News & Events

DACO’s New Regulation Against Deceptive Practices and Advertisements

On May 28, 2015, the Secretary of the Department of Consumer Affairs of Puerto Rico (“DACO”, for its Spanish acronym) approved Regulation No. 8599, a revised version of the Regulation Against Deceptive Practices and Advertisements (hereinafter, the “the New RADPA”). The New RADPA became effective on June 29, 2015. It places particular emphasis on issues that have generated the highest number of calls and complaints from disgruntled and/or concerned customers through the years. Some of the principal amendments incorporated by the New RADPA are the following:

  • Under the New RADPA, products offered in a shopper that do not meet the definition of “special sale” (because they are offered at regular price or because they are not part of the commerce’s regular inventory) must disclose the type of sale and the number of products available. The shopper must also disclose whether “raincheck” and/or substitute articles are provided. Also, the shopper must segregate the products it announces by sections or colors, so as to facilitate the identification of the advertised items.
  • The New RADPA requires merchants to guarantee that all items advertised as on sale in a 7-day shopper will be available for at least three (3) days. For sales with other duration times, the availability of the advertised goods must be guaranteed for at least half (50%) of the validity period of the shopper. If the merchant runs out of the advertised products before the minimum guaranteed time has elapsed, the establishment is required to provide the customer a rainchek or a substitute article.
  • The New RADPA also adopted recommendations from the Federal Trade Commission (FTC) regarding fine print. This includes an express prohibition to use fine prints to contradict the main advertisement or to clarify false representations made thereto.
  • RADPA’s former versions already prohibited the automatic renewal of contracts and the imposition of processing charges therefrom, except by the customer’s express consent. The New RADPA expands these restrictions to further require the customer’s consent to be included as a specific, independent clause within the contract. The customer will also be required to ratify any automatic renewal clause by affixing his /her initials alongside the corresponding section of the contract.
  • The New RADPA introduces a whole section exclusively devoted to motor vehicles. This section incorporates a new set of disclosure requirements for that industry. For instance, car dealers are required to disclose the total price of both used and new cars. If what the dealer is advertising is the balance to be financed, the advertisement must also disclose the down payment required to reach such price in a font that is at least half the font used for the total price. Also, every new motor vehicle must comply with federal labeling requirements and with labeling requirements from the Puerto Rico Treasury Department including the manufacturer’s suggested price, information regarding warranties, motor, or transmission, and performance in miles per gallon of fuel, among others. The New RADPA also provides that registration fees for motor vehicles in all financed sales cannot exceed the amounts fixed by the Department of Transportation and Public Works for said transactions. Every charge attributable to said transaction must be clearly broken down by the seller in the purchase agreement. The seller cannot charge twice for the same procedure.

Given the significant impact of these regulatory amendments, we believe that this development may interest you. This document, however, has been prepared for information purposes only and is not intended, and should not be relied upon, as legal advice. To further discuss or obtain additional information on how these changes to the legal landscape may impact your operations, please feel free to contact us at your convenience.