On September 13, 2018, Chile has amended its Consumer Protection Law. While the existing Consumer Protection Law did already establish a robust regulatory framework on the matter, protecting individual consumers, micro and small companies in their contractual relationships with their suppliers, the new amendments increase the power granted to the Consumer Protection Agency (Servicio Nacional del Consumidor or “Sernac”).
Furthermore, the existing Consumer Protection Law of Chile did already contemplate class actions, allowing consumer associations, 50 or more consumers and Sernac to sue before court for breach of the law. Class actions are governed by the rules of the summary proceedings, which result in a very quick and expedite process for hearing, prove and appeals. Under the amendments, the rules of prove will allow the court to burden defendant where the rendering of prove is deemed by the court as difficult for the consumers. Fines imposed by Sernac were increased. Most of the amendments will not become immediately effective, but within the calendar defined by the law.
Among other, the main changes of to the law include the following: (i) A maximum amount of damages to be imposed by courts in any class action proceedings against suppliers (other than utilities), which will be limited to up to 30% of the sales of the lines of business of products or services sold by the supplier during the term of the violation of the law. In the case of utilities, said amount is limited to 10%, or double the profit obtained, when the supplier is a micro or small company, unless otherwise set by provisions of a special law; (ii) Fines to be imposed by courts in class actions will consider several elements. Among such element, are the following: whether there was a substantial cooperation of the defendant during the administrative proceeding before Sernac; whether mitigation measures provided by the defendant were applied; whether there was leniency; whether there are no prior fines imposed on the defendant for the last 36 months; the damages caused to the consumers; whether physical or moral damages were caused to the consumers and whether the safety of the consumer was put under risk. Besides, the Court will have to ponder the seriousness of the breach, the objective parameters that define the professional duties of the supplier, the asymmetry of information between supplier and consumers; the profits made by the suppliers, if there was any; the time during which such breach of the law took place, and the financial condition of the supplier and the number of consumers affected. The court may impose one fine per each consumer affected, when the breach of the law takes place with respect to each of the consumers (unless the supplier has diligently repaired the damages caused, in which case, a global amount will be applied as a fine). (iii) Except where special laws prevail, utilities services where interconnection monthly payments are made shall allow courts to award indemnisations of up to 10 times the daily fare charged to the consumers affected by a breach in the regular supply; that amount may be discounted from future monthly bills. Four or more hours of interruption of service will also allow consumers to file for this daily compensation; (iv) moral damages suffered by consumers may be subject to the class action proceedings under the amended Consumer Protection Law. Before this change, moral damages were not available to consumers when damages are sued for in a class action proceedings.
The amendment contemplates further authorities for Sernac to lead a settlement procedure, amendments to the prove rules allowing consumers to be deposed as witnesses, and several other amendments that are not mentioned here.