Law Reform Commission Review of Aspects of

Law Reform Commission Review of Aspects of Consumer Laws Presentation of Findings and Recommendations Pierre Rosario DOMINGUE Chief Executive Officer 12 January 2011 1

(A) Background and Scope of Review Request from MINISTRY to review aspects of consumer laws • Consumer Protection Act [1991] • Consumer Protection (Price and Supplies Control) Act [1998] • Essential Commodities Act [1991] • Fair Trading Act [1979] • Hire Purchase and Credit Sale Act [1964] • Prices and Consumer Protection Advisory Committee Act [1983] And the subsidiary legislation made under those Acts as well as regulations made under the repealed Supplies Control Act No. 20 of 1974 2

(B) Methodology (1) (a) Benchmarking of current law with best international practices (+) International Standards (+) Laws and Practices in various jurisdictions International Trends and Strategies evolved for fair markets and for enhancing consumer confidence [Consumer Empowerment] [Government intervention to correct market failures and to redress inequalities of information and power in the context of a dynamic market environment characterized by trade liberalization and globalization, increased reliance on technology and a faster pace of innovation] 3

(B) Methodology (2) (+) International Standards =UN Guidelines for Consumer Protection (1985, amended in 1999) *Framework for Governments to use in elaborating consumer protection policies and legislation *Recognition of the following consumer rights: (a) Right to Satisfaction of Basic Needs, (b) Right to Safety, (c) Right to Choice, (d) Right to Information, (e) Right to Consumer Education, (f) Right to Redress, (g) Right to Representation, and (h) Right to a Healthy Environment. 4

(B) Methodology (3) = UNCTAD’s Work = EU law (Consumer Directives) = Standards laid down by other regional organizations [such as Council of Europe, CARICOM, Inter. American System] = Standards laid down by OECD Committee on Consumer Policy [eg OECD Recommendation on Consumer Dispute Resolution & Redress (2007)] = NGOs: Consumers International [Model Law for Africa: Protecting the African Consumer (1996)] 5

(B) Methodology (4) (+) Laws and Practices in various jurisdictions [Examination of Current legislation, Government policy documents, as well as Government/NGO proposals for reform and reflections of law reform agencies, whilst bearing the economic, social and environmental circumstances of those countries and the needs of their population] • India [Consumer Protection Act 1986 (amended in • • 2002)] Malaysia [Consumer Protection Act 1999] Singapore [Consumer Protection (Fair Trading) Act 2004] 6

(B) Methodology (5) • Australia [Australian Consumer Law (cif 1 January 2011)] • New Zealand [Consumer Guarantees Act 1993] • UK & Jersey [Consumer Safety (Jersey) Law 2006, • • • Distance Selling (Jersey) Law 2007, and Supply of Goods and Services (Jersey) Law 2009] EIRE [Consumer Protection Act 2007] France [Code de la Consommation] Barbados [Consumer Protection Act 2003 and Consumer Guarantees Act 2003] 7

(B) Methodology (6) • South Africa [Consumer Protection Act 2008] • Jamaica [Consumer Protection Act 2005] • Other Jurisdictions [Canada, US, Trinidad & Tobago, Argentinean and Brazilian Consumer Protection, Denmark Consumer Protection legislation, Latvia Consumer Rights Act 2001, Sarajevo Consumer Protection Act 2001] 8

(B) Methodology (7) (b) Consultations with Stakeholders/Empirical Studies • Administrative Cadre & Officers of Consumer Protection • • Unit NGOs: ICP (Institute for Consumer Protection) & ACIM (Association des Consommateurs de l’ile Maurice) Field Assessment of Consumer Awareness and Experience of Consumer Legislation 9

(C) Findings: Some of the Lacunas in the Current Framework (1) (a) Safety Standards are laid down only in respect of goods [Consumer Protection Act and Reg (toys, laser pointers, plastic and polyethylene pipes and fittings], not in respect of services -Protection afforded is far from being comprehensive: need for enactment of safety standards in respect of a wider range of goods 10

(C) Findings: Some of the Lacunas in the Current Framework(2) Regulations badly drafted [eg First Schedule to Laser Pointers (Safety) Regulations 2007, which was meant to contain the essential safety requirements had not been enacted] 11

(C) Findings: Some of the Lacunas in the Current Framework (3) (b) The manner in which the Consumer Protection (Price and Supplies Control) Act [aimed at providing protection to the consumer against abusive trade practices, by regulating trade, supply and price of goods] and the regulations made there under, is administered give rise to constitutional problems 12

(C) Findings: Some of the Lacunas in the Current Framework (4) (Responsibility for administration/enforcement of Act to two different Ministers/Ministries unconstitutional) (Fixing of price of goods in Rodrigues is the responsibility of RRA, not that of the Minister) (Regulations made ultra vires the Act: eg Consumer Protection (Maximum Recommended Retail Price) (Code of Practice) Reg 2008] 13

