Consumer protection

LEGAL FRAMEWORK

Legal framework and system architecture

The backbone of Chilean consumer law is Law No. 19,496, known as the Consumer Protection Law (LPDC). Three reforms concentrate the bulk of the current obligations.

Law No. 20,555, published on December 5, 2011, created the Financial SERNAC and extended oversight to financial products and services, with disclosure duties on the cost of credit.

Law No. 21,081, published on September 13, 2018, strengthened SERNAC, raised fines, defined mitigating and aggravating circumstances, and gave it the power to interpret the rules administratively.

Law No. 21,398, published on December 24, 2021 and known as the Pro-Consumer Law, enshrined the pro-consumer principle, expanded rights in e-commerce and reformed the legal warranty.

The law seeks to correct the asymmetry of the consumer relationship with rights that cannot be waived in advance, so any clause waiving a consumer right beforehand is void.

SCOPE

Consumer, provider and scope

The LPDC defines the consumer as the individual or legal entity that, under any onerous legal act, acquires, uses or enjoys goods or services as end recipient. The provider is the individual or legal entity, public or private, that habitually carries out activities of production, manufacture, import, construction, distribution or marketing of goods, or provision of services, for which it charges a price or fee.

The law adds cases it expressly covers, including the supply of a furnished property for rest or tourism for periods not exceeding three months, certain aspects of basic, secondary and higher education services, home sales by construction companies, real estate developers and the Housing and Urbanization Service, and acts connected with health services, excluding benefits and financing regulated by special laws.

This includes the right to individual compensation where the special law provides no procedure for it. Thus, a bank, a health insurer or a telecommunications company regulated by the CMF, the Superintendence of Health or Subtel coexists with the LPDC in the matters the LPDC reserves.

Protection extends partially to smaller companies. Law No. 20,416, known as the SME Statute, establishes in its ninth article the protection of micro and small enterprises acting as consumers, making certain LPDC rules applicable to specific acts and contracts with their suppliers, though excluding the rules on SERNAC’s role; actions are channeled to the competent Local Police Court or through whatever avenues apply at the company’s option. SERNAC has held, in its Interpretive Ruling on Administrative Interpretation Request No. 36,258, of May 31, 2023, that micro and small enterprises may exercise the legal warranty in their consumer role, under the ninth article of Law No. 20,416.

CONSUMER RIGHTS

Basic consumer rights and duties

Article 3 of the LPDC recognizes a core of basic rights, all unwaivable in advance. They include free choice of the good or service, truthful and timely information on goods and services and their conditions, freedom from arbitrary discrimination, safety in consumption and protection of health and the environment, adequate and timely repair and compensation of all material and moral damages in case of breach, and education for responsible consumption. In financial matters, the Pro-Consumer Law reinforced the right to go before the competent court. The same article sets duties for the consumer, such as informing themselves responsibly, dealing with established commerce and avoiding risks affecting their safety.

Two rules have immediate operational consequences. Silence never constitutes acceptance in consumer transactions; the provider cannot read a lack of response as a yes, nor charge for an additional service on that basis. And under the pro-consumer principle of Law No. 21,398, every provision of the law, and in particular the terms of an adhesion contract, is interpreted in the sense most favorable to the consumer, with the most favorable term prevailing over contradictory ones.

INFORMATIONANDADVERTISING

Duty of information and advertising

The LPDC requires the consumer to receive all basic commercial information relevant to an informed decision, including the price, taxes included, the contracting conditions and the characteristics of the good or service.

False or misleading advertising Article 28 sanctions anyone who, through any medium, induces error or deception regarding relevant elements of the good or service, including components and composition, suitability for the intended purposes, relevant characteristics, price and payment method or cost of credit, warranty conditions, and characteristics relating to environmental harm or recyclability or reusability. Article 28 A adds the prohibition of advertising that causes confusion about the identity of companies, brands or other distinctive signs. Advertising binds the provider; objective conditions communicated become part of the contract and are enforceable, and the rules also reach labels, signage, promotions, offers and contests.

CONSUMER CREDIT

Consumer credit, the CAE and total credit cost

The LPDC’s consumer credit section, reinforced by Law No. 20,555, imposes financial disclosure duties so the consumer can compare offers on a homogeneous basis. The credit provider must disclose the total cost of the credit, expressed as the Equivalent Annual Charge (CAE), an annual percentage indicator integrating the interest rate, commissions, expenses and associated insurance. It must also disclose the total cost of the credit in pesos, the interest rate, the number and amount of installments, and the product’s commercial and financial conditions.

