Cambodian IP News.

Cambodian Law on Consumer Protection Enacted

The Law on Consumer Protection, enacted on November 2, 2019, establishes for the first-time consumer rights and new rules governing competition, with significant implications for intellectual property rights.


The stated goals of the law are to protect consumers, ensure trading is fairly competitive, and promote trust between consumers and businesses. It applies to anyone engaged in business – whether for profit or not – including selling goods, services or property to consumers in Cambodia.




Consumer Rights & Associations


Consumers have the right to:

  • Access information and education in order to distinguish goods or services, and to prevent fraud through commercial advertising

  • Choose goods or services with competitive prices and quality

  • To be heard on concerns, and to examination and settlement by the competent regulators and the government

  • To claim compensation under the law

The law grants consumers the right to form associations, through registration as a non-governmental organization with the Ministry of Interior and authorization from the ministry regulating their sector. Consumer associations will have the following roles and duties:

  • Consulting with consumers and coordinating their issues

  • Acting as representative before the NCPC or before a court, in representing consumers whose rights have been infringed

  • Representing views and interests of consumers in the press and public forums

  • Consulting with regulators concerning information standards

  • Establishing a consumer protection working group in their sector

  • Undertaking other duties as assigned by the NCPC.



National Consumer Protection Committee


The law states that a new National Consumer Protection Committee (NCPC) will be established within the Ministry of Commerce. It will be chaired by the Minister of Commerce with participation of relevant ministries and other institutions. The organization and functioning of the Committee will be determined by a sub-decree in the future.


The NCPC can initiate an investigation on its own initiative, and after a complaint from any person, consumer association, or any competent regulator. The investigations are to be performed by an Ombudsperson, who will be qualified as a judicial police officer. As well as their investigatory powers to search premises, collect evidence and question suspects, they will have the power to temporarily ban the supply, distribution and market circulation of suspected products and services. While the broad outlines of their function and qualifications are stated in the law, the specifics will be determined in future implementing regulations.


Following the Ombudsperson’s investigation, the NCPC has the power to issue decisions and administrative sanctions, as well as negotiating a settlement. Their power to settle specifically excludes criminal matters and repeated violations; a future regulation will determine the settlement procedures.


When a business has failed to disseminate the required information, the NCPC can issue a decision requiring them to do so. In case incorrect or misleading information was disseminated, corrective dissemination may be ordered, at the business’s own expense.


Moreover, repeat violators may be prohibiting by the NCPC from exercising any managerial position of a Cambodian company. The violations need not be under Cambodian law nor in Cambodia, as the NCPC can prohibit individuals found in violation of equivalent provisions in a foreign country and under foreign law.


Further administrative penalties and sanctions are described below. A party displeased with an administrative decision may first request a review, correction or revocation within 15 days of receipt. Following a final decision, they will have thirty days to file a complaint to court should they not be satisfied.



Unfair Acts and Practices


Chapters 4 and 5 of the Law on Consumer Protection define and prohibit a wide range of unfair acts and practices in business. While the law separates acts from practices, with further differentiations with regard to goods, services, misleading representations, in our view that provisions overlap to a fair degree. The practices, explained further below, can be considered as specific types of unfair acts that the law specifically emphasizes are prohibited.


An unfair act is defined broadly as any act of a person in business that may be misleading or deceptive to a consumer, whether intentional or unintentional. The definition does not require any actual confusion, the use of the word “may” indicates that the mere possibility would suffice. Further, the law would seem to create a regime of strict liability, as even unintentional acts are prohibited.


Expanding on this broad definition, the law provides further types of unfair acts:

  • An act or representation such as advertising, sales promotion, and other representations

  • Misleading consumers with regard to the cost, price, or quality of the goods or services. One may not rely on hard-to-read small print, labels and misleading claims to avoid liability.

  • Failing to present consumers with promises, expectations and relevant information

  • Taking advantage of consumers if the supplier is aware that they are not in a position to protect their interests, or are incapable of understanding the goods or services, such as the characteristics, type, language, effect of the transaction or any problems related to the transaction

  • Other acts determined by the Prakas (declaration) to be issued by the Ministry of Commerce.

The law further expands on these types of unfair acts with articles specifically addressing goods, services and misleading representations. While the further articles provide more details on the ways in which an act may be misleading or deceptive, and specifically prohibits them, the broad language of the general definition would also cover such cases.


Finally, nine specific unfair practices are described and prohibited in their own chapter, as follows:


Prohibition of Unfair Sale: any sale which causes consumer confusion in the purchase of goods or services. This intersects to a large degree with trademark rights, which aim to prevent consumer confusion as to the source of a good or service. An unfair sale, however, would be broader, as it is not limited to just confusion as to source, but would also cover price, quality, quantity, and essentially any other characteristic or information relevant to the purchase decision.


