On September 13th, 2018, a significant modification to Law No. 19,496 Consumer Protection Act ("CPA") was enacted through its publication in the Official Gazette. This publication ends a process which lasted over four years.
This reform process commenced on June 2nd, 2014, when the Government filed a bill before the Congress which intended to modify the CPA, informally known as "Bill to strengthen the National Consumers Bureau ("SERNAC")" (hereinafter, the "Bill") since its main modifications introduced to the CPA are aimed to strengthen SERNAC's institutionality, granting it more abilities.
On October 25th, 2017, the Bill was approved by Congress. After this approval, on January of 2018, the Bill was significantly altered by the Constitutional Court, in order to ensure its constitutionality. In particular, the Court rejected the proposed sanctioning abilities of SERNAC.
Afterwards, and following an extensive administrative procedure involving the Executive Branch, the General Comptrollership of the Republic, and the Constitutional Court (process which lasted almost a year), the reform to the CPA (hereinafter the "Reform") was published in the Official Gazette on September 13th, 2018, thus officially becoming Law No. 21,081.
The Reform will enter into force progressively, depending on the provision and the region of the country in which it is implemented.
Hereunder is an outline on the Reform's principal guidelines and main changes to the CPA.
New abilities of SERNAC
The Reform significantly increases SERNAC's abilities regarding supervision, interpretation of the law, and regulatory propositional abilities:
Supervision: SERNAC has the ability to enter into facilities in which suppliers develop their activities in order to oversee the fulfillment of the law. This ability could be exercised with the assistance of the public force in case the supplier does not cooperate with the supervision process. Also, in this context, the authority has the ability to require any document, book or information necessary for the supervision process; and to subpoena the legal representatives, administrators, advisors and other dependents of the company regarding the facts subject to these proceedings. Interpreting: The National Director of SERNAC will be able, through the respective agency, to interpret regulation that protects consumers' rights. Regulatory propositional ability: The Reform grants SERNAC the ability of proposing, to the President, through the Ministry of Economy, the issuance, modification or elimination of legal or regulatory provision, in order to protect the rights of consumers. II. Increase and determination of fines
The Reform significantly increases the fines established in the CPA. Some of the most relevant modifications are:
Infringement Prior fine New fine General sanction Up to 50 UTM1 (USD 3,500 app.) Up to 300 UTM (USD 21,000 app.) Misleading advertisement Up to 750 UTM (USD 52,000 app.) and up to a 1,000 UTM (USD 70,000 app.) in case of affectation of health, safety or the environment Up to 1,500 UTM (USD 105,000 app.) and up to 2,250 UTM (USD 157,000 app) in case of affection of health, safety or the environment Suspension, stoppage or lack of provision of a contracted service Up to 150 UTM (USD 10,500 app.), and up to 300 UTM (USD 21,000 app.) for basic services Up to 750 UTM (USD 52,000 app.) and up to 1,500 UTM (USD 105,000 app.) for basic services (including telecommunications) Infringement to special requirements...