Consumer Protection Law in Malaysia
Content
CONSUMER PROTECTION LAW IN MALAYSIA
BY Dr.S. Sothi Rachagan and Susheela Nair The law fails to extend consumer protection legislation to many forms of credit including leasing (except under the general provisions regarding bailment in the Contracts Act 1950), credit and charge cards, instalment payments, revolving credit, etc. Moreover, there is uncertainty as to what law applies to many consumer credit transactions. The three statutes contain inconsistent provisions, amongst others, in relation to: Licensing Control of advertising Provision of information to consumers, in particular, -information pertaining to interest and other charges Regulation of exorbitant interest and other charges Reopening of contracts considered unfair Warning about legal action and the steps to be taken -prior to, at the time of, and subsequent to, the issue of warning; and - Use of the credit-leverage for tie-in sales such as insurance. The statutes also reveal a lack of consistent policy in relation to sanctions for infringement - in some instances the law provides criminal sanctions and in others offers only civil remedies. Where it does provide criminal sanctions the penalties provided for are inconsistent. The interest of third parties is inadequately provided for and guarantors are not equitably treated. The statutes are not all enforced by the same agency and this has resulted in inconsistent application of the laws. The law relating to advertising and credit remain unchanged by the Consumer Protection Act 1999.
Until the enactment of the Consumer Protection Act 1999, the law on product safety in Malaysia was found in several piecemeal legislation dealing with specific products, for example: Sale of Drugs Act 1952 and the Control of Drugs and -Cosmetics Regulations 1984. Electrical Inspectorate Act 1983 and the Electrical -Inspectorate Regulations 1984. Pesticides Act 1974. Poisons Act 1952. - Radioactive Substances Act 1968. These laws provide safeguards over the sale and distribution of these products; the appropriate authorities have to approve or register these products after satisfying themselves that they meet certain established standards, while the use of some products may be restricted. The Consumer
Protection Act 1999 has provided a general law on products safety aimed at those areas not already covered by the specific statutes enumerated above. Malaysia has an effective national body, the Standards and Industrial Research Institute of Malaysia (SIRIM), to do product testing and certification and develop product standards. SIRIM's role is geared more to assisting the manufacturing sector to produce products that meet Malaysian and international standards. It has no powers to enforce standards. It tests products voluntarily submitted by manufacturers for a fee and sells them its standard marks if they meet the required standards under its Certification Marketing Scheme. It is considered that with these labels, the manufacturers may have an edge over other competitors in Malaysia. SIRIM does not collect accident statistics related to consumer products, or develop mandatory standards for all manufacturers and importers to comply with, or test products before they go on sale. The Consumer Protection Act now permits the Minister of Domestic Trade and Consumer Affairs to specify mandatory standards. Again, until the enactment of the Consumer Protection Act 1999, Malaysia did not have a comprehensive and general statute on product liability. The law on product liability was expressed in the law of contracts, the common law principles of the tort of negligence, and several statutes, the most important of which is the Sale of Goods Act 1957. Both common law and statute provide different rights of compensation for loss or damage caused by goods to different classes of people. For a claim based on contractual or statutory liability, only the immediate party to the contract can claim compensation and other affected persons such as the innocent bystander, a friend, or family member who uses or receives the product as a gift has no right to claim. Hence, unless privity is established, no liability arises. These persons are required to base their claims under the tort of negligence. However, in view of the difficulty in proving fault, a claim based on tort would inevitably face insurmountable complexities. After ten years of discussion, and five years after its drafting, a more comprehensive statute entitled Consumer Protection Act 1999 became law on 15 November 1999. The Act comprising 14 parts and a total of 150 sections deals with selected areas of the law not yet provided for in other statutes; it does not seek to repeal or replace existing law. However, by extending its protection only to consumers it inevitably had the effect of differentiating the operation of general law, most significantly the law relating to contracts and the law relating to the sale of goods. The Act drew extensively from consumer protection statutes in other jurisdictions. Part II of the Act dealing with Misleading and Deceptive Conduct, False Representations, and Unfair Practices is based on similar provisions of the Trade Practices Act 1974 of Australia and the Fair Trading Act 1986 of New Zealand. Hence specific provisions pertaining to such conduct in relation to goods, services and employment support a general prohibition of misleading and deceptive conduct. Part II also deals with misleading indication of price, bait advertising, gifts, prizes, and free offers. Part III of the Act deals with Safety of Goods and Services. It provides for the declaration of safety standards and compliance with them. Also provided for is a general safety requirement for goods. A special defences section is included - compliance with a requirement imposed by law or a standard determined in accordance with the Act. For suppliers, the special defences are absence of
