would, in the circumstances of the case, act contrary to reason and equity by relying on it. In this sense all rules created by the parties or by statute have been brought under the control of the courts – not to judge their intrinsic fairness, but to decide whether their application in a concrete case would lead to an unjust result. - It is important to emphasise that the principle of good faith applies to both parties to the contract. EC Directive 1985 Law of 13-9-1990 PRODUCT LIABILITY (civil law) (producers’ liability) Joint and Several Third party action Liability for Development risks Financial Ceiling Time Limits × × PRODUCT QUALITY (civil law) (retailers’ liability) Retailers Services Guaranties 88 PRODUCT SAFETY (criminal law and regulations) The Inspectorate for Health Protection has responsibility for enforcement of most of the regulation on product safety [see also under “Enforcement”]. There are several operational methods employed by the Inspectorate for Health Protection for identifying the existence of dangerous products on the market, including: • • • • • Surveillance. Monitoring. investigation of supply of unsafe products. co-ordinated investigations. investigation of complaints received via toll-free number from members of the public which can involve the investigation of a particular product or range of products. Food and Commodities Act (Warenwet) A framework act of public law which has covered since 1935 the safety of products. ● This Act applies both to foodstuffs and non-foodstuffs. ● It comprises a general safety obligation. ● It enables the authorities to take specific measures on individual products and entitles them to regulate the marketing of the products. ● It also gives several powers to the authorities enabling them to organise the necessary checks in order to ensure compliance to the act. ● Any infringement of the provisions of the Food and Commodities Act is an economic offence within the meaning of the Act on Economic Offences. ● The Act has been the subject of numerous modifications since its adoption. The last important modification dates back to 1988; it is on this occasion that the general safety requirement for non-foodstuffs was introduced. ● The Act prohibits the placing on the market of unsafe products. In fact two different prohibitions are envisaged, one targeting foodstuffs and the other, nonfoodstuffs (Article 18a and 18c of the Act). Foodstuffs It is prohibited " to market foodstuffs which, because of their poor quality, can endanger the health or the safety of persons " (Article 18a). This obligation applies not only to products intended or likely to be used by consumers, but to all foodstuffs provided out of the framework of domestic activities. There are also additional prohibitions concerning foodstuffs. First, the Act lays down a ban " on marketing foodstuffs unsuitable for consumption " (Article 18d) which supplements the general safety requirement: it would cover the cases where a product is not dangerous. Second, (and reflecting an obligation in the GPSD) it is prohibited " to prepare foodstuffs by using elements whose incorporation in these products has for consequence that these can endanger, through their poor quality, the health or safety of persons" (Article 18b). This indirect obligation applies therefore before the marketing of the product, which is characteristic of the legislation on food safety where the phase of the preparation is also regulated. Non-foodstuffs The act lays down in addition the ban " on marketing goods other than foodstuffs, intended or adapted by their nature to be used within the household, when the person who markets them knows or must reasonably suspect that they can present a danger to the health or safety of persons, under foreseeable conditions of use because of their destination " (Article 18c). ○ This obligation applies only to non-foodstuffs for consumer use. ○ It introduces an element of subjective or objective knowledge of the dangerous character of the marketed product, which restricts considerably the scope of the general safety requirement with regard to non-food products, contrary to the GPSD which includes no reference to the knowledge of the dangerous character of the product relative to the general safety requirement. 89 ○ A similar limitation in the GPSD applies only on the obligations of distributors provided for in Article 3 (3). EC Directive The Food and Commodities Act as well as the Act on Economic Offences already largely transposed into the Dutch internal legal order the EC Directive on general product safety (92/59/EEC). Transposition of the Directive was completed by the Decree on general product safety issued in 1993 under the Food and Commodities Act: it entered into force on 29 June 1994 and has not been modified since. Regulations Criminal sanctions MARKETING PRACTICES Advertising Book 6 of the Civil Code [see supra under “Legal Framework”] contains special provisions on deceptive or misleading advertising stemming from the general provision on tort. - However, advertising is largely controlled by self-regulation by the industry. - Main surveillance authority is the Advertising Code Commission (Reclame Code Commissie) although for certain products, such as medicinal and health products, separate surveillance authorities exist. - Dutch Advertising Code (Nederlandse Reclame Code): contains general advertising rules, restricts deceptive and derogatory advertising, as well as passing off and advertising that is against standards of public decency and good taste. - However, for many products and services (e.g. alcohol, cigarettes, door-todoor sampling, sweepstakes, etc) special advertising codes exist. These codes are based on agreements between the organized media, advertising agencies, advertisers and consumer associations. ○ Although the Advertising Code Commission can, in case of breach of one the codes, only impose (legally non-enforceable) individual or public "recommendations", these recommendations are nevertheless generally followed by the industry. Dutch Courts also tend to follow such recommendations when court proceedings are initiated. - Prices Distance selling/ e-commerce Prices Act 1961 in connection with the Price Indication of Goods Decree Before the implementation of EU Directives, national law did not restrict telephone advertising except in the case of door-to-door sales by telephone. There was a “Code for Telemarketing”, which is still in force today. The Code contains instructions on how to conduct telephone advertising without intruding the consumer’s privacy. Today, there are three acts dealing with distance selling: ♦ The Telecommunications Act 1998: It permits the use of automatic calling systems and of faxes for making unsolicited calls only of the subscriber has given his prior consent. The use of other systems (e-mail, SMS, systems with human intervention) is permitted, unless the subscriber notifies that he does not want to receive such calls. ♦The Distance Contracts Directive: similar to the regulations above. ♦ Data Protection Directive: when personal data is processed for direct marketing purposes, the person affected may object to that, free of charge. E-COMMERCE No specific e-commerce legislation exists However, the e-commerce directive (2000/31/EC) is in the process of being implemented. Door-to-Door Act (Colportagewt) and Price Indications Decree (Besluit prijsaanduiding goederen): Doorstep selling 90 - Contain rules on doorstep selling and on price indications. Failure to comply with certain provisions of these regulations (e.g. failure of a doorstep selling to include cancellation rights) carry criminal sanctions. These are economic offences within the meaning of the Act on Economic Offences. REDRESS Consumers’ awareness – advice & assistance Redress in civil proceedings The Dutch consumer can enforce his rights before a civil court on the ground of Article 112 of the Dutch Fundamental Law and Article 6:236 of the new Dutch Civil Code. - small claims For cases brought before the District Court (rechtbank), the Regional Court of Appeal (gerechtshof) or the Supreme Council (Hoge Raad), the consumer needs to be represented by a lawyer, otherwise the judge will refuse to hear the case. On 31 December 1991, a new procedure was introduced before the Cantonal Court (Kantongerecht) which has jurisdiction in the case of: • • claims not exceeding NLG 5,000 claims concerning rent of housing or hire purchase, regardless of amount. This procedure is simpler than the one before a civil court. There is no need to use a lawyer, the consumer may bring his own case, or may be represented by another person with legal training, e.g. a bailiff. The judge can also try to effect conciliation (if the parties asked for it or on his own initiative): to this end he can order the appearance of the parties in person. New Dutch Civil Code Rules on collective interest actions are with one exception contained in Book 3. The exception is Article 6.240 which regulates collective actions with regard to unfair contract terms. Dutch law implementing the Injunctions Directive (98/27/EC) is split between Books 3 and 6. ● Article 3:305a and 3:305b of the DCC allow private law associations or foundations as well as public law entities to bring actions, under certain conditions. ● Actions can only be brought for the purpose of protecting “interests similar in kind which are held by other persons”, in other words actions to enforce collective interests. ● Actions brought pursuant to those articles cannot relate to damages in money. Those articles came into force on 1 July 1994. However, before they were even enacted, the right of associations to bring actions in tort for injunctive relief and even for compensation was recognized in judicial decisions. ● Conditions that private law associations or foundations have to meet to bring an action under Article 3.305 are: - that the interests they raise in their claim have to be represented in their statutes. In other words an organization can sue in defense of certain interests if this is in accordance with the objective of this organization. - There is an expectation that the organization will first endeavor to settle the dispute voluntarily with the defendant without the need for court action. In the Netherlands most disputes between consumers and suppliers of goods or services are settled by alternative dispute resolution, rather than by the courts. These alternative procedures are informal, cheaper and faster than court procedures. Moreover the conciliator plays an active role during the negotiations, which largely - class actions Alternative Dispute Resolution 91 - Ombudsman schemes compensates the imbalance between the consumer and supplier. The most important form of alternative dispute resolution for consumers in the Netherlands are the Consumer Complaints Boards (Geschillencommissis) Most Complaints Boards are recognised by the Ministry of Justice on the basis that they satisfy the Recognition Rules of the Consumer Complaints Boards (Erkenningsregeling geschillencommissies consumentenklachten). Traders who are not members of a trade association linked to a Complaints Board are not subject to the jurisdiction of the Complaints Board. However a trader can decide to be subject to a decision of a Complaints Board. A survey carried out in 1995 on the social relevance of the Complaints Boards operating under the SGC found that they were cheaper than court proceedings for consumers, business and the Government. In general, there are only two important categories of disputes that cannot be dealt with by a Complaints Board: 1. 2. disputes regarding the non-payment of an invoice that are not based on a substantive complaint; disputes that pertain to death, physical injury or illness. Nor can Complaints Boards deal with matters that have already been submitted to an ordinary court. Procedure - - A consumer who wants to submit a dispute to a Complaints Board must always first try to resolve the dispute with the supplier concerned. Only if this fails can he or she submit the dispute to a Complaints Board. A supplier's terms and conditions of supply and payment will contain specific provisions regarding the way in which and term within which a complaint has to be submitted to that supplier and to the Complaints Board concerned. Complaints Boards operating under the SGC work with a standardised procedure: A complaint to a Complaints Board has to be submitted in writing, but a simple letter will suffice. The consumer will then receive a questionnaire which he or she can use to submit the dispute to the Complaints Board. Following the receipt of this completed and signed questionnaire the supplier concerned is given an opportunity to inform the Complaints Board of his/her standpoint. After the written phase of the procedure, the parties concerned are invited to present their case verbally at a hearing of the Complaints Board. Witnesses and experts can be heard at the Complaint Board or the parties’ request. The procedure is set up with the view that the consumer should be able to settle the dispute without legal representation. The duration of the procedure is about 5 months. Costs 92 The Complaints Boards require fixed contributions which vary from NLG 45 to NLG 250 depending on the amount invoiced for the product or service in question. This includes the cost of any expert reports required. If a Complaints Board finds in favour of the consumer the supplier will pay the complaint fee back to the consumer. Binding decision - The Complaints Boards deliver decisions that are legally binding on both parties (Article 7:900, paragraph 11 of the Dutch Civil Code). It is not possible to lodge an appeal against a decision made by the Complaints Board. The only way to have a decision tested is to submit it to an ordinary court within two months after it was sent. A judge can, however, only marginally test the decision, as provided for in Article 7:904 of the Dutch Civil Code. This means that a judge will only declare the binding decision to be null and void if the decision, according to reasonable and fair standards, is unacceptable in view of its contents or the way in which it was reached under given circumstances. Thus a decision by a Complaints Board will only be rejected by the courts if the Complaints Board has ignored the fundamental principles of procedural law, such the right of both parties to be heard. If a court rejects the decision it can deliver a judgement itself. Enforcement Complaints Boards operating under the umbrella of the SGC must give a guarantee of compliance. The result is that if a supplier does not voluntarily comply with a binding decision the trade association guarantees that its members will act in accordance with the binding decision. Such a guarantee entails that a trade association takes over the obligation the Complaints Board imposed on one of its members whenever the latter does not voluntarily comply with the obligation, or submit the binding decision for testing to an ordinary court. In addition to Consumer Complaints Boards there are a number of Ombudsman schemes in the Netherlands, mainly in the financial sector. In terms of the number of complaints received, the most important of these are: ■ The Life Insurance Ombudsman. ■ The Damages Insurance Ombudsman. ■ The Savings Banks Ombudsman. ■ The Pensions Ombudsman. ■ The Care Insurance Ombudsman. 