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Topics for CIDIPs


» Proposals

U.S. Federal Trade Commission Proposal for OAS

Model Law on Monetary Redress for Consumer Transactions 

 * The United States supports the inclusion of a consumer protection topic for CIDIP-VII. The U.S. believes that strong and effective consumer protection laws and institutions can contribute to consumer welfare and economic development in the OAS countries. 

* The U.S. recognizes that there is a need to develop mechanisms to protect consumers who have suffered economic injuries from businesses, particularly for injuries that have a relatively small monetary value. Therefore, the U.S. proposes that the CIDIP process focus on encouraging mechanisms for monetary consumer redress. 

* Specifically, the U.S. proposes that the CIDIP focus on developing a model law on mechanisms for consumers to obtain monetary redress. There are many possible redress routes including judicial mechanisms such as small claims tribunals, administrative adjudication of small claims, and private, associational, and governmental (or parens patriae) collective court actions. A model law could cover some or all of these options. 

* For example, a model law could contain a basic statement regarding the right to monetary redress and the availability of mechanisms for redressing consumer complaints. It could contain a general declaration to the effect that: Monetary redress for economic injuries to consumers should be available through administrative or judicial mechanisms for adjudicating individual consumer claims for low monetary value and through collective or representational actions filed in courts or administrative or other appropriate tribunals. 

* With respect to small claims procedures, a model law could set forth a few basic principles for a low-cost, efficient, and expedited small claims procedure. It would not require member countries to set up special small claims courts but instead leave the forum for the small claims procedure up to the individual country (e.g., a specialized judicial court, administrative tribunal, or national consumer protection agency). 

* With respect to collective or representational actions, the model law could specify the types of entities with the ability to bring collective or representation claims seeking monetary redress, which could include governmental entities or attorneys representing a class of consumers with common claims. The model law could specify that collective action procedures are appropriate vehicles for obtaining monetary redress for individual consumers. 

* The model law also could include a provision clarifying that monetary redress judgments obtained in collective actions brought by governments should not be considered penal or public in nature and should be enforced based on rules for enforcing private international law judgments. The U.S.-Australian Free Trade Agreement contains a similar provision.

* The topic of redress mechanisms already has attracted attention from the OAS member states and through the Forum of Latin American Consumer Protection Agencies. Indeed, many Latin American and South American consumer protection agencies have begun to explore mechanisms for consumers to obtain monetary redress. Some countries, e.g., Mexico, have instituted small-claims type procedures within the administrative agency context.  Other countries are exploring collective action mechanisms. For example, Chile recently passed a law that gives the government the ability to bring collective actions on behalf of consumers. Brazil, which pioneered collective actions in South America, is currently conducting feasibility studies on expanding its class action procedure. Mexico=s consumer protection agency, Profeco, already has the ability to bring collective actions on behalf of consumers. 

* This topic has recently drawn a great deal of attention in other countries as well. The 30 member states of the OECD are currently studying consumer redress mechanisms, and the OECD=s Committee on Consumer Policy will host a workshop on this topic in Washington, D.C. in April 2005. Mexico is participating in this project. The OECD meeting could generate some information that might provide useful background for the CIDIP meeting. 

* A model law on consumer redress would complement the proposal for a consumer choice of law convention, by focusing on practical mechanisms for redress.  

* Inclusion of consumer-oriented topics would achieve a balanced agenda, together with an economics-based topic such as that proposed by the United States and supported by a number of OAS members to enhance economic development and trade throughout the Americas.

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