Issues related to competition laws

LEGISLATIVE DECREE No. 716 – CONSUMER PROTECTION LAW

　

Legislative Decree dated on November 7, 1991 (issued on November 09, 1991). Amended by Decree Law No. 25868 issued on November 24, 1992, Decree Law No. 26506 issued on July 20, 1995 and Legislative Decree No. 807 issued on April 18, 1996.

　

THE PRESIDENT OF THE REPUBLIC

WHEREAS:

The Congress of the Republic, in accordance with the Article 188o of the Peruvian Constitution, through Law No. 25327, has delegated law-making to the Executive Power in order to protect consumers' rights.

With the Cabinet's voting being in favor;

Has issued the following Legislative Decree:

　

　

TITLE I

GENERAL PROVISIONS

Scope

Article 1°.- This Law is applicable to all individuals and companies, whether public or private, engaged in goods production and commercialization or service delivery, at establishments open to the public or in a customary manner, in the national territory.

　

Constitutional framework of the consumer protection

Article 2°.- The consumer protection is given within the framework of a social market economy established by the Article 58° of the Peruvian Constitution.

　

Definitions

Article 3°.- For the purposes of this Law, the following definitions apply:

Consumers or users.- companies or individuals that purchase, use or benefit from products or services as final recipients.

Suppliers.- companies or individuals that manufacture, produce, handle, condition, mix, pack, store, prepare, sell or supply products or services to consumers. Suppliers include, but not are limited to:

b.1 Distributors or traders.- companies or individuals that customarily sell or supply in a manner other than wholesale, retail, products intended for end consumers, even when these activities are not performed at establishments open to the public.

b.2 Producers or manufacturers.- companies or individuals that produce, extract, industrialize or transform intermediate or final products for supply to consumers.

b.3 Importers.- companies or individuals that customarily import products to be sold or supplied in a different manner within the national territory.

b.4 Service providers.- companies and individuals that usually provide consumers with services.

Product.- any movables or immovables, whether tangible or intangible, whether produced or not in the country, being the object of a business transaction with a consumer.

Service.- any activities of service delivery in the market in exchange of a payment, including those in the banking, financial, credit, safety and professional service sectors. Services provided under conditions of dependence are excluded (Amended by the Article 18o of Legislative Decree 807)

　

Consumer Associations

Article 4°.- The consumer associations are organizations created pursuant to the provisions established for this purpose by the Civil Code.

Its purpose is to protect the consumers. The consumer associations represent only their members and persons that give them the power to act on their behalf; and can file an action or claim before the competent authorities on behalf of both.

　

　

　

TITLE II

CONSUMERS' RIGHTS

　

Consumers' Rights

Article 5°.- In terms of this Legislative Decree, the consumers have the right to:

be effectively protected from products and services that, under normal or foreseeable conditions, pose a risk to health or safety;

receive from the suppliers all information required to make an appropriately informed decision or choice when purchasing products or services, as well as to make an adequate use or consumption thereof;

have access to a range of products or services, qualitatively competitive, so that they can freely choose those desired by them;

protect their economic interests through an equal and fair treatment in all the business transactions; and be protected against business practices being coercive or implying disinformation or misinformation about products or services;

be compensated for damages and losses arising from the purchase of goods and services offered in the market or from the use or consumption thereof;

be individually or collectively listened in order to defend their interests through public or private consumer defense organizations by using the means as permitted by the law.

　

TITLE III

SUPPLIERS' OBLIGATIONS

　

Issuance of invoice to the consumer

Article 6°.- An inexcusable and unavoidable obligation is for the product or service provider to issue an invoice to the consumer in all transactions that take place.

　

Safety, quality and labelling standards

Article 7°.- The suppliers are obliged to comply with product or service standards on safety, quality and labelling, accordingly.

　

Announced prices and VAT

Article 7°.- It is the suppliers' obligation to indicate on their price lists and on their signboards, labels or containers, or other items on which the price of products or services being offered appear, the total price thereof, inclusive the corresponding value-added tax.

When credit sales are dealt with, the information specified in paragraphs b), c), d) and e) of the Article 24° herein shall be also included.

The consumers will not be obliged to pay, apart from the fixed price, any extra amounts or charges (Added by the Article 2° of Law 26506).

　

Suppliers' liability

Article 8°.- The suppliers are liable for the fitness and quality of products and services, the authenticity of trademarks and information displayed on products, the truthfulness of product advertising, and the contents and useful life of products indicated on containers, accordingly.

