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On Deceptive, Unfair, and
Unconscionable Sales Acts or Practices


1.
Q.
What is the policy of the state on deceptive, unfair and unconscionable sales acts or practices?
A.
It is the policy of the State to promote and encourage fair, honest and equitable relations among parties in consumer transactions and protect the consumer against deceptive, unfair and unconscionable sales acts or practices.
2.
Q.
Which government agency implements the provision of the consumer act on deceptive, unfair, and unconscionable sales acts or practices?
A.
The department of Trade and Industry.
3.
Q.
When is a sales act considered deceptive?
A.

A sales act or practice is considered deceptive whenever the producer, manufacturer,supplier or seller, or owner or operator of a consumer service or repair firm throughconcealment, false representation or fraudulent manipulation, induces a consumer to enter into a sales or lease transaction of any consumer product or service.

Without limiting the scope of the above paragraph, certain salesn acts and practices are considered deceptive when it is represented that a consumer product or service :

    • has a sponsorship or approval of a body or a person which it does not have;
    • has the performance, characteristic, ingredients, accessories, uses or benefits it does not have ;
    • has a particular standard, quality, grade, style or model when it fact it is not;
    • is new, original or unused, when in fact, it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state;
    • is available to the consumer for a reason that is different from the fact;
    • has been supplied in accordance with the previous representation when in fact it is not;
    • can be supplied in a quantity greater than the supplier intends;
    • needed a service or repair when in fact it does not;
    • has a specific price advantage when in fact it does not;
    • involves or does not involves a warranty, a discalimer of warranties, particular warranty terms or other rights, remedies or oblogations if the indication is false;

    • the seller or supplier has a sponsorship, approval, or a ffiliation he does not have.
4.
Q.
What id the coverage of the rules on deceptive, unfair, and unconscionable sales acts or practices?
A.

These rules shall apply to acts and practices in the sale or lease of any consumer product and in the availment of any consumer service.

5.
Q.
When does a deceptive, unfair or unconscionable sales act or practice violate the consumer act?
A.
A deceptive sales act or practice by a seller or supplier in connection with a consumer transaction violates the Consumer Acr whether it occurs before, during or after the transaction.
6.
Q.
What is the prohibition on the use of the words " No Return, No Exchange"?
A.
The words " No Return, No Exchange " , or words to such effects sahll not be written into the contract of sale or receipt in a sales transaction, in any document evidencing such sale or anywhere in a store establishment.
7.
Q.
Why is the presence of a "No Return, No Exchange " notice considered deceptive?
A:
The " No Return, No Exchange " notice is considered deceptive because it creates a misconception on the part of the consumers that they do not have the right to return shoddy or defective goods or demand for remedies in case of defective or imperfect service. On the contrary, consumers may return or exchange the goods or avail of other renedies in case of hidden faults or defects, or any charge not known to the buyer. By provision of law, sellers are obliged to honor their implied warranties and grant corresponding remedies to consumers.
8.
Q.
Cite other sales acts and practices which are considered deceptive ?
A:
  • Deceptive Presentation of Consumer Products
    - the appearance of consumer products shall not be reasonably enhanced as to deceive consumers on their true characteristics or condition.
  • Deceptive Demonstration of Performance of Consumer products, Services - fraudulent tricks or machnations sahll not be employed in the demonstration of the performance of a consumer product or service.
9.
Q.

What is unfair or Unconscionable sales act or practice?

A.
An act or practice of the producer, manufacturer, seller or supplier of a consumer product or the owner or operator of a consumer service or repair firm of inducing, or enticing a consumer to enter into a sales or lease transaction of a consumer product or to avail of its services grossly inimical to his interests or grossly one-sided in favor of the producer manufacturer, distributor, supplier or seller, owner or operator, by taking advantage of the consumer's physical or mental infirmity, ignorance , illiteracy, lack of time of the general conditions of the environment or surroundings.
10.
Q.
What are the circumstances to be considered in determining unfair and unconscionable sales acts and practices?
A:

The following circumstances shall be considered :

