The French consumer protection bill, known as the “loi Hamon”, was adopted on February 13, 2014. Several provisions of this bill have been referred to the Constitutional Council at the initiative of certain senators of the opposition. The bill will come into force, after the withdrawal of any provisions considered to be unconstitutional by the Constitutional Council, on the date of its publication.
This very dense bill contains numerous amendments to the French consumer law, in particular through the following eight flagship measures.
1. Introduction of Class Action
Class action, at the heart of numerous debates over the years, will be possible for damages suffered by a consumer (an individual acting for purposes which are primarily outside his trade, business, craft or profession) following violations of consumer law or competition law. Consumers who suffer the same loss may claim compensation for their material losses, with the exclusion of any bodily injury.
A consumer defence association operating at national level must take the responsibility of bringing the action. In the same decision, the judge will note that the conditions for the admissibility of the action have been met; will rule on the liability of the professional in light of the individual cases presented by the association; will define the group of consumers seeking liability; and will order measures to announce the decision to any consumers likely to be entitled to compensation, indicating the period during which (between two and six months) they may join the action (known as the 'opt-in' system).
In the field of competition law, the action can only follow on from a decision by the French or European competition authority which has become final after all the appeal channels have been exhausted (so-called"follow on" action). The consumer whose rights have been infringed may make use of the final condemnation decision without having to demonstrate the professional's fault.
A simplified procedure could also allow for automatic compensation without any prior action by the consumers ('opt-out' system) when the identity and number of consumers affected are known, for example via client files, and when they have incurred a loss of the same amount, for example in the case of same service subscribers (mobile telephone, internet access supply…).
2. Measures to counter abusive clauses
The DGCCRF (General Directorate for Fair Trading, Consumer Affairs and Fraud Control) may now ask the civil judge to pronounce the deletion of an unfair term contained not only in the contract which is the object of the dispute, but also in all contracts containing the said unfair terms.
The presence of one or several unfair terms in contracts concluded between professionals and non professionals or consumers will also be sanctioned by an administrative fine of up to €3,000 for an individual and €15,000 for a legal entity, whereas previously there was no automatic financial sanction.
3. Control over distance sales
All distance contracts and off-premises contracts concluded must include mandatory specifications, in particular concerning the essential characteristics of the goods or service and the conditions for consumers to exercise their right of withdrawal. Furthermore, a standard withdrawal formula established by decree will have to be joined to the contract and transmitted at the latest at the time of the delivery of the goods or at the beginning of the performance of the service in question.
As for the withdrawal period, it will be doubled and stand at 14 days instead of 7 days, without the consumer having to give any reason for his decision or pay any costs other than for the return of the goods or remuneration for the service carried out so far, if the services have begun.
Moreover, the express agreement of the consumer will now be required if the service is to begin before the end of the withdrawal period, for the waiver of the withdrawal period and for any additional payment on top of the principal amount of the contract (options, expenses…).
The bill also provides that all amounts paid in advance will be considered as a deposit, each contracting party being able to go back on his commitment, the consumer loosing his deposit and the professional having to return twice the amount of the deposit.
Lastly, in the absence of any timeline defined in the contract, the professional will be obliged to deliver the goods or supply the service at the latest within 30 days of the conclusion of the contract. Failing this, the consumer may demand the termination of the contract and the professional will have to reimburse all amounts paid, plus interest in the event of extended delays.
4. Extension of the guarantee due by the seller
The rebuttable presumption to which the consumer is entitled when claiming the legal guarantee of conformity according to which the defect affecting the product existed already at the time of the sale of the good is to be extended to 24 months (instead of 6 months), except for second hand goods. This measure will only come into force 2 years after the publication of the bill.
The General Terms and Conditions of Sale will have to mention the existence, the conditions for implementation and the content of the legal guarantee of conformity and of the guarantee for hidden defects which must be provided by the seller, and, if applicable, the existence of a commercial guarantee and after-sales service. The commercial guarantee will have to be reported in a written contract, stipulating the content, terms, price, length, territorial scope, name and address of the guarantor and clearly mention that the seller remains bound by the legal guarantees.
