In an article earlier this year, we highlighted the President of the Romanian Consumer Protection Authority’s dissatisfaction with the current penalty regime for consumer protection violations and call for stricter sanctions.
Only a week later, the Consumer Protection Authority (“CPA”) produced (and published on its website for public debate) a draft Emergency Government Ordinance (the “Draft”) containing significantly strengthened penalties for consumer protection violations.
The proposed penalties range from 2% to 5% of the defaulting operator’s turnover.
Notable provisions of the Draft include:
(i)CPA inspectors may acquire goods and services under false identity (‘mystery shoppers’) for the purposes of testing, inspecting, studying and disassembling in order to detect breaches of consumer protection laws.
(ii)Food products from non-EU countries may only be placed on the Romanian market subject to prior CPA approval, certifying conformity between the product and the labelling.
(iii)Any publicity on promotional sales must specify the beginning and end dates, as well as the category of products sold at reduced prices (if the discounted sales do not refer to all products sold within the relevant point of sale).
(iv)The following violations are subject to a fine of up to 2% of the defaulting operator’s turnover:
- placing products on the market or providing services which endanger the life, health or security of consumers;
- manufacturing or placing products on the market which are unsafe or untested/certified (if required);
- manufacturing or placing products on the market which do not meet the prescribed or declared conditions;
- failing to ensure spare parts and servicing for long-term use products;
- failing to cease deliveries/withdraw from the market or from consumers products determined to be noncompliant with the declared or prescribed characteristics, or which may affect the life, safety, security or economic interests of consumers;
- placing products on the market which have exceeded their validity term, or altering the validity term of products sold;
- failing to remedy defects or replace defective products during the warranty/validity period within 15 days;ofailing to observe rules related to complete, accurate and precise information of the products/services sold (including inconsistencies between label and product contents, insufficient information to consumers).
(v)The following violations are subject to a fine of up to 3% of the defaulting operator’s turnover:
- failure to comply with consumer information requirements (including in the pre-contractual phase) in relation to all financial conditions related to financial services;
- failure to observe legal requirements regulating marketing/publicity for credit agreements, such as failure to indicate an interest rate or any other value related to the cost of credit to the consumer;
- failure to respect legal requirements related to consumer contracts concluded by financial services providers (e.g. written form, size of font, clear indication of interest rate/commissions/taxes or any other costs of credit, anticipated reimbursement commission, administration costs, withdrawal/deposit fees etc).
- increasing or levying new commissions/taxes/bank costs or any other cost mentioned in a contract for financial services during the course of the contract (other than with respect to interest rate variability).
- breaches of consumer protection rules in the field of real estate intermediation;
- use of unfair commercial practices, etc.
(vi)The following violations are subject to a fine of up to 4% of the defaulting operator’s turnover:
- preventing consumer protection authorities from exercising their prerogatives;
- violations affecting a consumer’s health or body integrity or that severely and repeatedly affected the economic interests of one or more consumers;
- repeated violations of consumer protection regulations;
- failure to implement any measures instructed by the relevant consumer protection agency within the deadlines and under the conditions so prescribed;
- use of misleading and/or aggressive commercial practices.
(vii)Where a fine for violations affecting the health/body integrity and/or economic interests of consumers has been imposed, the defaulting operator's activity may also be permanently shut down and the company, its directors and shareholders may be prohibited from performing the related activities for up to three years.
Inserting abusive clauses in consumer contracts is subject to a fine of up to 5% of the turnover of the defaulting entity.
In addition, the Draft provides that, where a court has qualified certain contractual clauses as abusive, the operator must modify all pending contracts, eliminate the abusive clauses from any template contracts which it intends to use in its activity, and refrain from introducing the same clause in other contracts. Courts are also required to instruct the defaulting operator to reimburse consumers for all amounts levied pursuant to such abusive clauses.
Finally, the possibility for operators to pay half of the minimum fine provided in the law within a prescribed period of time (which is an incentive for fast payment) would no longer be available for the consumer protection violations covered by the Draft.
The Draft is up for public debate and interested parties may submit comments or proposals to the CPA until 25 January 2019.