Insight

News on the Bill Regarding the Strengthening of SERNAC

Strengthening SERNAC
Guillermo Carey

Guillermo Carey

April 18, 2017 02:32 PM

On June 2, 2014, President Michelle Bachelet presented to Congress a bill to modify Law N° 19,496 on the Protection of the Rights of Consumers (“CPA”) –Bulletin N° 9369-03.

Currently, this bill is in its second constitutional stage of processing before the Senate, pending the publication of the second report of the Constitution, Legislation, Justice, and Regulation Commission.

The president of the aforementioned commission has stated that there is an agreement with the Executive branch in order to finish the processing of certain bills which are high priority for the Government, before the end of the legislative year (January 2017). The bill for the modification of the CPA is among these bills. According to said agreement, on December 14, 2016, the Government instructed sum urgency for this bill1.

Please find a summary of the main lines and modifications contained in the bill herein:

I. NEW AUTHORITIES OF SERNAC

The bill aims to significantly increase the authority of the National Consumers Bureau (“SERNAC” for its Spanish acronym) regarding supervision, sanctioning, regulation and interpretation of the law.

  • Supervision: The bill confers upon SERNAC the ability to enter into those facilities in which suppliers develop their activities in order to determine if the law is being fulfilled. This ability may be exercised with the assistance of the police in case the supplier does not cooperate with the supervision process. Also, in this context, the Bureau has the authority to require that a company present any document, book or information that is necessary for the supervision process, and to subpoena the legal representatives, administrators, advisors and other dependents of the company regarding the facts subject to these proceedings.
  • Sanctioning: The bill gives SERNAC the authority to directly sanction infringements to the CPA. For this purpose, the bill sets forth a new proceeding before SERNAC.
  • Regulating and interpreting: The exercise of these new authorities will correspond to the National Director of SERNAC, and shall be approved by a new regulatory body, independent from SERNAC, named “Regulatory Counsel”. This counsel shall approve or reject the regulation and interpretation proposals made by the National Director of SERNAC. According to these new authorities, SERNAC may: (i) issue rules or general instructions, in order to complement the CPA, and (ii) administratively interpret regulations that protect the rights of consumers.The bill sets forth the possibility of filing an illegality claim against said proposals before the Court of Appeals of Santiago.

II. INCREASED FINES

The bill proposes a significant increase In the fines established by the CPA. Some of the most relevant modifications are:


Additionally, the bill establishes a system for the determination of the amount of the fines, applicable both to judges and to SERNAC.

This new fine determination system includes several mitigating and aggravating circumstances in order to delimit the amount of the applicable fines.

Mitigating circumstances (decreases the amount of the fine within the set range):

  1. Reparation of damage caused to the consumer issuance of the decision or ruling, as applicable.
  2. The fact that the infringing supplier is a small sized business (“SSB”).
  3. The fact that the supplier has collaborated with SERNAC before or during the proceeding.

Aggravating circumstances (increases the amount of the fine within the set range):

  1. Relapse by the supplier (the supplier has already been sanctioned for the same breach of the CPA within the last 36 months for medium or major sized businesses, or within the last 12 months for micro or small businesses).
  2. Serious damage to consumers (monetary, physical or emotional) or endangerment of consumers or their community.

III. NEW SANCTION FOR SUSPENSION OF UTILITY SERVICES

In cases of an unjustified suspension of utility services (water, gas, sewer, electricity, telecommunications, telephone or garbage collection), the bill sets forth the obligation of the supplier to compensate the affected consumers for each day in which the service was unavailable. This compensation (punitive damage) is set on a daily basis and its amount shall be equivalent to the fee charged for the preceding month, with a maximum of 12 days. According to the bill, it shall be understood that the service has been suspended for a day each time it is interrupted for four or more continuous hours.

IV. BENEFITS FOR SSBS

The bill establishes a series of measures that aim to benefit SSBs in case of potential breaches to the CPA, lowering the standard of the law in these cases. This less stringent system consists of the following measures:

  1. Determination of fines: The bill sets forth a mitigating circumstance if the supplier is an SSB, and for micro and small sized businesses it shortens the term for calculating relapse periods and lowers the amount of the first fine effectively imposed by 70%, in procedures before SERNAC, among other benefits.
  2. Alternative sanction in procedures before SERNAC: The fine may be replaced by the obligation to attend courses on the rights and duties of consumers, instructed by SERNAC.
  3. Grace period for supervision proceeding of SERNAC: Micro and small sized businesses have a 10 day grace period to resolve those infringements detected by on a supervision proceeding in order to avoid sanctions, as long as certain requirements are fulfilled.