knowledge and absence of a reasonable ground to believe that the goods failed to comply with the standard specified. Part III also confers the minister the power to declare any goods or class of goods to be prohibited where such goods are likely to cause injury to any person or property or otherwise unsafe. Such a prohibition order may additionally require the supplier to undertake remedial measures including the recall of the unsafe goods at the supplier's own cost. This part of the Act draws from the Trade Practices Act 1974 of Australia, the Fair Trading Act 1986 of New Zealand and the Consumer Protection Act 1987 of the United Kingdom. Unfortunately, this part of the Act does not apply to healthcare goods and food. Part IV of the Act deals with offences, defences and remedies in relation to Part II and III of the Act. Offences attract fines in the case where the defendant is a body corporate and fines and or imprisonment in the case where the defendant is not a body corporate. A full range of defences including reasonable mistake, reasonable reliance of information supplied by another where reasonable precaution and due diligence have been exercised. Part IV also enables the courts to void or vary the offending contract and provide for ancillary relief for the consumer by inter alia ordering the refund of money and property, payment of the amount of loss and expenses incurred and repair of the defective goods. Part V of the Act that deals with Guarantees in Respect of Supply of Goods pertains to title, acceptable quality, fitness for particular purpose, compliance with description, and sample. Included are also guarantees as to price, repairs and spare parts and certain express guarantees by manufacturers. Part VI deals with Rights Against Suppliers and Part VII deals with the Rights Against Manufacturers in respect of guarantees in the Supply of Goods. Parts VIII and IX deal with guarantees in relation to Supply of Services and the Rights Against Suppliers. Parts V to IX of the Act are based very closely on the Consumer Guarantees Act 1993 of New Zealand. Part X of the Act is an adoption of the strict liability regime for defective products introduced in the United Kingdom by the Consumer Protection Act 1987. Thus Malaysia has joined the increasing number of countries that have been influenced by the EC Directive on Product Liability. Unfortunately the Act does retain the exemption provided for agricultural produce. There is no maximum or minimum amount for the total claims that may be brought against any particular producer. The quantum of damages for personal injury or death are determined in accordance with the provisions of the Civil Law Act 1956 and will therefore not be different than that available for these heads under tort or contract law. What the law has provided is another head under which a claim may be founded and introduced for it a strict liability standard. Part XI of the Act provides for a National Consumer Advisory Council of government, producer, consumer and other civil society representatives and academicians. Part XII introduces an alternative redress mechanism styled as the Tribunal for Consumer Claims comprising a Chairperson and Deputy from among members of the Judicial and Legal Service of the public sector and other persons qualified for legal practice in the country. No lay membership is
provided for. The jurisdiction of the Tribunal extends to claims of up to RM10, 000 only though the parties may by agreement submit claims in excess of that amount. Supplementary legislation entitled Consumer Protection (the Tribunal for Consumer Claims) Regulations 1999 now provide for the forms and other operational aspects of the Tribunal. The Act provides that no party shall be represented by an advocate and solicitor at a hearing. The Legal Profession Act 1976 (section 37 read along with section 38) however requires that a company may be represented in a court only by an advocate and solicitor. This notwithstanding, the Consumer Protection Act 1999 specifically provides for a corporation or an unincorporated body of persons to be represented by its full time paid employee. Such a provision of course does not serve to preclude a person with legal training being employed full time by the company to serve as its officer to appear before the Tribunal on its behalf. The Act, it appears, recognizes the disadvantage that this can occasion to the consumer and therefore provides: "Where a party is represented as provided under subsection (3), the Tribunal may impose such conditions as it considers necessary to ensure that the other party to the proceedings is not substantially disadvantaged." Since its inception the Tribunal has had instances where it has had to deal with precisely this situation, i.e. where a legally qualified employee has represented the corporation or unincorporated body. However, the Tribunal has not in such instances relied on Section 108(4) to permit the consumer to have the services of an advocate and solicitor. It must be noted that in addition to this new mechanism there already exist in Malaysia a Small Claims Procedure in the magistrates courts for sums of up to RM5, 000 restricted to actions brought by individuals - corporations are explicitly barred. Also in operation in Malaysia are two industry initiated ombudsman schemes - one for the insurance sector and the other for the banking sector. A further two parts of the Act deal with enforcement and a number of miscellaneous matters. The major flaw of the Act is that it excludes from its ambit a number of important matters of interest to consumers, including the following: (a) Professionals who are regulated by any written law (lawyers, doctors, dentists, engineers, architects, nurse etc.) who are covered by separate statutes permitting either self-regulation or regulation by an administrative agency are therefore not subject to the Act. More critically, healthcare services provided or to be provided by health care professionals or healthcare facilities are similarly excluded. (b) At the time the Act was being debated the Multimedia Development Commission Act 1999 was not yet in place and the Ministry presumed, erroneously that electronic commerce will be regulated by that agency and consequently excluded it from the Consumer Protection Act 1999. The Act therefore excludes any trade transactions effected by electronic means unless otherwise prescribed by the Minister. The Minister is yet to make any such prescription and consequently there exists the absurd situation that a consumer contract entered into by mail would be covered by the Act but not an identical contract entered into by e-mail.
