Fair Trading Commission Discussion on Protecting Consumers in the Digital Era

1. Fair Trading Commission Discussion on Protecting Consumers in the Digital Era Ayanna Young Marshall Accra Hotel, Barbados March 8, 2018

2. Outline • Legal framework for consumer protection in Barbados • Consumer Guarantees Act • Consumer Protection Act • The digital environment • Considerations

3. Legal framework for consumer protection in Barbados • Pre 1895: Caveat emptor - Let the buyer beware • Merchant’s Law prevailed. • Consumer protection did not exist. • It was up to the buyer to thoroughly inspect goods. • Once the buyer took possession of the goods, s/he had no recourse if they subsequently proved to be defective. • Post 1895: • The Sale of Goods Act was enacted. • Even if the buyer took possession of the goods, various conditions and warranties were implied into every contract for the sale of goods.

4. Conditions to be implied into contracts for the sale of goods As long as the parties do not agree otherwise (see section 54 of the Act), the following conditions and warranties are to be implied into every contract for the sale of goods: • Title • Correspondence with any given description • Fitness for the express or implied purpose • Merchantable quality • Bulk correspondence with sample

5. 1. Title 1 of 2 • “Nemo dat non quod habit”: A person cannot give that which s/he does not own. • The objective of a contract for the sale of goods is to obtain ownership in the goods. • Under section 13 (1) of the Sale of Goods Act there is an implied condition that the seller has the “right to sell” the goods i.e. transfer ownership as opposed to possession. • e.g. infringement of a trademark has prevented a seller from passing property to a buyer.

6. 1. Title 2 of 2 • Under section 13 (2) there is an implied warrantythat the goods are free from any encumbrance not made known to the buyer and that they will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the encumbrance disclosed. • e.g. where a sale of equipment occurred but unknown to the seller a third party had legally asserted and obtained a patent.

7. 2. Correspondence with description 1 of 2 Section 14 of the Act states that where goods are sold by description there is an implied condition that: • The goods will correspond with the description. • If the sale is by sample as well as by description it is not sufficient for the bulk of the goods when delivered to correspond with the sample if the goods do not also correspond with the description.

8. 2. Correspondence with description 2 of 2 • Reliance on the seller’s judgment is readily inferred in retail sales because a buyer will usually enter a shop confident that the seller has selected merchandise with skill. • The buyer does not need to specify the purpose because it is obvious and implied. • e.g. where a buyer took delivery of a completely different vehicle from what was advertised. • e.g. where a buyer of undergarments contracted dermatitis because of excessive sulphite.

9. 3. Satisfactory quality • Goods should be as fit for their ordinary purpose as is reasonable to expect, taking into account any description applied to them, the price, and all other relevant circumstances. • e.g. a buyer was allowed to recover the purchase price as well as damages for a vehicle with a defective engine, gear box and bodywork, all of which were below the standard normally expected of a vehicle at the given cost.

10. 4. Fitness for purpose • Under s 15 there is an implied condition that goods must be reasonably fit for any purpose that the consumer makes known. • The buyer can make the purpose known expressly or it can be implied. • The goods must also be reasonably fit for any particular purpose for which the supplier represents they will be fit. • e.g. in the case of the undergarments mentioned before. • e.g. where a boy purchased a catapult and lost an eye when it broke during use. • This section also applies to second-hand goods, but the standard of fitness expected is lower.

11. 5. Bulk correspondence with sample Section 16 provides that where there is a sale by sample, conditions are implied that: • The bulk will correspond with the sample. • The buyer will have a reasonable opportunity to compare the bulk with the sample. • The goods will be free from any defect making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample. • e.g. wedding invitations.

12. Shortcomings of the Sale of Goods Act 1 of 2 • The balance of power was still in favour of sellers. • The Act did not address provision of services currently accounting for 87 percent of GDP. • Parties could still opt in and out of its operation. • The Act did not address manufacturer’s liability.

