Consumer defense involves restraining companies from engaging in harmful behavior. It is a broad concept that can include everything from enforcing disclosures to restricting the price, terms and products that businesses offer. Consumer defense can be seen as one of three types of government intervention: market-reinforcing, command-and-control, and de-coupling. The latter involves removing the incentive for businesses to engage in harmful behaviors because consumers will not purchase their goods or services.
For example, in California, utilities are a common target for consumer defense claims. Consumers have the right to file complaints about their utility bills and other service issues with the state’s consumer protection agency, which investigates claims and takes appropriate action. Depending on the nature of the complaint, the agency might issue an order to reduce or suspend the consumer’s overdue bill. The authority may also impose fines or require refunds. The idea behind consumer defense is to protect consumers against exploitation and to promote the interests of individual customers.
Aside from imposing fines, a government agency can enforce other consumer protection policies and laws. For instance, the agency can require that companies provide clear disclosures on their product offerings, prohibit unfair trade practices, and combat discrimination. In addition, the agency can help consumers understand the terms and conditions of a contract to prevent misunderstandings. Whether it’s a credit card, loan agreement or another type of contract, the agency can help consumers read and interpret the document before agreeing to it.
The current Consumer Protection and Defence Code (CPDC) aims to promote and monitor national consumer protection initiatives. It builds on many features of the previous Consumer Protection Act and jurisprudential developments of the consumer enforcement authority, INDECOPI, and it draws on European regulations that, for a long time, have informed the national legal model.
The CPDC, which replaced the Consumer Protection Act, was a legacy of the late President Alan Garcia Perez. Its preparation and approval began during his administration. Its structure and implementation are based on the Normative Framework for Consumer Protection, which was proposed by the International Consumer Organization, which has general consultative status with ECOSOC.
The Normative Framework is a set of guidelines that serves as the basis for the development of an integrated national consumer protection system. Its objectives include a framework for regulating consumer contracts and sanctioning abusive clauses, the regulation of registration of consumer complaints, and an administrative channel to solve minor disputes between suppliers and consumers. It also incorporates a summary procedure for solution of consumer disputes, as well as the integration of the Integrated National Consumer Protection System. The Normative Framework contextualizes purely legal constraints amid the other realities of commercial relationships, incentivizing companies to make sure their products match consumer expectations and needs. The framework is based on scholarship in the fields of technology, social change and law.