New Colombian Consumer Protection Regime (Law 1480)

The Colombian Congress enacted the new consumer protection regime by means of Law 1480 of October 12, 2011. The new regime strengthens the protection to the consumer rights as per international standards on consumer protection legislation. This new regime will come into force six months as of its enactment, that is, in April 2012. During this transitional period, manufacturers, merchants, and consumers may prepare for the changes that the new regime entails. We present a summary of some of the new issues set forth by the new consumer protection regime:

• Default warranty period for products/services: Unless expressly set forth by the manufacturer or retailer, the new law provides the following default warranty periods of one (1) year for new products, three (3) months for second-hand products, and three (3) months for services involving the delivery of the goods for repair.
• Product Liability: The new regime sets forth rules on product liability in the case of defective products that cause damages to the health, life, or safety of a person. Among other rules, the new statute provides for new procedures to claim such damages and sets forth that manufacturers and retailers are strictly, jointly, and severally liable for damages arising out defective products.
• Protection against standard form contracts: The new regime provides for a set of rules intended to protect consumers against unconscionable clauses in standard form contracts. Among others, producers, manufacturers, and retailers will be prevented from including clauses that allow them to unilaterally modify the contract or that entitle them to refrain from complying with their obligations.
• Invalidity of abusive clauses: The consumer protection regime sets forth a list of abusive and unconscionable clauses that will be void in a contract with a consumer. Some of the provisions classified as abusive are: clauses intended to limit the liability of the manufacturer or retailer below certain standards; clauses that entail a waiver by the consumer of the rights granted by the consumer protection rules; and clauses whereby the consumer agrees to submit the resolution of disputes arising out the contract to an arbitration tribunal.
• Right to rescind the contract: Under certain circumstances, the new regime provides for the right of the consumer to rescind some types of contracts, such as sale of goods contracts and provision of services contracts in which the producer or supplier provides financing to the consumer; contracts for the purchase of timeshare units; sales advertised and perfected by means of non-traditional methods, among others.
• E-commerce: As to transactions conducted through online and electronic systems, the new consumer protection regime establishes that consumers will be entitled to order the bank to reimburse the payment made by online or electronic systems in several events, such as: (i) if the consumer was defrauded; (ii) if the transaction was not requested by the consumer; (iii) if the purchased product was not received by the consumer; (iv) if the delivered good does not correspond to the requested product; or (v) if the product is defective.
• Sanctions: The new regulation grants to the Superintendence of Industry and Commerce (SIC) the power to impose sanctions in case of violation of the new consumer protection regime. Among other penalties, the SIC may impose fines equivalent to up to 2,000 Colombian minimum monthly wages (approximately US$600.000 in 2011).