On 20 June 2023, the National Assembly promulgated the Law on Protection of Consumers’ Rights No. 19/2023/QH15 (the “New PCR Law”), aimed to replace its almost 13 year old predecessor – the Law on Protection of Consumers’ Rights No. 59/2010/QH12 promulgated on 17 November 2010, as guided by Decree No. 99/2011/ND-CP (the “Current PCR Law”).
The New PCR Law, set to take effect on 01 July 2024 and with an additional 29 more articles, is expected to address the gaps and weaknesses of the Current PCR Law, including: more precise and consistent wording and definitions; better alignment with other relevant laws and regulations (including the recent Decree No. 13/2023/ND-CP on Personal Data Protection, “Decree 13/2023/ND-CP”); adapting to the current social and economic conditions.
Below are the key takeaways from the New PCR Law that may be of interest to businesses participating in for-profit trading activities under Article 3.2 of the New PCR Law (“Traders”).
1. Amended definition of “consumer”
Article 3.1 of the New PCR Law adds a crucial component to the current definition of “consumer” as previously defined by Article 3.1 of the Current PCR Law (bolded as follows): “a person who purchases or uses products, goods or services with the aim of consumption for daily needs of individuals, families or organizations, and not for commercial purposes” (“Amended Definition”). While this amendment reflects the government’s effort in improving the law, it still retains some drawbacks in terms of practical application, in particular:
The Amended Definition better differentiates between a consumer who purchases/uses a product/goods/service for personal/private uses, and a retailer/trader/any other individual/organization doing the same but for commercial purposes.
However, the Amended Definition does not specifically define “person” in the context of the New PCR Law or whether such term covers both individual consumers and organizational consumers. In case organizational consumers are also covered by the Amended Definition, it may be difficult to determine whether the goods/services purchased by such customers with the aim of consumption for daily needs during its business operation would be considered “for commercial purposes”.
2. More detailed protection of consumer’s information
Following the implementation of Decree 13/2023/ND-CP and drawing on Article 6 of the Current PCR Law, the New PCR Law now dedicates six of its Articles from Articles 15 to 20 on the protection of consumer’s information, thereby expanding the Trader’s responsibilities to include, among others, building an information protection regulation applicable to all consumers.
Though the New PCR Law is intended to better align with Decree 13/2023/ND-CP, there still exists some significant discrepancies between these two legislations. For instance, the exemptions to the restrictions on data processing without consent of the data subject provided by Article 18.3 of the New PCR Law have some differences to those provided by Article 17 of Decree 13/2023/ND-CP. Therefore, Traders who may be subject to both the New PCR Law and Decree 13/2023/ND-CP are recommended to further assess the application of such legislations to ensure full compliance.
3. Expansion of list of prohibited acts
The New PCR Law provides a more comprehensive list of prohibited acts by making several adjustments to existing ones and adds a number of others, notable examples include:
(i) The act of fraudulent or misrepresentation of products, goods and/or services via provision of incorrect, incomplete or false information now includes “images, documents, certification issued by the competent government authorities for the products, goods, services, or for the trader” .
(ii) Failure to compensate, refund, or exchange the products, goods, or services for the consumer due to mistake of the Trader, or due to the products, goods, or services not matching the Trader’s registered/notified/posted/advertised/agreed/committed contents .
(iii) Making consumer buy additional products, goods, or services as a compulsory condition in order to enter into a contract against the consumer’s will .
4. New category of Vulnerable Consumers
One of the key changes to the law on the protection of consumer rights in Vietnam is the recognition of vulnerable people as a separate category of consumers entitled to receive special treatment (hereinafter referred to as “Vulnerable Consumers”). Vulnerable Consumers are those who are likely to incur many negative consequences when acquiring or using products, goods or services in terms of access to information, health, property and dispute resolution, such as the elderly, disabled persons and children . With respect to these consumers, Traders are expected to proactively fulfill their obligations towards Vulnerable Consumers as prescribed in Article 8.3 of the New PCR Law . Some of the more noteworthy obligations include: prevention of stigmatization, discrimination, and taking advantage of vulnerable factors to violate the legitimate rights and interests of consumers during transactions ; development and promulgation of process, procedures, methods or measures suitable for each type of Vulnerable Consumers to ensure their right to complain, request dispute resolution and other rights .
Additionally, when there’s a request for protection from a Vulnerable Consumer with proof of their vulnerable consumer status and that their rights have been violated, the Trader must prioritize such request and must not transfer it to a third party for resolution unless the third party has a related obligation; any refusal for resolution must be given in writing with clear legal basis and inconsistency with the Trader’s published policy .
5. Influential Persons defined and regulated
Influential Persons are now recognized and defined under the New PCR Law as “experts, reputable persons, or person having the attention of the public in a specific field, industry or profession in accordance with the Government's regulations”. The use of an Influential Person’s images, advice, and recommendations for the purpose of promoting trade or encouraging consumers to buy and use products, goods, or services without notifying them that the content is sponsored is prohibited .
6. Sales and Transaction re-defined and re-categorized
The Current PCR Law only regulates the execution of contracts for “door-to-door sales”, “distantly executed contracts”, and “continuous service provision”. The New PCR Law, instead, provides clearer definitions and regulations for each type, including the Trader’s corresponding obligations, and separates them in terms of sales and transactions as follows:
(i) Direct sales : include door-to-door sales, multi-level marketing sales, off-premise sales.
(ii) Special transactions : distant transactions, continuous service provision and direct sales between Traders and customers.
For distant transactions, the New PCR Law also adds a provision on the Trader’s responsibilities for transactions carried out in cyberspace with consumer.
7. Dispute resolution
Similarly to the Current PCR Law, the New PCR Law also sets out four methods of dispute resolution for disputes between consumers and Traders, including: negotiation, mediation, arbitration, and court proceedings. Notably, however, while the Current PCR Law prohibits the use of negotiation and mediation as a dispute resolution method if, among others, the interests of multiple consumers are damaged , the New PCR Law provides an exemption for such prohibition if the number of affected consumers can be determined .
For in-court dispute resolution, summary court proceedings have been made unconditional for civil cases on protection of consumers' rights with a transactional value not exceeding VND 100 million . Cases with a transactional value of at least VND 100 million may also qualify provided that they satisfy all the conditions of Article 317.1 of the Civil Procedure Code 2015.
*Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice andshould not be regarded as detailed advice in individual cases. For legal advice, please contact our Partners.