A periodical update on consumer legislation by Dr. David Fabri

LEX CONSUMATOR 1

These last few months have witnessed some very important developments in consumer-related legislation. I plan to tell something brief about each of them.

1. We have recently seen the adoption of the new Food Safety Act which shall gradually be replacing the old (and by now tired and weary) Food, Drugs and Drinking Water Act of 1972 (which, by the way, we had copied from a UK Act of the same name). The new Act shall complement the Product Safety Act which was adopted two years ago and which does not apply to foodstuffs. This new Act applies safety standards to foodstuffs and establishes a new Food Safety Authority (yes, another public authority). One now waits to see how effective the new Authority shall eventually prove to be.

2. The new MFSA came into force on the 1st October replacing the MFSC. The Malta Financial Services Authority Act now specifically stipulates for the first time that one of the main functions of the MFSA is to promote consumer interests and to safeguard the interest of investors. It is also expected to promote fair competition and consumer choice in the financial services sector. The recent amendments have also set up a new post of Consumer Complaints Manager whose primary job is to help and mediate when customers of financial services operators (banks, insurance companies, stockbrokers etc) have complaints on the services provided to them and he tries to resolve the matter. He also disseminates consumer information.

3. New Price Indication Regulations have recently come into force. They have replaced some old rules adopted in 1972 under the Supplies and Services Act of 1947. The new regulations, issued by the Minister responsible for consumer protection after consulting the Consumer Affairs Council, are in line with an EU Directive on the matter. The whole idea is basically one of price transparency which should place a consumer in a better position to compare prices of similar products and therefore to strike a good deal.

4. Finally, another important piece of legislation is the new Metrology Bill which has just been published and has been approved by Parliament at Committee Stage where the details were examined, slightly amended and approved. When in force, this Bill shall replace the old Weights and Measures Ordinance of 1910. Readers should consider just what a fundamental measure in consumer protection this law represents. It safeguards us against false or incorrect weights and other measurements and against short-selling. Similar measures existed in most countries going back to the Middle Ages and even the Knights of Malta imposed severe punishments against traders who cheated their customers by using false or tampered weights and measures. The Act shall be administered by the Head of Metrology who forms part of the Malta Standards Authority.

5. Finally, a small revolution in consumer-related contract law has been brought into force. The articles in the Consumer Affairs Act dealing with the revocation of terms which are unfair and unduly balanced against a consumer came into force on the 15th October. They were adopted by Parliament two years ago. I suspect many of us are still only remotely aware what may be the potential impact of this very important new technique in consumer protection. Let's just give it some time to sink in. Consumer contacts can never be the same again.

6. The new product liability rules added to the Consumer Affairs Act in 2000 have yet to be brought into force but, never fear, under its own NPAA, Government is committed to the European Commission to do this before the end of the year.

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Another very important piece of legislation of interest to consumers in the field of public health and safety is the Medicines Act. This too has passed through all stages of Parliament and has now been published as Chapter No. 458 of the Laws of Malta. This law shall establish new procedures for official mandatory approval of medicinal products before they may be sold on the local market. It is not yet in force.

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Finally, the product liability rules added to the Consumer Affairs Act in 2002 have now been brought into force. This means that, for the first time ever, our law now specifically contemplates the civil responsibility for manufacturers and distributors who place on the market unsafe / dangerous products which cause damage to persons or property. The new provisions were brought into force on the 28th January 2003 by virtue of Legal Notice 46 of 2003. The rules are modelled on EU Directive 85 / 374 EEC.

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The Companies Act has recently been amended by what has been published as Act No. IV of 2003. Is company legislation interesting or useful to consumers at all? Yes it is. This Act establishes benchmarks for proper director and corporate conduct, a factor which may have a direct impact of consumers and other stakeholders. The amendments have introduced a proper comprehensive binding statement of the general duties of directors of all types of companies established in Malta. Every company director shall be bound to follow the parameters established by these welcome provisions which are intended to serve to improve the conduct and performance of company directors. Well-run companies tend to provide a better service to consumers and seek to retain their customers’ goodwill long-term for the purpose of securing repeat business. This development should therefore be considered good news for consumers. It is worth noting that although the popular idea is that we copy UK and EU law, neither of these have yet set out in their legislation a similar statement of directors’ duties. These amendments should be coming into force soon.

