The Law No. 12/2020 (Consumer Protection Act) was ratified into law on 31 August 2020 and became effective on 1 March 2021. Unlike its predecessor Law No. 1/96, this Act introduces a comprehensive set of guidelines for suppliers of goods and services and guarantees basics rights of consumers.
As per the new Consumer Protection Act, the purpose of this Act is to protect the rights of consumers and to lay down the responsibilities of suppliers of goods and services in the Maldives.
This law is applicable to both tangible and intangible goods which are sold for personal use, including those made in digital forms. Additionally, to those services that include management or servicing of a property or place, including repair or renovation.
As the regulations under this Act, which are not due for another six months remains to be enacted, it is yet to be seen how far and wide the above mentioned criteria of goods and services will be applicable to the various business activities of suppliers of goods and services.
The main provisions of the Act are outlined below.
Standards to be complied by suppliers
With the Consumer Protection Act coming into force, suppliers of goods and services must now maintain the standards required under the Act.
In this regard, key standards applicable to suppliers of goods are that suppliers must:
- show proof of ownership of the goods;
- provide goods which are in acceptable condition, adequate and safe to use for its purpose;
- notify any defects in the goods to consumers;
- specify clearly the price of the goods; and
- where applicable, provide the manufacturer guarantee of goods.
The Consumer Protection Act also subject similar standards on suppliers of services to similar. Some key standards applicable to services are that suppliers must:
- provide services with adequate care and by skilled individuals;
- use adequate items in providing services;
- except in the situation where an agreement or a contract exists between the consumer and the supplier, provide services within an adequate period of time; and
- except in the situation where an agreement or a contract exists between the consumer and the supplier, set the price of the service appropriate to the service provided.
In addition to these standards, the Act requires suppliers of goods and services to behave in a specific manner. These behavioral requirements include:
- not to engage in any form of discrimination amongst consumers;
- not to use any unfair means or influence in supplying of goods or services;
- not to sell expired goods or goods with defects;
- keeping the price of the goods visible to the consumer and not to sell goods with any additional condition except for the price;
- clearly specifying the price and conditions of the service;
- labelling the goods; and
- providing a copy of payment receipts.
Rights of consumers
With the enactment of this Act, various new rights and protections are afforded to consumers of goods and services. These include:
- right to return the purchased good upon certain conditions;
- right to return part of the goods upon certain conditions;
- right to be notified of the defects in goods sold;
- right to be able to view and test the goods;
- if the supplier fails to abide by the provisions specified in the Act, right to file a claim with the Ombudsman appointed under this Act;
- right to claim for damages;
- right to demand for a better service; and
- right to claim for damages upon termination of contracts with the service providers, where the service is significant in nature and the issue at hand is incurable.
Regulatory mechanism
The Act outlines both a regulatory and complaints mechanism for the purpose of its enforcement.
Under the Act, the Ministry of Economic Development is entrusted with powers to regulate and monitor consumer protection whereas the Consumer Ombudsman appointed by the President of the Maldives is entrusted to investigate and take action regarding reports of complaints.
In this regard, the Ministry holds the following powers and responsibilities:
- set price and quantity controls on goods and services based on the economic situation of the country
- establish different prices for goods in different regions
- search and inspect the place where goods and services are supplied to monitor compliance with regulations set out by the Ministry
- obtain information or documents for monitoring
- demand the recall of goods that are deemed unsafe
- prohibit goods and services that are deemed unsafe
- set out the safety standards of goods and services
The Consumer Ombudsman holds the following powers and responsibilities:
- establish a mechanism to regulate reports of incompliance;
- investigate reports of incompliance;
- award damages; and
- take action against those who contravene the Act.
For non-compliance with the Act, the Ministry and the Consumer Ombudsman has the power to impose a penalty of fine on enterprises as follows:
- for first time violations, a fine between MVR 1000 – MVR 100,000 may be imposed and a duration is given to rectify the issue;
- for second time violations, a fine between MVR 1500 – MVR 250,000 may be imposed and a period to rectify the issue; and
- for third time violations, a fine between MVR 5,000 – MVR 250,000 may be imposed and the authorities have the power to demand closure of the place for a duration not more than 6 months.
Other salient changes
In addition to the above, the Consumer Protection Act prohibits advertisements of goods and services which are untrue or misleading. The Act also prohibits inclusion of unfair terms in any agreements, notices or documents made between consumers and suppliers of goods and services. In such cases, the law gives immunity to consumers by permitting such consumers the right to not comply with unfair terms.
Additionally, online businesses are also required to comply with the Consumer Protection Act with a specific obligation on them to expressly specify cancellation procedures of purchased goods or services.