(c) Ideally, a comprehensive product safety policy should provide for surveillance of consumer products on the market in order to identify product related injuries and analysis of unreasonable risks, through data collection and other sources. Clearly, information derived from data collection systems such as for home accident and injury-reporting relating to consumer products are vital to develop standards on all consumer goods available in the market, be it manufactured locally or imported. Thus, data collection systems of injury and death statistics related to consumer products are an important source of such information. The Act does not make provision for such 'preparatory action'. (d) It is an essential element of any safety law that the scope of such law must extend to a wide range of consumer goods not covered by specific legislation. However, the Act does not apply to a person in respect of any defect in agricultural produce if such agricultural produce has not undergone any industrial process. There currently exist no specific legislation to govern genetically modified foods and other biotechnology products. The Act needs to be amended to provide for primary agricultural produce to come within the meaning of a 'product'. (e) The Act does not provide for public interest groups to bring an action on behalf of an aggrieved consumer. Unlike the novel feature seen in many other jurisdictions such as in Thailand, India and China that provides for consumers in obtaining legal aid and representation by consumer organisations, the Act does not provide for it. The concept of locus standi or 'standing in courts' as the term is commonly understood, being a procedural barrier created to prevent abuse of legal process should perhaps be done away with in instances involving consumer disputes. Consumer groups have lobbied for amendments to the Act. The shortcomings in the drafting that have manifested themselves in implementation need to be cured. Source:
http://paneir.blogspot.com/2008/10/consumer-protection-law-in-malaysia.html
BY Dr.S. Sothi Rachagan and Susheela Nair The law fails to extend consumer protection legislation to many forms of credit including leasing (except under the general provisions regarding bailment in the Contracts Act 1950), credit and charge cards, instalment payments, revolving credit, etc. Moreover, there is uncertainty as to what law applies to many consumer credit transactions. The three statutes contain inconsistent provisions, amongst others, in relation to: Licensing Control of advertising Provision of information to consumers, in particular, -information pertaining to interest and other charges Regulation of exorbitant interest and other charges Reopening of contracts considered unfair Warning about legal action and the steps to be taken -prior to, at the time of, and subsequent to, the issue of warning; and - Use of the credit-leverage for tie-in sales such as insurance. The statutes also reveal a lack of consistent policy in relation to sanctions for infringement - in some instances the law provides criminal sanctions and in others offers only civil remedies. Where it does provide criminal sanctions the penalties provided for are inconsistent. The interest of third parties is inadequately provided for and guarantors are not equitably treated. The statutes are not all enforced by the same agency and this has resulted in inconsistent application of the laws. The law relating to advertising and credit remain unchanged by the Consumer Protection Act 1999.
