The Brazilian Consumer Protection Code protects the rights of groups of consumers through class actions. Accordingly, corporations may be liable not only towards individuals, but also towards an entire community which shares common rights. This is a cause for concern for corporations such as telecommunications companies, which deal with millions of consumers daily.

Recently, an action was filed by the Public Attorney's Office of the Judicial District of Foz do Iguaçu, Parana State, against two telecommunications service companies for alleged damages caused to customers of fixed telephony services in the region.

Brazil's fixed telephony system underwent considerable changes following the opening of the market (which was previously dominated by a state monopoly) to new competitors. In July 1999 a new dialling system was instituted for domestic and international long-distance telephone calls, enabling users to choose their preferred operator by entering an operator selection code before dialling.

Some users encountered problems with the new system and the difficulties encountered by the residents of Foz do Iguaçu led to the filing of their action. They claimed R10 million in damages with the intention of donating it to the Parana State Diffuse Rights Fund.

During the proceedings it became apparent that (i) the telephony operators had a solid defence, and (ii) establishing proof of damage (dependent on the existence of some technical failure in the services supplied by them) would be difficult, lengthy and costly.

Thus the parties signed an agreement to end the civil action. In place of a legal hearing, it was agreed that the telephony operators would sponsor several educational projects for the local community. As a result, local schools are being provided with information on consumer rights, freedom of choice and various products and services.

The flexibility of the parties involved enabled the adoption of an alternative solution, bringing beneficial results not only to the parties involved but also to the wider community.

For further information on this topic please contact Ricardo Barretto or Fabiana Regina Siviero at Barretto Ferreira, Kujawski, Brancher e Gonçalves – Sociedade de Advogados by telephone (+55 11 3066 5999) or by fax (+55 11 3167 4735) or by email ([email protected] or [email protected]).