93 - - - The schemes are set up by the relevant trade association which finances them. The ombudsman handles complaints arising in connection with a business which is a member of the trade association. He will only handle complaints concerning non-members where those nonmembers have agreed to submit to the regulation of the ombudsman. Nor can an ombudsman handle complaints which are the subject of more formal dispute resolution, e.g. court proceedings. The services of the ombudsman are free. The ombudsman tries to reach an agreement between the parties through mediation. When mediation does not succeed, a recommendation can be given in order to resolve the dispute, but it is not binding. It is not a declaratory agreement within the meaning of the Dutch Civil Code, which has the effect of a contractual obligation. Nevertheless, the recommendation of the ombudsman will usually be complied with by trade association members. The duration of the procedure is about three months. - Codes of practice - Mediation/ negotiation practices Redress in criminal proceedings Criminal sanctions ENFORCEMENT Government enforcement: focus on product safety Enforcement in other areas is the responsibility of the consumer. Netherlands asserts that consumers themselves must (with the aid of a sound legislative framework) be placed in a position where they can enforce their own rights. To this end, they must be able to make informed choices in the marketplace, they must know their rights (information and support) and be guaranteed the means of enforcing them (accessibility). This approach to enforcement has been criticized by the Dutch Consumers Association as leading to a weakening of consumer protection in the Netherlands. Court remedies Public regulation The Inspectorate for Health Protection has responsibility for enforcement of most of the regulation on product safety. It has following powers under the Food and Commodities Act and the Act on Economic Offences: • • • • • • • Inspection Powers of entry into manufacturers' and suppliers' premises Sampling and testing Investigation of trader and producer activities Suspension of sale of unsafe goods Advise the Minister of Public Health to publish a warning. Prosecutions are taken by the Public Prosecutor ► Although the general safety requirement apply to all businesses without distinction, the Inspectorate for Health Protection first holds manufacturers and importers responsible for product safety. It is only as a last resort that distributors will be held responsible. * The power to organize the withdrawal of a product from the market and the permanent prohibition of the marketing of a specific product can only be done though the public prosecutor, although in practice businesses will generally voluntarily withdraw unsafe products. 94 - Self regulation Criminal sanctions Also, the public prosecutor has sole power to impose a fine for a breach of the Food and Commodities Act. Fines can vary from approximately 225 euros to 45,000 euros, depending on the intention or the professional’s cooperation or if this involves a second offence. Sanctions are frequently imposed in the Netherlands to penalise infringements of the Act, i.e. more than 10 000 per year, 80% involving foodstuffs and 20% non-food products. However, sanctions have recently decreased by more than half, while the proportion of sanctions involving non-food products has increased, particularly in relation to the industrial sectors not accustomed to the monitoring of the market. In general fines prove very effective as a way of compelling businesses to fulfil their obligations. However, there a small minority of businesses who are willing to pay fines and then continue with their illegal activities. The Door-to-Door Act (Colportagewet) and the Price Indication Decree (Besluit prijsaanduiding goederen) provide for criminal sanctions (e.g. for failure of doorstep selling contract to include information on cancellation rights). The Economic Monitoring Service (Economische Controledienst) is responsible for investigating contraventions of this legislation but reputedly gives this work low priority. INFORMATION/ EDUCATION/ ADVOCACY Government focus on providing information to consumers and businesses so that they become more active and responsible economic players. Public bodies Businesses Media Other INFORMATION Legal aid office (Buro voor rechtshulp) Approximately 50 municipalities have legal aid offices. Their lawyers can provide information, legal advice and help with legal proceedings. To be eligible for help from a legal aid office the consumer must be in the middle-income or low-income brackets. Legal aid offices have free "surgery" hours. "Lawshops" (wets- en rechtswinkels) Everyone has access to a legal advice centre or "lawshop", which is another source of information and advice. Lawshops are staffed by volunteers, often law students. Municipal citizens' advice departments (sociale raadslieden) Many municipalities have citizens' advice departments which can be consulted on all kinds of social or societal questions. Advice is given free of charge. 95 Bailiff (deurwaarder) Bailiffs also give legal assistance, particularly on the recovery of outstanding debts. However, bailiffs offer also advice in other (usually financial) fields. A bailiff can also represent a person in civil proceedings before the cantonal court. Consumers' Association (Consumentenbond) Members of the Consumers' Association can get free legal advice from the Association. The Consumers' Association advises all members on "consumer affairs", i.e. matters relating to the purchase and hire of goods and services, in writing or by telephone. A member may also ask for a personal consultation with a representative of the Association. See equally supra under “Institutions”. ANWB (Royal Dutch Touring Club) Members of the ANWB (Algemene Nederlandse Wielrijdersbond) can get free legal advice on matters of travel, leisure and tourism. It is not necessary to be a member in order to receive advice following a serious traffic accident. ADVOCACY The Committee for Consumer Affairs The SER Committee for Consumer Affairs (CCA) has operated for more than thirty years as the main consultative body to the Dutch government on consumer policy. - Consumers, business associations and independent members are all represented on the CCA, each holding six seats: ○ The consumer members are appointed by the Consumers' Union (Consumentenbond). ○ Officials attend the meetings and give a briefing on the requests for advice received from the government. So far, the CCA has issued more than forty advisory reports. - CONSUMER CONFIDENCE INTEGRATION WITH OTHER POLICIES The year 2000 Progress Report on “Structural Reform in the Netherlands” states that “over the past few years, consumer policy in the Netherlands has become a fully integrated part of marketing policy. It primarily targets the role of the consumer as a fully-fledged market player and examines the way in which the market serves the consumer. The aim is to keep the thresholds and obstacles for consumers as low as possible; consumers must be able easily to access and function on the market.” Consumer policy appears to have much lower priority in the Netherlands than does competition policy. Consumer protection and competition policies CASE STUDIES Travel Agents/ Holiday law Plumbers Used cars 96 Clothing Hotels CREDIT INSTITUTIONS LEGAL FRAMEWORK Responsibility for the regulation of credit transactions rests with the Ministry of Justice who administers the Consumer Credit Act 1992. Consumer credit is regulated by the Consumer Credit Act 1992 (Wet op het Consumentekrediet). Responsibility for this regulation rests with the Ministry of Justice. 97 AUSTRALIA 98 AUSTRALIA OBJECTIVES/ POLICIES INSTITUTIONS Central government and government agencies Local Government Co-ordinating bodies Enhance the welfare of Australians through the promotion of competition and fair trading and the provision of consumer protection. Treasury: Political responsibility for competition and consumer issues at Commonwealth level. Minister responsible: a junior Minister, the Parliamentary Secretary to the Treasurer: reports to the senior Minister, the Treasurer. Ministerial Council on Consumer Affairs: comprises consumer Ministers from Australian and NZ and State and Territory governments Meets annually to develop a consistent approach on consumer issues. Standing Committee of Officials of Consumer Affairs: Four advisory committees reporting to it, comprising: • • • Fair Trading Operations Advisory Committee – deals with enforcement Consumer Products Advisory Committee – product safety officers Trade Measurement Advisory Committee Consumer Consultative Committee (instituted by ACCC): facilitate discussions with consumer representatives on consumer issues. Government sponsored bodies Public services Consultative organisations Consumer cooperatives Consumer associations Independent organisations Australian Competition and Consumer Commission (ACCC): Independent statutory authority that is responsible for the administration of Commonwealth competition and consumer law. Established in 1995 by agreement of the Council of Australian Governments (i.e. of the Federal and various State and Territory Governments). Consumer Affairs Bureaus: established in all States and Territories. Aim: promotion of consumer awareness by education and dissemination of information on consumer matters, handling consumer complaints, commenting on proposed legislation and in some instances being responsible for the enforcement of government regulation. ACCC administers and enforces consumer law/ only responsible for competition law. State and Territory Governments may also enact consumer legislation and enforce it themselves. Consumer legislation is enacted at State/Territory level, presumably to provide a legal basis for regulatory action by the State or Territory Government. Trade Practices Act 1974 (TPA): covers anti-competitive and unfair market practices, mergers and acquisitions, product safety and liability. Has been amended and updated from time to time. Warranties legislation: TPA 1974, Law Reform (Manufacturers’ Warranties) Act 1977, Fair Trading Act 1989, Sale of Goods Act 1922, Consumers’ Affairs and Fair Trading Act 1990. Trade associations Ombudsmen Other LEGAL FRAMEWORK 99 FAIR CONSUMER PRACTICES Duty to trade fairly Fair trading and consumer protections: Part V Div 1 TPA General (catch-all) provision: section 52: A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive Perhaps not true "duty to trade fairly" - narrower Strict liability: it is not necessary that there should have been an intention to mislead or deceive. Nor does any person have had to suffer loss or damage as a result of the conduct or even in fact have been misled or deceived. All that is necessary is that misleading or deceptive conduct should have been engaged in. What must be considered is the effect on those likely to be affected by the conduct. Test on which deceptive or misleading character of conduct decided: An ordinary purchaser, including purchasers who fail to take reasonable care of their own interests, but not to the level of unusual stupidity. • The distrustful reasonable man is not the measure of the conduct. • The ingenuous, uneducated, inexperienced, superficial and gullible are considered. Examples of misleading or deceptive conduct: ♦ the use of distinctive words or products, features and slogans ♦ comparative advertising ♦ character merchandising ♦ representations in connection with the sale and purchase of real property/ businesses ♦ behaviour in connection with foreign currency loans Not criminal sanctions for violation of s. 52 Only civil remedies: - injunction - statutory damages Protection against unfair practices Sections 53 to 65 Part V – Div 1 TPA: Specific provisions prohibiting misleading or deceptive representations: Especially, section 53: - Section 53 of the TPA prohibits a corporation in a commercial transaction from making false representations or false or misleading statements in connection with the supply of goods or services. - Specific matters are covered such as the quality, standard or age of the goods, the consumer's need for the goods and statements about conditions, warranties and guarantees. - Liability for breach of s 53 is criminal and fines are imposed: s 79: In imposing penalties the courts have borne in mind the objectives of the TPA and the policy of consumer protection contained in Pt V so that factors such as deterrence of similar conduct, the degree of negligence, wilfulness, dishonest intent, extent of dissemination, are all given due weight. In addition to prohibiting false representations regarding the issues mentioned above, the TPA prohibits certain other kinds of business conduct in relation to the supply of goods and services: So, ss. 53A to 65 prohibit false representations and other misleading or deceptive conduct in relation to: ♦ the sale of land (s. 53A); ♦ employment by a corporation (s. 53B); ♦ the true price of goods or services (s. 53C); ♦ the offering of gifts or prizes in connection with the promotion of goods or services with the intention of not providing them as promised (s. 53D); ♦ the nature, characteristics of goods (s. 54) and services (s. 55A); ♦ bait advertising: e.g. Goods and services must not be advertised at a price if the seller is unable to supply reasonable quantities at that price (s. 56); 100 ♦ referral selling: i.e. inducement to pay by offering a rebate in return for suggesting potential customers (s. 57); ♦ accepting payment for goods and services while not intending to supply (s. 58); ♦ harassment or coercion of consumers with the intention to oblige them to make a purchase (s. 60); ♦ pyramid selling: inducement to make a payment to a corporation with the prospect of receiving payments for the introduction of other participants in the scheme (s. 61); ♦ sending unsolicited credit and debit cards (s. 63A); ♦ demanding payment for unsolicited goods, advertising and directories entries (ss. 64, 65). PRODUCT LIABILITY (civil law) (Producers’ liability) The law is very similar to the European law in the 1985 EC Directive. A manufacturer of defective (unsafe) goods is liable to compensate a person who is injured, or whose private property is damaged, by the goods. There is product liability when: - a corporation, in trade or commerce, supplies goods manufactured by it; - they have a defect, and - because of the defect, an individual suffers injuries. If this is so, then: - the corporation is liable to compensate the individual for the amount of the individual’s loss suffered as a result of the injuries. Goods: - defined widely and not limited to goods of a kind ordinarily acquired for personal, domestic or household use. Manufacturer: - the manufacturer of the goods. - a corporation that holds itself out to the public as the manufacturer of the goods. - a corporation that permits its business or brand name to be applied to goods. - a corporation that permits to another person to hold its name out to the public as the manufacturer. - a corporation that imports goods, when the actual manufacturer does not have a place of business in Australia. - a supplier/ retailer: when manufacturer unknown, a claimant may serve written request on any known supplier for information about the manufacturer. If no response within 30 days claimant may act against supplier as if it were the manufacturer Defective product - Goods have a defect if their safety is not such as persons generally are entitled to expect When safety is considered, regard is given to the following circumstances: - the manner in which the products are marked - their packaging - the use of any mark in relation to them - any instructions of use - what might be reasonably expected to be done with them - the time of their supply. There is no need to prove contractual relationship or negligence on the part of the manufacturer: strict liability. Application of the product liability provisions cannot be excluded. Any contract that does so is void. Claimant can claim full amount against any one liable In some cases, both manufacturer (under Part V – Div 2A TPA) and supplier (for breach of a condition or warranty implied by Div 2 Part V) liable. In such cases the manufacturer is liable to indemnify the supplier. Strict liability Non-exclusion Joint and several liability 101 Third party action Representative action Time limits Defences PRODUCT QUALITY (civil law) Defendant may join other parties by third party action. This relieves the claimant of responsibility for identifying who ultimately is responsible. The Commission is empowered to take action on behalf of persons who have suffered loss, with the written consent of such persons. Action may be taken: - within 3 years from accrual of the cause of action, e.g. injury; - within 10 years of time product was first manufactured by the manufacturer Defences include the development risks defence. The broad effect of Part V Div 2A (ss. 74A – 74L) of the Trade Practices Act is to make manufacturers concurrently liable with the actual seller of the goods (i.e. the retailer) to compensate a consumer for any loss or damage arising from specific circumstances. (This differs substantially from the position in English law, where the manufacturer does not incur liability - except for the period that a guarantee is valid - except for unsafe goods that may lead to injury or damage of property) The consumers can seek compensation or damages for loss or damage suffered when the goods: • are not reasonably fit for a particular purpose for which they were acquired and which was made known to the manufacturer (s. 74B). • do not correspond with a description by which they were supplied to the consumer provided the same