KNOW YOUR SMALL BIZ LAW: The Consumer Act

consumer act

 

The Consumer Act of the Philippines (RA &394) was passed in July 1992 in line with the policy of the government to protect the interest of the consumer, promote the general welfare, and establish standards of conduct for business and industry.

For the consumer, the law provides safeguards against  hazards to health and safety and deceptive and unfair acts and practices.  It also provides information and education to facilitate sound choice and proper exercise of rights by the consumer and adequate rights and means of redress.

For businesses, big and small, the law provides guidelines for action in case of consumer complaints regarding their products or service.

The law imposes sanctions on business establishments found violating consumer rights and therefore motivates business owners and managers to be customer-oriented in their operations.

The following agencies implement the Consumer Act:

  • Department of Trade and Industry (DTI) – for consumer product quality and safety; deceptive, unfair and unconscionable sales acts and practices; weights and measures; consumer products and service warranties; price tag; labeling and packaging; liability for products and services; service and repair; advertising and sales promotion.
  • Department of Agriculture (DA) –for quality and safety, labeling and packaging of agricultural products
  • Department of Health (DOH) – for quality and safety, labeling and  packaging, price-tagging, advertising and sales promotion of food, drugs, cosmetics and devices.
  • Bangko Sentral ng Pilipinas (BSP) – for consumer credit transactions extended by banks and other financial intermediaries
  • Securities and Exchange Commission (SEC) – for credit facilities extended to consumers by financing companies

These agencies are otherwise known as consumer protection agencies.

Consumers may file complaints about any product or service received which violate their consumer rights.  They are urged to gather documentation regarding the complaint (e.g. sales receipts, warranties, contracts, etc.), go back to where they made the purchase; contact the person who sold the item or perform the service and explain the problem.  If that person is not helpful, the consumer must ask to speak with the supervisor or manager and repeat the complaint.

If the above steps do not yield satisfactory results, consumers are asked to write a formal letter of complaint in the consumer protection agency concerned and to enclose documents supporting the complaint.  .

The complaints to be filed may be administrative or civil/criminal action.

For administrative proceedings, the remedies available to consumers are: replacement or repair of product or services; refund of payment; restitution or rescinding of contract; reimbursement to complainant of amount spent in pursuing the complainant.

For civil action, the remedies include:  award of damages; replacement or repair of product or services; refund of payment made; restitution or rescinding of contract; reimbursement of amount spent in pursuing the complaint.

In case of criminal action, if found guilty, the defendant business may face imprisonment or payment of fine or both, at the discretion of the court.

However, the Act encourages the filing of administrative proceedings in the proper consumer protection agency over the filing of court cases since mediation or arbitration is more economical and time saving and saves the consumer from the rigors and expense of a court case.

The administrative penalties that can be imposed on businesses found guilt under the Consumer Act are:  issuance of cease and desist order and the acceptance of a voluntary assurance or compliance or discontinuance from the defendant.

The harshest penalty that can be imposed on an establishment found guilty of violation of the Act is the condemnation and seizure of the consumer product found to be hazardous or offensive.  Administrative fines may also be imposed ranging from Php 500  to 300,000.

The National Consumer Affairs Council, headed by a representative from the DTI, coordinates the implementation of the Consumer Act.

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