5. Credit supervision and freedom to terminate insurance policies
The procedure regarding over-indebtedness of individuals has been amended, transferring part of the responsibility for the indebtedness to the professional. The latter must, for example, ensure that borrowers are solvent, thanks to the creation of a national register of consumer loans taken out by individuals, placed under the responsibility of the Banque de France. Borrowers who are offered a revolving credit must also be offered a redeemable loan and receive the information necessary to compare the two possibilities.
Distributors who offer credit cards must also propose cash payment solutions, without the consumer loosing the advantage obtained by being a credit card holder.
The bill provides for new measures in terms of the termination of insurance policies:
- For policies covering targeted policyholders with specific needs (bikers, golfers…) if the policyholder realises that he already had a policy covering the same risks, he may terminate the new contract within 14 days of its conclusion, with no cost or penalties due;
- For insurance policies in conjunction with goods or services, like for example car insurance, home insurance or utilities insurance (mobile phone, touchpad…), the policyholder may terminate his insurance policyat any time after the first year, without costs or penalties, with effect one month after receipt of the request for termination by the professional;
- For policies accompanying loans, the borrower may:
- terminate his risk insurance coverage in order to replace it with a better contract within twelve months of the date of signature of the loan agreement, by serving notice of termination to the insurance firm or its representative at the latest 15 days before the end of the twelve month period, subject to agreement by the lender, who will then make the corresponding amendment to the loan agreement by means of an addendum;
- replace the insurance policy subscribed with the loan by another insurance contract after the first twelve months, on condition that this replacement option and the related terms were defined in the loan agreement.
6. Financial sanction for failure to respect payment times
Failure to respect legal payment terms will give rise to an administrative fine of up to €75,000 for individuals and €375,000 for legal entities, whereas previously there was no automatic financial sanction.
7. Information on the availability of spare parts
The producer (manufacturer or importer) must indicate to the professional seller the period during which or the date up until which the spare parts that are indispensable for the use of the goods will be available on the market. This information must be issued mandatorily to the consumer by the seller in a legible form before the conclusion of the contract and confirmed in writing at the time of the purchase of the goods. Once this period has been fixed, the producer must supply the spare parts that are indispensable for the use of the goods sold to those professional sellers or repair firms requesting them, whether these firms are approved sellers or not.
Failure to respect these obligations is liable to an administrative fine of up to €3,000 for individuals and €15,000 for legal entities.
8. Modernisation and reinforcement of the powers of the DGCCRF
The powers of agents of the administrative authority in charge of competition and consumer laws (the DGCCRF and its local branches) will be reinforced and their capacity for coercion extended.
The agents will now be able to defer the moment when they declare their capacity (at the latest until the notification of the infraction or of the breach), that is to say they can use the ‘mystery client’ technique in order to establish proof of an infraction. They can also ask the identity of their interlocutor and, if the latter refuses to reveal his identity, they can refer the matter to the police which will carry out identity checks. In addition, the agents may order the temporary suspension of payment when firms are not able to deliver to their clients within the given delivery period (in particular concerning internet orders).
Furthermore, the administrative authority in charge of competition and consumer laws will now be empowered, without having to turn to a judge, to impose administrative fines of up to €3,000 for individuals and €15,000 for legal entities. These administrative sanctions may be inflicted in particular in the event of the violation of pre-contractual information obligations, obligations relating to distance or off-premises sales, failure to respect price advertising rules or unauthorised advertising (for example: sales, liquidation, electronic advertising…).
9. Other measures
Other measures have also been introduced by the Hamon bill, in particular the liberalisation of the sale of glasses and contact lenses via the Internet, the sale of pregnancy tests and ovulation tests in supermarket stores, the ban on transfer fees imposed by driving schools, the possibility for lawyers to advertise, opposition to telephone canvassing, regulations on specific contracts (exhibitions and trade fairs, purchase of precious metals, transport excluding removal firms, liquefied petroleum gas), regulations on leisure chauffeur-driven cars, parking fees charged per quarter of an hour, indications on the origin of foodstuffs, particularly meat, reinforcing the means of action relating to the security and compliance of products or the obligation for restaurants to indicate that a dish is home made. Misleading agri-food labels ("label rouge", "organic produce"…) will be sanctioned by a fine of €300,000 instead of €37,500.