description was applied to the goods by the manufacturers or with its consent (s.74C). • are not of merchantable quality (s.74D). • do not correspond with a sample by reference to which they were sold to the consumer, provided the sample was provided by the manufacturer or the supply to the consumer was with the concurrence of the manufacturer (s.74E). • where repair facilities or spare parts are not reasonably available and the manufacturer acted unreasonably in failing to ensure that they were reasonably available (s.74F). • where an express warranty given by the manufacturer is not complied with (s. 74G). Attempts to exclude, modify or restrict liability under Part V - Div. 2 TPA are void (s. 74K) State legislation New South Wales - Part VIII Sale of Goods Act 1922: Where it appears to the court that goods are not of merchantable quality by reason of defect in them, the court may add the manufacturer as a party to the proceeding and order to remedy the defect Northern Territories: Liability of manufacturers to compensate in certain defined circumstances Guaranties There is often no precise specification for these criteria. Case law is important. South Australian and Australian Capital Territory legislation: Imposes non-excludable warranties upon manufacturers in favour of consumers Statutory warranties: - correspondence with description - correspondence with sample - fitness for purpose in appropriate circumstances Consumer has right to sue for non-compliance of goods with the statutory warranties and with any express warranty given by the manufacturer. The action is for damages for breach of warranty/ the legislation creates a contractual relationship between the manufacturer and the consumer. Where a seller of manufactured goods incurs liability to a consumer for breach of a condition or warranty implied by law as to quality, the seller may recover from the 102 manufacturer an amount by way of indemnity against the liability Queensland legislation does not imply warranties or liability. Rather, it defines those representations that will constitute warranties and prescribes the minimum information that must be contained in such a warranty. PRODUCT SAFETY (criminal law and regulations) TPA permits Commonwealth Consumer Minister to: • • • • Publish a notice in the Gazette warning of possible risks of using particular goods or alerting the public that certain goods are under investigation as to their safety Ban unsafe goods from sale Set safety and information standards Require suppliers to o Recall unsafe goods; only when manufacturer has not already taken satisfactory remedial action o Issue public warnings o Repair, replace unsafe goods or make a refund o Advertise that they undertake to replace the goods or refund the price Dangerous goods can be banned without delay. Suppliers voluntarily withdrawing unsafe goods that may cause injury must inform the Consumer Minister in writing. Failure to comply with product safety standards, product information standards and mandatory standards or banning order can lead to fines of up to $1.1m for businesses, or $220,000 for individuals. Equally, manufacturers liable towards a consumer that has suffered loss or damage as a result of non-compliance with the product safety and information requirements. Compliance with mandatory standards is responsibility of suppliers including manufacturers, importers, distributors, and retailers. Criminal sanctions MARKETING PRACTICES Advertising Prices Distance selling/ e-commerce Doorstep selling All Australian States and Territories have legislation on doorstep selling. Legislation in virtually all States and Territories provides that: - consumer must be given a written contract. - he must be allowed a “cooling-off” period of ten days. In order to be valid, a “doorstep” agreement: - must be written. - a copy must be given to the purchaser. - a notice must be given to the effect that the purchaser has the right to terminate the agreement within ten days of the purchase - termination is by personal delivery or mailing of a notice to that effect. Once such a notice is given to the seller by the purchaser: - the agreement is deemed to be rescinded by mutual agreement. - within seven days, the vendor must repay the purchaser all money paid. - the purchaser is obliged to deliver to the vendor all goods delivered as a result of the purchase. Queensland, South Australia, Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory have uniform legislation in this area. 103 REDRESS Consumers’ awareness – advice & assistance Redress in civil proceedings - small claims Consumers in Territories can choose between territorial and federal agencies. ACCC website and Fair Trading Office provide advice on how to make complaints, and in one case even provide model letters for various situations Complaints and enquiries mainly directed at State/Territory offices. All States and Territories have small claims tribunals to settle small disputes: - Parties present their own case. - Dispute is heard before a referee: a legal practitioner (New South Wales, Victoria, Western Australia), a stipendiary magistrate (Queensland, South Australia). Jurisdiction for disputes that do not exceed a prescribed amount: - New South Wales: $10000 - Victoria, Queensland, Australian Capital Territory, Western Territory: $5000 - South Australia/ Tasmania: $2000. - class actions Alternative Dispute Resolution Redress system is ADR orientated The ACCC and State agencies aim to encourage customers and traders to solve problems themselves without seeking formal enforcement action by the authorities. They provide consumers and traders with copious advice about the extent of their rights and obligations (i.e. the advice goes beyond a statement of rights, and tries to show their limits, and in so doing strikes a balance between consumer and trader which should allow them to settle disputes more easily. They advise: - customer and supplier to try to agree a solution. Business is reminded that bad reputations (spread by word of mouth) damage business; - local consumer protection agencies will want evidence from both sides that they have tried reasonably to solve the problem. It may mediate, bringing in a neutral person; - industry Code of Practices help businesses and customers; - to provide accessible summaries of the key consumer legislation, with the obligations falling on businesses and consumer rights. - Ombudsman schemes - Codes of practice Government encourages development of industry self-regulation (Codes of Practice) These and voluntary standards are seen as light-handed market sensitive ways of securing compliance with TPA. ACCC involved with development and review of operation of Codes. While the State fair trading agencies may mediate to help to settle disputes, they emphasize that they cannot compel parties to accept their proposals. In the end the consumer has to have recourse to the courts. Examples: Warranties: It is an offence to communicate to a consumer a warranty that is not in accordance with the requirements prescribed for a warranty. Acting as a travel agent without a proper licence can lead to a maximum fine of $50,000 and/or 12 months in prison. - Mediation practices Redress in criminal proceedings Criminal sanctions Other ENFORCEMENT Court remedies . Court action is only taken in the most serious cases. The ACCC accept undertakings enforceable in the court from businesses or persons Court remedies can include: 104 injunction to stop: • it is a major civil remedy. • the court has the power to grant an injunction enjoining conduct which would constitute a contravention of a TPA provision. Damages • Any person who has suffered loss or damage because of a contravention of a TPA provision can recover the amount of loss or damage by an action against the persons involved in the contravention. corrective advertising: • The ACCC or the Minister can apply for an order requiring a person who has breached one of the unfair practices provisions of Pt V to publish corrective information, or to disclose information to the public. community service probation orders Ancillary orders - declaring the whole or any part of the contract void; - varying the terms of the contract; - refusing to enforce any or all of the terms of the contract; - directing the refund of money or return of property; - directing the payment of the amount of loss or damage suffered; - to repair or provide parts for goods supplied, or to render specific services to the person who suffered loss or damage criminal sanctions for breach of consumer protection provisions • maximum penalties: - $ 200000 for corporations; - $ 40000 for other persons. • limitation period for prosecution: 3 years • prosecutions instituted only with the written consent of the Minister. Public regulation Self regulation Individuals Independent organisations State/Territory consumer affairs agencies (State consumer offices) ACCC: Jurisdiction when complaints concern businesses operating across state borders, and when the breach is by a corporation The ACCC have discretion as to whether to act on a complaint. They receive many thousands a year. It is more likely to act in cases that accord with its broad priorities, namely where there is; • blatant disregard for the law; • significant public detriment; • worthwhile deterrent or educative effect; • significant new market issues; • significant effect on disadvantaged consumers ACCC undertakes about 400 major investigations a year, from about 60.000 complaints The ACCC can: - compel provision of information - require evidence be given on oath, - enter premises to see or copy documents. INFORMATION 105 Public bodies Fair Trading Office: Provides extended information on consumers’ rights Western Australia Department of Consumer and Employment Protection www.docep.wa.gov.au provides advice to consumers on choosing holidays and a handbook of advice to travel agents, prepared with the Australian Federation of Travel Agents Likewise, a guide to the principal requirements of the Travel Agents Act and related regulations. Businesses Independent organisations ACCC website: Provides contact details (addresses, telephone, fax and e-mail) for each office, its Director, and telephone numbers for each Commissioner. It also provides straightforward general guidance for consumers and businesses In particular, businesses are given: - Business Entry Point – an on-line reference point for all Government services and regulations relating to business; - Business Licence Information Service – supplying information about any business licences or permits needed to run a business. Media Other ACCC equally maintains a Product Safety Recalls Database for consumers to access. Australian Consumers Association (magazine “Choice”) gives product and business recommendations. Consumers’ Affairs Bureaus: see supra under institutions. ADVOCACY INTEGRATION WITH OTHER POLICIES Consumer protection and competition policies Explicitly seen as integral and complementary The TPA covers both. Anti-competitive conduct reduces choice and increases prices. Fair and ethical competition is good for consumers, giving them price, quality and service benefits. The TPA protects companies that act fairly and competitively. It prevents unfair competition and deception and misleading of consumers that can undermine consumer confidence. CASE STUDIES Travel Agents/ Holiday law Highly regulated sector. The legislation was introduced in the 1980s following the collapse of a number of travel agencies and significant consumer losses. Some of the agents are said not to have been fit and proper persons. Certificate is required to trade as a travel agent, and must be displayed in the premises. All letters, cheques, business cards etc. must include the name of the licensee even if the business is entitled to carry on under another name. All partners must be shown Licence: An applicant for a licence would need to show qualifications and experience (usually of several years selling international tickets and holidays). The Commissioner for Consumer Affairs has a duty to enquire into applications to establish that applicants are fit and proper persons, conduct character checks and ensure they are properly registered under the Business Names Act. Membership to the travel compensation fund: The licence requires membership of the Travel Compensation Fund: established in 1986 by Ministers in NSW, Victoria, South Australian and WA. 106 (Note Queensland and Tasmania were not party.) Cancellation of licence: Annual statements must be lodged by travel agents with the Consumer protection agency, otherwise the licence is cancelled. Similarly if the agent withdraws from the Travel Compensation Fund. If the travel agent repeatedly engages in “unjust conduct” the Commissioner for Consumer Affairs can require an enforceable undertaking (breach of which carries a penalty up to $10,000) or object to the licence with the Commercial Tribunal. Withdrawal of licence: The Tribunal can withdraw the licence. Its decision can be appealed to the District Court. Offence of acting without a licence: Acting as a travel agent without a proper licence can lead to a maximum fine of $50,000 and/or 12 months in prison. Plumbers Clothing Used cars Purchase of second-hand cars one of the most frequent reasons of consumer complaint for many years. Separate handling on State websites shows it is a major problem. State Fair Trading offices provide consumer and trader guidance. Considerable body of legislation in States and Territories: New South Wales: Motor Dealers Act 1974; Victoria: Motor Car Traders Act 1986; Queensland: Auctioneers and Agents Act 1971; South Australia: Second-hand Motor Vehicles Act 1983; Western Australia: Motor Vehicle Dealers Act 1973; Australian Capital Territory: Sale of Motor Vehicles Act 1977; Tasmania: Second-hand Dealers Act 1905; Northern Territories: Consumer Affairs and Trading Act 1990. In general, this legislation provides for: ♦ licensing of motor vehicle dealers. Second hand car traders require a licence: Licensees need to show: - they understand the legislation - are of good character - have the necessary financial resources - can and will train staff in all the legislative requirements. ♦ statutory warranties: such warranties are in addition to the remedies provided by the TPA for breach of the conditions of fitness for purpose and merchantable quality implied generally in contracts for the supply of goods. Likewise, the statutory warranties in most of the legislation cited above provide for the obligation of the dealer to repair a defect occurring within a specific mileage, commonly 5000 km or three months after the sale. Dealers’ liability is excluded if: i. defects arise from accidental damage. ii. purchaser has had the car in his/ her possession for three months prior to the sale. iii. a defect notice has been attached to the vehicle. Traders have to provide for each car: - a Notice of Particulars 107 - a Defect Notice, which lists what the trader is not putting right and an estimate of the costs of doing - a Road Worthy Certificate Hotels CREDIT LEGISLATION Consumer Credit Code - It has a wide application. - Applies generally to all personal credit, which is not used for a business related function. - Predominant purpose test: the purpose for which more than half the credit is intended. - It must be in writing. - All forms and documents must be expressed clearly. - There can be more than one documents. - Any alterations to the credit contract must be signed. CREDIT CONTRACT 108 CANADA 109 CANADA OBJECTIVES/ POLICIES INSTITUTIONS Provide fair and efficient marketplace that supports and advances the interests of Canadians as consumers and protects them in the event of market failure. Both federal and provincial governments responsible for certain issues (misleading advertising, company registration, financial institutions) – mechanisms for cooperation exist: The Consumer Measures Committee under Chapter VIII of the Agreement on Internal Trade, the Uniform Law Conference, and legislated codes Federal Government: responsible for consumer issues that are a consequence of its more general powers to regulate certain industries (e.g., transportation, banking), or legislate and regulate for other reasons that have consumer protection implications (e.g., for health and safety, for product labeling or criminal justice matters such as fraud and misleading advertising) Imposes national marketplace standards and aims to ensure a fair, efficient and competitive marketplace for producers, traders and consumers. Industry Canada: Office of Consumer Affairs (OCA) Objective is to: - promote a fair and efficient marketplace for Canadian consumers, and to protect the consumer interest. Central government and government agencies - help consumers make informed decisions by creating award-winning innovative information products - encourage the development of voluntary codes and standards - build the capacity of consumer organizations so that they can contribute more to public policy development, - develop a co-operative agenda with the provinces and territories by facilitating harmonisation of consumer protection legislation and regulations. Industry Canada: Competition Bureau - Responsible for enforcement of Competition Act (including misleading advertising, telemarketing, bait and switch, pyramid schemes, promotional contests) Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Industry Canada: Measurement Canada Ensures that goods and services traded on the basis of measure are inspected to ensure that they are measured accurately. Administers and enforces the Weights and Measures Act and Electricity and Gas Inspection Act. Departments and agencies have regulatory or policy roles relating to specific aspects of consumer affairs, focused on their departmental regulatory duties, i.e.: • Minister of Health (through Health Canada): responsible for safety of non-electrical consumer products, medical devices and pharmaceuticals, • Minister of Agriculture and Agri-Food Canada (through Canadian Food Inspection Agency): responsible for food safety and labeling Standards: Standards Council of Canada (SCC): 15-member body consisting of representatives from the federal, provincial and territorial governments and a range of public and private interests, including consumer representatives, governs the SCC. - Federal Crown corporation 110 - oversees the National Standards System (NSS) - accredits more than 250 organizations involved in standards development, product or service certification, testing and management systems registration in Canada - regularly audits accredited organizations Consumer and Public Interest Committee (created by SCC) It comprises four consumer representatives, members of environmental, labour and occupational health and safety groups, representatives from the federal government and academia and four consumer professionals from organizations that develop standards - recommends policies to identify and monitor emerging consumer and public interest issues, promotes consumer and public interest in standards, participates in standards development and contributes to SCC volunteer recruitment and training programs - advises the SCC on international consumer policy issues related to standards. There are four standards development organizations accredited by the Standards Council of Canada to develop standards. These organizations may submit standards to the SCC to be recognized as National Standards of Canada. They also develop standards-related documents, such as codes, specifications and guidelines, that do not have the authority of standards. • Bureau de normalisation du Québec - sets government procurement standards - standards development for the public and private sectors as well • Canadian General Standards Board - supports government programs - offers standardization services to both the public and the private sectors and charges for its services to recover costs • CSA International (Canadian Standards Association) - private, not-for-profit organization with offices across Canada, as well as in the United States, Europe and Asia, and offers a full range of services, including standards development • Underwriters' Laboratories of Canada 111 - standards development/ many included in government regulations and codes. Provincial Government Provincial governments: under their power to regulate property and civil rights, legislate all contractual matters associated with sales (e.g., terms of sale, guarantees, licensing of vendors, etc.) and certain sectoral issues (building codes and electrical safety) Also, responsible for contractual matters and most issues related to specific types of businesses or services, such as motor vehicle dealers, automotive repairs, door-to-door sales, consumer credit reporting, debt collection practices and cost of credit disclosure. Registration and licensing are common forms of provincial regulation of these businesses Consumer Measures Committee: has representation from the Federal government and all provinces and territories and provides a federal-provincial-territorial forum for national cooperation to improve the marketplace for Canadian consumers, through harmonization of laws, regulations and practices and through actions to raise public awareness. Issues addressed include cost of credit disclosure, consumer protection in internet sales. Equally, provides support and develops policy proposals for Federal-Provincial-Territorial Ministers of Consumer Affairs, who meet approximately every two years to take joint actions in consumer issues Federal, provisional and territorial ministers: cooperate on consumer protection in electronic commerce, including legislative harmonisation, consumer education and improved cooperative enforcement Co-ordinating bodies Government sponsored bodies Public services Consultative organisations Consumer cooperatives Federal Office of Consumer Affairs has modest budget ($1.7m) which is used to fund research and policy advice by non-profit consumer and voluntary organizations working in the consumer interest Consumer policy making generally follows ‘stakeholder’ model with extensive consultation with interested groups. Credit Unions are owned by members and provide financial services for 33 per cent of population. Approximately 900 independent credit unions in English Canada. In Quebec the Mouvement de Caisses Desjardins operates approximately 1,300 branches throughout the province. Significant variations between credit unions in their role in community economic development. See also Canadian Community Reinvestment Coalition at http://www.cancrc.org/ Consumers’ Association of Canada (CAC): Objective is to: - inform and educate consumers on marketplace issues - to advocate for consumers with government and industry - to work with government and industry to solve marketplace problems CAC focus on the areas of: Food, health, trade, standards, financial services, Communications industries… Consumer associations Consumers’ Council of Canada The Consumers’ Council of Canada is an independent, not-for-profit organization federally incorporated in 1994 to help business and government manage today's consumer issues, and working to improve the marketplace for consumers. Independent organisations Public Interest Advocacy Centre A non-profit organization which provides legal and research services on behalf of consumer interests, particularly vulnerable consumers, concerning the provision of important public services. Developed primarily as advocacy agency in the regulatory process. Subject areas include telecommunications, electronic commerce, financial services, cable TV and broadcasting, energy. 112 Options Consommateurs Quebec non-profit organization for defence and promotion of consumer interests, particularly vulnerable consumers. Le Réseau de protection du consommateur Provides information on consumer organizations operating throughout Quebec See http://www.consommateur.qc.ca/ Automobile Protection Association Membership based non-profit organization providing information and advice in relation to consumer issues with automobiles. Democracy Watch A citizen group advocating democratic reform, government accountability and corporate responsibility, Trade associations Ombudsmen There are many trade and industry associations some of which provide consumer information. See legal framework, financial services, standards for examples of specific role in consumer regulation. See below in relation to financial services Primary Federal Statutes: Competition Act, Consumer Packaging and Labelling Act, Bank Act, Food and Drugs Act, Hazardous Products Act, Motor Vehicle Safety Act, Personal Information and Electronic Documents Act, Interest Act, s347 Criminal Code [criminal interest rate] LEGAL FRAMEWORK Some provinces have developed the role of the private sector in regulation. Ontario has introduced the Delegated Administrative Authority Model based on the New Public Management Style. Under the Safety and Consumer Statutes Administration Act the government has entered into a number of agreements for industry self-management.These include the Ontario Motor Vehicle Industry Council (OMVIC), the Real Estate Council of Ontario (RECO) and The Travel Industry Council of Ontario (TICO). A government mandated evaluation of this initiative may be found at < http://www.pstgprototypes.com/> Of particular interest is the Loi sur la protection du consommateur of Québec that applies generally to any consumer contract. It is that effect that makes this law unique in North America. The Financial Consumer Agency of Canada Act provides for a new Financial Consumer Agency of Canada which would: ○ regulate existing and new consumer protection provisions in federal financial institution statutes; ○ monitor voluntary codes made among financial institutions to protect consumers, and ○ assume a broad consumer education and information role. FAIR CONSUMER PRACTICES duty to trade fairly Protection against unfair practices Regulation under Federal Competition Act and Provincial Trade Practices Acts No general duty to trade fairly but several provinces have broad prohibitions on misleading and unconscionable acts and practices. For example, Alberta Fair Trading Act Eight Provinces have enacted legislation against unfair practices: Business Practices Act – Trade Practices Act: different names/similar regime in most Provinces Authorities can open investigation, bring both criminal and civil actions (e.g cease and desist, assurances of voluntary compliance): private actions, possibility of punitive damages. In certain provinces public agencies may bring class or substitute actions on behalf of aggrieved consumers. Unfair terms PRODUCT See Product Quality below in relation to exclusion of implied conditions in consumer sales contracts and Credit in relation to regulation of terms in consumer credit contracts Tort law has become an important vehicle to remedy injuries suffered by victims of 113 LIABILITY (civil law) (Producers’ liability) manufacturers’ negligence. The elements of a negligence action for product liability are the same as the elements of any negligence claim, namely the: ■ Duty of care • a duty of care is owed to all reasonably foreseeable victims of the defendants’ negligent conduct: - All purchasers and foreseeable users and consumers of a product, whether they purchased it or not. - Third parties who are injured by the malfunctioning of a defective product. - In general, it is difficult to envisage a circumstance where a manufacturer of a product will not be liable to a person injured by that product, due to the absence of a duty of care. ■ Standard of care Duty of care extends to three general areas: design, production and marketing. This is similar to UK law before the Consumer Protection Act 1987. 114 Joint and several liability Third party action Time limits PRODUCT QUALITY (civil law) (retailer’s liability) - All of the Provinces have laws governing contracts for the sale of goods. - Sale of Goods Act: For most of the provinces/ In Québec, see Book Five of the Civil Code of Québec. - Certain related warranty provisions may also be contained in other statutes, such as a Consumer Protection Act. - Certain Provinces have also enacted much more extensive consumer warranty legislation. See New Brunswick's Consumer Product Warranty and Liability Act (S.N.B. 1978, c. C-18.1) and Part III of Saskatchewan's Consumer Protection Act (S.S. 1996, c. C-30.1). Under these latter provisions products must be of acceptable quality, reasonably durable and fit for the use intended as well as for any specific purpose stated by the retailer and match its description and the quality of any samples shown to the consumer; spare parts and repair facilities must be available for a reasonable period of time. The implied warranties of fitness and quality are deemed to be given jointly by manufacturer and retailer to a consumer buyer. Similar provisions exist under s54 of the Quebec Consumer Protection Code. Implied warranties ♦ Implied Warranty of Merchantability Section 18(b) of the British Columbia Sale of Goods Act provides that: “if goods are bought by description from a seller or lessor who deals in goods of that description, whether the seller or lessor is the manufacturer or not, there is an implied condition that the goods are of merchantable quality; but if the buyer or lessee has examined the goods there is no implied condition as regards defects that the examination ought to have revealed”. • the paragraph applies to any sale in the course of business/ the dealer need not be a dealer in goods of the very same description as the goods sold ♦ Implied Warranty of fitness for particular purpose Section 18(a) of the British Columbia Sale of Goods Act provides that: “if the buyer or lessee, expressly or by implication, makes known to the seller or lessor the particular purpose for which the goods are required, so as to show that the buyer or lessee relies on the seller's or lessor's skill or judgment, and the goods are of a description that it is in the course of the seller's or lessor's business to supply, whether the seller or lessor is the manufacturer or not, there is an implied condition that the goods are reasonably fit for that purpose; except that in the case of a contract for the sale or lease of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose. With the exception of the inclusion of leases, this is similar to UK law before the 1973 changes 115 Services Most provinces prohibit contracting out of implied conditions of sale of goods act in consumer sales. Provincial statutes regulate health, fitness, modelling, talent development, sports, dance services where individual makes advance payment. Generally cooling off period, limits on contract length, initiation fees, overlapping contracts. Example: Ontario Prepaid Services Act. Advance fees prohibited in some provinces in relation to Credit Repair services and Loan Brokers. In Ontario Consumer Protection Act 2002 (not yet proclaimed, July 2003) imposes nonexcludable obligation that supplier warrants services to be ‘of a reasonably acceptable quality’.. Guarantees PRODUCT SAFETY (criminal law and regulations) Government, industry and consumers share responsibility for product safety. Federal Government: - The federal government is responsible for national standards regarding food safety; transport safety; product safety (except electrical); labeling; legal metrology. Different departments deal with different products Provincial governments - responsible for contractual matters and most industry-specific issues; sale of goods; guarantees; licensing of traders; electrical safety; and structural safety. - They may also administer extensive food inspection programmes. Product Safety Programme: It applies where the hazard is chemical, mechanical, electrical, or fire related. Consumers’ Products Division: - responsible for any consumer products which are poisonous, toxic, flammable, explosive, corrosive, infectious, oxidizing or reactive [section 6(1)(a) Hazardous Products Act] - responsible for any product designed for household, garden or personal use, for use in sports or recreational activities, as life-saving equipment or as a toy, plaything or equipment for use by children that is or is likely to be a danger to the health or safety of the public by reason of its design, construction or contents [s. 6(1)(b) Hazardous Products Act]. Two sections: see under institutions. Standards: developed by National Standards Council and the four standards development organisations recognised by it (see further under institutions) Transport Canada's Safety and Security Group is focusing on consumer safety including improved international safety standards for cars and trucks, public awareness campaigns on the proper use of air bags and child restraint systems in vehicles and on school bus safety; on the safety of small passenger vessels. ■ Federal Hazardous Products Act and related regulations: provide for nationwide standards of safety for a wide variety of consumer products, ranging from child restraint systems for automobiles, to hockey helmets. ■ Food Safety: The Canadian Food Inspection Agency