There has been a growing outcry recently against the ease at which class actions alleging a variety of offenses are being filed against small and medium-sized business-owners.
Almost every week since October 7, news media have been reporting about business owners who were called up for reserve duty, spent months defending the country, and who, upon returning home after completing their tour of duty, are then forced to fight in the courts because a warning letter was waiting for them with a demand for high sums of compensation. Much has been written about this and about the impacts that such demand letters have on reservists – personally and at the business level. And as reported, this issue should be examined by the legislative authorities.
The war also however gave rise to other consumer issues, such as the country of origin of imported fruits, because some of us are not willing to fund any country that opposes Israel’s response to the Hamas attack or that conducts proceedings against us in the Hague. Fortunately, the legislature had already addressed this issue when it enacted statutory provisions imposing a labeling obligation for imported products. Unfortunately, not all merchants are complying with the law and are exposing themselves to class actions as mentioned above. Considering the public’s demand to receive information from business owners at points of sale, business owners should therefore ensure that they comply with the applicable laws in order to avoid class actions.
Which consumer protection obligations should business owners be meticulous about in order to mitigate exposure to legal proceedings?
Prohibition of deception
This is an extremely important prohibition that underpins several key consumer protection provisions. For example, failure to mark the country of origin of imported products is not only a violation of an explicit labelling obligation pursuant to the Consumer Protection Law, but also constitutes a violation of the prohibition of deception. Returning to the example of imported fruits, the failure to label that the fruits were imported from South Africa is not only a violation of the labelling obligation and an offense of consumer deception, but also constitutes a violation of consumers’ right to boycott products of a country that is conducting proceedings against us in the Hague.
The prohibition of deception is prescribed in numerous statutory provisions: the provision of misleading or incomplete information in advertising promotions or concerning delivery dates and terms, and warranty terms or cancellation terms are just a few examples of violations of the prohibition of deception. The Consumer Protection Authority has also issued clarifications of the scope of the prohibition of deception, such as the fact that the product labelling obligation also applies to products in which a substantial change in ingredients has been made and to products for which the package contents have been reduced.
It should be noted within this context, the prohibition of deception also encompasses another consumer protection provision – consumers’ right to make informed decisions. Furthermore, since violating consumers’ right to make informed decisions also deprives consumers of autonomy, such conduct can be expected to trigger negative sentiments towards the brand or business.
Online services and e-commerce
Many of the class actions were filed against businesses engaging in online services and e-commerce on the grounds of violations of website accessibility, a failure to display an accessibility statement, or the provision of misleading and/or incomplete information about products or services. Failure to disclose material information, such as the manufacturer’s and importer’s names, or the provision of incomplete information about the terms of the warranty, supply dates or cancellation terms, constitute violations of the Consumer Protection Law – provisions that also derive from the prohibition of deception rule.
Additionally, businesses that fail to ensure website accessibility or publish an accessibility statement are violating provisions of the Equal Rights for Persons with Disabilities Law. Therefore, businesses engaging in online services, especially e-commerce websites, are obligated to make their websites accessible and to publish an accessibility statement, which specifies, inter alia, the existing accessibility arrangements on the website and in the physical store.
Considering the numerous statutory provisions, business owners should meticulously examine the applicability of these laws to their businesses and their specific compliance obligations. This is the only way to try to avoid legal proceedings, even if they are not always fair.