Business Law

Consumer Protection in Malaysia

Objectives By the end of this section, you should be able to:

Explain the scope of application of the Consumer Protection Act 1999 and define the term “goods”.

Elaborate the concept of unfair trade practices and its consequences.

Describe the concept of false and misleading conduct. Elaborate and apply the provisions for consumer protection. Evaluate the provisions and impact of various implied

guarantees. Explain and apply the remedies available to consumers. Comprehend and apply the processes to be used for consumer

rights through the consumer tribunal.

Course Content

The need for and status of consumer protection Consumer Protection Act 1999 False, misleading and deceptive conduct Remedies available to the consumer Punishment Role of tribunals for consumer claims Implications for business decisions

Introduction

The term “consumer protection” can be used to describe rules of law which recognises the bargaining weakness of individual consumers as well as ensure that their weakness is not unfairly exploited

The main concern of this law is defective goods and services.

Introduction

Relevant law is the Consumer Protection Act 1999

It provides: - For consumer protection in relation to supply of

goods and services, and Established the National Consumer Advisory

Council and the Tribunal for Consumer Claims

Introduction

Other laws which directly or indirectly provide for consumer protection and govern the transactions involving a consumer such as: Price Control Act 1946 Control of Supplies Act 1961 Hire-Purchase Act 1967 Weights and Measures Act 1972 Trade Description Act 1972 Direct Sales Act 1993

Introduction Some key consumer rights are:

Right to obtain fundamental goods and services to guarantee a satisfactory life

The consumer is protected from the processing and marketing of goods as well as services which can be harmful

Sufficient, accurate and precise information to assist him/her in making the right decision

The consumer reserves the right to have access to direct information with regards to all goods and services

The consumer must have the right and opportunity to voice out Right for compensation

Scope of application of the Act Application of this Act is supplemental This Act does not affect the liability arising under any other law such

as the Sale of Goods Act or the Contracts Act etc By an amendment carried out in the Act in year 2007, transactions

effected by electronic means are also covered by the Consumer Protection Act

The Act does not apply to all transactions involving sale of goods It must be goods and services supplied to a consumer in the course

of a business and there are a number of transactions which are excluded

Scope of application of the Act This is stated in Section 2 of the Act which reads as follows:

1. Subject to subsection 2(2), this Act shall apply in respect of all goods and services that are offered or supplied to one or more consumers in trade.

2. This Act shall not apply —a. to securities as defined in the Securities Industry Act 1983;b. to futures contracts as defined in the Futures Industry Act 1993;c. to contracts made before the date on which this Act comes into operation;d. in relation to land or interests in land except as may be expressly provided in

this Act;e. to services provided by professionals who are regulated by any written law;

andf. to healthcare services provided or to be provided by healthcare professionals

or healthcare facilities.

The consumer

Applies to consumer transactions Defined in s3

S3 Consumer Protection Act 1999A “consumer” means a person who —a. acquires or uses goods or services of a kind ordinarily acquired for

personal, domestic or household purpose, use or consumption; andb. does not acquire or use the goods or services, or hold himself out

as acquiring or using the goods or services, primarily for the purpose of:i. resupplying them in trade;ii. consuming them in the course of a manufacturing process; oriii. in the case of goods, repairing or treating, in trade, other goods or

fixtures on land.

Goods

“Goods” means goods which are primarily purchased, used or consumed for personal, domestic or household purposes and includes —a. goods attached to, or incorporated in, any real or personal

property;b. animals, including fish;c. vessels and vehicles;d. utilities; ande. trees, plants and crops whether on, under or attached to land or

not, but does not include choses in action, including negotiable instruments, shares, debentures and money.

Services

Services are also defined in s3 as follows:

any rights, benefits, privileges or facilities that are or are to be provided, granted or conferred under any contract

Unfair trade practice Part II of the Act in s9 to s18 proscribes or limits the

various business or trade practices that are regarded as unfair

It seeks to protect consumers by improving the public conduct of businesses, their selling practices, advertising and promotional activities

The prohibited conduct listed in Part II includes any misleading or deceptive conduct, false representation and unfair practice in connection with the goods and services offered or supplied to consumers in trade

Unfair trade practice

Part III of the Act provides for the safety of goods and services for the consumer

Such goods and services must comply with the safety standards laid down by the authorities

The punishment for contravention is also provided by s25.