administers a great number of statutes and regulations that are designed to ensure the safety of the food supply. The primary statutes are the Regulations and preventive measures 116 Canada Agricultural Products Act, Canadian Food Inspection Agency Act, Feeds Act, Fertilizers Act, Fish Inspection Act, Health of Animals Act, Meat Inspection Act, Plant Breeders’ Rights Act, Plant Protection Act, Seeds Act, the Consumer Packaging and Labelling Act as it relates to food and the Food and Drugs Act as it relates to food. [For a comprehensive list of these statutes and regulations see: http://www.inspection.gc.ca/english/reg/rege.shtml] ■ Federal Motor Vehicle Safety Act: requires automobile manufacturers to adhere to safety standards in manufacturing their products. ■ The Federal Consumer Packaging and Labelling Act (R.S.C. 1985, c. C-34) ensures that food packages properly identify products -- in terms of quantity and ingredients -- in both official languages. Criminal sanctions exist under product safety statutes Criminal sanctions MARKETING PRACTICES Advertising Primary general regulation under Federal Competition Act. Also controls under Food and Drugs Act. Broadcast advertising regulated by Canadian Radio-Television and Telecommunications Commission (CRTC) under regulations pursuant to Broadcasting Act. There is also regulation of specific product advertising such as alcoholic beverages, foods, drugs, cosmetics and medical devices. Tobacco Act imposes stringent restrictions on advertising of tobacco products. This Act replaced Tobacco Products Control Act which banned almost all advertising and sponsorship of tobacco products but which was held by the Supreme Court of Canada to be unconstitutional as an unjustified infringement of freedom of expression under the Canadian Charter of Rights and Freedoms. Quebec Consumer Protection Act bans television advertising directed at individuals under 13 years. Legislation was upheld by Supreme Court of Canada as a reasonable limit on the guarantee of freedom of expression in the Canadian Charter of Rights and Freedoms. Significant role for codes and self-regulation in advertising. Canadian Code of Advertising Standards administered by Advertising Standards Council. Also codes on specific topics such as sex-role stereotyping, cosmetics. Prices Distance selling/ ecommerce ♦ Canadian Online Trust Project: "Canadian Code of Practice for Consumer Protection in Electronic Commerce": it is being finalized by the Electronic Commerce and Consumers Working Group, available at http://strategis.ic.gc.ca/SSG/ca01861e.html ● The Code is based on the "Principles of Consumer Protection in Electronic Commerce: A Canadian Framework". ● Code consistent with the "OECD Guidelines for Consumer Protection in the Context of Electronic Commerce". ● This voluntary code establishes best practices for business to consumer electronic commerce in such areas as information provision, contract formation, online privacy, security, redress, unsolicited commercial Email and communications with children. ♦ Revision of legislation ● In May 2001, Federal, Provincial and Territorial Ministers responsible for consumer affairs approved a new approach to harmonized consumer protection legislation in electronic commerce which will ensure consumers benefit from equal protection across the country. ● A common template, the Internet Sales Contract Harmonisation Template will cover contract formation, cancellation rights, credit card charge-backs and information provision (available at http://strategis.ic.gc.ca/pics/ca/sales_template.pdf). ● The province of Alberta has passed amendments in accordance with the template (http://www.qp.gov.ab.ca/Documents/REGS/2001_081.CFM) ♦ Federal and provincial governments have worked with the Canadian Association of Internet Providers to provide products to inform business and consumers on the Consumer Protection in Electronic Commerce Guidelines (available on: http://strategis.ic.gc.ca/oca). 117 ♦ The Office of Consumer Affairs has published an “online shopping assistant” which enables consumers to check whether a merchant’s website provides sufficient and clear information to facilitate an informed purchase. ♦ Internet Surveillance Project “Fairnet”: Since August, 2001, the Competition Bureau has been conducting monthly surveillance of Internet advertising. The initiative, called Fairnet, focuses on Canadian web sites to assess whether they are making false or misleading representations. ◊ Specific websites give advice on online shopping: • • • Media Awareness Network: http://www.media-awareness.ca Canadian Marketing Association: http://www.the-cma.org/consumer/kidtips.cfm Advertising Standards Canada: http://www.adstandards.com/en/standards/adstandards.asp Doorstep selling - Almost all provinces requires door-to-door sellers to be licensed. - In addition to that, there is generally a ten day cooling-off period, during which a consumer can cancel a contract he or she makes with a door-to-door salesperson for any reason. REDRESS Consumers’ awareness – advice & assistance Redress in civil proceedings - small claims - class actions Consumers make significant number of complaints to Federal and Provincial Agencies However, difficulty or impracticality of enforcing court redress mechanisms significantly limits, in most instances, the value of litigation. Available in most provinces. Most developed in Quebec where lawyers are barred, business corporations may not use the process, judges may play an activist role and the court provides assistance for the lay litigant. - Possible in British Columbia, Ontario and Québec. - The efficiency resulting from a grouping of claims in this way may make class proceedings particularly amenable to consumers with a common complaint against a merchant or manufacturer. Alternative Dispute Resolution Canadian Motor Vehicle Arbitration Plan [CAMVAP] provides national arbitration programme for disputes between consumers and manufacturers in relation to maunufacturing defects and warranty claims. For details see http://www.camvap.ca Ontario Consumer Protection Act 2002 (not yet proclaimed): in a consumer agreement which requires disputes to be submitted to arbitration any provision which prevents a consumer from exercising a right to commence a court action is invalid. Provision will be upheld if entered into after a dispute has arisen. Air Travel Complaints Commissioner established under amendments to Canada Transportation Act in 2000. Powers include resolving consumer complaints in relation to quality of airline service and terms and conditions of carriage. See Annual Reports at http://www.ctaotc.gc.ca/cta-otc2000/report-rapport/index_e.html - Ombudsman schemes Better Business Bureaux provide complaint and mediation services. Banking Ombudsman for small business established by banks in 1996, extended to consumers in 1997 and since 2001 includes investment dealers, mutual fund deales and investment fund companies. See . Funded by industry, majority of directors must be independent of financial services industry. The Ombudsman is appointed by the Board of Directors, on the recommendation of the independent directors’ committee, for a term of up to five years, and may be reappointed. The Ombudsman 118 - Codes of practice cannot have been a government employee or have worked for or been closely associated with a participating financial service provider for five years prior to appointment. The Ombudsman can be removed for cause by vote of 75% of the Board, provided the vote includes a majority of the independent directors. In addition Ombudsmen established in insurance industry. Financial services ombudsmen linked by Financial Services Ombudsnetwork which is industry based and industry financed. See http://www.cfson-crcsf.ca/en/ - Canadian Code of Practice for Consumer Protection in Electronic Commerce: see supra under Commercial practices – distance selling/ e-commerce. - The Office of Consumer Affairs (OCA) has published a Guide on the Development and Implementation of Voluntary Codes, an Evaluative Framework for Assessing Voluntary Codes, and research papers on the subject [available on the Office of Consumer Affairs Consumer Connection website: http://strategis.ic.gc.ca/SSG/ca00973e.html] Provincial Consumer Services Bureaux or Consumer Protection Departments mediate written complaints between consumers and businesses. Topics covered include collection agencies, credit repair, consumer reporting, loan broker fraud, car repairs, home renovations, door-to-door sales, health clubs, modeling and talent contracts, condominiums, time shares, and refunds and exchanges. Ontario Consumer Protection Act 2002 provides in s112 for possibility of compensation or restitution where person convicted of offence under Act Criminal sanctions exist under Competition Act. Competition Act includes administrative penalties and possibility of corrective advertising. Enforcement the same in all parts of the country Considerable overlap between federal and provincial agencies; however written agreements between agencies specify areas of responsibility for enforcement. Main problem: lack of resources. See CAMVAP, Banking Ombudsmen, OMVIC. - Mediation practices Redress in criminal proceedings Criminal sanctions Other ENFORCEMENT Court remedies Public regulation Self regulation 119 Individuals Independent organisations INFORMATION/ ADVOCACY/ EDUCATION Public bodies Information Canadian Consumer Information Gateway (CCIG): http://consumerinformation.ca/ Includes: - over 35 federal government departments and agencies - over 250 provincial and territorial partners - non-governmental organisations about to join site informs about safe/ healthy products, alerts about unsafe ones and facilitates redress Consumer Connection: http://www.consumerconnection.ic.gc.ca website of OCA ‘Straight goods’ (www.straightgoods.com): an online independent source of news and tips relating to consumer affairs. Education/ research The Contributions Program for Consumer and Non-Profit Organizations - It is a programme that provides consumers’ organisations with the resources to undertake research in order to provide analysis to policy debates and contribute to the policy-making process. - In 2001-02, the programme budget was increased from $1,000,000 to $1,690,000 a year. Better Business Bureaux provide consumer information Canadian Consumer Handbook: Available on CD-R / internet at http://strategis.ic.gc.ca/SSG/SSG/ca01136e.html Very detailed information on all consumer issues CBC (public tv channel): tv programme Marketplace provides advice and investigates consumer issues Offers consumer advice/ news on its website Businesses Independent organisations Media CONSUMER CONFIDENCE INTEGRATION WITH OTHER POLICIES Consumer protection and competition policies CASE STUDIES Travel Agents/ Holiday law Consumers make significant number of complaints Weak consumer movement in Canada, especially if judged by American, Australian or British standards. Industry Canada responsible for both Travel Industry Act Ontario requires registration of travel agents, liability for deposits, travel industry compensation fund. Consumer Protection Act 2002 provides ten day cooling off period in relation to time share contract 120 Plumbers Clothing Used cars Where a motor dealer makes a written representation in the form of a sales or purchase agreement respecting the sale by him of a used motor vehicle, he shall include the particulars required for a new motor vehicle under subsection…and (a) any documentation or transfer fee, (b) the recorded odometer reading at the time of sale, (c) the name of any jurisdiction known to the motor dealer other than British Columbia in which the motor vehicle has previously been registered, (d) an itemized list of any repairs to be effected and the additional cost, if any, (e) a statement that the motor vehicle complies with the requirements of the Motor Vehicle Act, and (f) in the case of a motor vehicle not suitable for transportation a statement to that effect. A motor dealer shall give a duplicate copy of the sales or purchase agreement to the purchaser or seller, as the case may be, at the time it is accepted by the motor dealer. Hotels CREDIT Regulatory Agencies Financial Consumer Agency of Canada established in 2001 under Financial Consumer Agency of Canada Act. Responsible for oversight of compliance of federally regulated financial institutions with consumer legislative provisions and self-regulatory initiatives. These institutions include all banks and all federally incorporated or registered insurance, trust and loan companies and co-operative credit associations. Federal consumer credit protection provisions in Bank Act (truth in lending, credit card liability), Bills of Exchange Act Part V, Interest Act, Criminal Code, Personal Information Protection and Electronic Documents Act., Tax Rebate Discounting Act. CREDIT CONTRACT Federal government regulates through jurisdiction over banking, interest and negotiable instruments. Significant provincial regulation under property and civil rights. Harmonisation of cost of credit disclosure (truth in lending) through Consumer Measures Committee See Federal Personal Information Protection and Electronic Documents Act Privacy Credit Bureaux Truth in Lending Regulated provincially. Limits on time derogatory information (eg bankruptcy) may be held in file, purposes for which information may be released, consumers entitled to see credit report and request correction. Required disclosures in advertising and contract documents. APR must be disclosed. APR calculated on nominal not effective interest rate. Requirements for disclosures in leases. For uniform model act see http://www.ulcc.ca/en/us/index.cfm?sec=1&sub=1c3 Disclosure requirements: limit of $50 liability for lost or stolen card Credit Cards 121 Connected Lender Liability Controls on cutting off defences by third party financiers under provincial laws and Federal Bills of Exchange Act. Financier’s liability generally will not exceed amount financed. Credit cards do not fall within connected lender statutes and not subject to consumer defences or claims against supplier Section 347 Criminal Code establishes criminal Interest Rate of 60 per cent. Very broad definition of interest. Many short term loans such as ‘payday loans’ will be caught by this provision, but reluctance by governments to prosecute. Usury Various provincial controls on creation of overbroad security interests in consumer goods, limits on default charges, regulation of collection practices Credit Counselling available in all provinces through non-profit credit counseling financed primarily by creditor contributions. Credit Counselling Canada provides an umbrella organization for these agencies. See http://www.creditcounsellingcanada.ca/root/en/about/ Consumer bankruptcy is accessible to consumers. Process is administered by private trustees in bankruptcy who are licensed and monitored by Office of Superintendent of Bankruptcy. 122 UNITED STATES OF AMERICA 123 UNITED STATES OBJECTIVES/ POLICIES INSTITUTIONS Central government and government agencies Federal Trade Commission: main federal government agency with enforcement jurisdiction FTC responsibilities: - individual company and industry wide investigations. - Federal Court litigation. - rulemaking proceedings. - consumer and business education. - information of Congress and other government entities of the impact that proposed actions could have on consumers. Ensure consumers can exercise informed choice Prevent fraud, deception and unfair business practices in the marketplace Bureau of Consumer Protection (under FTC): - BCP’s mandate is to protect consumers against unfair, deceptive or fraudulent practices. - The Bureau enforces a variety of consumer protection laws enacted by Congress, as well as trade regulation rules issued by the Commission. - BCP’s actions include: • individual company and industry-wide investigations • administrative and federal court litigation • rulemaking proceedings; and • consumer and business education • information of Congress and other government entities of the impact that proposed actions could have on consumers. The Bureau of Consumer Protection is divided into six divisions and programs, each with its own areas of expertise: □ The Division of Advertising Practices. □ The Division of Enforcement. □ The Division of Financial Practices. □ The Division of Marketing Practices. 