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Now for some snippets:


(a) Gozo Channel at your own risk- have you noticed that despite the tremendous expense incurred in constructing three state of the art vessels for crossing between Malta and Gozo, the reverse of the tickets still declare that you travel at your own risk. Unacceptable? Unfair? I think so. The message being transmitted is certainly not consumer-friendly at all. It is also nonsense as customers have no alternative transport to cross between the two islands by sea.

But does Gozo Channel really mean what it says? I am sure its administrators feel responsible for the safety of persons and cargo entrusted to their care. Perhaps the insertion of that the controversial exemption from liability clause may possibly be attributed to old and bad habits. Perhaps they should be reminded of the unfair contract terms provisions in the Consumer Affairs Act. Perhaps they should delete this anachronistic statement.

(b) The Consumer Affairs Act 1994 went to great pains to establish a framework under which the Director of Consumer Affairs and the Consumer Affairs Council may from time to time issue what the law describes in article 8 as Public Warning Statements. The law carefully protects the Director and the members of the Council from any possible civil or criminal prosecution. But we never seem to hear or read any such statements. Perhaps the consumers in Malta are living in a shoppers’ paradise and there is nothing that the authorities feel the need to warn them about. Or perhaps these provisions have in reality proved a waste of time, nice on paper and useful to refer to in seminars and articles. This column shall continue to monitor developments (or the lack of them) in this area.

Dr. David Fabri

LEX CONSUMATOR 3

August 2003

Nigerian and other scams

What a tired and tiring subject! I am amazed by the interest these silly offers, now being circulated more easily than before via the internet, still attract from many locals. People keep asking and asking about them. A few have actually fallen for them. Some ask what the authorities plan to do about them. They ask this every time some new special offer appears on their screen. I receive at least one a day and they are really outrageous.

The reality is that the authorities have done more than their share in alerting the Maltese public about them, and I personally with others have written about them and discussed them on radio programmes etc. Colleagues from the MFSA and the Central Bank have done the same and they have published official press releases on this subject during these past eight years. One would have thought that the public is now sufficiently well-informed that these get-rich-quick-schemes - like most other similar ridiculous schemes - are simply bogus. They are base attempts to exploit the blind greed that makes asses of some of us.

And yet, people still ask about them. They get hooked. I am now more convinced than ever that some of us actually wish them to be true. They wish to believe that while we scare the masses away from these offers, they - the "chosen ones' - will slyly have the honey-pot all to themselves. They shall then stand back enjoying their new luxury yacht and await our envious admiration. The once in a lifetime opportunity to become filthy rich without doing anything. Better than stealing.....or is it? So this is where my patience and my sympathy for likely victims try up.

The scams offer nothing better than an invitation to share in stolen goods, often monies derived from bribes, looting and other forms of corruption. All imaginary of course. Simply put, I have no time for people who are attracted by these sordid offers. They get what they deserve if they get their hands burnt. They deserve no less and I have no time to waste in any form of sympathy. Some have suggested that I should not be so judgmental and should show more pity and h human concern. Sorry, I am not an actor, I am not Rachel Vella, and nor am I Patri Montebello. Nor am I a peddler of good news.

These Nigerian, Congolese, Sierra Leone and other "God bless you" and "I know you are a trustworthy person" special offers exist because their creators know that there are people who are feeble in the sight of potential riches and are prepared to suspend morality and prudence if only they can get their hands on some fantastic stolen property. The offer is as sordid as the possible acceptance. No pity from here: the offeror and the acceptor deserve each other. Do we really have to spend more time pontificating on this stupid matter? Can't we just learn to ignore them and press the delete button or simply treat them as a sick joke?

TIMESHARE

Congratulations are due to the local newspaper 'The Independent' which in recent weeks published at least two separate features attacking continuing abuses in the selling of timeshare particularly in the Bugibba area. The local timeshare association have been heard claiming on various occasions that they have their act in order, that the industry is sound and well self-regulated, and that hardly any complaints are ever received. Sure, sure. A holiday-maker's paradise.