False, misleading and deceptive conduct S8 provides the definition of “false”,

“misleading” or “deceptive” as conduct, representation or practice which is capable of leading a consumer into error

Any misleading conduct as to the nature, manufacturing process, characteristics, suitability for a purpose or quantity of the goods is an offence under s9

False, misleading and deceptive conduct In relation to services, any conduct which is

misleading or deceptive or is likely to mislead or deceive the public as to the nature, characteristics, suitability for a purpose or quantity of the services, is an offence.

S10 creates an offence in relation to false or misleading representation

False, misleading and deceptive conduct A person who makes a false or misleading

representation or misleading indication as to price would be guilty under s12

For false representation and other misleading conduct in relation to land, it is an offence under s11

Bait advertising

Provided by s13 Bait advertising is a conduct intended to

attract customers by offering ‘special’ prices only for the consumers to be told upon follow up that the goods and services have been sold out but another product at a higher price is available for sale

Gifts, prizes and free offers To attract customers, some stores make

promises of free offers or gifts S14 gives some protection to consumers

against such offers by providing that no person shall offer any gift, prize or other free item when there is no intention of providing it

Such an offer cannot be made when there is no intention of not providing it as offered

Limited goods

Retailers and suppliers say that the goods are of limited edition

This is meant to attract consumers to buy the goods quickly before stocks run out

Limited goods

S15 requires that in supplying or offering to supply goods for sale to consumers, no person should describe the goods as limited unless their edition, printing, minting, crafting or production is restricted to pre-determined maximum quantity; or the actual quantity ordered or subscribed to within

a specified and reasonably short period of time.

Limited goods

Whenever a retailer or supplier claims that goods are limited, he shall state clearly in a statement which shall be conspicuously placed near the claim that the maximum quantity of goods which are offered for

sale; and the specific time period or dates for which the goods

are offered for sale. The punishment for not fulfilling the above

requirement is provided in s25.

Limited goods

The issue is whether a supplier of goods cannot demand for or accept any payment when he/she does not intend to supply the goods or services (s16)

S16 is meant to prevent gimmick advertisements

Safety of goods and services Part III of the Act which comprises s19 to s24

provides rules for the protection of consumers against unsafe goods and services

Punishment

Part IV of the Consumer Protection Act 1999 provides for common penalties, defences and remedies for offences committed under Part II and III

Punishment

Punishment is s25(1) Defences are stated in s26 – s28

Implied Guarantees S30 provides that the implied guarantees under Part V of the

Act shall apply irrespective of the fact whether the goods are supplied in connection with services or not

There are seven guarantees in Part V which are implied in terms of supply of goods to a consumer: S31: Implied guarantee as to title S32: Implied guarantee as to acceptable quality S33: Implied guarantee as to fitness for particular purpose S34: Implied guarantee that goods comply with description S35: Implied guarantee that goods comply with sample S36: Implied guarantee as to price S37: Implied guarantee as to repairs and spare parts

Remedies

The Consumer Protection Act provides the following remedies for failure or breach of above mentioned implied guarantees: S41: Options against suppliers where goods do

not comply with guarantees S43: Loss of right to reject goods S46: Consumer’s option of refund or replacement

Implied guarantees in respect of services In Part VIII of the Act under Sections 53 to 56,

there are provisions in relation to contracts for the supply of services: S53: Implied guarantee as to reasonable care and skill S54: Implied guarantee as to fitness for particular

purpose S55: Implied guarantee as to time of completion S56: Implied guarantee as to price

Product liability

Part X of the Consumer Protection Act deals with product liability: Liability for defect in product Liability for harm caused by defective products

Civil remedies

The National Consumer Advisory Council and The Tribunal for Consumer Claims are two specialised bodies established under the Consumer Protection Act 1999

The former act as an advisory to the Minister and the latter is a mechanism to determine consumer claims

Q & A