Section 119 of the National Budget Act, 27,701, published in the Official Gazette on December 1st., 2022, amended section 47 of Act 24240[1], of Consumer Defense, to set new amounts of the fines applicable to infringers, which substantially increase those in force up to now and which, in addition, significantly increase the maximum amount of the so-called “punitive damages”.
The text of section 47 in force up to the above said amendment provided for that the fines applicable to infringers would be adjusted between a minimum amount of AR$ 100 (One hundred Argentine pesos) and a maximum sum of AR$ 5,000,000 (five million Argentine pesos).
As from the amendment, the regulation determines that the fines will be adjusted between a minimum of half (0,5) and a maximum of two thousand one hundred (2.100) Total Basic Family Basket (Canasta Básica Total para el Hogar -CBT-) type 3.
As at November 2022, according to the information released by the National Institute of Statistics and Census -INDEC- (Instituto Nacional de Estadística y Censos -INDEC-), the value of the Total Basic Family Basket type 3 was of AR$ 146,973 (One hundred and forty-six thousand nine hundred and seventy-three Argentine pesos).
Considering said value, the minimum amount of the fines for violations to the Consumer Defense regulations amounts to AR$ 73,486.50 (Seventy-three thousand four hundred and eighty-six with 50/100 Argentine pesos) – this implies that the minimum value of the fine was multiplied by almost seven hundred and thirty-five – and the maximum value to AR$ 308,643,300 (Three hundred and eight million six hundred and forty-three thousand three hundred Argentine pesos) – what implies that the maximum fine is now almost sixty-two times higher.
In addition, this very significant values, will be adjusted on a monthly basis, every time the INDEC publishes the new value of the Total Basic Family Basket type 3. Within the current context, highly inflationary, it is clear that the amounts of the fines will be strongly increased, month by month.
Furthermore, the new text of section 47, determines that the additional penalty of publication, at the infringer’s expense, of the adverse ruling or of a summary of the events that gave rise to it, the type of infringement committed and the imposed penalty. – that is imposed in all the cases in which the penalty is not a warning, being the only event in which the enforcement authority may dispense with its publication – it shall be made in the media that the enforcement authority considers more appropriate for their disclosure and pursuant to the criterion to be specified by the enforcement authority, in substitution of the current provision, that sets forth its publication in a newspaper.
In the event that the infringer develops the activity whereby it was punished in more than one jurisdiction of the country, the enforcement authority may order in addition that the publication be made in nationwide media and those of each jurisdiction in which it acts.
The obligation to publish the adverse ruling or a summary of the facts that originated it, the type of incurred infringement and the imposed penalty in the media that the enforcement authority deems more appropriate for its disclosure, will generate also – like the new value of the fines – higher costs for the suppliers of goods and services.
But the higher costs derived from the amendment under analysis do not stop there.
Because the modification of the amount of the fines derived from the new text of section 47 increases, also substantially, the maximum amount of punitive damages (civil fine) regulated in section 52 bis of the Consumer Defense Act[2], that may now reach – at values of November 2022 – AR$ 308,643,300 (Three hundred and eight million six hundred and forty-three thousand three hundred Argentine pesos), equivalent, at the time of writing this work, to USD 1,837,000 (One million eight hundred and thirty-seven thousand U.S. dollars) roughly, pursuant to the dollar bill, buying rate, published by the Bank of the Argentine Nation (Banco de la Nación Argentina) on December 6, 2022.
Like the value of the fines set forth in section 47, the maximum amount of punitive damages shall be adjusted on a monthly basis every time the INDEC publishes the new value of the Total Basic Family Basket type 3.
It should be borne in mind that the punitive damages (or “civil fine”) provided for in section 52 bis of the Consumer Defense Act do not compensate any damage, either damage to property or pain and suffering, that consumer may have suffered as a consequence of the infringement. It is, as evidenced by the regulation itself, independent from other relevant indemnifications, that are added to said damages.
In other words, punitive damages accumulate with the eventual compensations for damages that consumer may have suffered.