124 □ The Division of Planning and Information. □ The Consumer and Business Education Program. [source: FTC website: www.ftc.gov] Department of Transportation: responsible for cars, trucks, motorcycles Food and Drug Administration: responsible for drugs and cosmetics Department of Treasury: covers alcohol, tobacco and firearms US Consumer Product Safety Commission: jurisdiction over 15000 products in home/ schools/ recreation Objective: reduce risks of injuries and deaths from consumer products Responsibilities: - develops voluntary standards with industry - issues/ enforces mandatory standards/ bans products if no standard would adequately protect the public - recalls products/ arranges for their repair - conducts research on potential product hazards - informs/ educates consumers through media/ state-local governments/ private organisations Local Government Coordinating bodies Government sponsored bodies Consultative organisations Consumer cooperatives Consumer associations Consumers’ Union: independent/ non-profit testing and information organisation Responsibilities: tests products, informs public, protects consumers Income: derived from the sales of reports and non-commercial contributions, grants and fees Consumer Policy Institute: - based in Consumers’ Union HQ in Washington - promotes consumer interest through research/ education/ conferences/ policy papers Council on Consumer Interests: - organisation for academics/ other professionals involved in consumer economics - Goal: promote education/ inform policy Independent organisations Trade associations Ombudsmen Consumer Affairs Division (in State Governments) National Association of Consumer Agency Administrators: umbrella organisation encompassing over 160 consumer agencies that provide direct constituent services Facilitates sharing of information/ expertise as well as collective action to increase public awareness LEGAL FRAMEWORK Federal Trade Commission Act (FTC): - prevents unfair or deceptive acts that may affect business commerce. - Congress passed the FTA to protect consumers from unfair methods of competition. Section 5(a) of the FTC Act: “unfair or deceptive practices are declared unlawful”: Main provision enforced by FTC FTC equally enforces specific statutes that prohibit specifically defined trade practices: - Equal Credit Opportunity Act - Truth-in-Lending-Act - Fair Credit Reporting Act 125 - Cigarette Labelling Act Many federal acts of great importance on consumer credit Most important: Consumer Credit Protection Act 1968. Congress continuously amended CCPA adding the following: - Fair Credit Reporting Act (1970) - Fair Credit Billing Act (1974) - Equal Credit Opportunity Act (1974) - Consumer Leasing Act (1976) - Fair Debt Collection Practices Act (1977) - Electronic Funds Transfer Act (1978) - Fair Credit and Charge Card Disclosure Act (1988) - Home Equity Loan Consumer Protection Act (1968) - Telephone Consumer Protection Act (1991) - Telephone Disclosure and Dispute Resolution Act (1992) - Telemarketing and Consumer Fraud and Abuse Prevention Act (1994) - Home Ownership and Equity Protection Act (1994) - Credit Repairs Organizations Act (1996) FAIR CONSUMER PRACTICES Duty to trade fairly Section 5(a) of the FTC Act: “unfair or deceptive practices are declared unlawful” There are three broad categories of unlawful conduct: (a) unfair methods of competition (b) deceptive acts or practices (c) unfair acts or practices The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. It is the FTC’s Bureau of Consumer Protection – Division of Marketing Practices that is mainly responsible for consumer protection against unfair practices: Protection against unfair practices - The Division of Marketing Practices responds quickly and decisively to the rapidly changing world of fraudulent marketing practices. - It enforces federal consumer protection laws by filing actions in federal district court on behalf of the Commission to stop scams, prevent scam artists from repeating their fraudulent schemes in the future, freeze assets, and obtain compensation for scam victims. - The Division also files administrative cases with the Commission to stop these scams. The Division’s enforcement priorities include: Shutting down high-tech Internet and telephone scams that defraud consumers of hundreds of millions of dollars annually; • Halting deceptive telemarketing or direct mail marketing schemes that use false and misleading information to take consumers’ money; and • Stopping pyramid schemes and other fraudulent investment scams. • Investigating and addressing the use of the Internet and other emerging technologies to defraud consumers/ Its initiatives in this area include: ○ Developing and presenting Internet Investigation Training to federal, state, local, and international law enforcement agencies. ○ Sponsoring and conducting symposia on legal issues arising from cutting-edge technologies. ○ Prosecuting civil enforcement actions to keep fraud artists from operating on the Internet • 126 and in other high-tech areas. The Division also is responsible for issuing, revising and enforcing many of the Commission’s rules, including: • • • The Telemarketing Sales Rule, which prohibits deceptive sales pitches and protects consumers from abusive, unwanted, and late-night sales calls. The Funeral Rule, which requires funeral directors to disclose price and other information about their services to consumers. The Magnuson-Moss Act, which requires merchants to make warranty information available to consumers before they make a purchase. [Source: FTC website: www.ftc.gov] Unfair practices: ◊ those that cause or are likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. ◊ unfair or deceptive methods by a business need only to have the possible likelihood of deceiving the consumer. The law does not require that an actual deception take place. ◊ a business may also be liable for the unfair and deceptive acts of its employees, agents, or representatives. PRODUCT LIABILITY (civil law) (producers’ liability) Wherever damage or injury is caused by a defective product that is unreasonably dangerous to the user or consumer. The theory of strict tort liability was developed by legal scholars as a part of the Restatement of the Law of Torts. Section 402A of the Restatement of Laws provides as following: 402A. Special Liability of Seller of Product for Physical Harm to User or Consumer: (1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer, or to his property, is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property if: (a) the seller is engaged in the business of selling such a product, and (b) it is expected to and does reach the user or consumer without substantial change in the condition in which it was sold. The nature of strict liability is apparent in subsection (2) which provides that the rule stated in subesection (1) applies although: (a) the seller has exercised all possible care in the preparation and sale of his product, and (b) the user or consumer has not bought the product from or entered into any contractual relation with the seller. ● Consumer expectations test is used to determine if a product is defective/ it will be defective if it does not meet the standards that consumers expect and is unreasonably dangerous. The consumer need only prove that: ■ a product was defective; ■ the defect existed at the time the product left the defendant’s control; ■ the defect caused the plaintif’s injury. Moreover, disclaimers are not effective and lack of privity of contract is immaterial. ◘ There are certain defences though that the defendant may assert to avoid liability: ○ assumption of risk: a person cannot succeed who voluntarily: - encounters a known unreasonable danger; - disregards due warnings and instructions; 127 - proceeds unreasonably to use a product he or she knows to be defective or dangerous. ○ Comparative negligence: an injured person’s recovery is reduced by his/ her share of fault. ○ Misuse/ abnormal use: only where the producer was not able to foresee the misuse or abnormal use. [source: P. Shedd – R. Corley, “Business Law”] PRODUCT QUALITY (civil law) (retailers’ liability) Implied warranties - They establish the controlling quality standards that goods must meet. Their aim is to require sellers to provide goods that are reasonably safe for their ordinary intended use (although the law does not require accident-proof products, it does require products that are reasonably safe for the purposes for which they were intended when they were placed in the stream of commerce). - Implied warranties are legally present unless clearly disclaimed or negated. - They exist even if a seller is unable to discover the defect involved or unable to cure if it can be ascertained, i.e. strict liability. - Liability for breach of an implied warranty is not based on fault, but on the public policy of protecting the buyer of goods. ■ Merchantability § 2-314 of the Unified Commercial Code specifies that: (1) Unless excluded or modified (Section 2-316 ), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale. (2) Goods to be merchantable must be at least such as (a) pass without objection in the trade under the contract description; and (b) in the case of fungible goods , are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goods are used; and (d) are, within the variations permitted by the agreement , of even kind, quality and quantity within each unit and among all units involved; and (e) are adequately contained, packaged, and labeled as the agreement may require; and (f) conform to the promise or affirmations of fact made on the container or label if any. ■ Implied warranty of fitness for a particular purpose Fitness for purpose 128 §2-315 provides that: “Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is, unless excluded or modified under the next section, an implied warranty that the goods shall be fit for such purpose”. * The implied warranty of merchantable quality signifies that the buyer can reject goods that are not fit for the ordinary purpose for which they are sold. . Nevertheless, if the seller has reason to know that the purchase of goods is made for a particular purpose, then he has to bear the risk if goods are not fit for that purpose. This is, in fact, what §2315 provides. □ Written disclaimers of implied warranties Exclusion is possible: - but the seller has to make it clear that the buyer is not to have the benefit of implied warranties. - To exclude the waranty of merchantability, the word “merchantability” must be used. - The disclaimer, if included in a written contract, must be set forth in a conspicuous manner. - The disclaimer clause must be in a larger type or a different color or indented./ if set forth in the same type or color as the rest of the contract, it will not be effective. Exclusion also valid if: - product sold “as is” or “with faults”. - If buyer examines the goods before he buys them, no implied warranties on those defects that a careful examination would have revealed. Further protection outside implied warranties “lemon laws”: deal with new cars that are so defective that the seller or manufacturer can not remedy the defects (impose for a stated period of time or number of miles a new car must conform with the warranty given by the manufacturer – if, within a reasonable number of attempts, the dealer or manufacturer is unable to remedy a defect that substantially impairs the value of the car, the manufacturer must either replace it or refund the purchase price) Magnuson-Moss Warranty Act: ▪ imposes the disclosure of certain information when a written warranty is given ▪ invalidates disclaimers of implied warranties - Retailers Services PRODUCT SAFETY (criminal law and regulations) Responsible authorities FTC develops and enforces voluntary and mandatory standards. It can also recall products for repair. It informs and educates the media regarding product safety. FTC issues regulations imposing the labelling of all products other than food, drugs, therapeutic devices and cosmetics to disclose net contents, identity of commodity, name/ place of manufacturer (according to the provisions of Fair Packaging and Labelling Act) Additional regulations may be issued. Separate acts covering the labelling of other products (wool/ fur/ textile fibre/ cigarettes) are equally enforced by FTC. Apart from FTC regulations, numerous regulations in all fields: Regulations 129 e.g. regarding agricultural and animal products, energy, food and drugs, alcohol, tobacco products and firearms etc. 130 MARKETING PRACTICES Advertising FALSE ADVERTISING Protection against false advertising - Common law action for deceit against a seller for falsely advertising a product: - s. 12 of FTC Act explicitly prohibits false advertising. - s. 5 FTC: false advertising is automatically considered as an unfair or deceptive practice (according to 15 U.S.C. § 52 1994). - state law: 3 broad categories: - State laws that model the FTC Act and broadly prohibit false advertising - State laws that contain a list of practices that constitute false advertising. - State laws that provide for a private action under a specific Unfair and Deceptive Acts and Practices statute offering various types of damages. - Truth in Lending Act: for false advertising of credit - enforced by FTC – no private action Prices Class actions very useful in cases of false advertising. Price cutting and price discrimination actionable at common law. Price discrimination is in fact a special form of price-cutting (selective price cutting). Price cutting and discrimination actionable when they pursue a predatory purpose. Price cutting Besides common law, price cutting may equally violate anti-trust legislation, state statutes as well as the Robinson-Patman Act, which prohibits sales at unreasonably low prices. Price cutting can consist in: - sales below cost: state statutes forbid sales below cost when they intend to destroy or to injure a competitor. Criminal penalties may be imposed and there may be civil actions for damages or injunctions. - Unreasonably low prices: s. 3 of the Robinson-Patman Act (15 U.S.C.A. 13a). Enforcement only through a criminal prosecution – civil enforcement not possible and anti-trust protections not applicable. Price discrimination Three basic types of price discrimination: - price discrimination per se price discrimination in the guise of brokerage fees price discrimination in the guise of promotional allowances and services Enforcement is through the FTC and by private civil actions. Distance selling/ ecommerce Telemarketing fraud is widespread (consumer loss estimated up to $40 billion per year). In the mid-1990s Congress enacted three statutes on point and the Federal Communications Commission has promulgated regulations under all three: - Federal Telephone Consumer Protection Act, 47 U.S.C. § 227 (1994): authorises telephone calls only between 8 a.m. and 9 p.m.; no calls to cell phones and emergency facilities allowed; provides for private action and treble damages for wilful conduct or injunctions for losses greater than $500. - Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §6101 (1994): regulates time, place and manner of telemarketing calls. - Telephone Disclosure and Dispute Resolution Act, 47 U.S.C. § 228 AND 15 U.S.C. §5711: forbids phone companies from disconnecting a customer’s service due to unpaid telemarketing calls – telephone companies also obliged to itemize such calls and to provide the possibility to consumers to block such calls. The problem is there is often no right of private action for victimised consumers or right is very limited. Consumers can opt out of receiving unwanted calls. However, sellers (again according to testimony) 131 usually do not inform sellers of their right or, even worst, they present the possibility of receiving calls as an extra of the contract! Telemarketing fraud usually about investment opportunities. Telephone advertising provisions usually regulate internet fraud as well. * A “National-Do-Not-Call” Registry is under construction by the FTC. The Registry will contain the telephone numbers of consumers unwilling to receive telemarketing calls. Those numbers will be disclosed to authorised telemarketing firms, which could risk fines of up to $11000/ call if they called a registered number. Register planned to be effective from October 2003. Similar programmes already apply in two-dozen states where consumers can place their numbers in so called “do-not-call” registers. In NY, for example, where the register has been in force since April 2001, about two million NY residents have registered 2.4 million phone numbers. Registers appear to have curbed some unwanted solicitation in the states. ** As of July 11, 2003 consumers have registered a total of 24.5 million