Well my view is that self-regulation does not work, it is a sham offered by the industry to keep proper regulation by legislation at a safe distance. There is big money and huge commissions in that business and it sets a small army of sales people roaming the streets to hook unsuspecting customers. They attract them with all forms of silly sales talk and offers of prizes and gifts. These sales people are paid to persuade foreign strollers to get into a car and speed to the timeshare resort where a bottle of soft drink and a draft contract is immediately placed before them. How can they refuse such an offer?

Have you seen these touts in action? Have you seen them swaggering all over the Bugibba seafront as if they own the place? No identification on them. No special attire. But you will notice them approaching every single foreign couple attempting to enjoy a walk on the seafront. Go to Bugibba Pioneer Square on a Sunday morning in the Villa Mare area and observe some British looking guys walking around with some flimsy papers in their hands, a car at the ready, swooping on tourists who happen to pass by. Third rate behaviour in a third rate tourist resort. And the authorities dish out work permits for this sort of trashy work. But the
timeshare operators are happy as they seem to have the authorities on their side, undisturbed no doubt by the incompetence and indifference the authorities have consistently shown in handling this issue, year after year. Perhaps even the MTA is enjoying its summer siesta.

A NEW LAW ON PRICE CONTROL

I suspect hardly anybody noticed, but recently, just before starting its Summer recess, Parliament passed a new law on price control. This new law passed through all the necessary stages and is now awaiting publication in the Government Gazette - a legal notice to bring it into force. This can take some months as there is still some work which Government has to carry out before this new law can function.

This means that today we still have the very stringent and silly price control regime that evolved on the model of a fortress and closed economy reflecting concerns starting with the immediate post-war black market and hoarding abuses up to the restrictive economic policies so popular with Mr Mintoff and his ideological allies. The Supplies and Services Act adopted in 1947 reflected the pitiful situation after the costly war we suffered just a couple of years earlier. It forms a relevant landmark in our legal history generally, but, in my view, is a more significant development for studies in the development of Consumer Protection legislation in Malta.

A number of important regulations were passed on the strength of the enormous enabling powers given by the 1947 Act to the Minister responsible for trade. The Act and these regulations established a stifling framework under which no item can be sold in Malta unless costing documents are drawn up and delivered to Government unless a specific selling price has been fixed and published in the Government Gazette. Eventually a general price order
was issued under which a safety net benchmark of 35% maximum profit was imposed for any item for which a specific price or profit margin had not been published.

Price Orders were a common-place matter in the recent past. In fact they were the rule. They affected anything sold to the public, from toilet paper rolls to cans of tuna, bottles of soft drinks, cars and biscuits. The rules applied to both local and foreign products. In the current situation, with EU membership around the corner, this system was bound to shipwreck.

The EU beckoned and such restrictions on foreign origin products would fall deeply foul of the EU rules on free movement of goods. So the law had to change and here it is, a new law under the same name as before - regrettably - but otherwise completely new. The price order powers have been significantly reduced, but - I suspect - we shall some day have to reduce them even further. My assessment - and I here own up to involvement in the drafting of this law - is that this law is a good thing, long overdue and it hopefully constitutes another useful contribution to local consumer protection. At the same time, it guarantees sufficient powers of intervention to the Minister, where justified, in the event of an emergency or serious shortages of essential products.

PRICE INDICATIONS

Some months ago, Government introduced brand new regulations concerning the obligation of traders who sell on retail basis, i.e. to the public, to mark the full price of any item on sale. The object is of course to ensure price transparency, avoid nasty surprises for consumers, avoid needless disputes, and to permit better competition between rival products and traders. The new rules are in line with EU requirements on the subject.

My assessment is that the local market place is showing absolute contempt and disregard in this context and operates as if these regulations do not exist. Too many retail outlets, including some supermarkets, lack proper indication of the prices of goods on sale. I am not in a position to know what initiatives, if any, are being taken by the relevant Government Authorities. But the results in practice demonstrate clearly that traders do not hesitate to violate the laws seeing that the official consumer watchdogs are still enjoying their summer siesta.

Dr. David Fabri

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