(C) Findings: Some of the Lacunas in the Current Framework (5) (c) The provisions as to consumer guarantees in respect of the supply of goods and services, as to unfair business practices, are insufficient. (Existing provisions in Fair Trading Act need to be complemented by more elaborate provisions; consumer guarantees to be expressly laid down in our law) (Sections 3 and 10 of Fair Trading Act in breach of section 68 of the Constitution) (Many of the Regulations made under Fair Trading Act drafted in a very unsatisfactory manner) 14

(C) Findings: Some of the Lacunas in the Current Framework (6) (d) There is no provision as to unfair contract terms in consumer agreements. 15

(C) Findings: Some of the Lacunas in the Current Framework (7) (e) Distance selling, doorstep selling and unsolicited consumer transactions are not regulated. 16

(C) Findings: Some of the Lacunas in the Current Framework (8) (f) The enforcement framework relating to consumer transactions and agreements needs to be strengthened; need to develop a mechanism for consensual resolution of disputes 17

(D) Recommendations for Reform of the Law (1) The overall objectives of the New Consumer Regime should be to promote and advance the social and economic welfare of consumers by establishing a legal framework for the achievement and maintenance of a consumer market that is accessible, fair, efficient, responsible and sustainable for the benefit of consumers generally, and which provides adequate safeguards to vulnerable consumers. 18

(D) Recommendations for Reform of the Law (2) The consumer law should protect both natural persons and legal entities when goods and services are supplied to them, as well as (a) any user of such goods, or (b) any beneficiary of such services. However, goods acquired or the services availed of must not have been for a commercial purpose. 19

(D) Recommendations for Reform of the Law (3) (a) Provision should be made for consumer rights, including the freedom of consumers to associate and form groups to advocate and promote their common interests • Right to be protected against products, production • • processes and services, which are hazardous to health or life; Right of access to basic goods and services; Right to true, sufficient, clear and timely information concerning goods and services; 20

(D) Recommendations for Reform of the Law (4) • Right to choose and to return unsafe or defective goods; • Right to fair, nondiscriminatory treatment by suppliers of • • goods and services; Right to prompt, timely and adequate compensation for any damages caused by the supply of goods and services; Right to be heard and to make complaints to the appropriate authority for redress against unfair practices; Right to associate and join or form consumer unions and associations; Right to consumer education. 21

(D) Recommendations for Reform of the Law (5) (Prohibition of Retaliatory measures against a consumer who exercises his rights) (When a consumer’s rights have been infringed, impaired or threatened, or that prohibited conduct has occurred or is occurring, not only the consumer may seek redress but also any of the following persons: • an authorized person acting on behalf of another person who cannot • act in his own name; a person acting as a member of, or in the interest of, a group or class of affected persons; an association acting in the interest of its members; or • • a person acting in the public interest, with leave of the Court. ) 22

(D) Recommendations for Reform of the Law (6) (b) Responsibilities of the State towards consumers to be spelled out = To disseminate consumer education and information in conjunction with consumer associations and appropriate NGOs. = To provide or facilitate the provision of requisite financial and logistical support for the operation of consumer groups and associations. 23

(D) Recommendations for Reform of the Law (7) (c) The consumer regime should provide for “information standards” to be complied with by any supplier Requirement for very supplier to provide consumers with true, sufficient, clear and timely information on goods and services offered to enable consumers to make proper and reasonable choices 24

(D) Recommendations for Reform of the Law (8) (d) The consumer regime should provide for guarantees to consumers in respect of the supply of goods and services = In respect of Supply of Goods * An implied guarantee as to title * An implied guarantee as to acceptable quality * An implied guarantee as to fitness for a particular purpose, where the consumer makes known, expressly or by implication, to the supplier the purpose for which the goods are being acquired 25

(D) Recommendations for Reform of the Law (9) * An implied guarantee that goods comply with description when they are supplied by description to a consumer * An implied guarantee that goods comply with sample when they are supplied to a consumer by reference to a sample or demonstration model * An implied guarantee as to price: that the consumer shall not be liable to pay to the supplier more than the reasonable price of the goods *An implied guarantee as to Repairs and Spare Parts (that the manufacturer and the supplier will take reasonable action to ensure that facilities for the repair of the goods and the supply of spare parts for the goods are reasonably available for a reasonable period after the goods are so supplied, unless the consumer has otherwise been 26 notified)

(D) Recommendations for Reform of the Law (10) Need for provisions as to availability of redress against suppliers and manufacturers where goods fail to comply with the guarantees (including the right to reject the goods) 27

(D) Recommendations for Reform of the Law (11) = In respect of Supply of Services * An implied guarantee that the services will be carried out with reasonable care and skill; *An implied guarantee as to fitness for any particular purpose where the consumer makes known to the supplier, before or at the time of the making of the contract for the supply of the services, the particular purpose for which the services are required or the result that the consumer desires to achieve; *An implied guarantee as to completion within a reasonable time; 28

