This semester, we kick off a brand new course for final year undergraduate law students on e-commerce and the law. This course aims at explaining the legal challenges that are posed by electronic commerce. We shall also contextualise and problematise on-going legal/policy developments in Kenya to regulate electronic commerce. In this blogpost, we explore the implications of consumer protection law. What kind of goods and services fall within the ambit of laws governing consumer protection issues including advertising and marketing? All goods? All services? What of goods or services traded electronically/online (Jumia? Skiza Tunes? Mdundo? Mondo Ride?)
Consumer protection covers all spheres of our lives ranging from the air we breathe, water we drink, food we eat, even drugs we take etc. Prior to 2013, there was no specific law dealing with consumer protection in Kenya. Consumer protection was covered in various pieces of legislation including the Trade Descriptions Act, Standards Act, Weights and Measures Act, Restrictive Trade Practices, Monopolies and Price Control Act (now known as the Competition Act), the Foods, Drugs and Chemical Substances Act, the Pharmacy and Poisons Act, the Public Health Act, the Fertilizers and Animal Foodstuffs Act, as well as private law measures in the law of contracts and law of torts. In this connection, it is important to note that there are also Acts of Parliament that relate to the provision of professional services to consumers such as the Law Society of Kenya Act and the Advocates Act, in the case of the legal profession. These and other statutes touching on consumers are criminally oriented as they seek to ban one malpractice or the other and to prosecute offenders for breach of their provisions, but do not empower a consumer to sue the offender to get redress, including compensation, where the said breach affects him or her adversely. Herein lies a major set-back in protection of consumers by these statutes.
It is in this regard that the Article 46 of the Constitution of Kenya 2010 and its enabling statute, the Consumer Protection Act are lauded as landmark achievements by Kenya in the area of consumer protection in the sense that these new laws spell out consumers rights and obligations vis a vis product and service liability, make provisions for the promotion and enforcement of consumer rights as well as empower consumers to seek redress for infringement of their rights as consumers; and also make provisions for compensation.
Article 46 states that consumers have the right:
(a) to goods and services of reasonable quality;
(b) to the information necessary for them to gain full benefit from goods and services;
(c) to the protection of their health, safety, and economic interests; and
(d) to compensation for loss or injury arising from defects in goods or services.
The Article also directs Parliament to enact legislation to provide for consumer protection and for fair, honest and decent advertising. This direction resulted in the enactment of the Consumer Protection Act in 2013.
Part II of the Consumer Protection Act gives consumers a wide range of rights including the right to commence legal action on behalf of a class of persons in relation to any contract for the supply of goods or services to the consumer. This right cannot be ousted by any agreement between the parties. Other consumer rights provided for in the Act include the right to full pre-contractual information for the consumer to make an informed choice, the right to complain with regard to quality, delays in provision of rectification, quantity and price of such goods or services as are offered, the right to a reasonable notification of termination of service – particularly in relation to the provision of basic telecommunications services and/or internet access, among other rights. The Act prohibits ‘unfair practices’ and proceeds to provide for radical sanctions against a supplier who engages in ‘unfair practices’. Such practices include representing that goods or services have a sponsorship, approval, performance or characteristics that they do not have; or representing that goods or services are of a particular standard, quality, grade, style or model, if they are not, and so on. Therefore where a consumer enters into an agreement, whether oral or written, after or while a person has engaged in an unfair practice, the Act provides that the consumer has the right to terminate the agreement and seek any remedy available to them in law, including a suit for damages.
Undoubtedly, the Consumer Protection Act is a far-reaching piece of legislation that will affect different sectors of our economy including real estate, e-commerce, manufacturing, agriculture, banking and finance, aviation, among many others. In this connection, the Act establishes the Kenya Consumers Protection Advisory (CPA) Committee that shall aid in the formulation of policy related to consumer protection, accredit consumer organisations, advise consumers on their rights and responsibilities, investigate complaints and establish conflict resolution mechanisms amongst other duties. A A breach of any regulations made under the CPA, will make a person liable to a fine not exceeding five hundred thousand shillings or imprisonment for a term not exceeding two years or both such fine and imprisonment. In sum, although consumer protection is very much in its infancy in Kenyan law, there have been two significant developments in this area over the last three years, namely the promulgation of the new Constitution in 2010 and the subsequent enactment of the Consumer Protection Act, which came into effect in 2013.
