Israel’s Consumer Protection and Fair Trade Authority reduces financial sanctions

At the end of June 2026, during its adjudication of the Afikim Water case, Israel’s Supreme Court prescribed a clear test for the first time for calculating financial sanctions pursuant to the Consumer Protection Law. In our earlier update about this case, we reviewed the Supreme Court’s ruling on the “act-based test” for counting violations and calculating financial sanctions.

The CPFTA responded relatively swiftly and published a legal statement and temporary enforcement directive to immediately implement the test and change how sanctions are calculated on the ground. Since the CPFTA does not publish statements very often, this swift response indicates that it attributes considerable significance to the court ruling.

Legal statement and urgent temporary enforcement directive

Up until now, in particular instances of a defect in a standard document (such as nondisclosure or misrepresentation in a contract), the CPFTA had customarily counted each affected consumer as a separate violation, based on the approach that each document delivery constituted an independent “act.”

The CPFTA’s new statement implements the ruling in the Afikim Water case and prescribes that prospectively, a violation due to defective wording of a standard document (such as an engagement contract or transaction cancellation terms) or on a dealer’s website, will be deemed a single violation, regardless of the number of consumers who received the document.

Retroactive application

The CPFTA’s statement clarifies that the said relief does not apply solely to future violations and announced that it will downwardly revise sums of sanctions (through the State Attorney’s Office) in cases where the administrative proceeding has concluded and which are now pending before the courts, and in proceedings still at the administrative stage, and will no longer multiply the sanctions by the number of affected consumers.

This means that businesses currently in the midst of an enforcement proceeding might benefit from an immediate reduction of the sum of the sanction.

Material exception – actual financial damage

Notwithstanding that stated, the CPFTA clarified that whenever a defect in a standard document actually caused consumers financial damage (such as unlawful collection) and whenever the CPFTA has evidence of actual financial damage, it will continue to multiply the sanction by the number of affected consumers.

The differentiation between a “technical” violation and a violation that caused actual financial damage is what will largely determine the magnitude of the exposure. The CPFTA also emphasized that at issue is a temporary ameliorating directive with immediate effect, and that it reserves the right to impose permanent and more stringent procedures in the future.

No change in the food and retail sectors

The CPFTA noted that it is not making any changes in the food and retail sectors, since there are already specific methods in effect for counting violations, such as the “categories method” (up to 12 categories under inspection) in respect of failure to display prices and the “catalogue number method” in respect of price deception, which are already consistent with the principles of the ruling and have been ratified in extensive case law.

The implications for businesses

The CPFTA’s statement, like the ruling itself, makes clear that how violations are counted and how each violation is classified, can determine the size of the sanction no less than the existence of the violation itself.

We recommend that businesses in the midst of active enforcement proceedings – and especially when violations due to a defect in a standard document are being multiplied by the number of affected customers – should ascertain whether they have grounds for a reduction of the sanction and contact the CPFTA.

Looking ahead, the key factor determining the magnitude of the exposure is whether the violation caused substantive financial harm to consumers. Above all, properly drafted contractual documents and clean website interfaces remain the best protection, especially since even a single defective template could still trigger a sanction.

Upcoming in our next update: permanent enforcement procedures

The CPFTA noted that its statement is intended to cover the period until the permanent enforcement procedures anchoring the principles of the court ruling are formulated, which will be published gradually in order to increase certainty, transparency and uniformity. The CPFTA also emphasized that it reserves the right to adopt more stringent methods for counting violations in those procedures. This means that the current temporary relief is definitely not the end of the story, and it is advisable to keep checking for future announcements of the CPFTA’s procedures.

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Adv. Efrat Cohen is a senior partner and heads our firm’s Regulation Department.

Adv. Or Levi is an associate in our firm’s Regulation Department.

Barnea Jaffa Lande’s Regulation Department advises businesses and companies in relation to preventive measures and managing CPFTA enforcement proceedings, and helps clients examine their specific exposures and make the necessary adjustments to mitigate their legal exposures.