(D) Recommendations for Reform of the Law (12) * An implied guarantee as to price: that the consumer shall not be liable to pay to the supplier more than the reasonable price for the services. Need for provision as to availability of redress against suppliers where services or product resulting from the services fail to comply with any of the implied guarantees 29

(D) Recommendations for Reform of the Law (13) (e) Provision for Safety standards that have to be complied with when goods and services are supplied (Power conferred to Minister to prescribe safety standards in respect of any goods or class of goods, any services or class of services) (Courts empowered to grant ancillary relief to any person who has suffered loss or damage as a result of a breach of safety standards) (Provision for liability in respect of defective products supplied to consumers) 30

(D) Recommendations for Reform of the Law (14) (f) The consumer regime must make provision for unfair contract terms in consumer agreements (Contractual terms or conditions which are unfair, unreasonable or unjust, to the consumers should be null and void) (Courts to be vested with sufficient powers for them to ensure fair and just conduct, terms and conditions, in respect of consumer transactions) 31

(D) Recommendations for Reform of the Law (15) (g) The consumer regime should prohibit in a comprehensive manner unfair commercial/business practices (A commercial practice should be regarded as unfair when (1) it is contrary to the general principle of good faith in the trader’s field of activity and/or the standard of skill and care that the trader may reasonably be expected to exercise in respect of consumers; and (2) it would be likely to cause appreciable impairment of the average consumer’s ability to make an informed choice in relation to the product concerned, and cause the average consumer to make a transactional decision that the average consumer would not otherwise make) 32

(D) Recommendations for Reform of the Law (16) =Misleading commercial practices, as well as misleading marketing or advertisement, should be prohibited [Eg omission or concealment of material information, provision of false information or information likely to deceive the average consumer] = Aggressive commercial practices, such as harassment, coercion or undue influence which would likely cause significant impairment of the average consumer’s freedom of choice or conduct and cause the average consumer to make a transactional decision that the average consumer would not otherwise make, should also be prohibited 33

(D) Recommendations for Reform of the Law (17) =Other unfair practices, such as referral selling, pyramid promotional schemes, bait advertising, would also have to be prohibited. = Protection should be afforded to recipients of unsolicited goods or of invoices in respect of unordered goods or services. = Agreements with persons lacking legal capacity would be treated as void or voidable =Discriminatory business practices to be prohibited 34

(D) Recommendations for Reform of the Law (18) (h) Distance selling (and doorstep) selling needs to be regulated (Distance selling regulations would inter alia contain provisions • regulating the advertising and marketing (including advertising and marketing by mail-order or doorstep selling) of business that is to be conducted by way of distance contracts; • with respect to the information that must be supplied to persons to whom distance contracts are offered; • with respect to the transparency, clarity and fairness of distance contracts; • requiring information to be given to any such person as may be determined by or under the regulations for the purpose of enabling that person to exercise any function conferred on him by the regulations; • for the resolution of disputes and differences between parties to distance contracts, including resolution of such disputes and differences otherwise 35 than by a court. )

(D) Recommendations for Reform of the Law (19) (i) Provision should be made in respect of consumer credit for responsible lending conduct (No dealer, under the Hire Purchase and Credit Sale Act, should enter into a credit contract with a consumer unless he has ascertained the credit contract will meet the consumer’s requirements and that the consumer has the capacity to fulfill his obligations under the contract) 36

(D) Recommendations for Reform of the Law (20) (j) Establishment of a National Consumer Council, which would encourage consumer participation in decision-making processes concerning the marketplace and the interests of consumers (Composed of representatives of Government, consumer organizations or groups and NGOs, and business; Its functions would include: advising the Minister on research to be conducted on consumer issues, formulating Policy and legislative proposals in the interest of consumers, and advising the Minister on consumer education programs and activities. ) 37

(D) Recommendations for Reform of the Law (21) (k) Provision for an effective enforcement framework: The Consumer Protection Unit to be given the necessary powers to enable it to perform its functions effectively and efficiently (Power to obtain information, search premises, and seize incriminating materials) (Power to accept and enforce undertakings) (Power to seek an injunction to restrain a person from engaging in conduct that constitutes or would constitute a breach of consumer law) (Protection from civil and criminal liability for actions taken in good faith in performance of functions) 38

(D) Recommendations for Reform of the Law (22) (l) Provision for an accessible, effective, efficient system of redress for consumers (Courts empowered to award compensation, where appropriate, and to issue any appropriate order) (Alternative dispute resolution mechanisms, as well as forms of “collective actions”, by or on behalf of consumers, should be available as redress mechanisms for consumer grievances) 39

(E) The Way Forward: LRC’s Views Formulation of a Consumer Protection Policy Provision for a New Consumer Regime (Drafting Instructions) Role of Ministry to be reassessed: Need for research on consumer issues (Surveys) so as to effectively combat consumer detriment Operational Capability enhanced: the knowledge and skills of Administrative Cadre at the Ministry and of Officers of Consumer Protection Unit should be enhanced by training locally and overseas 40