Consumers’ Protection Law: New decision on direct damages

“Direct damages” are one of the new institutions incorporated to the Consumer Protection Law (“CPL”) by the last amendment under Law No. 26,361 in 2008.

These damages can be awarded by the administrative authority when there is “any damage to a right of a consumer appraisable in monetary terms, caused immediately to the consumer’s goods or to his or her own person as a consequence of an action or omission of the supplier or the service provider”. However, the definition of the CPL does not provide further details about the kind of loss or injury covered by direct damages.

Currently, their maximum value is Argentine Pesos 6,500 and, unlike fines, they are paid directly to the consumer.

The consumer protection authority of the City of Buenos Aires has already awarded this kind of damages in several cases. For example, they were ordered as compensation for the value of a wardrobe for construction defects, and the estimated value of an air conditioning for performance defects.

Legal authors have different opinions about the scope of these damages; however, a recent case clarified the kind of loss covered by them.

In the “R. Y., Laura Mónica v. Advance Speedy de Telefónica de Argentina S.A. and Telefónica de Argentina S.A.” case, Tribunal A of the Court of Appeals of Trelew, Province of Chubut, ruled about a decision of the consumer protection authority of that province (“the Authority”).

The controversy was originated in a complaint about the conditions of telephone and internet service and finally the Authority imposed a fine on the companies involved due to several violations of the CPL. At the same time, the Authority determined that the companies had to pay Argentine Pesos 5,000 as direct damages, described by the Authority as “the suffering, discomfort and loss of time that arises from having to make  different complaints, which inevitably cause irritation and stress to the consumer”.

When analyzing the award for direct damages, the Court of Appeals considered that the harm suffered by the user, as it had been described by the Authority, consisted of mere pain and suffering and subsequently revoked it.

The new contribution of the decision is that the Court of Appeals decided that pain and suffering cannot be compensated through direct damages, agreeing in this way with the opinion of the majority of legal authors, who understand that direct damages were created to compensate for an immediate damage caused to the consumer’s goods or to his or her own person, and “appraisable in monetary terms”, that is to say, economic.

The Court of Appeals considered that moral damages cannot be established by administrative authorities because a judicial procedure is necessary to quantify them. Furthermore, it criticized the Authority’s lack of grounds with regard to how the damages had been determined.

The Court of Appeals also referred to the constitutionality of direct damages, and despite the fact that it declared that the issue had become moot, it seems to consider that they are not constitutional because they do not fulfill the requirements established by the Federal Supreme Court for the decision of cases by administrative courts.

Only three days later, the same court decided another case over the same issue (“A., I. M. v. B. C. S.A.”). However, despite the fact that it maintained its previous criterion, the result was different. In this case, the plaintiff went to an ATM to take out money. The withdrawal was recorded in the system, but he did not obtain the money. The Authority imposed a fine of Argentine Pesos 5,000 on the defendant, a bank, plus Argentine Pesos 3,000 for the consumer as direct damages. The Court of Appeals decided once again that the Authority had made a mistake when considering direct damages as an award for pain and suffering. However, the Court of Appeals found that in this case direct damages had to be awarded because the money had not been given to the plaintiff (Argentine Pesos 580) and awarded that amount.

In this way, courts are starting to ratify the opinion of the majority of the legal authors about direct damages, which should we awarded just for economic and immediate damages.