These duties are developed in regulations. Decree No. 43 of 2012 of the Ministry of Economy approved the Regulation on consumer credit information; Decree No. 44 of 2012 that on bank and non-bank credit cards; and Decree No. 48 of 2020 that on the content and information of the settlement certificate, in addition to amending Decrees Nos. 42, 43 and 44 of 2012. For mortgage loans, Decree No. 42 of 2012 applies, whose current version should be checked against the rules applicable to the transaction.

ADHESION CONTRACTS

Abusive clauses and adhesion contracts

An adhesion contract is one whose clauses have been drafted and imposed unilaterally by the provider, with no ability for the consumer to alter them. The LPDC regulates it from two angles.

Formally, it must be legibly written, in Spanish, in a font size no smaller than 2.5 millimeters, and the consumer must be able to know its full content before being bound; the Pro-Consumer Law reinforced the requirement to make them available to the enforcement authority.

On substance, Article 16 declares abusive clauses to be entirely without effect and lists prohibited categories. These include clauses empowering the provider to unilaterally void, modify or suspend the contract; those establishing price increases for services, accessories, financing or surcharges unless the consumer can accept or reject them in each case; those charging the consumer for deficiencies, omissions or administrative errors not attributable to them; those reversing the burden of proof to their detriment; absolute liability limitations depriving them of redress for deficiencies affecting the product’s or service’s essential utility or purpose; those including blanks not filled in before signing; and those limiting their rights. It closes with a general clause condemning stipulations contrary to good faith that cause a significant imbalance to the consumer’s detriment.

Articles 16 A and 16 B regulate the consequences. Once a judge declares one or more abusive clauses void, the contract survives with the rest, unless that is impossible given its nature or the parties’ intent, and the pro-consumer principle also governs its interpretation.

LEGALWARRANTY

Legal warranty: the triple option

The legal warranty, regulated in Articles 19 to 21 of the LPDC, gives the consumer a remedy when a product is faulty or unfit for ordinary use. Faced with a defective product, they may choose, at their discretion, between free repair of the good, its replacement or a refund of the amount paid — the so-called triple option. This choice belongs to the consumer, not the provider, and the Pro-Consumer Law required it to be communicated in stores, branches and websites.

THE TRIPLE OPTION APPLIES IN THE FOLLOWING CASES:

When a product subject to mandatory safety or quality When the materials, parts, pieces or components making standards fails to meet the corresponding specifications. up the product do not match the specifications they display or the label’s statements.

When, due to deficiencies of manufacture, preparation, When the provider and consumer agreed the product materials, structure, quality or sanitary conditions, the would meet certain specifications and it does not. product is not fully fit for its intended use or the use the provider advertised.

When, after the warranty is exercised and technical When the item has hidden defects or vices that make its service provided, deficiencies persist that prevent normal habitual use impossible. use of the good.

· Metal fineness lower than indicated in gold work and jewelry

The term was one of the points reformed by Law No. 21,398. The current general term for durable goods is six months from the consumer’s receipt of the product; before the reform it was three months. For food and perishables, the warranty is determined by the date on the packaging or, absent that indication, by a maximum of seven days, per Article 21, paragraph 7 of Law No. 19,496. If the good is sold with a voluntary warranty longer than six months, the longer term prevails. SERNAC systematized these terms in its Interpretive Circular on exercising the legal warranty, approved by Exempt Resolution No. 779 of 2023.

W I T H D R AWA L

Voluntary warranty and right of withdrawal

Interaction between legal and voluntary warranties The voluntary or contractual warranty is what the provider or manufacturer offers above the legal minimum. It neither replaces nor diminishes the legal warranty, which cannot be waived. SERNAC clarified in its Administrative Ruling on the application of legal and voluntary warranties, of November 18, 2021, referring to Articles 20 and 21 of Law No. 19,496, that where a compliant voluntary warranty exists, the consumer must first exhaust it before exercising the legal triple option.

Right of withdrawal The right of withdrawal allows the consumer to unilaterally terminate the contract within 10 days from receipt of the product or from contracting the service and before its provision, without stating cause. It is regulated by Article 3 bis of the LPDC and operates in the following cases:

That period extends to ninety days when the provider fails to send the written confirmation of the contract required by Article 12 A. For higher education services provided by professional institutes, universities and technical training centers, Article 3 ter regulates a special withdrawal, whose ten-calendar-day period runs from the first publication of admission results for the Council of Rectors universities.

E-COMMERCE

E-commerce and distance selling

E-commerce today concentrates most consumer litigation, and the LPDC applies rules combining the duty of information, the adhesion contract regime and the right of withdrawal. A provider selling through electronic means must, at a minimum:

Inform clearly, comprehensibly and unambiguously of the contract’s general conditions and allow them to be stored or printed before contracting.

