On 20 December 2022, the Department of Consumer Affairs (“DOCA”) issued a directive which established guidelines for the “recalling and the permanent/temporary ban on the sales and distribution of perilous goods and services” (“Directive”). The Directive provides DOCA with a process for recalling perilous goods and services – hereby referred to as “products” – and the procedures to be followed by the owners of products considered to be perilous.
Background and basis of the Directive
On 15 March 2019, the Pyidaungsu Hluttaw issued Law No. 9/2019 on the new Consumer Protection Law of 2019 (“CPL”), which repealed the previous Consumer Protection Law of 2014. On 18 January 2022, the Ministry of Commerce (“MOC”) issued the Consumer Protection Rules (“CPR”). The Directive is issued as per the power vested under Section 83 (b) and Section 33 of CPR, which states that DOCA must stipulate the product recall process or prohibit the distribution of perilous products. This Directive seemingly ensures that in terms of perilous products, DOCA gives rights to business owners, government bodies, and the public to report on the products so that the recall process can proceed without delay, and compensation will be made according to the procedures prescribed in the Directive. Government agencies will cooperate with DOCA to provide full protection for consumers.
Types of bans for the products by DOCA
There are two types of bans on products, temporary and permanent. Simply put, products that cause minor damage to consumers are temporarily banned. In contrast, products capable of causing death to consumers are permanently banned, according to the decision of DOCA based on cases reported to it under Rule 56 of the CPR.
Types of products that are recalled
Products are recalled based on factors such as a hazardous design that was not present at the time of manufacture but may arise during use, defects in the products in the production process or during transportation or storage before distribution to the market. Products subject to recall also include defects that render them unsuitable for use and products that do not meet the safety criteria for consumer products or possess perilous characteristics.
DOCA implementation and Inspection Officer duties
Under this Directive, DOCA will implement the recall of products based on reports by the public, and relevant government departments or based on the discovery of an Inspection Officer (“IO”) assigned by DOCA under Rule 56 of the CPR, which states the procedures for the IO to implement and report to DOCA when a product is recalled.
DOCA will recall products from the market if there is a reason to temporarily or permanently ban the sale and distribution. DOCA will do so after submitting the IO’s discovery to the relevant director's office of DOCA. The IO will visit local markets and check whether the products have been recalled on a case-by-case basis. The IO will also confirm if the consumers have been compensated accordingly. DOCA will set a certain period for business owners to voluntarily recall their products from the market and the IO will supervise the process.
Suppose the perilous products are the responsibility of a specific government department under some law. In that case, DOCA will implement “government to government” measures, which refer to different ministries cooperating to transfer cases or work together on the temporary or permanent banning of perilous products to protect consumers.
- DOCA announcement on perilous products
On its website, DOCA will make an announcement to consumers regarding perilous products and its actions on temporarily or permanently banning products. The announcement will also be posted on the website of the ASEAN Consumer Protection Committee and the official news network of the department.
Duties of the business owners
- Reporting of business owners to DOCA and IO
Business owners are to recall their products and cease services during the dates prescribed under Rule 58 of CPR. Business owners must follow guidelines from the IO and report on the recall process. The IO will proceed with DOCA’s decision on the temporary or permanent product ban. Business owners are to announce the recall or temporary or permanent ban of their products via letter, email, and other ways of communication to DOCA. Business owners must disclose when a perilous product is discovered in the market, notably to other businesses in the Supply Chain, such as importers, retailers, producers and so on.
Duties of the solely responsible business owner for the Supply Chain
- Procedures for the solely responsible business owner during the recall process
A business owner who has been identified as the sole person responsible in the Supply Chain in a reported case of perilous products must recall those products from the market and away from consumers. Suppose the recalled products are manufactured locally, whether temporarily or permanently banned. In that case, the business owner must follow the procedures such as stopping the distribution and the production of products, removing products from the market, developing recall measures, sending information to relevant government departments, recalling perilous products, and if necessary taking them back from consumers who may have purchased them. Those found solely responsible business owners must inform other businesses in the Supply Chain about the decisions and procedures made by the DOCA on the products. Such notifications may include issuing notices to consumers, contacting and notifying the concerned bodies in the Supply Chain, and acquiring proof of a complete recall of the products that were exported and distributed to foreign countries. Other procedures include keeping records related to the recall, acquiring proof that the original place of manufacture has been contacted and informing DOCA that the recall process was completed.
After following the recall procedure, the business owner must carry out complete and accurate inspections of products that have been recalled or temporarily banned, properly store the products to be repaired, destroy the irreparable products in an orderly manner and provide remedial actions for consumer complaints.
- Compensation by the solely responsible business owner to the affected businesses in the Supply Chain and Consumers
The solely responsible business owner must compensate the other businesses and consumers in the Supply Chain who were affected by the recall of the products, depending on the risk or the temporary or permanent banning. The business owner shall refund the same amount of monetary value, replace or fix the products and resend them, or send a repair team to a consumer's home or any location of the products as requested by the consumer, notably for products that are difficult to return or repair.
Factors to be considered when a business submits to the recall process on its own accord and the information to be submitted after the products have been recalled
The recall submission must include basic information about the products -- for example, the brand, name, and type of product – as well as a description of the potential danger, the possibility of danger being notified to the consumer, how the danger may occur and at what stage it may occur. Other required information must include the degree of vulnerability of the products, information regarding the shelf-life of the products, how the products are distributed to consumers, method of recall from the market, plan for consumer grievances, and the method of communication with distributors.
After the products have been recalled, the business owner must submit the following information to DOCA– the brand name and the total number of the stored products, records from where it was recovered, evidence that the products to be repaired were properly stored and maintained, evidence that the irreparable products were properly destroyed, evidence that the consumer and other businesses involved in the Supply Chain were compensated.
Such information must be submitted to DOCA according to Rules 63, 64, and 66 of the CPR, which require business owners to inform DOCA when implementing a product recall of their own accord. They must also inform DOCA after fixing the errors of the products and reselling them, and request DOCA’s approval to repeal the temporary banning of the product. Forms required by the department must state the reasons for recall or temporary ban from the market. Evidence that the product was properly preserved during the time it was stored must also be provided as well as an expert’s comment or recommendation. If a product requires laboratory testing during repair, the result of the test is required within one month from an officially recognized laboratory.
Notifying consumers of the business regarding perilous products
The business owner must notify consumers in the media, television, radio, newspapers, a journal, or publication for three consecutive days. The notification must include a basic description and information about the products to be recalled, reason, place, time, methods of recall, recall period of the products, and necessary adjustments for damages resulting from the recall of the products.
The DOCA will act against business owners if they do not report to it. These business owners will be reported to the Consumer Protection Committee of DOCA, which will take administrative action as defined under the CPL. If found that the products that are recalled, temporarily or permanently banned, are being resold without notifying DOCA, the relevant committee will take action against such business owners.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.