telephone numbers with the National Do-Not-Call Registry (in the 14 days that the program was running). Consumers registered 20 million of those numbers via Internet and 4.5 million via the telephone. Doorstep selling Cooling-off period rule (16 C.F.R. § 429): right to cancel sale within 3 days of sale. Also, seller is obliged to provide the buyer with a written copy of the sales contract and two copies of a notice of the buyer’s right to cancel. Right to cancel cannot be waived. * Places of business are not protected by cooling-off period rule. REDRESS Consumers’ awareness – advice & assistance To file a complaint or to get free information on consumer issues, consumers can visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. Most states have Unfair and Deceptive Practices Acts which allow consumers to sue for damages or to obtain other relief Not all persons can sue: some states allow only natural persons to sue, thus excluding corporations and associations. Likewise, not everyone can be sued: for example, mass media advertisers who publish claims made by others are exempted. [source: G. Marsh, Consumer Protection Law, 1999] Redress in civil proceedings - small claims - class actions Widely used across country Class actions play a very important role in consumer redress. They can be very effective. However, there is also a rising concern for abusive class actions, where attorneys are the only benefactors. There have been cases where attorneys walked away with multi million dollar fees, while consumers were left with “coupons” or very insignificant compensation. - As a response to such practices, certain judges have refused to approve settlements where attorneys would negotiate a high compensation for themselves, leaving nothing for their clients. - Equally, the National Association of Consumer Advocates developed and published, in 1997, a set of guidelines to protect consumers (The NACA Guidelines for Litigating and Settling Class Actions). These guidelines were considered one of the most important improvements in consumer law. There are state and local ombudsmen across USA, but most of them investigate solely complaints against governmental agencies. Mediation – Arbitration: two most popular forms of ADR Alternative Dispute Resolution - Ombudsman schemes - Codes of practice - Mediation/ negotiation practices 132 Redress in criminal proceedings Criminal sanctions Criminal prosecutions mostly base on larceny by false pretences, but the success of basing a prosecution on larceny varies depending on the extent of burden of proof placed on the prosecution and the maximum permissible sentence and fine. Criminal sanctions apply, but not to a great extent. [source: G. Wenston-P. Maggs- R. Schechter, Unfair Trade Practices and Consumer Protection, 1992] ENFORCEMENT Court remedies Public regulation FTC enforces a variety of consumer protection laws enacted by Congress and regulations issued by the Commission. FTC enforces consumer protection law through both administrative and judicial processes. FTC enforcement in the consumer field takes place through Bureau of Consumer Protection – Division of Enforcement: The Division of Enforcement conducts a wide variety of law enforcement activities to protect consumers, including: (1) ensuring compliance with administrative and federal court orders entered in consumer protection cases; (2) conducting investigations and prosecuting civil actions to stop fraudulent, unfair or deceptive marketing and advertising practices; and (3) enforcing consumer protection laws, rules and guidelines. • Monitoring compliance with Commission cease and desist orders and federal court injunctive orders involves: • Investigating compliance of parties subject to agency and federal court orders. • Initiating federal court actions for substantial civil penalties for violation of agency orders. • Enforcing federal court injunctive orders through civil and criminal contempt actions (Project Scofflaw). Investigations of violations of consumer protection laws and litigation before the Commission’s administrative law judges or the U.S. District Courts involve: • E-Commerce and the Internet, including online shopping and unfulfilled holiday delivery promises. • Scholarship scams, targeting services that falsely guarantee scholarships or claim to have information that is unavailable elsewhere. Enforcement of trade laws, rules and guides through administrative or federal court proceedings includes: • The Mail or Telephone Order Merchandise Rule, which requires “brick and mortar” and online companies to ship purchases when promised (or within 30 days if no time is specified) or to give consumers the option to cancel their order for a refund. • Textile, Wool, Fur and Care Labeling Rules, which require proper origin and fibre content labeling of textile, wool and fur products, and care label instructions attached to clothing and fabrics. • Green Guides, which govern claims that consumer products are environmentally safe, recycled, recyclable, ozone-friendly, or biodegradable. [source: FTC website: www.ftc.gov] • • Equally, State Attorney-Generals enforce state consumer protection laws. Self regulation INFORMATION/ EDUCATION/ ADVOCACY 133 Public Bodies FTC considers consumer information as an effective means against fraud and devotes considerable resources to it: 83 consumer publications from May 2001 to March 2002/ millions of pages in the internet FTC promotes consumer information through the Bureau of Consumer Protection – Division of Planning and Information: The Division of Planning and Information helps consumers get the information they need to protect themselves, and gives FTC attorneys and other consumer protection law enforcers the information and support they need to take action. The Division pursues this mission in several ways: • • • • • Consumer Response Center, which houses counsellors who respond to consumer complaints and requests for information (1-877-FTC-HELP [1-877-382-4357] or www.ftc.gov). Identity Theft Data Clearinghouse, which houses counsellors who tell consumers how to protect themselves from identity theft and what to do if their identity has been stolen (1877-IDTHEFT1 3[1-877-438-4338]; TDD: 1-866-653-4261; or www.consumer.gov/idtheft). Consumer Sentinel. The FTC enters Internet, telemarketing, identity theft, and other fraudrelated complaints into Consumer Sentinel, a secure, online database and cyber tool available to civil and criminal law enforcement agencies in the U.S. and abroad (www.consumer.gov/sentinel). International Consumer Protection. The Division coordinates the FTC’s international consumer protection work, and helps facilitate international information-sharing among consumer protection law enforcers to combat cross-border fraud and deception. This work includes a joint project with more than a dozen countries to collect and share cross-border e-commerce complaints (www.econsumer.gov). Operations. The Division also administers the core financial, administrative and litigation support activities of the Bureau, and manages the agency’s consumer redress program. In the same time, FTC promotes consumer education through the Bureau of Consumer Protection – Consumer and Business Education Program. - The Consumer and Business Education Program plans, develops and implements creative, practical, plain-language mission-related campaigns aimed at both broad and segmented consumer and industry audiences. These efforts encourage informed consumer choice and competitive business practices in the marketplace, and are viewed by the Commission as a cost-effective way to help minimize consumer injury and obtain compliance with the law. - To leverage expertise and limited resources, the program targets businesses, trade associations, consumer groups and other government agencies when appropriate, exhibits at national conferences and conventions, and produces public service announcements for radio, print and web. A consumer and/or business education component is included in each major consumer protection law enforcement initiative. 134 - In addition to producing award-winning publications and websites, the program maintains www.consumer.gov. The Program launched this “one stop” site for federal consumer information with four partner agencies (Food and Drug Administration, Consumer Product Safety Commission, National Highway Traffic Safety Administration and the Securities and Exchange Commission) in December1997. Today, the site links to consumer information, arranged in 10 broad topic areas, from more than 170federal agencies. It also has become the consumer information portal for FirstGov.gov, a public-private partnership, led by a cross-agency board and administered by the Office of FirstGov in the General Services Administration’s Office of Government-wide Policy. [source: FTC website: www.ftc.gov ] Businesses Hundreds of other consumer agencies at federal, state and local level offer information to the public. One can observe a trend towards enhancing consumers’ awareness: e.g.: in NY taxis, information is posted in the back of the driver’s seat regarding the taxi’s licence number, the cost/ mile and other additional costs. Equally, a telephone number is provided which customers can dial if they want to make a complaint. Finally, an oral message of similar content is played when entering and leaving the taxi. In some cases (e.g. when getting a taxi from the airport), a brochure is provided containing relevant information. To give an other example, licences are very often in general display (e.g., in food stores or parkings) Media/ Internet CONSUMER CONFIDENCE Consumer issues do not seem to attract the media’s interest. Americans very demanding consumers not afraid to assert their rights. * In the aftermath of the September 11 attack on the World Trade Centre and the Pentagon, news reports suggest that more American consumers are seeking out products that are "Made in the USA" with the expectation that the claim is truthful and accurate. The FTC has focused on explaining the “made in USA” standard in order to enforce consumer confidence. FTC responsible for both/ coordination: INTEGRATION WITH OTHER POLICIES Consumer protection and competition policies ○ The Bureau of Competition of the Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Department of Justice (DOJ) share responsibility for enforcing laws that promote competition in the marketplace. Competition benefits consumers by keeping prices low and the quality of goods and services high. ○ The FTC is a consumer protection agency with two mandates under the FTC Act: to guard the marketplace from unfair methods of competition, and to prevent unfair or deceptive acts or practices that harm consumers. These tasks often involve the analysis of complex business practices and economic issues. When the Commission succeeds in doing both its jobs, it protects consumer sovereignty - the freedom to choose goods and services in an open marketplace at a price and quality that fit the consumer’s needs - and fosters opportunity for businesses by ensuring a level playing field among competitors. In pursuing its work, the FTC can file cases in both federal court and a special administrative forum. CASE STUDIES Travel Agents/ Holiday 135 law Plumbers Licensing*: Most States license electrical and plumbing contractors Licensing can range from simple registration to a detailed qualification process Licensing requirement in one locality may be different from requirements in the rest of the state Used Car rule: retailers obliged to place a buyer’s guide on every used car they offer for sale The buyer’s guide explains the scope of any warranty protection or lack thereof (Used Motor Vehicle Trade Regulation, Rule 16 CFR § 455) Used cars Clothing Hotels CREDIT Statistics Legislative Framework Credit Reporting By 1990: the average consumer possessed 9.1 credit cards with a total unpaid balance of $2042. By 1995: the average household had more than $4000 debt. - Consumer Credit Protection Act (federal level) - Comprehensive statutory regulation of credit transactions and specific statutes focused on particular abuses (state level) Credit reporting is a major concern. The common law response for false credit reporting is defamation. However, the “doctrine of qualified privilege” is a very efficient defence for consumer reporting agencies. The Fair Credit Reporting Act regulates the context and confidentiality of credit reports of consumer reporting agencies and provides for consumer access to the reports. Liability for unauthorised use of credit card Maximum liability under federal law for unauthorized use of a credit card is $50. If the loss is reported before credit cards are used, the Credit Card Loss or Fraudulent Charges (FCBA) says the card issuer cannot hold the proprietor of the card responsible for any unauthorized charges. If the loss involves the credit card number, but not the card itself, there is no liability for unauthorized use. [source: FTC website] 136 JAPAN 137 JAPAN OBJECTIVES/ POLICIES Redress the imbalance between business and consumers through the establishment of several institutions and by bringing in new laws. Aim: increase consumer sovereignty in Japan. Equally, to redress the price differential that exists between Japan and other nations. See article 2 of the Consumer Protection Fundamental Act, according to which: “the state has responsibility for establishing and executing integrated policies concerning the protection of consumers in accordance with the economic development of society”. In establishing consumer policies, the state shall have regard to consumer opinions: article 13 of the Consumer Protection Fundamental Act 1968 states: “To contribute to the formulation and execution of proper policies for the protection of consumers, the state shall take the necessary measures to establish a system for having consumer opinions reflected in policymaking”. Consumer policy has been shifting its stance from aiming for consumer protection by preregulations under conventional government administration to consolidating fair and clear market rules and strengthening post surveillance functions. In such a policy environment, consumers themselves are requested to positively collect information, take a reasonable judgment and action on their own responsibility. Current policies show emphasis is placed on the following: • Consumer safety and disclosure of information. • Electronic commerce. • Effectiveness of market rules. • Consumer education. • Fair and free competition. INSTITUTIONS Central government and government agencies Cabinet Office – Quality of Life Policy Bureau: General coordination Government Ministries and Agencies: Implementation of various policies Consumer Protection Council: Conducts deliberations concerning plans for basic consumer protection policies and undertakes secretarial duties for the execution of such policies Japan Fair Trade Commission (JFTC) (Ministry of Finance) is the body responsible for monitoring business practices in the country and for protecting consumers National Consumer Affairs Centre of Japan (NCAC): ‘special status organisation established by the government to improve and stabilise people’s lives’ Role: to answer consumer inquiries and publish a variety of information such as the results of product testing and has to come to play an important role in aiding consumer choice. Umbrella organisation for a network of around 400 local government consumer centres across the country The Consumer Product Safety Association gives approval to affix the SG-mark on a product when it conforms to the standard. When a defective product bearing this SG-mark causes an accident the consumer is entitled to compensation. In 1999 only 30 such cases occurred. Local government responsibilities: see article 3 of the Consumer Protection Fundamental Act: “Local governments have responsibility for planning policies paralleling those of the state as well as for planning and executing policies concerning the protection of consumers in accordance with the social and economic conditions of the area under jurisdiction”. Local Government 138 Local consumer centres: product testing, handling complaints. Co-ordinating bodies Government sponsored bodies Consultative organisations Consumer cooperatives Consumer associations Independent organisations Trade associations Ombudsmen Other LEGAL FRAMEWORK Consumer Contract Act 2001 Consumer Protection Fundamental Act Product Liability Act: Various measures are currently being promoted which include improving an alternative dispute resolution system, strengthening of the gathering