AMERICAS: PERU

NEW CONSUMER PROTECTION CODE IN PERU
Author: Teresa Tovar, Estudio Echecopar

After nearly a year of intense debate[1], that involved the participation of regulators, business associations, consumer associations and experts, on October 2nd, 2010, the Consumer Protection and Defense Code entered into force [2] (hereinafter, “the Consumer Code”), which contains rules regarding the information to be provided to consumers, advertising, warranties, health and safety, consumer contracts and abusive business practices, among others.

Some of the provisions contained in the Consumer Code that we consider of interest can be found herein:

1. ADVERTISING

The Consumer Code contains regulations regarding "Consumer Protection against advertising", even though currently in Peru there are special rules governing advertising, which are mainly contained in the Unfair Competition Act, approved by Legislative Decree No. 1044 on June 2008.

Nevertheless, it must be noted that provisions on advertising for minors and advertising that leads to antisocial acts were removed from the legal system during the approval of the Unfair Competition Act, since its application during the validity of the previous unfair competition law revealed the application of subjective parameters of analysis.

i) Advertising for minors

In accordance with the Consumer Code, advertising for minors must respect the following requirements:

• Should not lead minors to mistaken conclusions about the actual characteristics of the products advertised or the scope thereof,
• Should respect the naivety, credulity, inexperience and the feeling of loyalty of children.
• Should not produce feelings of inferiority on the child who does not consume the product offered.

ii) Advertising which leads to the commission of antisocial acts

The Consumer Code reaffirms the protection against incitement to illegal and discriminatory acts - already contained on the Unfair Competition Act -, and reinstates the protection against induction to antisocial acts, which we consider incorrect, whenever “antisocial act” turns out to be a very subjective concept. The problem of including this provision in the Consumer Code is to endorse competent authorities to punish bad taste or to become censors, objectives whose pursuit is not up to this regulation.

2. SALES PROMOTIONS

According to the Consumer Code, each ad of sales promotions must consign the indication of its duration and minimum quantity of units available of the products[3]. Otherwise, the supplier would be obliged to provide consumers the products or services in the conditions indicated in the ads. In case sales promotions have conditions or restrictions, sellers may use an alternative information source (web sites or call centers), which must be free and easily accessible[4].

3. TELEMARKETING AND AGGRESSIVE SALES

Since September 2009, a Register has been implemented in our country in which consumers can inscribe their telephone numbers and electronic mails, in order to avoid being contacted by sellers that market their products using call centers, telemarketing and massive text messages and e-mails. The Consumer Code prohibits the use of those commercial practices with consumers included in the Register, considering it constitutes an aggressive business method which allows consumers to return the product within seven days, free of any charge[5].

It also constitutes an aggressive practice which gives the consumer the right to return the product, when a seller creates the impression that he has already won or will get a prize or other similar benefit, if he accepts the seller’s proposal. For example, sellers are not allowed to call consumers telling them they have won a prize in order to make them go to their store to get it, where the seller will coerce them to buy a product or hire a service.

4. PRODUCT LABELING

Organic food, genetically modified food and food containing trans fats must explicitly state this in the labeling As well, in the case of food containing trans fats, it should also indicate the percentage[6].

In our opinion, it was not necessary to include regulations on advertising in the Consumer Code, since has caused the duplicity of many dispositions. For example, in case an advertiser includes in its ads misleading information, such conduct would be an infringement of article 13 of the Consumer Code, but also an infringement of Article 8 of the Unfair Competition Act.

In this case, there is doubt regarding which fines should be applied: the ones contained in the Unfair Competition Act or the ones contained in the Consumer Code. This matter is relevant, since the fine’s regimen of both laws is different. Thus, while the Consumer Code establishes penalties up to US$ 643,000 approximately, the Unfair Competition Act establishes penalties up to US$ 900,000.00 approximately.

We hopefully expect that these problems will be solved with the regulations of the Consumer Code that are still pending.