E-COMMERCE AND PROFECO

Dear clients and friends:

On January 11, 2018, a decree was published in the Official Gazette of the Federation that amends and adds various articles to the Federal Consumer Protection Law. The decree entered into force the day after its publication.

Among the amendments are the following

(i) The obligation of suppliers to inform the applicable restrictions in the commercialization of goods, products or services is incorporated to the law.

(ii) Prohibition of price increases due to natural or meteorological phenomena or health contingencies, or to apply charges without prior consent of the consumer.

(iii) The Federal Consumer Protection Procuracy (“Profeco” for its Spanish abbreviation) may issue alerts by any means on products or services that have been detected as risky or publish those that are in breach of the law and, if applicable, withdraw goods from the market or suspend services that are in such situation.

(iv) It will be considered a violation of the law attributable to the suppliers to hinder or prevent, directly or through third parties, verification visits and administrative enforcement procedures.

(v) Among the measures of constraint, it is important to highlight the repeal of the warning directly leading to the imposition of a fine, as well as the granting of powers to Profeco to order administrative arrests for up to 36 hours.

(vi) The Procuracy is required to remove suspension or warning stamps within 10 days after the cessation of the causes that gave rise to them is demonstrated.

(vii) Suppliers are prohibited from including advertising information that states that what is offered is endorsed, approved or recommended by any type of company or institution when the documentation and approval of the same is not available. To this end, suppliers may submit their products to the Attorney General's Office for evaluation, which may be used for advertising purposes.

(viii) Copy advice is clearly regulated - a mechanism inherited from Cofepris and used for several years by Profeco - by virtue of which suppliers may submit their advertising to review to ensure that it complies with the law and avoid penalties for misleading advertising.

(ix) The consumer is given a period of 5 days to revoke his consent and terminate the contract of sale at home or away from the establishment, mediated or indirect.

(x) The suppliers that offer or sell products or services by electronic means (e-commerce), must comply with the Mexican Standard issued by the Ministry of Economy, which must contain the specifications, characteristics, conditions or terms applicable to the goods or services offered; mechanisms so that the consumer may verify that the operation reflects his will to acquire; mechanisms so that the consumer may accept the transaction, and the safeguarding of his personal data is guaranteed, as well as mechanisms to file claims or delivery of merchandise.

(xi) The fines imposed by Profeco will be tax credits, will be executed directly by Profeco under the administrative procedure of execution in terms of the Federal Fiscal Code, may be covered through electronic means, and may have a 50% reduction in their amount if paid within 30 business days and are not challenged.

(xii) The period to consider updated the recidivism in the commission of infractions is extended to 3 years, but it is added the requirement that the respective procedures be carried out by the same administrative unit within its territorial jurisdiction.

(xiii) The use of an adhesion contract different from the one the supplier has registered will be subject to the sanctions that the law provides for particularly serious cases.

We believe that these changes will contribute to the legal certainty in the acts of consumption and in the relationship of the governed with the Procuracy.

At the same time, suppliers will have to be very attentive to new established infractions, the strengthening of the Procuracy’s powers, as well as the evolution of the Mexican Standard and Regulations in order to ensure compliance and avoid sanctions, in an increasingly developed e-commerce environment.

We remain at your service in case you wish to receive further information.



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