V. MODIFICATIONS TO THE PROCEEDINGS OF THE CPA

  1. Proceedings before the Local Courthouses (Juzgados de Policía Local) Local Courthouses maintain their jurisdiction to judge cases in which consumers, individually, file an infraction and/or damages claim against the supplier. Nevertheless, there are some new aspects incorporated by the bill, among which it is possible to highlight: (i) consumers must always be represented by an attorney; and (ii) the criteria for determining the competence of the court is limited to the domicile of the consumer or the supplier, at the choice of the former.
  2. New administrative sanctioning proceeding before SERNAC This proceeding may be initiated directly by SERNAC, or through a claim filed by a consumer. SERNAC will inform the supplier of the alleged infringement, and that the supplier a solution. In case the consumer or SERNAC do not accept the supplier’s proposal, or if the supplier does not make any proposal for solution, there will be a conciliation hearing before SERNAC, which may be waived by the consumer, confirming his claim. Accordingly, the minute that declares the conciliation as failed or that confirms the claim may originate a sanctioning proceeding.
    The sanctioning proceeding is substantiated by the corresponding Regional Director of SERNAC and will be overseen by an attorney from SERNAC (instructor). This proceeding will be initiated by a resolution providing the supplier with a term of ten days in order to present its evidence and formulate its defenses (any evidentiary means is accepted). Afterward, the instructor will propose a ruling of acquittal or sanction of the supplier to the Regional Director. Then, the Regional Director will have a term of ten days to issue a resolution confirming, modifying or overruling the proposal of the instructor. It will be possible to file an illegality claim against such resolutions before the Local Courthouse with jurisdiction in the domicile of the consumer, within a term of ten days. Also, the resolution that solves the claim will be appealable before the Court of Appeals only in cases of an amount over 25 UTM (app. USD 1,700).
  3. Class actions One of the main modifications introduced by the bill is the possibility for consumers to request moral damages in this type of proceeding, which is currently excluded by the CPA. Another important innovation of the bill is that, in qualified cases, and only once the claim has been declared admissible, the judge may order the supplier to provisionally cease collection of any charges questioned by the consumer, as a protective remedy. The bill also establishes that the court shall have the ability to impose a fine for each affected consumer in case the nature of the infringement justifies it, within the limitations set forth in the law (the total amount of the fines may not exceed 30% of the sales of the line of products or the service subject to the sanction during the period in which it lasted, or double the economic benefit resulting from the infringement).
  4. Collective mediation This new proceeding established in the is a special administrative sanctioning proceeding in charge of a specialized and independent unit of SERNAC.This proceeding may be initiated by or through a claim filed by consumers. The duration of this mediation proceeding shall not exceed three months, extendable only once, for an additional three-month period. If an agreement is not reached within such term, the mediation will be considered as failed. Additionally, the parties may express their intention not to continue with this proceeding at any stage of the mediation.

VI. NEW OF LIMITATIONS

The bill increases the statute of limitations for consumers or SERNAC to file an infractional claim against the supplier, from six months to two years. This new term is counted from the time in which the infringing conduct ceased. On the other hand, regarding civil actions (damages), the bill provides that the statute of limitations set forth in the Civil Code will apply (five years for contractual liability and four years for torts).

1 Sum urgency means that the corresponding chamber of Congress, in this case, the Senate, has 15 days to dispatch a bill.

Trending Articles

The 2024 Best Lawyers in Spain™


by Best Lawyers

Best Lawyers is honored to announce the 16th edition of The Best Lawyers in Spain™ and the third edition of Best Lawyers: Ones to Watch in Spain™ for 2024.

Tall buildings and rushing traffic against clouds and sun in sky

Best Lawyers Expands Chilean 2024 Awards


by Best Lawyers

Best Lawyers is pleased to announce the 14th edition of The Best Lawyers in Chile™ and the inaugural edition of Best Lawyers: Ones to Watch in Chile™, honoring the top lawyers and firms conferred on by their Chilean peers.

Landscape of city in Chile

The Best Lawyers in Spain™ 2023


by Best Lawyers

Announcing Spain's recognized lawyers for 2023.

Flag of Spain

Announcing The Best Lawyers in South Africa™ 2024


by Best Lawyers

Best Lawyers is excited to announce the landmark 15th edition of The Best Lawyers in South Africa™ for 2024, including the exclusive "Law Firm of the Year" awards.

Sky view of South Africa town and waterways

Announcing the 2023 The Best Lawyers in America Honorees


by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

The Best Lawyers in Portugal™ 2024


by Best Lawyers

The 2024 awards for Portugal include the 14th edition of The Best Lawyers in Portugal™ and 2nd edition of Best Lawyers: Ones to Watch in Portugal™.

City and beach with green water and blue sky

The Best Lawyers in Peru™ 2024


by Best Lawyers

Best Lawyers is excited to announce the landmark 10th edition of The Best Lawyers in Peru, the prestigious award recognizing the country's lop legal talent.

Landscape of Peru city with cliffside and ocean

The Best Lawyers in South Africa™ 2023


by Best Lawyers

Best Lawyers proudly announces lawyers recognized in South Africa for 2023.

South African flag

The Best Lawyers in Chile™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms in Chile.

White star in blue box beside white box with red box on bottom

The Best Lawyers in Colombia™ 2024


by Best Lawyers

Best Lawyers is honored to announce the 14th edition of The Best Lawyers in Colombia™ for 2024, which honors Colombia's most esteemed lawyers and law firms.

Cityscape of Colombia with blue cloudy sky above

Announcing the 2024 Best Lawyers in Puerto Rico™


by Best Lawyers

Best Lawyers is proud to announce the 11th edition of The Best Lawyers in Puerto Rico™, honoring the top lawyers and firms across the country for 2024.

View of Puerto Rico city from the ocean

The 2023 Best Lawyers in Portugal™


by Best Lawyers

Announcing the elite group of lawyers recognized in Portugal for 2023.

Green and red Portuguese flag

Unwrapping Shrinkflation


by Justin Smulison

Through the lens of the United States, we take a closer look at the global implication of companies downsizing products while maintaining and often raising prices.

Chocolate bar being unwrapped from foil

Best Lawyers: Ones to Watch in America for 2023


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

2021 Best Lawyers: The Global Issue


by Best Lawyers

The 2021 Global Issue features top legal talent from the most recent editions of Best Lawyers and Best Lawyers: Ones to Watch worldwide.

2021 Best Lawyers: The Global Issue

Announcing the 2023 The Best Lawyers in Canada Honorees


by Best Lawyers

The Best Lawyers in Canada™ is entering its 17th edition for 2023. We highlight the elite lawyers awarded this year.

Red map of Canada with white lines and dots