Private Law Measures
The laws of contracts and torts provide for consumer protection thereby allowing for direct measures that can be taken by consumers. Contract law plays some role in consumer protection. The areas of general law of contract which have a bearing on consumer protection are:
Terms implied by a court in relation to services
Exclusion clauses: The law of contract is based on the concept of equal bargaining power. Consequently, parties to a contract are deemed to be capable of negotiating terms that are fair to them. In cases where suppliers have a monopoly they may adopt a “take it or leave it” approach, putting the consumer in a difficult position. Once a consumer enters into a contract with a supplier it is up to him to enforce the contract in case of a breach. If he is ignorant of his rights , then he remains without redress. A consumer can also be discouraged by the amount of time taken in court and lawyers fees to pursue his rights. However, contract law has certain principles that do not favour all consumers e.g. the doctrine of privity of contract.
Under the law of tort the consumer can seek redress from the provider of goods and services if he can prove negligence on the part of the provider that leads to harm befalling him. The remedies in tort law are vital in the sense that although there is no privity of contract between the parties, one may be held liable for negligence. A consumer can also seek redress where she is dissatisfied with the quality of services she obtained from a professional. As such, the aggrieved consumer is entitled to remedies for negligent misstatements causing economic loss.
Public Law Measures
There are certain statutes that have been enacted which indirectly protect consumers of products and services, eg. Consumer Protection Act (CPA), Competition Act (CA), Kenya Information and Communication Act (KICA), Anti Counterfeit Act, Trade Descriptions Act, Standards Act, Weights and Measures Act and Public Health Act, Medical Practitioners and Dentists Board, Fertilizers and Animal Foodstuffs Act, Food, Drugs and Chemical Substances Act etc. These laws are prescriptive, prohibitive and protective. They carry sanctions and prosecution. They place positive duties on providers or sellers of certain services and goods. They provide for the use of machinery to detect non-compliance.
In the Consumer Protection Act (CPA), “consumer” means-
(a) a person to whom particular goods or services are marketed in the ordinary course of the supplier’s business;
(b) a person who has entered into a transaction with a supplier in the ordinary course of the supplier’s business, unless the transaction is exempt from the application of this Act;
(c) a user of particular goods or a recipient or beneficiary of particular services, irrespective of whether that user, recipient or beneficiary was a party to a transaction concerning the supply of those particular goods and services; and
(d) a franchisee.
Meanwhile, Kenya Information and Communications (Consumer Protection) Regulations, 2010 provide the following rights to consumers:
(a) receive clear and complete information about rates, terms and conditions for available and proposed products and services;
(b) be charged only for the products and services they subscribe to;
(c) where possible, select a service provider and service of the customer’s choice;
(d) personal privacy and protection against unauthorized use of personal information;
(e) accurate and understandable bills for products and services authorised by the customer, and to fair prompt redress in the event of a dispute in the provision of the products and services;
(f) protection from unfair trade practices, including false and misleading advertising and anti-competitive behaviour by licensees; and
(g) equal opportunity for access to the same type and quality of service as other customers in the same area at substantially the same tariff limiting variations to available or appropriate technologies required to serve specific customers.
Consumer Protection Act on Internet Agreements
Section 2 defines “internet agreement” to mean a consumer agreement formed by text-based internet communications. A “consumer agreement” is defined to mean an agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment.
Disclosure of information (s.31): “express opportunity to accept or decline the agreement and to correct errors immediately before entering into it.”
Delivery of a copy (s.32): “within the prescribed period”, “delivered in the prescribed manner.“
Cancellation (s.33): “at any time from the date the agreement is entered into until seven days after the consumer receives a copy if the supplier did not disclose to the consumer the information required under (the Act?) OR the supplier did not provide to the consumer an express opportunity to accept or decline the agreement or to correct errors immediately before entering into it.” (…)”within thirty days after the date the agreement is entered into, if the supplier does not comply with a requirement under (the Act?)”
Consumer Protection Online: International Consensus?
Outside the CPA, there are a number of regional and international sources such as:
- East African Community Competition Act
- COMESA Competition Regulations
- United Nations Guidelines on Consumer Protection
- OECD Guidelines
- EU directives (Consumer Rights, E-commerce, Quality of Goods & Services, Unfair Terms in Consumer Contracts, Unfair Commercial Practices).
Consumer Protection in M-Commerce: Kenyan Case
In the case of Beatrice Ndungu v Safaricom Ltd, there was an alleged violation of section 56(4).
S. 56 on Unconscionable conduct states:
(1) It shall be an offence for a person, in trade in connection with the supply or possible supply of goods or services to another person, to engage in conduct that is, in all the circumstances, unconscionable.
(4) A consumer shall be entitled to be informed by a service provider of all charges and fees, by whatever name called or described, intended to be imposed for the provision of a service.
BN complained of charges on Lipa na Mpesa services that the providers had not informed consumers. As a result of this case, Safaricom and other telcos were required to disclose charges to consumers.
Other recommended case law: