The initiative for the Framework Law for the Defense and Protection of the Consumer, known as the Prodeco law, was presented in 2016 and since then it had not attracted attention until now, in the first half of February, when it was approved in the second and third debate .
Despite the political inertia, business entities requested a technical discussion before its final approval, because they question part of its content. Among these entities are the Technical Alliance for Legislative Support (Atal), made up of Cacif, Fundesa and Fundación 2020, and separately the pronouncements of the American Chamber of Commerce (Amcham) and the National Business Council (CNE).
At the other extreme, the now former deputies to Congress, who were speakers of the initiative in 2016, Rudy Castañeda, Carlos Barreda and Óscar Chinchilla expose the need to strengthen legislation and consumer protection in the country, and agree that the The norm contains positive aspects in that direction, although they believe that the Legislature should establish a technical discussion, since the proposal was presented almost eight years ago.
“It is a good law, and it is necessary to strengthen consumer defense; but it has not yet had the technical discussion part with the research centers, universities and business chambers,” Barreda explained. This discussion will help to have the necessary votes to approve it and avoid possible challenges, she explained.
What does the bill contain??
The purpose of the law is to regulate the relationships between suppliers and consumers and users as a consequence of legal acts that they carry out among themselves, establishing rights, obligations, prohibitions, as well as infractions, sanctions, and procedures, the initiative states. Furthermore, these rules constitute a minimum of rights and guarantees of an inalienable nature “and no customs, customs, practices, agreements or stipulations to the contrary may be alleged against their observance.”
If approved as it is currently, the Attorney General’s Office for the Defense of Consumers and Users (Prodeco) would be created, which would replace the Directorate of Consumer Care and Assistance (Diaco), which reports to the Ministry of Economy.
The new entity will have jurisdiction throughout the national territory, and is established as a decentralized and autonomous entity, with its own assets and budget, with functional, technical, administrative and financial independence.
The Attorney General’s Office would have a Specific Unit to address complaints about: massive public or private services, including electricity, water service, telecommunications, credit cards, and health services included, hospitals, sanatoriums, private clinics and others. that are considered necessary, according to article 14.
Meanwhile, the attorney will be selected by the Congress of the Republic for a period of four years and will enjoy the same prerogatives of the Human Rights Attorney. The selection will be from a shortlist proposed by the nomination committee and this in turn will be made up of 7 regulars and their respective substitutes, which includes 3 presidents of Professional Associations, 3 members of the Legislative Commission for Consumer Protection of the Congress of the Republic and a representative of CACIF.
In addition, the Administrative Council for the Defense and Protection of Consumers and Users is created, the Commission for Monitoring and Compliance with Administrative and Judicial Resolutions, and the attorney can create specific Technical Advisory Councils.
It also establishes 14 rights of consumers or users and 4 obligations, and for suppliers it lists 5 rights, 27 obligations and more than 18 prohibitions.
It includes 63 minor, serious and very serious infractions, their respective fines that must be detailed in the regulations. But it also establishes other procedures that will depend on actions that violate the law, such as written and public warnings, precautionary measures, confiscation and destruction of merchandise, closure of establishments, and cases of recidivism.
Create a chapter that refers to product information and advertising and misleading advertising. Here the attorney general’s office may order the provider to suspend the information or advertising that violates the provisions of this Law and, where appropriate, the media that disseminates it, order that the information or advertising that violates the provisions of this Law be corrected in the manner that It is considered necessary or the necessary clarifications are made when advertising is suspended so that the consumer can have accurate information, among other provisions.
Strengthening necessary, but also discussion
Castañeda, Barreda and Chinchilla explained that the purpose of the initiative is to strengthen consumer defense and service, aspects that have been weak in the country, and they consider that the law has positive aspects for that purpose.
Barreda indicates that there is a need to create an autonomous entity, and Castañeda agrees, although he states that in his opinion it has been a mistake to name it as the Attorney General’s Office due to the experience that has been had with other attorney general’s offices in the country.
Although the Diaco exists, its function has been criticized over the years. They also agree that regulations must be established so that there is an entity that verifies that what is approved in the records and what is mentioned on the labels is really the content of the product that is offered to the consumer.
Castañeda says that they were based on experiences from Mexico, Colombia and other countries to create the proposal. In the neighboring country, the legislation has been in operation for more than 50 years and Profeco is very strong, he adds.
Barreda adds that one of the first issues that should be discussed is the governance of the entity, how the Attorney General will be selected since governance must be protected to maintain independence and face ups and downs and truly protect the consumer. And, the issue of the budget being fed by fines must be reviewed, since it could create the “trapped effect” that has been criticized for the municipal traffic police.
“We believe that the entity should exist, that it should have more teeth in consumer defense, request information and impose more fines and sanctions that have a deterrent effect, we are not interested in affecting companies.” Carlos Barreda, former deputy rapporteur of the law.
They indicate content
The Atal organization, made up of Cacif, Fundesa and Fundación 2020points out that the broad powers contained in this proposal raise risks of abuse of authority and that the model would not result in the consumer protection policy being functional.
Among the points they criticize is that an excessive mandate is given to Prodeco, because it would have the function of verifying compliance with the law through visits, information or documentation requirements, monitoring, or by any other means and this “would imply a bureaucratic apparatus extremely expensive.”
That the entity’s budget is also based on the fines collected and is constituted as a private fund for its operation will generate a perverse incentive for its actions, it is added. Meanwhile, it questions the function of the Specific Unit to address complaints about public or private mass services, and the power to require any official to adopt legal and necessary measures, prior judicial authorization, that tend to protect the rights of consumers and users. or to stop the violation of their rights, through almost any type of measure.
Another point is that the Attorney General’s Office could order the provider to suspend the information or advertising that violates the provisions of the Law, and could also order the media that disseminates it to correct said information or advertising in the manner that the entity considers necessary.
Provisions are pointed out that, in Atal’s opinion, are excessive and he adds that the law violates several constitutional rights, such as freedom of commerce and industry, and private property.
While Amcham exposes the importance of having legal frameworks that ensure the defense of consumer rights, but they ask the block heads to carry out a detailed analysis and a broad discussion, with the participation of all sectors impacted by this initiative.
They indicate that concern arises about the regulation of sectors that are already supervised by governing entities in their field and ask for harmonization with existing regulation. Some of these sectors are the financial sector, which is already regulated by the Superintendency of Banks and the Bank of Guatemala, in addition to the food and health sector, whose governing body is the Ministry of Health, the chamber expanded.
It is necessary to find an adequate balance between the effective protection of consumers and the creation of an environment conducive to investment and economic growth, and adds that the broad powers that Prodeco would have, which include moving goods or suspending the marketing of products.
Separately, CNE states that there are still important gaps regarding the protection of consumer rights in Guatemala with respect to good international practices, but that they detected technical and legal flaws that undermine the purpose of the initiative, among them, regarding the fact that the fines are the source of its budget, established in articles 11 and 139, and coincides with the other entities that would generate wrong incentives to sanction.
And, in article 18, they question the formation of the nomination committee for the shortlist for the position of Attorney since there have been experiences in other areas of consequences of politicization.
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