　

Products or services hazardous to consumers' health and safety

Article 9°.- The products or services made available to the consumers shall not pose an unjustified or unnoticed risk to health or safety of the consumers or their property.

When, by the nature of products or services, the risk is foreseeable, the consumer shall be warned of such risk as well as the correct utilization thereof.

　

Detection of hazards in products or services put on the market

Article 10°. When products or services are put on the market and unforeseen hazards are detected later on, the supplier is obliged to take reasonable measures to eliminate or minimize such hazards, such as notifying the competent authorities of this situation, recalling products or services, replacement or repair, and warning timely consumers of these hazards.

　

Supply of parts and accessories. Servicing

Article 11°.- In the case of production, manufacture, assembly, import, distribution or trading of goods that do not imply a timely supply of parts and accessories or servicing or that imply a restricted supply or servicing, the supplier shall inform clearly and unmistakably the consumers about such conditions. If they do not provide this information, they will be liable for the timely supply of parts and accessories, servicing of goods they produce, manufacture, assemble, import or distribute, for the period of time they are commercialized in the domestic market by them and, later on, for a reasonable period of time based on the product durability. (Amended by the Article 18° of Legislative Decree 807).

　

Speed in the service delivery. Use of components or spare parts

Article 12°.- The servicing provider will be obliged to provide the service speedily and, unless otherwise specified by the consumer in writing, to use new components and spare parts fit for the involved products.

　

Automatic charge on debit account systems. The consumer's silence

Article 13°.- Offering the consumer, in any form or by any means, goods or services that have not been previously demanded and that imply an automatic charge on any debit account system or interpret the consumer's silence as an acceptance thereof, is prohibited. If the offer is sent together with a product, even when it is indicated that such product can be returned at no cost by the recipient, the recipient will not be obliged to remain with it or return it to the sender (Amended by the Article 18° of Legislative Decree 807).

　

Claims on public utility delivery

Article 14°.- The public utility companies shall not make the handling of claims made by consumers or user conditional on the prior payment for the invoiced service.

　

　

TITLE IV

INFORMATION ON THE OFFERED PRODUCTS OR SERVICES

　

Information on the offered products or services

Article 15°.- The supplier will be obliged to provide the consumer or user with sufficient, true, appropriate and very accessible information on the offered products or services. When food products or medicaments are dealt with, this information shall also include product ingredients and components.

All information or presentation misleading the consumer about the nature, origin, production process, components, uses, volume, weight, measures, prices, ways of use, features, properties, fitness, quantity, quality of the offered products or services or any other data thereon is prohibited.

　

Information in Spanish

Article 16°.- All information on products of domestic manufacture given to the consumers shall be readily understood, written in Spanish and conforming to legal measurement unit system. In the case of products of foreign manufacture, the information on warranties, warnings or foreseeable risks as well measures to be taken in case of damages shall be written in Spanish (Amended by the Article 18° of Legislative Decree 807).

　

Exhibition of product and service prices

Article 17°.- Establishments shall exhibit, in showcases in a prominent place, the prices of the products displayed therein. Likewise, establishments where products or services are offered to the consumers shall have a price list available. Prices of all offered products or services shall appear on such list, which shall be made available to any consumers on request.

　

Price lists at food and drink service establishments

Article 18°.- Food and drink service establishments shall exhibit their price lists on the outside.

　

Commercialization of defective, used or rebuilt products

Article 19°.- When defective, used or reworked products are offered to the public, consumers shall be clearly informed of this condition, which shall be indicated on the proper products, labels, wrappings or packings, and the corresponding invoices.

　

Product or service advertising

Article 20°.- The offer, promotion and advertising of products or services shall keep in line with their nature, features, conditions, intended use or purpose, without prejudice of the provisions for advertising. The contents, features and functions of each product and the terms and warranties offered give rise to the suppliers' obligations that will be demandable by consumers or users, even when they do not appear in the contract made or in the receipt or document issued.

　

Credit-card payment

Article 21°.- The price to be paid with credit card shall be the cash price. The supplier shall inform, previously and explicitly, the existence of extra charges. All offer, promotion, discount or allowance related to cash payment will be also demandable by consumers that make credit-card payments, unless otherwise explicitly specified in advertising or relevant information. (Amended by the Article 18° of Legislative Decree 807).

