9 January 2024
On 18 October 2023 the Consumer Protection and Guarantees Bill 2023 (the CPG Bill) was published in the Extraordinary Gazette for Parliamentary consideration, at the instigation of MP Chris Saunders.
The Cayman Islands stands apart from the majority of the developed world in that it presently has no dedicated law establishing and protecting the rights of consumers, other than a few narrow (and now antiquated) provisions within the Sale of Goods Act (1997 Revision).
While the CPG Bill has not yet been debated in Parliament and it is therefore not known when it will become law, once it is passed it will represent a cosmic shift and a substantial advancement in the private rights of consumers in the Islands. It also carries with it a reciprocal risk for businesses who supply goods or services in Cayman.
What does the CPG Bill mean for Consumers?
The CPG Bill seeks to regulate the relationship between consumers and suppliers of goods and services in order to set a standard of protection that the public can rely and depend upon, and to rectify the relative disadvantage consumers face in seeking redress when things go wrong.
Presently, consumers are more or less unprotected in the marketplace. When issues arise, the burden (and expense) is on the consumer to try and obtain a resolution. Unless the supplier is voluntarily cooperative, doing so is often very difficult. Formal legal advice and action is often necessary, which is costly and, in many cases, uncommercial and prohibitive.
The CPG Bill cuts to the heart of that issue. It prescribes a level of protection that consumers can enjoy, while holding suppliers to account. It does this by (among other things, but most importantly) prescribing certain Consumer Rights and Consumer Guarantees.
Under the CPG Bill, consumers will have the right:
- to avoid any legal liability in relation to unsolicited goods or services;
- not to be required, as a condition of receiving goods or services from a supplier, to acquire other goods or services from that (or any other) supplier or third party;
- in relation to repair or maintenance services and replacement of parts, to only pay for that work if a detailed estimate for that work was received and approved by the consumer before the work was undertaken;
- to examine, select and reject any particular item where goods are displayed in, or sold from, open stock;
- to timely delivery or performance of goods and services; and
- to cancel any advance booking or reservation for a good or service to be supplied (such as a hotel reservation), in which case any deposit paid is to be refunded and only a reasonable charge for cancellation may be made.
Consumer Guarantees are promises that automatically apply by operation of law to every instance where goods or services are supplied to a consumer.
The core Consumer Guarantees prescribed under the CPG Bill are:
- a guarantee that goods are of acceptable quality, in that they are (i) fit for all purposes for which goods of the type in question are commonly supplied, (ii) acceptable in appearance and finish, (iii) free from defects, (iv) safe and (v) durable;
- a guarantee that goods and services are reasonably fit for purpose;
- where goods are supplied by description, there is a guarantee that the goods correspond with the description;
- where a consumer makes a decision to acquire goods based on a sample or demonstration model, there is a guarantee that the goods correspond in quality with the sample or demonstration model;
- a guarantee that goods are unused (unless the supplier discloses that the goods are used, or the consumer knows or ought to know that the goods are used);
- a guarantee that the supplier will take reasonable action to ensure that facilities for repair and supply of parts are available for a reasonable period after goods are supplied; and
- a guarantee that suppliers and manufacturers are bound by any express warranties that are included on any label or package attached to or accompanying goods.
What happens if a Consumer Right or Consumer Guarantee is breached?
If a supplier infringes a Consumer Right, they are liable to pay a penalty. The penalties under the CPG Bill have not yet been prescribed, but will be set out in regulations that will be made after the CPG Bill is passed into law.
If a supplier fails to comply with a Consumer Guarantee:
- the consumer can require the supplier to remedy the failure within a reasonable time;
- where a supplier fails to remedy a failure to comply with a Consumer Guarantee within a reasonable time (or at all), the consumer may:
- have the failure remedied elsewhere and obtain all reasonable costs in doing so from the supplier; or
- reject the goods;
- where a failure cannot be remedied or is of as substantial character, the consumer may:
- reject the goods; or
- obtain compensation from the supplier for any reduction in value of the goods below the price paid or payable for the goods.
Suppliers can remedy a failure of any goods to comply with a Consumer Guarantee by repairing the goods, curing any defect in title, replacing the goods with goods of an identical type, or providing a refund.
Where goods are rejected by the consumer, the consumer must notify the supplier of that in writing, including the grounds for rejection, at which time legal ownership of the goods transfers back to the supplier and the consumer must return the goods. The consumer can then elect to receive either (a) a refund, or (b) replacement goods of the same type and of a similar value.
How are the rights and remedies under the CPG Bill enforced?
A supplier who fails to comply with a Consumer Guarantee is liable to pay a penalty, and additionally, a supplier who fails to provide the remedies prescribed in the CPG Bill is liable to pay a further penalty.
In addition to facing penalties for non-compliance, the Consumer Guarantees remain enforceable against suppliers. The CPG Bill establishes the Consumer Affairs Commission, an independent body created for the purpose of receiving complaints and taking enforcement action for contraventions of the CPG Bill.
Similar to the Ombudsman, the Commission is empowered to investigate complaints made by consumers, to represent a claimant who the Commission thinks has a justifiable claim against a supplier, and to impose appropriate orders and prescribed penalties for contraventions of the CPG Bill.
While the establishment of the Commission does give “teeth” to the CPG Bill in terms of ensuring compliance and enforcing consumer’s private rights, it is not yet known how much funding the Commission will be given to operate, and how well-resourced it will be. As is often the case in judicial and quasi-judicial governmental departments, it may be expected that the Commission will have a high case volume, which may result in lengthy delays for consumers seeking the Commission’s intervention.
Aside from the ability to seek assistance from the Commission, it remains open for consumers to bring a private legal action against suppliers of goods and services for any failure to comply with a Consumer Guarantee, and any failure to provide the prescribed remedies when Consumer Guarantees are not met.
The CPG Bill makes this process easier for consumers by providing a clear statutory basis for their claims, rather than putting consumers to the time and expense of having to establish a more complex form of claim (such as negligence).
The CPG Bill signifies a pivotal moment in the Cayman Islands’ consumer landscape.
While it does not go as far as counterpart legislation in other jurisdictions in terms of outlawing restrictive trade practices such as cartel conduct, exclusive dealing and misuse of market power, it offers a sound structured framework that empowers consumers with private rights while setting clearer expectations for suppliers.
The effectiveness of the CPG Bill will depend not only on its provisions but also on the operational capacity and resources allocated to the Consumer Affairs Commission, as the relevant regulatory authority and consumers’ first point of call.
The CPG Bill gives consumers rights which suppliers must uphold and give effect to, so it is important for suppliers to understand those rights and to consider how their business practices may need to be amended to ensure compliance with their obligations under the CPG Bill. Businesses are encouraged to seek legal advice early to avoid risking non-compliance.
KSG is highly experienced in competition and consumer law in the Cayman Islands, with attorneys bringing significant expert knowledge from comparable overseas jurisdictions such as the UK, Australia and Canada.