Updates on Consumer Protection Laws

Obligation to disclose post-sale delivery and service policies

On August 6, 2018, the Consumer Protection Regulations pertaining to the disclosure of material information about the provision of an asset or service will come into effect. The regulations were enacted following an amendment to the Prohibition of Discrimination in Products, Services and Entry into Places of Entertainment and Public Places Law, which addressed discrimination based on place of residence. The legislative amendment indirectly amended the Consumer Protection Law so that another detail was added to the list of material details that must be disclosed to consumers – that of “the location where the asset or service will be provided”.

It should be noted that the initial version of the amendment to the Prohibition of Discrimination Law sought to prohibit merchants employing more than one hundred employees from discriminating in the provision of a product or a public service outside of the business’s premises between consumers residing at a similar distance from the business, provided there is no security obstacle to providing the product or the service. This demand arose as a result of merchants who refused to deliver goods or provide services to particular areas or, alternatively, who charged a higher price for the delivery of goods or the providence of services to those areas. However, the version of the amendment that was approved and promulgated eliminated the prohibition of discrimination and replaced it with a strict disclosure obligation, whereby the merchant must disclose its delivery policy by virtue of the Consumer Protection Law.

The purpose of the Regulations, therefore, is to prescribe detailed provisions regarding the disclosure obligation as it pertains to the provision of an asset or the provision of a service, insofar as they are not being provided on the business’s premises, including to areas in Judea and Samaria (excluding territories of the Palestinian Authority). In addition, the Regulations mean to prescribe provisions regarding the fulfillment of the disclosure obligation.

Pursuant to the Regulations, a merchant who sells a product to a consumer that includes a delivery service is obligated to disclose to the consumer, prior to closing the transaction, the list of locations to which it does not provide delivery service or the exclusions applying to the delivery service to that location, even if the consumer can waive the delivery service within the scope of the transaction. Furthermore, in relation to a transaction for the provision of a service, including repair services subsequent to the statutory warranty period, the merchant must disclose to the consumer the list of locations where it does not provide the service, or whether exclusions apply to the provision of service.

Regulations relating to transactions transacted in shops – The Regulations prescribe provisions on the fulfillment of the disclosure obligation to disclose the shop’s policy regarding the provision of a service or a delivery service. This includes the merchant’s obligation to post a sign near the cash register and in a conspicuous location (the Regulations also define the required dimensions of the sign and the font size) specifying the shop’s product delivery service policy or the shop’s service-provision policy.

Regulations relating to remote-sale transactions (via internet/telephone) – The Regulations prescribe that merchants selling goods or providing services to consumers via the internet must disclose to consumers, at the remote marketing stage, in a conspicuous location at the website and in clear and legible letters and numerals, the merchant’s policy regarding the provision of a service or a delivery service. If the transaction is transacted via the telephone, the merchant must inform the customer orally during that same telephone conversation.

In addition to that stated above, in relation to transactions being transacted both in shops and via remote sales, merchants are also obligated to disclose their policy regarding the provision of a service or a delivery service in a written contract, including on the order form (if any).

It should be noted that many merchants who sell goods or services to consumers via a website specify their delivery policies in the “Terms of Use” of their website. However, these sections are not always adequately understandable or conspicuous enough for consumers. Considering the stringent disclosure obligation specified in the Regulations in this regard, and in light of the purposive interpretation of the Consumer Protection Law, it might be wise for merchants to re-examine the content and fulfilment of presentation of their delivery policies on their websites in order to minimize any possible exposure.

Noncompliance with the disclosure obligation exposes a merchant to lawsuits of up to NIS 10,000, without proof of damage in respect of each violation, and to class actions.

Expansion of provisions regarding scheduling of providing services at consumers’ homes

At the beginning of July 2018, the Israeli Knesset approved the second and third readings of a draft bill to amend the Consumer Protection Law in relation to the provision of services at consumers’ homes. The draft bill aims to rectify the current situation whereby consumers are forced to wait for hours in their homes until the arrival of a merchant’s service provider, thus disrupting their routines and their work schedules.

