Product Liability & Safety 2022

Last Updated June 23, 2022

Brazil

Law and Practice

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Innocenti Advogados Associados is a trusted partner and ally to its clients in the search for the most appropriate legal solutions to their needs. The firm provides comprehensive expertise, strategic insight, legal intelligence, and global vision in advisory, preventive, and litigation matters for national and multinational companies, banks and investment funds, pension funds, and non-profit organisations. The cases and their legal and procedural developments are analysed and studied individually by Innocenti Advogados Associados’ technical team and key decisions are taken jointly with the managers. This collaboration ensures the accuracy, effectiveness and success of the overall strategy presented. Innocenti Advogados Associados’ professionals have a strong commitment to the needs and expectations of their clients, an attitude that has guided the law firm’s activities since its foundation in 1983.

The main laws and regulation on the product safety legal regime in Brazil are as follows:

  • Law No 8,078/1990, known as Consumer Protection Code, which governs all processes connected with the production and placement of goods and services on the market.
  • Ordinance No 618/2019 of the Ministry of Justice and Public Safety, which regulates the recall campaigns of defective goods and services.
  • Ordinance No 3/2019 of the Ministry of Justice and Public Safety and the Ministry of Infrastructure, which regulates the recall campaigns of vehicles.
  • Board Resolution No 551/2021 of the Brazilian Health Surveillance Agency (ANVISA), which applies to medical products and devices (other than medicines).
  • Board Resolution No 625/2022 of ANVISA, which requires suppliers of medicines to communicate to the health authorities and consumers details of any potential health risk arising from their products.
  • Board Resolution No 655/2022 of ANVISA, which regulates the collection of food and the packaging or any other materials in contact with food, among other things.
  • Ordinance No 333/2012 of the National Institute of Metrology, Standards, and Industrial Quality (INMETRO), which applies to products subject to compulsory conformity assessment by the Brazilian Conformity Assessment System.

SENACON

In Brazil, the National Consumer Secretariat (Secretaria Nacional do Consumidor– SENACON), which is part of the Ministry of Justice and Public Safety, is responsible for examining claims involving relevant general and national interests, as well as assessing administrative sanctions, and has the power to undertake preliminary investigations and administrative proceedings. SENACON is the main authority with responsibility for defending consumers’ interest in product safety.

Procons

Additionally, the state, federal district, and city agencies (Procuradoria de Proteção e Defesa do Consumidor – Procons) are responsible for consumer protection within the scope of their jurisdiction and authority.

Sector-Specific Regulators

Besides SENACON, there are several other regulators with responsibility for product safety issues depending on the industry or the type of product at stake.

For instance, ANVISA is the competent authority with regard to control and regulation of pharmaceutical products, medicines, and food.

The competent authority for safety issues relating to vehicles is the National Transport Department (Departamento Estadual de Trânsito – DENATRAN).

Products placed on the consumer market must meet with the requirements of safety. If issuing the marketed product can put consumer safety or health at risk, then the supplier must recall the product and immediately notify SENACON and the respective regulatory agencies, if applicable.

Notification to SENACON must be in writing and in Portuguese and must meet with the requirements established in Ordinance No 618/2019 (see 1.1 Product Safety Legal Framework). Also, for pharmaceutical products, medicines and food, the notice to ANVISA must meet the requirement of its Board Resolutions.

The obligation to notify SENACON is triggered when any risk that the product may pose a health or safety hazard to consumers is discovered, regardless of the level of that risk. The law does not provide any distinction related to the level of risk.

Ordinance No 618/2019 establishes that the supplier must inform SENACON and the respective regulatory agency (if applicable) once it becomes aware of the harmfulness or dangerousness of the product/service introduced in the market, within two working days, counted from the decision to launch the recall.

