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The Chargeback of the Salvadoran Consumer Law 

by Carlos Sibrian

Published: August, 2019

Submission: September, 2019

 



As of August 7th, 2018, the amendments of the Consumer Protection Law (CPL), which includes for the first time, the consumer protection in the field of electronic commerce (e-commerce), taking that as the contracting process or the goods, services and commercial information trading through data communication webs.


Such amendment includes as a new basic consumer right:being protected during the electronic commerce transactions with providers; considering that the information and communication technologies have changed the way that people do business, easing the everyday life, by means of fast goods and services transactions, with a lesser cost of time and money.


It is important to highlight that the concluded contracts by electronic means have a significant advantage, on the understanding that when the web is used, a reduction on the business costs is obtained; however, when there are transactions not on-site, it turns out logical that there must be a protection level equivalent to the one that rules on the traditional transactions, where the consumer and provider are physically present.


Hence, the amendments to the CPL related to the electronic commerce, establish the procedures so that the consumer can act in case that the acquired product by electronic means, is not received; that the delivered product does not match to the requested one or is faulty; or in case that the provider performs unrequested or misleading commercialization practices; putting at their disposal, legal means that allow them to filter the content of the communications systems or attend to the Consumer Defender. This regulation is extremely important for the consumers, as well as for the providers, that want to commercialize through the web.


To that effect, the “chargeback” is one of the innovative mechanisms of the contractual protection, for the electronic commerce consumer, in force as of August 7th, 2019, provided in Article 13-D of the CPL.


The chargeback compels the legally established provider in El Salvador, who sell goods or services by means of electronic commerce or any other contracting method, to chargeback or refund the payments that the consumer requires, when:


  1. Practice their chargeback right;
  2. The requested product has not been received, or the hired services is not the one that was given;
  3. The contract object does not match what was requested, or turns out faulty; and
  4. There are mistakes on the collection of transactions due to failures on the third-party payment system.

The term for the provider to effect the chargeback are 15 days since the date when the consumer filed his claim.


Hereafter, we will analyze such figure, in order to comprehend its extension and importance, as well as the possible difficulties on its application since the way it was written by the Salvadoran legislator.


In the first place, it is important to appoint that this figure is only applicable to legally established providers in El Salvador. It won´t be applicable, then, to providers who are not domiciled in El Salvador. It will have to be the Private International Law, by means of international treaties, who will have to give a solution to the consume relations where non-national providers participate, due to the fact that one of the electronic commerce is: cross-border.


In second place,it is highlighted, that the chargeback figure is confined to goods or service sales made by electronic commerce means orany other contractual method, which involves, as well, the application of the chargeback to goods or services sales made on-site, reaching the point of accepting payments by non-electronic means – cash-. On the contrary, analyzing such figure using comparative law, this one does not proceed when the purchase has been made on-site or by means of a channel that is not considered electronic, and neither when the payment has been made by means of an on-site channel, as established – for example – in Article 51 of the Consumer Statute (1480 Law of 2011) of the Republic of Colombia.


This situation can cause further inconveniences on the application of the chargeback in El Salvador, at the moment of the application of this figure to contractual methods out of the electronic commerce and allowing payments by non-electronic means, distorting the purpose for which it was created.


In third place, the provider is compelled to refund the payments to the consumers in four situations, which will be developed as follows:


  1. When the chargeback right is practiced:

The first paragraph of the Article 13-A of the CPL, provides that the chargeback right of a contract is the faculty of the consumer to unilaterally void the contract, without the need to explain his decision and without any penalty, provided that the contract has not been enhanced since the eight days term has not ended, or the good has not been used yet, or the services has not begun to be provided.


The consumer law doctrines grant the chargeback right to the consumers, at considering that the term the Law gives – eight days in this case -, is a consideration term or a cooling period for the sales or contracts that arise in a special context: doorstep sales, out of the store, long distance sales, by catalogue, by tele-sales, and, generally, where the good is not physically appreciated by the consumer.


When the consumer uses his withdrawal right must practice, consequently, the chargeback right. The provider, since, is compelled to unilaterally terminate the contract and to return what was paid by the consumer.