　

Advertising for offers, discount prices and promotions

Article 22°.- Advertising for offers, discount prices and promotions shall indicate the duration thereof and the number of units to be offered. On the contrary, the supplier will be obliged to provide the consumers requesting them with the offered products or services under the specified conditions (Amended by the Article 18° of Legislative Decree 807).

　

Promotional Activities

Article 23°.- Raffles, draws, contests, exchanges of containers for gifts or other similar systems organized by the supplier for promotional purposes shall be previously authorized pursuant to the applicable legislation.

　

　
TITLE V

CONSUMER CREDIT

　

Information on credit transactions

Article 24°.- In all transactions in which the consumer is given credit, the supplier shall previously inform the following:

the cash price of the product or service;

the initial installment;

the total amount of interest and the effective annual interest rate;

the amount and detail of extra charges, if any;

the number of installments, their periodicity and the date of payment;

the total amount to be paid for the product or service, which shall not exceed the cash price plus interests and administrative costs;

the consumer has the right to pay in advance the outstanding amount, with a subsequent interest reduction, and the charges and costs to be paid by the consumer for this operation (Amended by the Article 18° of Legislative Decree 807).

(Derogated by the Article 20° of Legislative Decree 807).

When a banking or financing organization gives the consumer a credit, it shall previously inform about the paragraphs b), c), d), e) and g) above. (Last paragraph added by the Article 19° of Legislative Decree 807).

　

Documentation on credit transactions

Article 25°.- The transactions referred to in the Article 24° shall be recorded on documents, a copy of which, duly signed by the supplier or an authorized person, shall be handed out to the consumer. All information as specified in the Article 24° and the date when the product or service will be delivered, shall be indicated in such documents.

　

Interest on installment or deferred payment buying-selling

Article 26°.- For contracts of installment sale or deferred payment service delivery, interest shall be calculated on the basis of cash price minus initial installment paid. Interest shall be calculated exclusively on the unpaid balance of the credit given and the payment thereof shall not be required in advance. Only the interest payment due shall be required.

Article 27°.- (Derogated by the Article 20° of Legislative Decree 807).

　

CONASEV permission for commercialization systems

Article 28°.- The commercialization systems that consist in grouping of consumers that make money contributions to a common found administered by a third party with the purpose of purchasing given products or services, shall be only implemented after authorization of the National Companies and Securities Supervisory Commission (CONASEV), in conformity with the applicable norms.

　

　

TITLE VI

LIABILITY BEFORE CONSUMERS

　

Overpayments made by the consumer

Article 29°.- Overpayments shall be refunded to the consumer. They will bear, until return, the maximum compensatory and penal interest as agreed, or in its absence, the legal interest. The return of overpaid amounts shall be claimed within one year from the date of the payment. After this period of time, such right will expire.

　

Product replacement or refund of overpaid amounts

Article 30°.- The consumers will have the right of product replacement or refund of overpaid amount when:

after considering the permissible tolerances, the net content of a product is less than the one that would be or less than that indicated on the container or packing; and

the consumer notes that a measuring device used for measurement is operating, or has been handled, to the detriment of his interests, out of the permissible tolerances established by the competent authority for this type of devices.

Claims in this respect shall be made before the supplier within ten (10) working days from the date when deficiencies in the measurement or failures of the measuring device used for it were noted.

The supplier will be late in the payment for claims if the claim is not handled within fifteen (15) working days.

　

Free repair, product replacement or refund of paid amount

Article 31°.- The consumers will have the right of free repair of the product and, if not possible, its replacement; or if not feasible, the refund of the paid amount in the following cases:

when products with a quality certificate are not conforming to the relevant specifications;

when materials, components, substances or ingredients of which the product is made are not as specified;

when grade of metals of which jewelry articles are made is lower than that indicated thereon;

when, in a product purchased under given warranty conditions, deficiencies in a guaranteed function or feature become evident within the period of warranty life;

when a product, because of deficiencies in manufacture, processing, structure, quality or sanitation, is not fit for intended use; and

when a product or service does not keep in line with the terms of the offer, promotion or advertising.

　

Defective products

Article 32°.- The supplier is liable for damages to the personal safety of consumers or to their property due to defects in its products.

A product is deemed as defective when it poses a risk to people's safety, being considered all the circumstances such as:

the product design;

the way the product has been put on the market, including appearance, trademark, advertising related to such product, the use of instructions or warning;

the intended use of the product;

materials, contents and condition of the product.

Compensation covers all damages caused by defects, including lost profits, personal injuries and moral prejudice.