The notice to SENACON should include detailed information, such as:

  • detailed information about the supplier;
  • the existence, if any, of representatives of the supplier in member countries of the Mercosur (the South American trade bloc), indicating their identification and contact details;
  • a detailed description of the defective products, including the characteristics necessary to identify them;
  • a detailed description of the defect and the date when the hazardousness or harmfulness was discovered;
  • the risks and implications for consumers;
  • the number of defective products placed on the Brazilian market, including those still in stock, and the number of consumers affected;
  • the geographic distribution of defective products placed on the Brazilian market, per federate state, and countries where the products were exported;
  • the measures already adopted and those proposed to remedy the defect and mitigate the risks;
  • a description of accidents related to the defective product, where applicable;
  • a media plan (to advertise the dangers and the intended recall);
  • a consumer support plan; and
  • a form of risk notice to consumers.

When a supplier fails to comply with the reporting obligations and recall procedures, despite being aware of the fact that a product may be dangerous for human health and safety, the supplier risks administrative, criminal, and civil penalties.

Administrative Penalties

If consumer authorities consider that a supplier violated the Consumer Protection Code, they can initiate a procedure for verifying violations and applying penalties (which can be imposed separately or together) including:

  • fines;
  • product seizures;
  • destruction of the product;
  • cancellation of product registration with the competent authorities;
  • prohibition of product manufacture;
  • suspension of product or service supply;
  • temporary suspension of activity;
  • revocation of concession or permission for use;
  • cancellation of the permit for the establishment or activity;
  • total or partial closure of the establishment, work, or activity;
  • administrative intervention; and
  • counter-advertising.

The public authorities can impose fines of up to BRL10 million, depending on the severity of the infraction, the advantage obtained, and the economic status of the supplier.

Criminal Penalties

A criminal investigation can also be started against anyone who contributed to failure to notify, late notification, or insufficient notification. Failure to inform the competent authorities or to withdraw harmful or hazardous products from the market can lead to a prison sentence of six months to two years as well as a fine.

Civil Penalties

Without prejudice to administrative and criminal penalties, civil actions before the courts can be started to compel the supplier, whether jointly or severally, to answer for property or moral damages caused to consumers in connection with defective products.

All legal consumer relations in Brazil are regulated by Law No 8,078/1990, known as the Consumer Protection Code. The Brazilian Consumer Protection Code distinguishes two types of liability: (i) liability as regards the product itself and (ii) liability for a flaw in the product.

Liability as regards the product itself is related to the concept of a consumption accident (product liability).

On the other hand, liability arising from a flaw in the product does not arise from any damage caused to the consumer. In this case, liability arises from the flaw itself which renders the product improper or inadequate for consumption, or from a reduction in its value or quantity.

In both cases (product liability and liability for a flaw in the product), the liability is strict. Whether it arises from a contractual or non-contractual relationship is of no relevance.

Regarding a consumption accident (product liability), a product is considered defective when it does not offer the safety reasonably expected of it, taking relevant circumstances into consideration, including the presentation of the product, the uses and risks reasonably expected of it, and the time when it was distributed.

Where Responsibility Lies

The responsibility as regards the defective product is borne by the manufacturer, producer or builder, whether domestic or foreign, and by the importer.

The importer is answerable in its capacity as presumed supplier, whilst the remaining are answerable in their capacity of effective supplier.

The retail supplier (also a presumed supplier) has been excluded from the general rule and is only answerable in a supplementary manner when the manufacturer cannot be identified or the product does not contain a clear identification of the manufacturer, or when the merchant does not adequately store perishable products.

As a general rule, the injured party is entitled to compensation for damages caused by a third party (Article 186 of the Brazilian Civil Code).

In product liability cases, any person who suffers bodily injury, or damage to products other than the defective product itself, has standing to bring claims for product liability.

Furthermore, according to Article 82 of the Brazilian Consumer Protection Code, the Public Prosecution Offices; federal, state and municipal governments, and the Federal District; consumer protection government bodies and entities; and duly declared consumer associations may also bring collective civil actions.

The right to demand indemnification for damages caused by the defective product becomes time barred after a term of five years, to be calculated as from the time the damage and its authorship becomes known.

Article 101, I, of the Brazilian Consumer Protection Code allows a consumer to bring an action before the court of the place where they are domiciled.

No mandatory steps must be taken before proceedings can be commenced formally for product liability cases. The plaintiff must simply summon the defendant to appear before the court.

According to Article 334 of the Brazilian Code of Civil Procedure, the judge may schedule a conciliation or mediation hearing. The lawsuit will only proceed if parties have failed to reach a settlement during the conciliation or mediation hearing.

