Consumer rights protection in Georgia

As of June 1, 2022, a new law titled "On Protection of Consumer Rights" came into effect in Georgia (with the date of publication on the website being 06.04.2022 and the date of adoption by the Parliament in the third hearing being 29.03.2022) (hereinafter referred to as 'the law'). Without any exaggeration, it can be said that this is a long-awaited law. It is worth noting that the previous similar law was repealed before the adoption of the new law and was valid until 25.05.2012.

It should be noted at the outset that this document does not permit the exchange or return of new items and does not establish significant penalties that may be imposed on the trader in favor of the consumer in court. Simultaneously, it is largely tailored to address the challenges of the rapidly changing mechanism of the country’s economy, incorporating regulations for the online trading process. It is noteworthy that the National Competition Agency will play a decisive role in the implementation of the law.

As is known, the concept of a 'retail purchase agreement' does not exist in Georgian legislation, and special rules of civil law regulating this type of relationship have not yet been adopted. The new law addresses this gap. Specifically, it simplifies the process for consumers of goods and services in Georgia to cancel transactions related to defective goods. Article 17 of the law stipulates that, in case of discovering a defect, the buyer of the product has the right to file a complaint with the seller, request the correction of the defect, or demand free repair or replacement of the product within a reasonable time. The right to reduce the price of the goods or terminate the contract entirely arises when repair is completely impossible or, for example, if the seller has not repaired the item within a reasonable time, and the buyer has already lost interest in performance. Additionally, it is noteworthy that the trader is not required to conduct an examination of the quality of the goods at the stage of considering the claim.
It should be noted that the buyer does not have the right to refuse the contract if the defect in the goods is insignificant or non-existent.

It is significant that the new law applies not only to the retail purchase and sale of goods in stores but also to the remote sale of goods via the Internet, trade in samples, delivery of goods, and various financial services.

Moral damage caused by the violation of the consumer’s rights is subject to compensation only in one case: when the consumer is discriminated against in the public offer of goods or services, such as on the basis of nationality, race, or sex. Actions carried out on a similar basis are prohibited under Article 3 of the law.

The legislator has accorded significant attention to the consumer’s right to receive reliable information about products and services. The law mandates that, before the conclusion of a contract, the buyer must be clearly and comprehensively provided with reliable information about the product or service, including its name, manufacturer, all essential characteristics, and the address and name of the entrepreneur.

The price of the product should be indicated, with taxes in mind. Additionally, the contact information of the merchant, on whose behalf the person is acting at the point of sale, details about service points, as well as the service price with all additional costs (including delivery and installation charges), information about the warranty, and the terms of contract termination must be specified. For digital content, it is necessary to provide the user with information 'about the technical means used for its protection.' Importantly, all information must be presented in the state language of Georgia.

The new law introduces an element of protection for consumer rights, specifically by prohibiting 'aggressive commercial activity.' This prohibition addresses dishonest techniques employed by some car dealers, a practice well-known to customers, where the impression is created that the customer cannot leave the company’s premises until they sign the contract—an unacceptable practice. Additionally, it includes the entrepreneur’s refusal to leave the residence against the consumer’s will, sending 'spam' messages via telephone or other means of remote communication, and, surprisingly, advertising directed exclusively at children with the obvious purpose of influencing parents.

The list of prohibited aggressive actions also encompasses 'creating a false impression' that the customer has won or, as a result of taking a certain action, will win a prize or receive another benefit. In other words, it addresses the established and well-known practice of presenting a product as a prize in a lottery.

The law imposes significant penalties for engaging in actions prohibited by the law. It is essential to note that the penalty is not imposed for the violation of the right per se but for non-compliance with the decision made in connection with the complaint submitted due to prohibited actions.

The new law envisions the establishment of non-profit organizations dedicated to the protection of consumer rights. However, as envisioned by the authors of the law, their role is limited to preparing collective consumer statements and mediating in resolving disputes with entrepreneurs.

The resolution of consumer disputes is subject to an out-of-court review procedure, falling within the competence of the National Competition Agency.

The final chapter of the law elucidates the types of complaints falling under the authority of the agency. Notably, the services provided by banks, resource providers, insurance companies, and other similar enterprises are excluded from its jurisdiction. However, it is crucial to emphasize that despite being beyond the agency’s direct oversight, the activities of these entities remain subject to the law. Any violations of consumer rights by such companies will be scrutinized by the relevant profile authorities.

Articles 30−36 of the new law outline the regulations guiding the agency’s investigation of consumer complaints. These investigations are conducted in a cameral manner, as the law does not grant the agency the authority to physically visit the trader’s location, seize documents, or conduct on-site inspections. Instead, agency employees remotely request documents, invite involved parties, and, if necessary, engage experts.

Decisions related to complaints, including issues such as the elimination of violations or termination of contracts with customers, must be made no later than one month after receiving the complaint. In cases of non-compliance within five days, the trader may be subject to a fine. The fine’s amount is at the discretion of officials but can reach up to 2 percent of the trader’s turnover from the previous financial year.

The new law specifies that the agency may conduct an inspection even without a specific user’s application (complaint). This will occur if there is information that objectively indicates the violation of the rights not only of one user but also of a group of users.

If a violation of consumer rights is uncovered during the case review, the trader must be provided with a reasonable period to rectify the violated right or cease the action deemed a violation. Subsequently, the agency is authorized to impose a fine on the entrepreneur. It is noteworthy that the deadline for applying to the agency to establish a violation of the requirements of the Consumer Rights Protection Law is quite generous, allowing a timeframe of 2 years after the violation was committed. Detailed rules governing the operations of the National Competition Agency of Georgia within the framework of the law will be further elucidated in a separate legal act, slated for adoption before October 1, 2022.