Amendments to the Consumer Protection Law

New Laws Nos. 27,265 and 27,266 to modify the Consumer Protection Law No. 24,240 ("CPL") were published in the Official Gazette on August 17, 2016. We briefly describe here below the amendments to the CPL by such regulations.

I. Law No. 27,265 incorporated Section 10 quater to the CPL establishing the possibility of unsubscribing to a service by the end-user without the supplier being entitled to any payment related to advance notice or penalties. Such right must not be subject to any other circumstance other than the consumers’ will to interrupt the service.

On the grounds of the law, it is stated that those costs are established unilaterally and arbitrarily by the providers. In spite of the intention of this Law –to provide end-users with a simpler and cost-free process to cancel a service– the economic reasonability of this measure is questionable since when costs actually exist, they will be transferred to the mass of end-users, and even to those who did not unsubscribe.

II. Law No. 27,266 replaced Section 38 of the CPL. The original Section dealt with all matters regarding the adhesion contract, mainly with the CLP enforcing authorities’ obligation to monitor unfair terms in adhesion contracts. Law No. 27,266 incorporated the following obligations for suppliers of both goods and services:

1. Publish on its website a copy of the model adhesion contract.
2. Deliver a free copy of the model adhesion contract at the consumer’s request.
3. Display in a visible place in their business premises a poster with the following caption "There is a copy of the model contract proposed by the company at your disposal”.

The purpose of this amendment is to increase the degree of information provided to consumers/end-users at the pre-contractual stage, reducing the typical asymmetric information problem regarding the contracting conditions.

This modification also allows that both the NGOs and the State take preventive action if the adhesion contract includes any unfair terms.

This Law does not specify any penalty for noncompliance. However, we must take into consideration the current sanctions regime of the CPL.

These new amendments to the CPL, coupled with the one made by Law No. 27.250 that modifies Section 4 adding the obligation to provide all the information on paper (unless otherwise expressed by the consumers/end-users), show the legislator’s interest in providing broader, more accurate and appropriate protection to consumers/end-users.