In product liability cases, there are no specific rules for the preservation of evidence. Each party must preserve materially relevant evidence supporting their claims before submitting them to the court. According to Article 373 of the Brazilian Code of Civil Procedure, the burden of proof lies on the plaintiff, as to the facts supporting their case, and on the defendant, as to the existence of any facts that impede, modify or extinguish the plaintiff’s case.

However, in cases involving consumer rights, the burden of proof may be shifted by the judge by means of a reasoned decision, if the allegation is likely or the consumer is at a disadvantage in accordance with the ordinary rules of experience (Article 6, VIII, of the Brazilian Consumer Protection Code).

Furthermore, a party that is concerned about the perishing of evidence may request its advance production in court (Article 381 of the Brazilian Code of Civil Procedure), since, as a rule, the evidence shall be presented throughout the process until the end of the discovery phase. In such cases, the court may order investigative measures for the advanced collection of evidence. This way, a party has the possibility to preserve or establish crucial evidence for use in a possible trial.

Unlike other jurisdictions, the Brazilian system does not provide for full disclosure and therefore does not allow a party to oblige its opponent to disclose a vast number of documents and information as evidence in litigation. However, a party can request the disclosure of documents or objects in court if it is likely that this evidence is in the other party’s possession and that such evidence is relevant to the case (Article 396 of the Brazilian Code of Civil Procedure).

The requested party shall disclose the document or expose the reasons why the document cannot be disclosed. The judge cannot accept a refusal to disclose the document in any of the following cases:

  • the party has the legal duty to disclose it;
  • the document was mentioned in the proceedings by the party; and
  • the document is common to both parties.

If the other party remains silent, the facts stated by the applicant are presumed to be true and correct. If a party refuses to comply with the exhibition order without an acceptable reason, a search and seizure order can be issued.

The main methods of producing evidence are through court-appointed experts and oral hearings. The expert examination will be conducted by an expert appointed by the court directly, and the parties will be granted the possibility of appointing their own experts to assist the court expert in the production of the technical evidence.

Each party pays the costs of its experts. The party that requested the expert opinion must pay the court expert’s fees initially. If both parties or the judge requested the expert opinion, the expenses will be divided (Article 95, CPC). In the final award, the losing party will be ordered to reimburse all paid expenses of the court expert.

The burden of proof rests, in principle, on the plaintiff with respect to the facts supporting its case; and on the defendant, with respect to the existence of any facts that impair, modify or extinguish the plaintiff’s case.

In product liability cases, the consumer does not have the burden of proving negligence, imprudence or a lack of skilfulness of the supplier, since the liability for the product itself is strict; ie, it does not depend on a fault of the supplier. However, the consumer must prove (i) the damage arising from the defective product, as well as (ii) a chain of causation.

The burden of proof may be shifted to the supplier, at the court’s discretion, when (i) the claim brought by the consumer is found to be plausible, or (ii) in the event the supplier is found to hold a stronger position in its relationship with the consumer. Whenever technical aspects are involved, the courts may order the suppliers – in lieu of the consumers – to submit proper evidence.

The injury party, the public authorities and consumer protection associations can bring civil lawsuits against a supplier seeking redress for any damages caused by the defective product.

The lawsuit shall be filed before a first instance State Court and a single judge shall preside over the trial. The judge’s award can be appealed, and the second instance court (Court of Appeals) affords the parties a new trial before a panel of three judges. In some cases, review by the Superior Court of Justice is permitted.

The Federal Constitution has reserved for trial by jury all crimes wilfully committed against life, therein including homicide, infanticide, assistance or instigation to suicide and abortion, which is not the case in product liability claims.

Product Liability Damages

The indemnity to the injured consumer is to be calculated on losses and damages actually borne by the aggrieved party.

It is important to stress that, although the Brazilian legal system does not admit the concept of punitive damages, recently there have been some court decision recognising the application of the theory of discouragement, according to which the amount of the award for pain and suffering must be set at a level sufficient to discourage it repetition.