13. Shortcomings of the Sale of Goods Act 2 of 2 At common law: • There was no concept of manufacturer’s liability. • A person injured by a defective product therefore encountered a legal quandary. • If they had purchased the item themselves, the measure of damages could be limited to the purchase price of the item. • If they did not purchase the item themselves, there could be no redress under the Sale of Goods Act. • Donaghue v Stevenson

14. Consumer Guarantees Act • The Consumer Guarantees Act CAP 326E of 2003 remedied many of the shortcomings of the Sale of Goods Act. • Sale of goods to a consumer is now governed by this Act. • A “consumer” is an individual who acquires goods or services from a supplier for personal, domestic or household use. • It is the most groundbreaking legislation that protects consumers in the Caribbean.

15. Guarantees in respect of goods 1 of 2 The Act provided guarantees for contracts for the sale of goods in sections 5 to 13 that cannot be excluded : • that the seller has the right to sell the goods • that the goods are of acceptable quality in appearance and finish • that the goods are fit for the purpose for which the consumer indicates they are to be used • that if the goods are sold by sample, then the bulk must correspond with the sample

16. Guarantees in respect of goods 2 of 2 • that if the goods are sold by description, then they must correspond with that description • that the goods are new unless the consumer is told otherwise • that the price for the goods is reasonable • that the supplier has a reasonable supply of spare parts and accessories in stock

17. Remedies for breach of guarantees in respect of goods 1 of 2 The consumer can reject the goods and ask the Public Counsel to enforce statutory rights provided in sections 17 to 25 which include, within a reasonable time after discovering the defect: • Having them repaired, replaced and/or • Refund of the purchase price • Damages (monetary compensation) for inconvenience, hurt feelings, disappointment, vexation, distress, personal injury etc.

18. Remedies for breach of guarantees in respect of goods 2 of 2 • Unlike the Sale of Goods Act, a person may seek redress under the Consumer Guarantees Act even if they did not personally purchase the defective good. • The consumer may take direct action against the manufacturer of the goods. • These legal provisions sections 25 and 26 statutorily recognise the ruling in Donoghue v. Stephenson.

19. Guarantees in respect of services In relation to services the guarantees in sections 29 to 32 are that: • performance of the services will be with reasonable care and skill • the services will be fit for the purpose rendered • completion of the services within a reasonable time if no specific time limit is provided for • a reasonable price for the service will be charged if one is not fixed by the contract

20. Where a consumer believes rights under the Act have been infringed s/he may: • Refer the matter to the Public Counsel; • Obtain mediation of the matter by the Public Counsel and if a settlement is not achieved through mediation; • Obtain representation by the Public Counsel before the Consumer Claims Tribunal. • The Public Counsel is an experienced attorney-at-law.

21. Jurisdiction of the Consumer Guarantees Act • The jurisdiction of the Consumer Claims Tribunal is $10, 000. • This is a major drawback of the Act as the prices of many consumer items and services exceed this amount.

22. Consumer Claims Tribunal • Cellphone with malfunctioning speaker • Secondhand defective car stereo amplifier • Pure breed dog not suitable for breeding • Pumping gasoline in a diesel only tank • Ineffective bailiff services • Faulty construction • Defective bodywork • Defective laptop on hire purchase • Ineffective burial services

23. Consumer Protection Act The Consumer Protection Act CAP 326D: • Makes provision for the protection and safety of consumers. • Administered by the Fair Trading Commission. • Deals with issues concerning consumers at the macro level while the Consumer Guarantees Act addresses consumer concerns on a micro level.

24. Unfair Contract Terms 1 of 3 • The Consumer Protection Act prohibits unfair contract terms in agreements with consumers. • A contract term is unfair if it causes a significant imbalance in the rights of the supplier and the consumer to the detriment of the consumer. • An unfair contract term is one that has been prepared in advance without any influence or input from the consumer.

25. Unfair Contract Terms 2 of 3 • Any written contract term must be expressed in plain, intelligible language. • If there is doubt about the meaning of a written contract term, the interpretation that is most favourable to the consumer prevails. • Any offending unfair term would be rendered unenforceable.