Liability of diverse suppliers of one defective product, according to this Article, is a joint and several liability. Without prejudice of this, each supplier has the right to bring an action against the one that supplied him with the defective product or caused the defect.

　

Basis for calculation of the amount to be refunded

Article 33°.- If the supplier is obliged to refund the amount paid by the consumer, the product price at the time of return thereof shall be taken as a basis. If the product or service price is lower than that at the time of return, the amount originally paid by the consumer plus the legal or conventional interest shall be refunded.

　

Repair of defective products

Article 34°.- When a repaired product presents defects related to servicing and they are attributable to the servicing provider, the consumer will have the right to demand a new repair at no extra charge within thirty (30) days from the product receiving.

　

Compensation for deficiencies in repair, cleaning, maintenance services

Article 35°.- When, due to deficiencies in servicing performed by the service provider, the product being the object of repair, cleaning , maintenance or other similar service is either lost or impaired, damaged or modified in a manner that decreases its value, makes it completely or partly unfit for its intended use, or makes it hazardous, the service provider shall compensate the consumer for damages caused.

　

Compensation for negligence in the service provided

Article 36°.- The noncompliance with the obligation referred to in Article 13° herein will give rise to a compensation for damage or loss and the service provider's obligation to replace the involved components or spare parts at no extra charge.

　

The supplier's liability for products or services authorized by a governmental organization

Article 37°.- The authorization by governmental organizations to product manufacture or service delivery when necessary, will not exonerate the supplier from liability before the consumer.

　

Alternative means of resolving conflicts

Article 38°.- The Commission on Consumer Protection will establish, directly or through agreements with public or private organizations, alternative means of resolving discrepancies, such as arbitration, mediation, conciliation or combined mechanisms, that allow, through simple and quick procedures, to handle consumers' and users' complaints and claims and to issue final decisions binding on parties, without prejudice of the administrative jurisdictions.

The noncompliance of agreements, arbitration awards or decisions in favor of consumers' rights will be a violation of this Legislative Decree.

The Commission will be entitled to sanction parties failing to comply with agreements, arbitration awards or decisions that put an end to discrepancies between suppliers and consumers as follows:

when the supplier fails to comply with an agreement:

a fine up to three times the unpaid compensation shall be imposed on the party failing to comply. In case that the noncompliance does not imply an unpaid amount of money, a fine up to two (02) UITs per each five (05) working days of noncompliance shall be imposed until the party fully complies with the agreement.

when the supplier fails to comply with a arbitration award or any other decisions:

a fine up to three times the unpaid compensation as stipulated by the arbitration award or decision shall be imposed on the party failing to comply. In case that the noncompliance does not imply an unpaid amount of money, a fine up to two (02) UITs per each five (05) working days of noncompliance shall be imposed until the party fully complies with the agreement.

In all above cases of noncompliance, the Commission will be empowered to continue with the procedure and issue a decision within its jurisdiction, whether the consumer chooses or not to demand the compliance through a legal proceeding (Amended by the Article 18° of Legislative Decree 807).

　

　

TITLE VII

VIOLATIONS AND SANCTIONS

　

Administrative sanction

Article 39°.- Violators of the provisions herein will be administratively sanctioned, without prejudice of civil or criminal actions that might be admissible.

　

Proceeding

Article 40°.- Administrative proceeding is opened by decision of the Commission on Consumer Protection or its Technical Secretariat, on its own initiative or acting upon a petition of the aggrieved consumer, and is governed by the provisions herein and those in the Unique Procedure of the Commissions on Consumer Protection and on Unfair Competition Repression (Amended by the Article 18° Legislative Decree 807).

　

Types de administrative sanctions

Article 41°.- The sanctions to be imposed on violators as a result of an administrative proceeding are:

Admonition

A fine up to a hundred (100) UITs (Amended by the Article 18° of Legislative Decree 807)

Seizure and auction of goods

Destruction of goods, wrappings and/or labels

Temporary closing of the establishment or store up to a maximum of sixty (60) days

Definitive closing of the establishment or store. This sanction will be applied only when sanction specified in c) above has been imposed on the supplier three times.

(last paragraph derogated by the Article 2° of Legislative Decree 807).

　

Grading of sanctions

Article 42°.- The application and grading of sanctions will be determined by the INDECOPI Commission on Consumer Protection according to Article 41°, considering the violator's intent, damages arising from the violation, the benefits obtained from the violation by the supplier and recidivism and repetition of violation by the supplier (Amended by Decree Law 25868).

