Monday, October 7, 2013

Consumer Protection Law: A Case for Consumer Awareness and the Powers of the Courts

Oman’s Consumer Protection Law promulgated by Royal Decree No. 81/2002 (with executive regulations issued by Ministerial Decision 49/07) (the “Law”) is intended to protect the principles of “freedom of choice, fair treatment, honesty and trustworthiness” which every supplier or advertiser should observe in their dealings with consumers.

The Law defines “Consumer” as every natural or corporate person who purchases a commodity or service or who is having benefit of any of them. The Law therefore does not specify that it is only the end consumer and not the intermediaries which will be considered ‘consumers’ pursuant to the Law. Potentially it is both the intermediaries as well as the consumers (or retail consumers) who fall within the ambit of the Law. We have also noted that the Public Authority for Consumer Protection (“PACP”) has in the past accepted cases with respect to end consumers as well as intermediaries.

Article 2 of the Executive Regulations lists the instances which shall be considered as breach of the above principles:

  1. Production, manufacture, display or distribution of toxic, adulterated or rotten commodities or those with expired validity, or practicing or trying to practice fraud, propaganda or deceit to use this commodity through advertisement, printed material, posters, leaflets or any other means.
  2. Deceiving or trying to misinform the consumer through whatsoever means as to the reality, nature, kind, source, ingredients, benefits or components of any commodity or service.
  3. Delivering a commodity or quantity or rendering a service to the consumer that differs from the one agreed upon.
  4. Failing to notify any of the safety risks that may arise from the use of a commodity or failure to notify the method of use or the necessary precautions.
  5. Failure to supply the commodity or render the agreed service on the maturity date or failure to finalize it on the date set for its completion.
  6. Using unsound or faulty balances, measures, hallmarks, stamps or testing equipment.
  7. Using inaccurate processes of weighing, measuring or inspecting the commodities.
  8. Granting or using fraudulent or forged quality certificates or misrepresenting that the commodity or service includes a quality certificate guaranteed by the relevant authorities.
  9. Failure to mention the conditions of sale and the method of using electrical and mechanical equipment.
  10. Advertising which misleads the consumer in respect of the ingredients of a commodity, the quantity of its useful elements, its type, source, quantity, manner of manufacturing, date of manufacture, results of its use or other data.
  11. Offering discounts in prices without obtaining prior approval or non-adherence to the dates of discounts.
  12. Organizing promotional schemes without obtaining a prior written approval or failure to adhere to the dates of promotional schemes or delaying the delivery of prizes to winners.

The Law provides that it is a consumer’s right to be provided with correct information about a product (which includes details about the price, production, expiry date, the country of manufacture, the uses and qualities, the main components of the product, the degree of effectiveness, instructions for use and after-sales service, assured health and safety, personal freedom of choice, right to obtain receipt for a product or service and the right to exchange or return if a product is defective). The above consumers’ rights are deemed to be duties incumbent upon the supplier.

The Law protects the consumer to the extent that if the conditions of purchase are unfair or attempt to relieve the supplier of its civil liability towards consumers, then such conditions can be declared null and void, even if such conditions appear in standard form contracts, documents or announcements.

Establishment and Role of PACP

PACP was created pursuant to Royal Decree No. 26/2011 which promulgates the establishment of an independent consumer protection authority to regulate the market. The PACP was established to:
  1. ensure that the principles of the Law are effectively implemented; and
  2. initiate action against traders, suppliers in breach of the law, and detect inflated pricing or the sale of items which are banned in Oman.
PACP’s key role is to act on consumer complaints, and to ensure businesses do not circumvent the Consumer Protection Law.

The Law provides that consumers may approach the PACP, and lay a complaint about any misuse/violation of the Law. The PACP operates a hotline to receive any complaints from consumers. Alternatively, consumers can visit the Authority’s website where they may post any complaints and suggestions. Once a complaint is lodged, the PACP will forward the complaint to the relevant authorities in order to conduct further investigations, before transferring the case to the appropriate Court of legal proceedings if considered necessary and appropriate in the circumstances.

Suppliers are also required to submit an application to the PACP if they propose to increase the prices of any commodity or services, and give reasons for the price increase. Failure to do is considered a violation of the Law.

Application of Commercial Agency Law

In addition to the rights of consumers under the Law, Royal Decree No. 26/77 promulgating the Law of Commercial Agencies, as amended (the “Agency Law”), also requires Omani agents to supply consumers with all the guarantees that are normally given by the original manufacturers or the suppliers of the products, the spare parts necessary for the repair and maintenance of vehicles, engines, machinery, electricity and electronic equipment, mechanical tools etc., which are distributed or sold by the agents and also the necessary workshop for repairing the supplied products.

Penalties, Judgments and Awareness Campaign

The Law sets out penalties for violating consumer rights. Article 21 of the Law imposes a fine not exceeding RO 5000 (Omani Rial Five Thousand) and the fine shall be doubled in case of recurrence of the contravention. The court may further order the closing of the shop and confiscation of the commodities which are the subject of the contravention. Further, the Omani Penal Code (Article 294) also imposes a penalty provision which clearly states that “anyone who cheats [in respect of] goods either in its nature or essence, his punishment will range from one month to one year of imprisonment, or a fine that ranges from 10 to 200 riyals.”

Consequently, due to numerous judicial rulings that Courts have recently issued for violators which ranged from cheating, price manipulating, dealing in objectionable materials and unauthorized copying, the PACP has increased awareness in the Sultanate by warning the companies and manufacturers to stay away from fraud and price manipulation. It has also stressed that companies must get rid of any items that might have adverse negative impact on consumers so as to avoid any danger to the health and safety of the people.

Further, as an awareness mechanism, the PACP has recently launched an outdoor and media campaign which warns consumers not to buy fake products and urges traders to safeguard consumer rights. The main objective of the campaign is to educate consumers of their rights. Suppliers and advertisers should familirise themselves with the Law, as we have noted of late that the PACP is actively enforcing the Law, and that criminal proceedings are being taken against senior management of the allegedly offending companies.