and providing of information related to product accidents and improving product safety education Consumer Product Safety Law: responsible for ensuring there are adequate levels of safety for consumer products, regulates manufacturers and sales companies to prevent the distribution of hazardous products with the mandatory PSC-mark system. Four other specific product safety laws provide for the obligatory recall on the orders of the relevant ministers: • the Electrical Appliance and Material Safety Law. • Gas Utility Industry Law. • Law Concerning the Securing of Safety and Optimisation of Transaction of Liquefied Petroleum Gas. • Law for the Control of Household Products Containing Harmful Substances. Only two recalls have been ordered under the Consumer Products Safety Law. The Industrial Standardisation Law aims to improve the quality of mineral and industrial products. To achieve this aim Japan Industrial Standards (JIS) have been established. As of March 1999 approximately 190 consumer goods are covered by the JIS marking system. The Household Goods Quality Labelling Law: see under product safety Product Liability Act: see under product liability Consumer Product Safety Law: see under product safety Industrial Standardisation Law: see under product safety FAIR CONSUMER PRACTICES Duty to trade fairly The Consumer Contract Act 2001 seems to create a general obligation of businesses to act fairly when drafting consumer contracts. In particular, article 3 (Chapter I) of the Act provides that: “businesses drafting clauses of a consumer contract shall strive to make the rights and duties of consumers and such other things set forth in the consumer contract clear and plain to consumers and, in order to deepen consumer understanding when consumers are solicited to 139 enter consumer contracts, to provide necessary information on consumer rights and duties and such other things set forth in the consumer contract”. The Consumer Protection Fundamental Act imposes certain responsibilities upon businesses, which could be interpreted as meaning partially a general duty to trade fairly, but in fact the responsibilities described below seem to impose a duty of broader nature. See article 4: 4(1):“Businesses have responsibility for taking the necessary measures concerning the goods and services they provide, such as preventing danger, ensuring correct measures and weights, and giving proper indications. Businesses also have responsibility for being cooperative to the state and to local governments in the execution of their policies concerning the protection of consumers”. 4(2): “Businesses must always endeavour to improve the quality and other elements of the goods and services they provide, and to dispose properly and speedily of complaints that may arise from consumers”. The Consumer Contract Act 2001 provides for the avoidance of a declaration of intent from a consumer. This may be possible under the following conditions (see article 4 – Chapter II): • the consumer is solicited by the seller to enter into a contract; • the seller performs one of the prohibited acts: - misrepresentation; - false evaluations in respect of future prices, of amounts of money that consumer should receive in the future; - intentional failure to state disadvantageous facts; - failure of seller to leave a consumer’s place when requested by consumer to do so (door to door selling); - not allowing a consumer to leave a place where he is solicited to enter a consumer contract So, the consumer is not held liable for a contract that has been made under the conditions mentioned above. But, avoidance of a declaration of intent is possible only within certain time limits: • 6 months from the time ratification was possible. • in any case, five years after the conclusion of the contract. Misleading representations are prohibited by section 4 of the “Act against Unjustifiable Premiums and Misleading Representations”: In particular, section 4 states that: “No entrepreneur shall make such representation as provided for in any one of the following paragraphs in connection with transactions regarding a commodity or service which he supplies: (i) Any representation by which the quality, standard or any other matter relating to the substance of a commodity or service will be misunderstood by consumers in general to be much better than the actual one or than that of other entrepreneurs who are in competitive relationship with the entrepreneur concerned, and thereby which is found likely to induce customers unjustly and to impede fair competition; (ii) Any representation by which price or any other terms of transaction of a commodity or service will be misunderstood by consumers in general to be much more favorable to the consumer than the actual one or than those of other entrepreneurs who are in competitive relationship with the entrepreneur concerned, and thereby which is found likely to induce Protection against unfair practices 140 customers unjustly and to impede fair competition; or (iii) In addition to those stipulated in the preceding two paragraphs, any representation by which any matter relating to transactions as to a commodity or service is likely to be misunderstood by consumers in general and which is designated by the Fair Trade Commission as such, finding it likely to induce customers unjustly and to impede fair competition”. Exemption Clauses The Consumer Contract Act 2001 prohibits exemption clauses in consumer contracts. Exemption clauses may be: ■ clauses excluding, totally or partially, liability for non-performance; ■ clauses excluding, totally or partially, liability in tort arising from non-performance of a consumer contract; ■ clauses excluding liability for damages caused by a defective product. In particular, article 8 (Chapter III) provides that: “The following enumerated clauses are void. (1) Clauses which totally exclude a business from liability to compensate damages to a consumer arising by business’s non-performance. (2) Clauses which partially exclude a business from liability to compensate damages to a consumer arising by business's non-performance (such non-performance shall be limited to instances where the same arises by intent or gross negligence on the part of the business, the business's representative or employee). (3) Clauses which totally exclude a business from liability to compensate the damage to a consumer arising by a tort provided in the Civil Code committed on occasion of business's performance of a consumer contract. (4) Clauses which partially exclude a business from liability to compensate the damage to a consumer arising by a tort (such torts shall be limited to instances where the same arises by intent or gross negligence on the part of the business, the business's representative or employee) provided in the Civil Code committed on occasion of business's performance of a consumer contract. (5) When a consumer contract is a contract for value, and there exists a latent defect in the material subject of a consumer contract (in case where a consumer contract is a contract for work, a defect should exist in the subject of the work. Other exemption clauses prohibited: ■ clauses that stipulate the amount of the damages paid by the consumer in case of a rescission of contract (article 9 – Chapter III). ■ clauses that impair the interests of the consumers one-sidedly (article 10 – Chapter III): such clauses are “clauses which restrict the rights of consumer or expand the duties of consumers beyond restrictions and expansions that would otherwise apply by application of the provisions of the Civil Code, Commercial Code and such other acts not concerned with public order and which, at the same time, impair the interests of consumers one-sidedly against the fundamental principle provided in the second paragraph of article 1 of Civil Code”. Product Liability Act: came into force in July 1995. It is clearly based on the 1985 EC Directive. Aim: “to relieve the injured person by setting forth liability of the manufacturer, etc. for damages when the injury on a life, a body, or property is caused by a defect in the product, and PRODUCT LIABILITY (civil law) (producers’ liability) 141 thereby to contribute to the stabilization and improvement of the people's life and to the sound development of the national economy” (article 1). ♦Terminology: • Defect/ article 2(1): “lack of safety that the product ordinarily should provide, taking into account the nature of the product, the ordinarily foreseeable manner of use of the product, the time when the manufacturer, etc. delivered the product, and other circumstances concerning the product”. • Manufacturer/ articles 2(3)1-2-3: any person who manufactures, process, or imports a product or any person who puts his name/ trademark in such a product or any person who may be recognised as its manufacturer in the light of a manner concerning manufacture, process, importation or sales. ♦ Product Liability/ strict liability: Article 3 of the Product Liability Act: “The manufacturer, etc. shall be liable for damages caused by the injury, when he injured someone's life, body or property by the defect in his delivered product which he manufactured, processed, imported or put the representation of name, etc… However, the manufacturer, etc. is not liable when only the defective product itself is damaged”. ♦ Defences include the development risks defence. Various measures are currently being promoted which include improving an alternative dispute resolution system, strengthening of the gathering and providing of information related to product accidents and improving product safety education. Joint and Several Third party action Time limits • 3 years from the time when the victim becomes aware of the damage and the liable person for the damage [article 5(1) of the Product Liability Act] • In any event, when ten years have passed since the delivery of the product by the manufacturer [article 5(1)]. • The above ten year period is calculated from when the damage arises, where such damage is caused by the substances which are harmful to human health when they remain or accumulate in the body, or where the symptoms for such damage appear only after a certain latent period [article 5(2)]. Comparative Testing: NCAC and the Japan Consumers Association (JCA) conduct comparative tests on the quality and performance of products. PRODUCT QUALITY (civil law) (retailers’ liability) Retailers Services Guaranties PRODUCT SAFETY (criminal law and regulations) Regulations Product safety standards See article 7 of the Consumer Protection Fundamental Act: “To prevent goods and services from causing danger to life and to the property of the people in their consumer lives, the state shall establish necessary standards for the prevention of danger and take the necessary measures to maintain them”. See, equally, article 9: 9(1):“To contribute to the rationalization of consumer life, the state shall establish proper 142 standards concerning goods and services and take the necessary measures to popularize them. 9(2): “The establishment of standards referred to in the preceding paragraph shall be carried out in accordance with the progress of technology and with a rise in the standards of consumer life”. A mandatory quality labelling standards system, and a voluntary Japanese Agricultural Standards (JAS) system exist. As of March 2001 there were a total of 352 JAS standards. Industrial Standardisation Law: aims to improve the quality of mineral and industrial products. To achieve this aim Japan Industrial Standards (JIS) have been established. As of March 1999 approximately 190 consumer goods are covered by the JIS marking system. Household Goods Quality Labelling Law regulates the labelling of the quality of household goods. As of March 2001, 90 goods have been designated. Criminal sanctions MARKETING PRACTICES Advertising Prices Distance selling/ e-commerce Doorstep selling REDRESS Consumers’ awareness – advice & assistance Businesses, state and local organisations have the obligation to set in place proper procedures for dealing with consumer complaints: See article 15 of the Consumer Protection Fundamental Act which states that: (1) Businesses must endeavor to establish a necessary system for disposing properly and speedily of complaints that may arise from transactions between businesses and consumers. (2) Cities, towns, and villages (including the wards of Metropolitan Tokyo) must endeavor to use their good offices in the disposition of complaints that may arise from transactions between businesses and consumers. (3) The state and the local governments must endeavour to take the necessary measures to dispose properly and speedily of complaints that may arise from transactions between businesses and consumers. Redress in civil proceedings - small claims - class actions Alternative Dispute Resolution - Ombudsman schemes - Codes of practice See Consumers' awareness Wide use Guidelines describe the ideal corporate code of conduct as well as a desirable compliance system. Focus on consumer contract and safety. Most consumer complaints regarding goods and services are handled through negotiations between consumers and businesses. The NCAC and local government consumer information centres handled 684,369 complaints in 1999 - Mediation/ negotiation practices Redress in criminal proceedings Criminal sanctions 143 ENFORCEMENT Court remedies Public regulation Self regulation JFTC has powers of enforcement under the Consumer Protection Fundamental Act. Efforts underway to persuade businesses to create “Corporate Codes of Conduct”: These Codes would: • clarify and extend legal provisions; • refer to relations with consumers, contain provisions regarding implementation and should disclose information regarding consumer policies. INFORMATION/ EDUCATION/ ADVOCACY Article 12 of the Consumer Protection Fundamental Act states that: “So that consumers can live sound and self-reliant consumption lives, the state shall take the necessary measures to improve the quality of education concerning consumer life as well as to promote the edification of consumers by, for example, spreading knowledge and providing information concerning goods and services, and spreading knowledge concerning the life aspirations of individual consumers”. National Institute on Consumer Education: - established in February 1990 under the joint auspices of the Cabinet Office and the Ministry of Education (MOE). - Activities: research, conducting seminars and symposia, designing instructor manuals and teaching materials and establishing international and domestic information networks. School education: - symposiums for teachers practising consumer law. - supplementary reading materials for consumer education prepared for them. Consumer education included in the new Courses of Education to be implemented in 2002 at the elementary level and lower secondary level and 2003 at the upper secondary level. Local agencies: 455 consumer centres in Japan as of April 2001 that contribute to the implementation of consumer policy at the local level. Public bodies Businesses Media 144 CONSUMER CONFIDENCE Japanese consumers have very high expectations of product/service quality. * Japanese consumer policy is quite distinctive in that it emphasises the responsibilities of consumers to educate themselves adequately. See, for example, article 5 of the Consumer Protection Fundamental Act 1968 which states that: “Consumers must play positive roles in stabilizing and improving their consumption life by taking the initiative to acquire necessary knowledge concerning their consumer life and by endeavouring to act self-reliantly and rationally in accordance with the economic development of society”. However, in the last few years policy seems to have shifted from relying on ‘better consumers’ to increasing the amount of consumer legislation and enforcement. Even so, the Consumer Contract Act 2001, imposes an obligation on consumers to be well informed/ See article 3(2) (Chapter I) which provides that: “Consumers entering a consumer contract shall strive to actively use the information provided by businesses and to understand their rights and duties and such other things set forth in the consumer contract”. INTEGRATION WITH OTHER POLICIES Consumer protection and competition policies The Cabinet Office is responsible for coordinating consumer policy with others and has a specific aim to ensure consumer protection policies fit well within the program of regulatory reform being proposed by the government. CASE STUDIES Travel Agents/ Holiday law Plumbers Used cars Clothing Hotels 145 146