Promise of Gifts and Prizes: a promise of a gift, prize or other free object with intent to deceive or lie to the consumer with respect to goods, services or real property.


Bait Advertising: advertising goods or services at a certain price without the intent of supplying them, or with no reasonable ground to believe that they can be supplied at the advertised price. Commonly referred to as “bait-and-switch”, this practice involves advertising a good or service at an extremely attractive price, but not actually offering it (or not at a reasonable quantity). Interested consumers are then redirected to a more expensive or otherwise less attractive option. The law requires a supplier to offer the goods or services at the advertised price within a specified time and at a reasonable quantity.


Unfair Solicitation Sales: a sale that entices or induces someone to buy something and get a benefit (e.g. commission or bonus) in exchange for providing the name of a potential customer, or otherwise helps the seller attract new customers, who end up buying the goods or services. This provision targets multi-level marketing schemes, which entice buyers with benefits when they find further buyers. The wording of the article is very specific as to the actions that make up the unfair practice; multi-level marketers are advised to review their practices to ensure they comply with the law.


Demanding or Accepting Payments Without Intention to Supply Goods or Services as per the Purchase Order: demanding or accepting payment without the intent to supply the goods or services per the purchase order, or intending to supply substitute goods or services, or without a reasonable ground to prove they can supply them within a certain time.


False or Misleading Representation in Respect of Certain Business Activities: this prohibits certain representations regarding business activities carried out in a residence, performance of work, and investment. Whereas the rest of the law addresses the sale of goods, services and real property, this provision widens the scope significantly by covering work and investment activities.


Coercion by Force and Mental Threat: coercing another through force, disturbance or mental threat regarding the supply of goods or services, or payment for them, is prohibited.


Pyramid Scheme: the law defines this as a scheme that supplies goods/services for a prize or consideration (ie. money), and creates a purchase-sale and investment opportunity for numerous participants, individually or through agents who are not creating real-world sales opportunities.


Selling Goods Bearing False Trade Description: trade description refers to the display or description of the goods, including quantity, size, production method, substance or time, their suitability, durability, function, nature, and the appearance of the goods. It specifically excludes marks or trade names. The provision covers any false description on the goods, their cover, packaging, label, tube, as well as sewn, pressed, inserted, attached or sealed on the goods.


Other Unfair Practices: further unfair practices may be defined by implementing regulations in the future.



Information for Consumers


The law sets forth future minimum information standards, which will be determined in subsequent regulations. These will be issued by the competent regulator, in consultation with the National Consumer Protection Committee as necessary. Crucially, all information will need to be written in Khmer, which is often not the case at present. While the specifics will need to await the future regulations, the law sets forth model content for the standards.


These cover:

  • Disclosing information related to the kind, class, safety, quantity, origin, use function, maintenance, composition, design, installation, use instruction, cost, packaging, promotion or supply, manufacturing and expiration dates, product information, or information concerning the supply of the goods or services

  • Specifying how this information is to be received

  • Specifying the form and method of dissemination of the supply, re-supply, and promotion thereof.

  • Setting the minimum information standard for conducting e-commerce



Penalties


In addition to requiring disclosure of information and prohibition from serving in a managerial role, as described above, the NCPC is empowered to issue administrative sanctions including written warnings, and suspending, revoking and cancelling a business’s commercial registration or license. Separately, the Ombudsperson may impose obstruction penalties, payment of which extinguishes a criminal charge. Specific procedures for imposition of fines and criminal penalties will be issued in an implementing regulation.


Commission of an unfair act is first met with a written warning, following which the certificate of commercial registration or license may be suspended, revoked or cancelled. If the unfair act concerns the quality or origin of the goods, an obstruction penalty of at most 20,000,000 Riels (approx.. USD 5,000) would apply. In case of a severe impact to consumer’s health and safety, criminal punishment of six months to two years imprisonment, plus a fine of 1,000,000 to 4,000,000 Riels (approx. USD 250 to 1,000) applies. In case of permanent disability or death, the imprisonment is increased to 2 to 5 years and the fine to 4,000,000 to 10,000,000 Riels (USD 1,000 to 2,500).


Unfair practices are subject to a fine of up to 50,000,000 Riels (approx. USD 12,500), except for pyramid schemes and selling goods bearing false trade descriptions. These are subject to a maximum fine of 80,000,000 Riels (approx. USD 20,000). In case of a severe impact to consumer’s health and safety, criminal punishment of six months to two years imprisonment, plus a fine of 1,000,000 to 4,000,000 Riels (approx. USD 250 to 1,000) applies. In case of permanent disability or death, the imprisonment is increased to 2 to 5 years and the fine to 4,000,000 to 10,000,000 Riels (USD 1,000 to 2,500).


Failure to comply with consumer information standards or with a decision prohibiting one from a managerial role are both subject to a maximum fine of 10,000,000 Riels (approx. USD 2,500).

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