  • That the producer, manufacturer, distributor, supplier or seller took advantage of the inability of the inability of the consumer to reasonably protect his interest because of difficulty to understand the language of an agreement or similar factors;
  • That when the consumer transaction was entered into, the price grossly exceeded the price at which similar products or services were readily obtainable in similar transaction by like consumer;
  • That when the consumer transaction was enteredinto, the consumer was unable to receive a substantial benefit from the subject of the transaction;
  • That when the consumer transaction was entered into, the seller or supplier was aware that there was no reasonable probaility of payment of the obligation in full by the consumer;
  • That the transaction that the seller or supplier induced the consumer to enter into was excessively one-sided in favor of the seller or supplier.
On Direct Marketing
11.
Q:
What is Direct Marketing?
A:
Direct marketing is the sale of consumer products or services by mail, telephone, any form of telecommunications, message delivery service or like facilities or through, any form of mass media but shall not include general advertising.
12.
Q:
What are the requirements for Direct Marketing?
A:

The following data shall be indicated in the solicitations or communications sent or made to a prospective buyer :

  • The business name and address of the seller, lessor or operator, where purchases or orders are to be made to a post office box address, the name and address of the seller, lessor , or operator shall nevertheless be indicated;
  • If it is a consumer product that is offered for sale or lease, all the mandatory requirements of product labeling, should be indicated;
  • A photograph, picture, illustration or detailed description of the product or service;
  • The terms and conditions of sale or lease of the product or availment of the service;
  • A statement that order may be canceled before or upon delivery in the event that the product is not in conformity with representation in the solicitation or communication;
  • The manner and schedule of payment.
On Sale By Sample
13.
Q.
What is sale by sample?
A:
sale by sample is a sale or lease of consumer products whereby the prospective buyer or lessor is only able to insepct or examine a consumer product for sale through an example , model, prototype of the consumer product or a specimen from among several units being sold in stes or bulk.
14.
Q.
What is the rule on sale by sample?
A:
The sample used in the selling of any consumer product or service shall be essentially the same as the consumer product or service being sold.
On Sale By Description
15.
Q.
What is sale by description?
A:
Sale by description is the sale or lease of a consumer product or service whereby the only inducement is through a description of the product or service either verbally or through any form of literature.
16.
Q.
What is the rule on sale by description?
A:
The description of any consumer product or service for sale shall be accurate and shall indicate all the essential features of such product or service.
On Negative Option Plan
17.
Q.
What is a negative option plan?
A:
Negative option plan refers to a sales scheme whereby a consumer product or a description thereof is sent to a consumer and considered sold to him unless the consumer notifies the seller of his intention not to buy the product or to buy another product offered as alternative thereto. Thus , it shall not be used in the sale or lease of consumer products. The consumer shall be under no obligation to pay or return products sent to him under a negative option plan.
18.
Q.
When may negative option plans be allowed as an exception to the rule?
A:

Negative option plans may be allowed in the following instances:

  • If a prior written agreement for the purpose had been entered by the seller or lessor and the buyer or lessee;
  • If such agreement is part of a prior subscription agreement between the seller or lessor and the buyer or lessee;
  • In the case of clubs or organizations where such plan is an accepted ordinary practice and a member thereof has signified agreement to it in writing.
19.
Q.

What are the required stipulations in a negative option plan under the exception?

A:

Any agreement or offer or solicitation to enter into agreement to engage into a negative option plan under the exceptions provided that such shall contain stipulations as top the following:

  • nature and duration of the plan;
  • intervals at which the products will be sent to the buyer;
  • manner by which a buyer may inform the seller that he does not wish to buy or lease a selection or offer made;
  • how the buyer may be billed or how the selection may be paid;
  • whether billing charges include shipping and handling;
  • statement that the buyer may decide within a specific time which shall not be less than thirty days from the date of receipt of the selection or offer.
On Referrals Sales
20.
Q.
What is referral sales?
A:
Referral sale means the sale or lease of a consumer product or service to a buyer reffered by another buyer for a consideration, whether for a fee or some other benefit. It shall not be used in the sale of consumer products unless the seller excutes in favor of the buyer a written undertaking that will grant a specified compensation or other benefit to said buyer in return for each and every transaction consummated by the said seller with the persons referred by said buyer of for subsequent sales that said buyer has helped the seller enter into.
On Lay-Away Plan
21.
Q.
What is a Lay-away plan?
A:
A Lay-away plan means a consumer credit transaction whereby the buyer of a consumer product is allowed to pay by installment or at a future day wheter or not a reservation fee is required, provided that the possession and ownership of the product remains with the seller until full payment at the time agreed upon.
22.
Q.
What is the rule on Lay-away plan?
A: Where consumer products are sold through a lay-away plan, the selller shall provide the buyer with a written and signed document describing in detail the consumer product, price and terms of payment, subject of transaction. Failure of the buyer to pay the full amount of the product or where the seller fails to deliver the same upon full payment as when it is lost, altered, changed, or substituted while in the custody of the seller, the rights and remedies of the parties shall be gorverned by the Civil Code of the Philippines.
On Sale By Vending Machines
23.
Q.
What is the rule on sale by vending machines?
A:
Where consumer products are sold through vending machines or like machines which the buyer himself has to operate, the name and business address of the owner or operator of such vending machine shall be posted in a conspicuous place therein.
On Home Solicitation Sale
24.
Q.
What is Home solicitation sale?
A:
home solicitation sale means consumer sales or leases which are personally solicited by any person, organization through person to person contact at the buyer's residence, place of work, at the seller's transient quarters or at any appointed place, except the seller or lessor's usual place of business.
25.
Q.
What is the basic rule in conducting Home solicitation sale?
A:
A business entity sahll obatin first a permit form the Department of Trade and Industry before conducting any home solicitation sales of any consumer product or service. Moreover, a business entity applying for a permit in behalf of all other business entities acting as its agents conducting home solicitation sale for the applicant whether or not such agents are independent business entities or are also conducting home solicitation sales for other consumer products.
26.
Q.
Where are applications for permit filed?
A.
  • If the home solicitation sale is to be conducted within a single province, the application shall be filed with the Department's provincial office , or in the absence of such an office, with the Department's regional office which has jurisdiction over such province;
  • If the home solicitation sale is to be conducted within several provinces within a single region, the application shall be filed with the Department's regional office which has jurisdiction over said provinces;
  • If the home solicitation sale is to be conducted nationwide, only within the National Capital Region, or in several including Metro Manila, the application shall be filed with the Department's regional office in the National Capital Region (NCR);
  • For home solicitation sales covering more than one region but excluding Metro Manila, the application sahll be filed with the Department's regional office where the main office of the business entity is located.
27.
Q.
When can home solicitation sales be conducted?
A:
home solicitation sale s may be conducted by a person who has the proper identification and authority from his principal to make such solicitations.
28.
Q.
Are receipts needed for home solicitation sales?
A:

Yes. All sales generated from home solicitation sales shall be properly receipted as per existing laws, rules and regulations on sale transactions.

29.
Q.
What are the prohibited representation in conducting home solicitation sales?
A:

Except where such is actually the case, it shall not be represented in a home solicitation sale that:

  • the buyer has been especially selected;
  • a survey, test or research is being conducted;
  • the seller is making a special offer to a few persons only for a limited period of time.
30.
Q.

Is disclosure of criteria employed in selection of prospective buyer in a home solicitation sale required?

A.
Yes, if the seller or supplier claimed that a specific consumer has been chosen from among a number of other consumers, and such selection had actually been made, the criteria used in the selection should be disclosed to the chosen consumer.
31.
Q.
What are the rules on consumer sevice firms?
A:

the following are the rules on consumer service firms:

  • Representation as to Availability of Certain Facilities or Amenities:

    • Any service firm engaged in the provision of consumer services shall not represent that it has a certain facility and/or amenity unless the same is actually available to the consumer and in good working condition. However, if any of the facilities and amenities usually advertised are out-of-order, the consumers availing of the services of the service firm shall be informed of such facts' before any consumer transaction is entered into. If within the duration of a consumer transaction, such facility or amenity falls into disrepair, the same shall, if practicable, be repaired or serviced at once. Provided, that the consumer shall also have the option to terminate the contract or service and receive a corresponding refund of payments already made.