Until the enactment of the Consumer Protection Act 1999, the law on product safety in Malaysia was found in several piecemeal legislation dealing with specific products, for example: Sale of Drugs Act 1952 and the Control of Drugs and -Cosmetics Regulations 1984. Electrical Inspectorate Act 1983 and the Electrical -Inspectorate Regulations 1984. Pesticides Act 1974. Poisons Act 1952. - Radioactive Substances Act 1968. These laws provide safeguards over the sale and distribution of these products; the appropriate authorities have to approve or register these products after satisfying themselves that they meet certain established standards, while the use of some products may be restricted. The Consumer
Protection Act 1999 has provided a general law on products safety aimed at those areas not already covered by the specific statutes enumerated above. Malaysia has an effective national body, the Standards and Industrial Research Institute of Malaysia (SIRIM), to do product testing and certification and develop product standards. SIRIM's role is geared more to assisting the manufacturing sector to produce products that meet Malaysian and international standards. It has no powers to enforce standards. It tests products voluntarily submitted by manufacturers for a fee and sells them its standard marks if they meet the required standards under its Certification Marketing Scheme. It is considered that with these labels, the manufacturers may have an edge over other competitors in Malaysia. SIRIM does not collect accident statistics related to consumer products, or develop mandatory standards for all manufacturers and importers to comply with, or test products before they go on sale. The Consumer Protection Act now permits the Minister of Domestic Trade and Consumer Affairs to specify mandatory standards. Again, until the enactment of the Consumer Protection Act 1999, Malaysia did not have a comprehensive and general statute on product liability. The law on product liability was expressed in the law of contracts, the common law principles of the tort of negligence, and several statutes, the most important of which is the Sale of Goods Act 1957. Both common law and statute provide different rights of compensation for loss or damage caused by goods to different classes of people. For a claim based on contractual or statutory liability, only the immediate party to the contract can claim compensation and other affected persons such as the innocent bystander, a friend, or family member who uses or receives the product as a gift has no right to claim. Hence, unless privity is established, no liability arises. These persons are required to base their claims under the tort of negligence. However, in view of the difficulty in proving fault, a claim based on tort would inevitably face insurmountable complexities. After ten years of discussion, and five years after its drafting, a more comprehensive statute entitled Consumer Protection Act 1999 became law on 15 November 1999. The Act comprising 14 parts and a total of 150 sections deals with selected areas of the law not yet provided for in other statutes; it does not seek to repeal or replace existing law. However, by extending its protection only to consumers it inevitably had the effect of differentiating the operation of general law, most significantly the law relating to contracts and the law relating to the sale of goods. The Act drew extensively from consumer protection statutes in other jurisdictions. Part II of the Act dealing with Misleading and Deceptive Conduct, False Representations, and Unfair Practices is based on similar provisions of the Trade Practices Act 1974 of Australia and the Fair Trading Act 1986 of New Zealand. Hence specific provisions pertaining to such conduct in relation to goods, services and employment support a general prohibition of misleading and deceptive conduct. Part II also deals with misleading indication of price, bait advertising, gifts, prizes, and free offers. Part III of the Act deals with Safety of Goods and Services. It provides for the declaration of safety standards and compliance with them. Also provided for is a general safety requirement for goods. A special defences section is included - compliance with a requirement imposed by law or a standard determined in accordance with the Act. For suppliers, the special defences are absence of
knowledge and absence of a reasonable ground to believe that the goods failed to comply with the standard specified. Part III also confers the minister the power to declare any goods or class of goods to be prohibited where such goods are likely to cause injury to any person or property or otherwise unsafe. Such a prohibition order may additionally require the supplier to undertake remedial measures including the recall of the unsafe goods at the supplier's own cost. This part of the Act draws from the Trade Practices Act 1974 of Australia, the Fair Trading Act 1986 of New Zealand and the Consumer Protection Act 1987 of the United Kingdom. Unfortunately, this part of the Act does not apply to healthcare goods and food. Part IV of the Act deals with offences, defences and remedies in relation to Part II and III of the Act. Offences attract fines in the case where the defendant is a body corporate and fines and or imprisonment in the case where the defendant is not a body corporate. A full range of defences including reasonable mistake, reasonable reliance of information supplied by another where reasonable precaution and due diligence have been exercised. Part IV also enables the courts to void or vary the offending contract and provide for ancillary relief for the consumer by inter alia ordering the refund of money and property, payment of the amount of loss and expenses incurred and repair of the defective goods. Part V of the Act that deals with Guarantees in Respect of Supply of Goods pertains to title, acceptable quality, fitness for particular purpose, compliance with description, and sample. Included are also guarantees as to price, repairs and spare parts and certain express guarantees by manufacturers. Part VI deals with Rights Against Suppliers and Part VII deals with the Rights Against Manufacturers in respect of guarantees in the Supply of Goods. Parts VIII and IX deal with guarantees in relation to Supply of Services and the Rights Against Suppliers. Parts V to IX of the Act are based very closely on the Consumer Guarantees Act 1993 of New Zealand. Part X of the Act is an adoption of the strict liability regime for defective products