26. Unfair Contract Terms 3 of 3 • The Schedule to Act lists contractual provisions that would be held to be unfair. • e.g. excluding or limiting the legal liability of a supplier in the event of the death or personal injury to the consumer resulting from an act or omission of that supplier; or • e.g. requiring the consumer to pay a disproportionately high sum in compensation if s/he fails to fulfil an obligation.

27. Unfair Trade Practices The Act also prohibits Unfair Trade Practices which attract prosecution and fines or imprisonment e.g.: • misleading or deceptive conduct • making false representations in relation to goods and services • offering gifts and prizes with the intention of not providing them as offered • misleading conduct in relation to goods and services • dual pricing • bait advertising

28. Product/Manufacturer’s Liability • Part V of the Consumer Protection Act deals with product liability i.e. Donoghue v. Stevenson type scenarios. A third part can receive relief. • Where damage is caused wholly or partly by a defect in a product, the following persons are liable for the damage: • the producer of a product (defined as the person who manufactured the product). • a person placing a trademark on the product & thereby holding out as a producer. • any person who imports the product into Barbados in the course of his business in order to supply it to another.

29. Impetus for protection in the digital environment • Technological development • Developments in the field of telecommunications • Convergence of the world economy – globalisation • Trade liberalisation, commitments under the World Trade Organisation • Growth of trade in services • E-commerce has altered the way companies reach consumers, the information they provide and the cost to do all of this • Ease of use and access for shoppers and wealth for owners

30. Legal effect of the Electronic Transactions Act 1 of 4 • The Electronic Transactions Act 2001 CAP 308B provided Barbados with a regulatory framework necessary for the development of e-commerce andprocessing of electronic transactions. • In general, the Act seeks to improve user confidence by addressing concerns over contract enforcement, privacy and security.

31. Legal effect of the Electronic Transactions Act 2 of 4 • Recognition of the legal effect, validity, admissibility and enforceability of digital transactions, electronic signatures, communications, records and electronic contracts, in satisfaction of written and paper requirements under the law. • Admissibility and evidential weight of electronic records in legal proceedings. • Data protection by restricting disclosure of information obtained in these transactions to the consent of the natural person or business; and use to the investigation of any criminal or certain civil proceedings; or to the carrying out of prescribed public functions.

32. Legal effect of the Electronic Transactions Act 3 of 4 • A process of certification and verification that binds the identity of a particular party to a particular signature. • Regulations in respect of encryption, penalties for contravention of disclosure provisions and for records management in relation to the recording of the time and place of dispatch and receipt of electronic records.

33. Legal effect of the Electronic Transactions Act 4 of 4 • Section 8 of the Act states that electronic signatures have the same legal effects as written signatures so long as a reliable and appropriate method is used to identify the signatory and to indicate the signatory’s approval of the information in the electronic record. • Section 12 provides that unless otherwise agreed by the parties, an offer and the acceptance of an offer necessary to form a contract may be expressed by means of electronic records i.e. there is equivalency between electronic and paper based documents. • Section 15 provides that there must be acknowledgement of receipt of electronic records.

34. Cybercrime • The Computer Misuse Act makes provision for the protection of computer systems and information contained in those systems from unauthorised access by individuals or from abuse by individuals with authorised access and for related matters.

35. Considerations • Consumers are not generally aware of the risks associated with e-commerce, use of the Internet, social media etc. • The track record of consumer advocacy groups offline or online has not been good. • Data privacy means much more in cyberspace that has been contemplated by the draft Data Protection legislation across the Caribbean. • Issues surrounding identity theft are increasing rather than decreasing.

36. Considerations • Advantage of being increasingly involved in e-commerce as consumers and suppliers. • Impossibility of establishing jurisdiction. • Costs associated with negotiating international agreements. • Risk that larger countries may renege anyway.

37. Is the question of protecting the consumer online strictly legal one? Is it one of regulation? International cooperation? • What is the role of the suppliers? • What is the role of consumers as a group in the digital environment? What is the role of social media? • What is the role of financial institutions? • What is CARICOM’s role?

38. Ayanna Young Marshall ayanna.youngmarshall@cavehill.uwi.edu