Confirm Send written confirmation once the consumer accepts.

Honor the conditions, terms and timelines offered or advertised, including delivery.

Not refuse unjustifiably the sale or service publicly offered.

Its terms and conditions are an adhesion contract, subject to Article 16 review and the pro-consumer principle, and breach of the offered dispatch time is an infringement and, as the case may be, a source of liability.

INSTITUTIONS

Institutions and SERNAC’s role

The National Consumer Service, SERNAC, oversees LPDC compliance. It enforces consumer regulation, interprets it administratively through circulars and rulings, proposes to the President the enactment, amendment or repeal of rules, manages complaints and conducts the voluntary procedure for protecting collective or diffuse interests. It may mediate and litigate, but does not impose fines itself — that decision belongs to the competent court. The administrative interpretation power, granted by Law No. 21,081, matters because its circulars and rulings set criteria guiding its enforcement, though their ultimate legal weight is defined by the courts.

Alongside SERNAC operate Consumer Associations, independent organizations that defend collective and diffuse interests and may bring the law’s actions on behalf of consumers. The LPDC also created the SERNAC Seal, a certification the service may grant, at the provider’s request, to adhesion contracts for financial products and services that comply with the law; its use has been limited.

ACTIONS

Types of action and procedural route

Breach of the LPDC gives rise to actions seeking to sanction the infringement, void abusive clauses, demand performance, stop the act and obtain compensation, classified into three categories according to the interest they protect.

The individual interest action defends the rights of a specific consumer. It is generally heard by the Local Police Court of the place where the contract was made, the infringement committed or its performance began, at the plaintiff’s choice; for electronic contracts, when those places cannot be determined, the law provides a special rule tied to the consumer’s commune of residence. No attorney is required, and clauses purporting to extend jurisdiction beyond the legal options are inadmissible.

The collective interest action defends the common rights of a determined or determinable group of consumers linked to a provider by a contractual bond, and the diffuse interest action protects an undetermined set. Both follow the special procedure of Articles 51 et seq., and may only be initiated by SERNAC, a legally constituted Consumer Association or a group of no fewer than fifty consumers. Once the suit begins, other affected parties may join, and the complaint interrupts the limitation period for damages actions.

Added to these routes is the voluntary procedure for protecting collective or diffuse interests, regulated in Articles 54 H et seq., a collective mediation SERNAC manages to reach an out-of-court agreement with the provider that repairs the harm. If the provider does not participate or the solution does not resolve the problem, SERNAC may bring the class action.

SANCTIONS

Sanctions and limitation periods

Fines imposed by the court go to the Treasury and do not compensate the consumer, whose redress is obtained through damages. The LPDC contains no single schedule but scattered sanctions, and the general rule is a fine of up to 300 UTM, unless a specific sanction applies. False or misleading advertising can carry fines of up to 750 UTM, rising to 1,500 UTM when it concerns characteristics affecting public health or safety or the environment. Omitting instructions, warnings or safety measures for dangerous products, and other serious infringements, can reach fines of up to 2,250 UTM.

Law No. 21,081 introduced a system of mitigating and aggravating circumstances the court must weigh. Selfreporting and substantial cooperation with SERNAC operate as mitigating factors; being sanctioned for the same infringement within the previous twenty-four months, causing serious economic harm, affecting the consumer’s physical or mental integrity, and endangering their safety or the community’s operate as aggravating factors.

Actions to pursue infringement liability generally lapse after two years, though the computation depends on how the infringement is configured, especially for continuing ones. That period is suspended when the consumer files a complaint with the provider’s customer service, a mediator or SERNAC. The LPDC also provides for the publication and registration of Local Police Court judgments, adding a reputational cost to the economic one.

R E G U L AT E D S E C TO R S

Sectors with reinforced consumer regulation

Some industries bear an additional layer on top of the LPDC. In financial services, SERNAC — with the Law No. 20,555 powers over credit disclosure and adhesion contracts — coexists with the Financial Market Commission (CMF) as prudential regulator. The Pro-Consumer Law added obligations to assess the consumer’s solvency when contracting credit or financing products, and to disclose the result.

In telecommunications, Subtel regulates service provision, while the LPDC governs the consumer relationship in matters not covered by the special rules and in relation to collective or diffuse interests and individual compensation. In health and insurance, the Superintendence of Health and the CMF regulate providers and insurers, and the LPDC applies with the exclusions proper to benefits governed by special laws. In real estate, the LPDC reaches certain aspects of home sales by developers and construction companies, excluding construction quality, governed by the General Urbanism and Construction Law.

channel comply with Law No. 19,496?