introduced in the United Kingdom by the Consumer Protection Act 1987. Thus Malaysia has joined the increasing number of countries that have been influenced by the EC Directive on Product Liability. Unfortunately the Act does retain the exemption provided for agricultural produce. There is no maximum or minimum amount for the total claims that may be brought against any particular producer. The quantum of damages for personal injury or death are determined in accordance with the provisions of the Civil Law Act 1956 and will therefore not be different than that available for these heads under tort or contract law. What the law has provided is another head under which a claim may be founded and introduced for it a strict liability standard. Part XI of the Act provides for a National Consumer Advisory Council of government, producer, consumer and other civil society representatives and academicians. Part XII introduces an alternative redress mechanism styled as the Tribunal for Consumer Claims comprising a Chairperson and Deputy from among members of the Judicial and Legal Service of the public sector and other persons qualified for legal practice in the country. No lay membership is
provided for. The jurisdiction of the Tribunal extends to claims of up to RM10, 000 only though the parties may by agreement submit claims in excess of that amount. Supplementary legislation entitled Consumer Protection (the Tribunal for Consumer Claims) Regulations 1999 now provide for the forms and other operational aspects of the Tribunal. The Act provides that no party shall be represented by an advocate and solicitor at a hearing. The Legal Profession Act 1976 (section 37 read along with section 38) however requires that a company may be represented in a court only by an advocate and solicitor. This notwithstanding, the Consumer Protection Act 1999 specifically provides for a corporation or an unincorporated body of persons to be represented by its full time paid employee. Such a provision of course does not serve to preclude a person with legal training being employed full time by the company to serve as its officer to appear before the Tribunal on its behalf. The Act, it appears, recognizes the disadvantage that this can occasion to the consumer and therefore provides: "Where a party is represented as provided under subsection (3), the Tribunal may impose such conditions as it considers necessary to ensure that the other party to the proceedings is not substantially disadvantaged." Since its inception the Tribunal has had instances where it has had to deal with precisely this situation, i.e. where a legally qualified employee has represented the corporation or unincorporated body. However, the Tribunal has not in such instances relied on Section 108(4) to permit the consumer to have the services of an advocate and solicitor. It must be noted that in addition to this new mechanism there already exist in Malaysia a Small Claims Procedure in the magistrates courts for sums of up to RM5, 000 restricted to actions brought by individuals - corporations are explicitly barred. Also in operation in Malaysia are two industry initiated ombudsman schemes - one for the insurance sector and the other for the banking sector. A further two parts of the Act deal with enforcement and a number of miscellaneous matters. The major flaw of the Act is that it excludes from its ambit a number of important matters of interest to consumers, including the following: (a) Professionals who are regulated by any written law (lawyers, doctors, dentists, engineers, architects, nurse etc.) who are covered by separate statutes permitting either self-regulation or regulation by an administrative agency are therefore not subject to the Act. More critically, healthcare services provided or to be provided by health care professionals or healthcare facilities are similarly excluded. (b) At the time the Act was being debated the Multimedia Development Commission Act 1999 was not yet in place and the Ministry presumed, erroneously that electronic commerce will be regulated by that agency and consequently excluded it from the Consumer Protection Act 1999. The Act therefore excludes any trade transactions effected by electronic means unless otherwise prescribed by the Minister. The Minister is yet to make any such prescription and consequently there exists the absurd situation that a consumer contract entered into by mail would be covered by the Act but not an identical contract entered into by e-mail.
(c) Ideally, a comprehensive product safety policy should provide for surveillance of consumer products on the market in order to identify product related injuries and analysis of unreasonable risks, through data collection and other sources. Clearly, information derived from data collection systems such as for home accident and injury-reporting relating to consumer products are vital to develop standards on all consumer goods available in the market, be it manufactured locally or imported. Thus, data collection systems of injury and death statistics related to consumer products are an important source of such information. The Act does not make provision for such 'preparatory action'. (d) It is an essential element of any safety law that the scope of such law must extend to a wide range of consumer goods not covered by specific legislation. However, the Act does not apply to a person in respect of any defect in agricultural produce if such agricultural produce has not undergone any industrial process. There currently exist no specific legislation to govern genetically modified foods and other biotechnology products. The Act needs to be amended to provide for primary agricultural produce to come within the meaning of a 'product'. (e) The Act does not provide for public interest groups to bring an action on behalf of an aggrieved consumer. Unlike the novel feature seen in many other jurisdictions such as in Thailand, India and China that provides for consumers in obtaining legal aid and representation by consumer organisations, the Act does not provide for it. The concept of locus standi or 'standing in courts' as the term is commonly understood, being a procedural barrier created to prevent abuse of legal process should perhaps be done away with in instances involving consumer disputes. Consumer groups have lobbied for amendments to the Act. The shortcomings in the drafting that have manifested themselves in implementation need to be cured. Source:
http://paneir.blogspot.com/2008/10/consumer-protection-law-in-malaysia.html