According to the current language of the provisions of the Law, the obligation to schedule a service provider’s visit to a consumer’s home applies to a technician only, and only during the warranty period specified in the regulations, or according to a service contract in which the provision of the service is contingent upon installation of a device in the consumer’s home. Pursuant to the provisions of the Law, the technician must schedule the date and time of the visit to the consumer’s home within a time frame of two hours. In the event of a delay, the consumer must be compensated and will not have to prove damage.

The amendment expands the obligation currently in effect so that it will apply not only to the technician, but also to any representative of the merchant who is supposed to arrive at the consumer’s home in order to provide a service to him. Not only will this apply in the instances referred to above, but also for the purpose of installing and uninstalling a device that the merchant sold, rented, or loaned, as well as in instances of periodic inspections of household gas installations, delivery of goods, and a continuous service contract to repair goods for a fee.

Furthermore, similar to the provisions that currently apply to technicians, the amendment prescribes that a visit by a service provider to a consumer’s home must be done between the hours of 08:00 and 19:00 on weekdays, and between the hours of 08:00 and 13:00 on Fridays and holiday eves. This provision does not apply to post-sale product delivery services or to a continuous service contract to repair goods for a fee.

The amendment to the Law will be promulgated within the coming days and will come into effect within two months of the date of its promulgation, apart from service providers in the gas sector and delivery service providers, for which the amendment will come into effect on February 1, 2019.

Relief in the obligation to mark apparel products

At the end of June 2018, an amendment to the Consumer Protection Order was promulgated, easing the regulatory burden involved in the obligation to mark apparel products. The amendment to the Order was enacted further to a government resolution dating from 2014 at the initiative of the Consumer Protection and Fair Trade Authority.

The amendment to the Order addresses three main issues:

(1)  Eliminating the obligation to mark apparel products with Hebrew labeling prior to importing

The amendment to the Order eliminates the obligation imposed up until now to mark apparel products prior to importing. According to the explanatory notes to the amendment to the Order, marking of apparel products after they are imported will not pose any harm to consumers, provided that the information that must be disclosed pursuant to the Order is brought to consumers’ attention before the apparel product is purchased.

(2)  Relief in the mode of labeling apparel products

Prior to the inception of the amendment to the Order, an obligation was imposed to label items of apparel with Hebrew labeling either on the item itself or by sewing a label to the item. Upon the inception of the amendment to the Order, it will also be possible to label the apparel product using an external tag that is not permanently sewn to the product, including via a sticker or printed tag. In this way, the Order maintains the consumer interest in receiving information in Hebrew prior to purchasing, while also enabling merchants or importers to provide the information in Hebrew in a simpler manner not requiring special devices or expensive industrial equipment.

However, it should be noted that the Order does not amend the obligation to provide information about the size of the item of apparel, nor the laundering, dry cleaning, and ironing instructions specific to that item of apparel, either on the item itself or by sewing a label to the product. This is because the Consumer Protection Authority believes that consumers need this information over time, including after purchasing the item, while other items of information, such as the trade name of the product, the name of the manufacturer, the country of manufacture, the fabric composition, etc. are relevant mainly for the purpose of deciding whether to purchase the apparel product.

(3)  Relief in the labeling apparel products sold online

The Order eliminates the obligation imposed on merchants to provide Hebrew labeling on apparel products sold in remote sale transactions via the internet, provided that the following two conditions are met: (a) the merchant disclosed all labeling details to the consumer in compliance with the provisions of the Order during the remote marketing stage; and (b) the size and laundering and ironing instructions are provided using graphic symbols and numerals on the body of the item of apparel or on a label permanently attached to it. This is because clear, conspicuous graphic markings are accepted as international graphic symbols, and referring to these symbols in Hebrew is superfluous and does not provide any real added benefit.