A New Consumer Protection Law

On 13 September 2018, a new Consumer Protection Law No. 181 of 2018 was issued (the “Law”).[1] The Law replaces a previous one on the same matter which dates back to 2006,[2] and is the establishing law for the Consumer Protection Agency (“CPA”), which is the entity responsible for monitoring trade activities and the protection of consumer rights, including health and safety. The new Law addresses the more complex commercial issues presented by online commerce. It also lends some attention to real-estate clients, information that is advertised to consumers, provides more detailed retail return and instalment policies, and imposes harsher penalties on infringements on consumer rights as provided under the Law. However, similar to several recent legislation, the Law permits the government to ban products on vague moral or public policy grounds.

Scope

The Law addresses the suppliers of any commercial, industrial, or professional service or craft and the producers, manufacturers, importers, exporters, and retailers of any good. It also clearly removes from its scope all financial services, placing an end to jurisdictional issues between the CPA and the Financial Regulatory Authority.

Return, Refund, and Instalment Policies

The Law retains the existing 14-day return policy, though it qualifies that right by extending the period to 30 days if the purchased good was faulty, not in accordance with specification, or not fit for the purpose it was purchased to achieve. Manufacturers of non-perishable goods – to be defined in executive decrees – now have an obligation to warrant these goods for a period of two years. The warranty extends to maintenance and spare parts, and could lead to replacement if the product shows fault more than twice in the first year after purchase. In addition, a one-year warranty is now mandatory on home installations, maintenance and finishing jobs.

Disclosure and Reporting Requirements

The new Law expands the obligation to divulge information about the product to consumers, and sets out new requirements for contracts and invoices. Suppliers are required to integrate Value Added Tax into the price shown on the goods or services to avoid confusion on the consumer’s part. A criticism of the previous law was that it gave suppliers seven days to report a defect that has come to their attention to the CPA without setting a standard for either reportable defects or guidelines for proportional remedies, and the new Law continues to reflect this impracticable expectation.

Real Estate

The marketing and sale of real estate is prohibited until a building permit for the offered property has been issued, presumably in order to cut down on property fraud.

The Consumer Protection Agency

Maintaining its original role as regulator with enforcement powers, the composition of the CPA board has changed. In addition to the board membership of representatives from relevant ministries, the board also includes members of consumer protection association in different geographic locations, a representative from the Food Safety Council, the Federation of Egyptian Industries, and the Federation of Commercial Chambers. The term of the board has been extended from three years to four, that are renewable only once. An interesting addition to the financial resources of the CPA is a 25% of the total amount of the fines collected as sanctions in breach of the provisions of the Law. This may act as an incentive for CPA staff to collect large penalties. The Law requires the CPA to respond to complaints filed by consumers within a period no longer than 30 days, a provision that had been missing in previous legislation.

Remote Contracting

The Law 2018 defines what it refers to as “remote contracting” i.e. internet commerce, and extends the application of consumer protection to the offering and purchasing of goods and services online or via phone.

Sanctions

The annulled law allowed settlement in crimes in breach of its provisions and placed no ceiling on that right. The new Law imposes harsher penalties on perpetrators. The hoarding of strategic goods is punishable by a year in prison under Article 71 of the Law. In addition, the breach of any of its provisions which results in the death of one or more persons is punishable by life in prison. The same provision punishes the perpetrator with a prison sentence and a fine if the victim(s) suffer a chronic or infectious disease, or a permanent disability.

Conclusion

Sound consumer protection regulation is a staple of developed legal systems. It is typical for states to aspire to reach a balance between promoting a healthy competitive business environment while ensuring the protection of consumers who deal with businesses against unfair, deceptive, fraudulent or harmful practices. In this light, the new Law is a positive step in the right direction. What remains to be attained is an equation of seasoned judgment and implementation which ensures the maintenance of that balance between promoting investment and protecting citizens from misleading advertising and unsafe products.   [1] Law No. 181/2018 on Consumer Protection, Official Gazette, Issue No. 37 (cont.), 13 September 2018. [2] Law No. 67/2006 on Consumer Protection, Official Gazette, Issue No. 20 (bis), 20 May 2006.