It must be borne in mind also that the legal proceedings filed in accordance with the Consumer Defense Act, by reason of an individual right or interest, grant to consumers the benefit of free justice.[3]
Said free-justice, that eases the filing of legal actions without taking risks, even when claims are made without being entitled to – since the claimants should not worry for the payment of the legal costs in the event they are defeated – together with the huge “prize” that consumers may now obtain with punitive damages, could generate a large amount of complaints, in the pursuit of a “pool” substantially higher than the one ordinarily put at stake in the “Lotto” draws.
In short, aside from the good intentions of our legislators, the amendments to the Consumer Defense Act discussed above create – in my opinion – an enabling framework for the presentation of reports and judicial complaints for trivialities or for issues in which the legally protected right may not be affected or could be insignificant.
Because the prize at stake is, as I have already said, extremely high and the risk to make accusations or file complaints is so low for consumer, it may be qualified as nonexistent.
A combination that could be explosive, within the framework of a society in which – again, in my opinion – the values (as, for example, work ethic) have been greatly weakened for several decades now.
Our legislators seem not to understand that nothing is free.
The miracle of the multiplication of loaves and fishes is what it is, a miracle. Without the supernatural intervention of divine origin, reality is different and very simple: everything has a cost and someone always pays for it.
The increase in the number of reports and lawsuits that could generate the amendment of section 47, the increase of the amounts of fines, the judgment ordering to pay to consumers large amounts for punitive damages, the – eventual – saturation of the courts with cases of limited or zero importance for society, without paying the justice service, is not for free.
Us, the consumers – ironically – will end-up paying its cost.
At best, as a result of the higher price of the goods and services that the suppliers will attempt to collect for the increase of the costs derived from the amendment.
At worst, in order to sustain with subsidies – which are paid, certainly, by society as a whole– those who are unemployed as a consequence of the closure of the companies which, for one or another reason, cannot pass-on said increase of costs to the public or that, as it is frequent in recent years, decide to discontinue their operations in the country, tired of dealing with the so-called “Argentine cost”.
[1] The new section 47: Penalties. Once the existence of the infringement is verified, the infringers will be subject to the following penalties, which may be imposed individually or jointly, depending on the circumstances of the case:
a) Warning;
b) Fine of zero point five (0.5) to two thousand and one hundred (2,100) total basic family baskets 3, published by the National Institute of Statistics and Census -INDEC- (Instituto Nacional de Estadística y Censos -INDEC-);
c) Confiscation of the goods and products subject matter of the infringement;
d) Closure of the establishment or suspension of the affected service for a term of up to thirty (30) days;
e) Suspension of up to five (5) years in the registries of supplier that allow to enter into contract with the Government; and
f) The loss of concessions, privileges, special tax or credit regimes enjoyed by them.
In all cases, infringer shall publish, or the enforcement authority may publish at the infringer’s expense, through the most appropriate means for their disclosure and pursuant to the criterion to be specified by the enforcement authority, the adverse ruling or a summary of the facts that gave rise to it, the type of infringement committed and the imposed penalty. In the event that the infringer develops the activity whereby it was punished in more than one jurisdiction, the enforcement authority may order to make the publication in nationwide media and those of each jurisdiction where the infringer acts. When the imposed penalty is a warning, the enforcement authority may dispense with its publication.
Fifty percent (50%) of the amount collected for fines and other penalties imposed by the enforcement authority according to this section shall be assigned to a special fund meant to comply with the purposes of chapter XVI —consumer’s education— of this act and other activities carried out for the enforcement of consumption policies, as set forth in section 43, subsection a), thereof. The fund shall be managed by the national enforcement authority.
(Section substituted by section 119 of Act Nº 27.701 published in the Official Gazette on 12/1/2022.)
[2] SECTION 52 bis: Punitive Damage. Upon the request of the damaged party, the judge may impose a civil fine in favor of consumer, upon the supplier that fails to perform its legal or contractual obligations with consumer. Said fine will be adjusted on the basis of the seriousness of the event and other circumstances of the case, regardless of other relevant indemnifications. When more than one supplier is liable for the nonperformance, all the suppliers will be jointly and severally liable vis à vis the consumer, notwithstanding the corresponding recovery actions. The imposed civil fine cannot exceed the maximum amount of the fine set forth in section 47, subsection b) of this Act.
(Section included by section 25 of Act Nº 26.361 published in the Official Gazette on 4/7/2008).
[3] As set forth in section 53, last paragraph, of Act 24,240.