  1. The purchased product has not been received, or the service has not begun to be provided:

The chargeback can be requested by the consumer in this case, provided that the good has not been received or the service has not begun to be provided.


Because of the way that this situation has been written, as long as these conditions have not occurred, the consumer can practice his chargeback right, no matter the contractual method:on-site or not on-site. Unlike the figure of deferred delivery – Article 13 CPL-, that applies only in on-site contracting.


 


  1. The object of the Contract does not match what was requested, or turns out to be faulty:

This situation produce some dispute, since, as it has been developed in this article, the chargeback figure in El Salvador does not only operate for goods or service sales by electronic means, but also for any other contractual method; and, does not restrict, consequently, the exclusive use of electronic payment means (debit or credit cards), taking into consideration cash payments.


The above raise the following doubt: the chargeback that is required by the consumer, under the statement that the contract object does not match what was requested, or turns out faulty, operates immediately, during the following 15 days after the date when the consumer filed his claim to the provider – Article 13-D, sixth paragraph CPL-,as an autonomous right, acting as a preventive measure; or, the chargeback will apply, provided that the consumer filed the claim to the provider and, also, file his complaint to the Consumer Defender, under the breach of contract figure, and which has been resolved by the Sanctioning Court of the Consumer Defender, declaring the breach of the contract or guarantee, and accessorily, the chargeback,as an accessory right.


And, the problem is the fact that it cannot be to the sole discretion of the consumer to consider that the object of the contract does not match with what was requested or if it turns out to be faulty, without the consent of the provider, in further sanctioning procedures under this figure.


Going back to the comparative law, the chargeback is applicable in the Republic of Colombia,as an autonomous right, acting as a preventive measure, and if the administrative or judicial authority resolves the dispute in the consumer favor, the chargeback will be understood as definitive; if it resolves in the providers favor, the claimed transaction will be charge to the bank deposit, or from the consumer’s current or saving account, and the money will be given to the provider.


We do not think that the interpretation of such situation,as an autonomous right, acting as a preventive measure, is very much attached to the origin of this figure in the comparative law, but must be interpreted in such way in El Salvador – the Article 44 letter k CPL was written that way-; however, applying the chargeback figure in El Salvador to goods or service sales out of the electronic commerce, taking into account non-electronic payment means (cash), it will produce some practical and legal inconveniences during its application.


 


  1. There are mistakes on the collection of the transactions due to failures in third-party payment system.

This last situation is very useful, given the fact that before the failures in the third-party payment systems, it has been established the obligation to refund the amounts that were payed to the consumers, which were unfairly affected by these collections.


Finally, the consumer must document his claim of chargeback directed to the provider, who has a 15 days term since the date in which the consumer filed his claim, to apply the chargeback. In case of a refusal or silence by the provider, the consumer can directly address to the Consumer Defender, to file the complaint, attaching proof of the submission of the chargeback claim, as a requirement in order to process his complaint.


It is important to address that up to date, the Sanctioning Court of the Consumer Defender has not yet been pronounced relating the adequate interpretation of the chargeback figure for the Salvadoran consumer law, since it is a right that was recently added. Once it pronounces itself on that matter, we can obtain legal certainty for the consumer as well as for the providers, relating its application.


We, as Consortium Legal, are at your disposal to provide the adequate legal assessment regarding the current regulation of the electronic commerce in El Salvador, as well as the Consume Law regulation as up to date, which is applicable for the development of your company or the defense of your rights.


 


 


Footnotes:

Consulted Works:



  1. Barajas Villareal, Viviana Beatriz. La reversión del pago en el estatuto del consumidor, constitucionalidad y eficiencia. Universidad Santo Tomás, Bogotá D.C., 2013.

  2. Mena Castro, Armando Enrique. Criterios jurisprudenciales de Protección al Consumidor. Defensoría del Consumidor, 2015.

  3. Valdés Jaramillo, María Camila. Derecho del consumo: El ABC de la reversión de pagos. Blog de derecho de los negocios. Revisado el 11-08-19.


https://dernegocios.uexternado.edu.co/comercio-electronico/derecho-del-consumo-el-abc-de-la-reversion-de-pagos/



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