　

Unjustified refusal to provide information in an administrative proceeding

Article 43°.- The unjustified refusal to provide, in an administrative proceeding filed in accordance with this Law, data and documents, to sign records or notices and fulfill other duties arising from the proceeding is a violation, a fine up to fifty (50) UITs being imposed on the violator. If, in spite of the imposed sanction, the violator continues to fail to comply with the requirements, he will be compelled to comply with them every five days through successive fines equal to twice the immediate previous fine (Amended by the Article 5° of Legislative Decree 807).

　

Filing false claims

Article 44°.- Persons that file false claims before the competent authority, will be accused of defamation and slander in conformity with the Penal Code.

　

Administrative and criminal sanctions

Article 45°.- The administrative sanctions as specified in this title are imposed without prejudice of criminal sanctions that may be admissible, if the acts are classified as a crime by the Penal Code.

　

Jurisdiction of the Commission on Consumer Protection

Article 46°.- The authority being competent to hear or try administrative proceedings and impose sanctions as specified herein is the Commission on Consumer Protection. The jurisdiction of the Commission on Consumer Protection will be only refused by a legal norm (Amended by the Article 21° of Legislative Decree 807).

　

Basis for calculation of fines

Article 47°.- The amount of fines shall be calculated on the basis of UIT (Unit for Tax Purposes) in force at the date of voluntary payment thereof or at the date when they are coercively collected. The whole amount of fines constitutes INDECOPI's own funds (Amended by the Article 50° of Law 26199 and by the Article 25° of Law 26533).

　

　

FINAL PROVISIONS

　

Derogatory provision

Article 48°.- Derogate the Supreme Decree No. 036-83-JUS and the Law No. 23863 as well as the other legal and statutory provisions contrary to provisions herein.

　

Effective Date

Article 49°.- This Legislative Decree will enter into force after thirty days from its issue on the Official Gazette "El Peruano".

　

Powers of investigation. Publicity on administrative proceedings

Article 50°.- The Technical Secretary and the Commission on Consumer Protection are empowered to collect information about the features and conditions of products or services put on the market, in order to keep the consumers informed in such a way that they can make an appropriate decision on products or services to be consumed. The information provided will constitute an opinion and give rise to liability when it is provided in a malicious manner.

Proceedings filed before the Commission on Consumer Protection are public. In that sense, the Technical Secretary and the Commission on Consumer Protection are empowered to arrange for dissemination of information related to such proceedings provided that it is deemed pertinent to affected consumers' interests and does not constitute a violation of commercial or industrial secrets (Added by the Article 21° of Legislative Decree 807).

　

Protection of diffused interests. Individual Representation

Article 51°.- INDECOPI, by its Board of Directors' previous agreement, is empowered to promote legal proceedings in matters within its jurisdiction, in defense of the consumers' interests, according to the Article 82 of the Civil Procedure Code. Such proceedings will be extraordinarily summary proceedings, in which desired compensation for damages and losses, product repair or replacement, refund of unduly paid amounts and in general any other claims required to protect the affected consumers' interests and rights, which has bearing on them may be jointly tried. INDECOPI may delegate this power to public and private organizations that are in condition to represent the consumers' interests. The power delegated to the corresponding organization shall be admitted by the judge simply by presenting the document that demonstrates delegation by INDECOPI.

The judge will attend to the petition on the same day when publications referred to hereinbefore are made. INDECOPI will represent all the consumers affected by the facts on which the petition is based whether they state expressly and in writing their will to not exercise their right or to do it separately, within thirty (30) days from such publications. After this period of time, the settlement hearing will be summoned.

Once the decision ordering to comply with the claimed obligation has been consented and executed, it will be collected by INDECOPI, who will then share it pro rata, or watch over its execution, among the consumers that appear before such organization and prove to be holders of the right being claimed in the proceeding.

After one year from the date when the compensation is really collected by INDECOPI, the remainder thereof not being claimed will go to a special fund aimed at financing and diffusion of the consumers' rights, relevant information intended for them and diffused interest sponsorship system. The scope and procedures for managing and allocating appropriately the above funds as well as executing the obligations in favor of the affected consumers will be established through a Supreme Decree

Without prejudice of the provisions hereinabove, INDECOPI may represent the individual consumers' interests before any public authority or any individual or private organization. For this purpose, a simple letter of attorney signed by the affected consumer will suffice. INDECOPI is empowered to demand and execute any right of the consumer in question by this power of attorney. (Added by the Article 21° of Legislative Decree 807).