  • Display of Lincense to Operate Consumer service Firm


    • Consumer service firms required by any law or regulation to acquire a lincense to operate shall secure the same and shall exhibit such lincense in its place of business.

  • Damage or injury caused by service firm

    • Any repair for damage or injury caused by the service firm shall be paid for by the service firm whether or not the repair is undertaken by it or anothe firm. The buyer availing of the services of the service firm shall also be reimbursed of the fees paid for the services of the service firm responsible for the damage or injury . In case of loss of any property of the buyer due to the fault of the service firm, the buyer shall be reimbursed of its fair market value at the time of injury or damage.
  • Acquisition of an insurance policy

    • Consumer service firms required by any law or regulation to acquire an insurance for damages, injuries or loss due to its operations shall acquire the same and make the insurance policy accessible to the Department and to any buyer upon reasonable request.

 

32.
Q.
What are the additional rules on consumer repair and service firms for electrical appliances, electronic equipment and motor vehicles?
A:
before undertaking any repair or servicing of a common product, the owner shall be informed by the repair of service firm of the following:
  • Results of the examination, assessment or evaluation of the nature and extent of the damage of the consumer product
  • Nature and extent of repair or servicing necessitated by the damage
  • Whether a part of the product need be replaced or a new one installed
  • Inclusive dates within which the repair or servicing will be done and where applicable, the existence of a penalty clause
  • An estimate of how long the repair or service work done and the specific aspects of work guaranteed such as parts, labor, the job as a whole, its extent and duration
  • Itemized and total amount to be paid for the repair or servicing of the product, separating labor charges for parts or accessories used
  • Form and schedule of payments for the work to be done
  • In cases of electrical, mechanical, and electronic consumer products, the foregoing disclosures shall be in writing.
33.
Q.

Is a downpayment required for repair services?

A:
Yes, however, downpayment shall not exceed fifty percent (50%) of the total cost of such service except where spare parts or materials have to be procured before any repair service can be done and such materials are identified and are for the account of the consumer.
34.
Q.
Should the owner be informed in case further damages were discovered?
A:
Generally, repair or servicing of a consumer product shall be confined to the results of the examination or assessment. Thus, if other damages would be discovered in the course of the repair or service, the owner should be informed first of such damage and the price of such additional work before any repair or servicing would be done.
35.
Q.
Can the repairman change any of the parts without informing the owner?
A:
No replacements or change in any parts shall be made without the knowledge and prior consent of the owner. Moreover, owners should also be informed if the parts are available in the market. In case it is only available in the repair and service firm, the name, brand and price of the same shall be made known to the consumer prior to the actual reapir or servicing.
36.
Q.
Who will shoulder the cost of repair in case it was further damaged during the repair?
A:
The repair or service firm shall shoulder the cost of repair of the consumer product for damages caused by it whether or not the repair is to be undertaken by another firm.
37.
Q.
What should be included in the receipt for a product that has been repaired?
A:
The repair for the services of a repair or service firm shall contain an itemized statement of account showing the amount for the service or repair and for the parts installed. The nature and extent of the repair or service shall also be indicated in the receipt or any accompanying document.
38.
Q.
What are the sanctions under the Consumer act (RA 7394)?
A:
 CRIMINAL SANCTION:
a.) Any person who shall violate the provisions of Title III, Chapter I, shall upon conviction, be subject to a fine of not less than Five Hundred pesos (P500.00) but not more than Ten Thousand pesos (P10,000.00) or imprisonment of not less than five (5) months but not more than one (1) year or both, upon the discretion of the court.

b.) In addition to the penalty provided for in paragraph (a), the court may grant an injunction restraining the conduct constituting the contavention of the provisions of Articls 50 and 51 (Prohibition Against Deceptive Sales Acts and Practices) and/or actual damages and such other orders as it thinks fit to redress injury to the person caused by such conduct.
ADMINISTRATIVE SANCTION:
a.) The issuance of a cease and desist order.
b.) The acceptance of a voluntary assurance of compliance or discontinuance from the respondent.
c.) Restitution or rescission of the contract without damages.
d.) Imposition of administrative fines ranging from P500 to P300,000.

       

  


        

      


   
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