The following types of appeal are available:

  • appeal of the award rendered by the first instance judge;
  • interlocutory appeal (seeking review of interlocutory decisions such as injunctions);
  • a motion for clarification;
  • special appeal (brought before the Superior Court of Justice as a last instance against an award rendered by the Court of Appeals that is contrary to a treaty or a federal law); and
  • extraordinary appeal (brought before the Supreme Federal Court if the award rendered by the Court of Appeals is contrary to the Federal Constitution).

The Brazilian Consumer Protection Code holds the supplier – ie, the manufacturer, producer, builder or importer – safe from liability if it is proven that:

  • the defective product was not put on the market;
  • although it put the product on the market, there was no defect; or
  • the accident occurred as a consequence of the exclusive fault of the consumer (Article 12, Section 3).

In product liability cases, adherence to regulatory requirements is mandatory. Indeed, according to Article 39, VIII, of the Brazilian Consumer Protection Code, non-compliance with the rules issued by the competent official bodies is considered a deceptive practice.

It is important to note that, although mere adherence to regulatory requirements does not cannot constitute a proper defence, there are some court precedents recognising the application of the “regulatory compliance defence”.

The losing party shall pay all court costs, as well as the other side’s attorneys’ fees. Attorneys’ fees are normally fixed at 10–20% of the amount of the award. Recovery of the party’s own costs does not follow automatically from success at trial and will, at all times, be subject to the reasonability criterion and to effective proof that it represents material damage.

Public funding is limited to very specific situations in Brazil; legal aid is one of these. Legal aid will only be granted to those who need it in the manner established by law and is restricted to a limited budget.

On the other hand, third-party funding is not, as such, forbidden by Brazilian law. However, third-party funding is not yet common practice in Brazil even if it is growing.

Arrangements based on contingency fees or “no win, no fee” agreements are not allowed in Brazil.

Class actions are allowed in Brazil, even to discuss a product liability issue in the interest of a class of consumers. Such class actions may be filed by entities legally recognised as legitimate entities, such as the Public Prosecution Office; federal, state and municipal governments, and the Federal District; consumer protection government bodies; and entities and associations legally set up to protect consumers.

Salmonella in Kinder Chocolates

In May 2022, a European chocolate manufacturer initiated the recall campaign of one of its products manufactured in Belgium. According to the company, the recall is preventive and voluntary due to a potential salmonella contamination. Cases of the disease have been reported in Europe after consumption of the brand’s chocolates.

Even though the specific product is not officially sold in Brazil, the Brazilian company’s branch states that third parties import the chocolates and sell them in Brazil, which caused the recall announcement. Thus, ANVISA ordered the recall, in the Brazilian market, of all products manufactured in Belgium by the chocolate manufacturer.

Hazardous Beer Bottles

In 2020, a Brazilian brewery found a design flaw in the packaging of its long-necked beer bottles. Usually, the brand’s long-necked beer bottles must be opened by being unscrewed by hand. If opened with a bottle-opener, this design flaw could cause a small sliver of glass to come loose from the nozzle when opening, which could lead to injury or accidental ingestion. More than one million units of the long-necked bottles were affected by the recall conducted by the brewery.

Although they are low value-added products, the company had significant success in recalling the beer bottles through the use of behavioural inducers and an active recall campaign.

Contamination of Backer Beers

In 2019, another brewery announced the recall of its products, after finding contamination in the production line by diethylene glycol. The toxic substance caused the death of ten people and had significant repercussions.

Recently, SENACON imposed a fine of approximately BRL12 million, because it considered that the brewery had committed a health and safety violation, endangering consumers, because it had not conducted a prompt recall campaign or at least encouraged consumers to stop drinking its products.

There are growing calls in Brazil for consumers to commence conciliatory proceedings at administrative level before bringing lawsuits to reduce the number of ongoing proceedings and resolve cases. In this regard, there is a bill being considered by the Legislative Branch of the Brazilian government that seeks to include in the Code of Civil Procedure a requirement to demonstrate that the plaintiff sought to resolve the conflict before filing a lawsuit with the Judiciary (Bill No 533/19).

Also, since the adoption of Ordinance No 618/2019, SENACON has taken several measures and published technical opinions to improve the effectiveness of recall procedures. In this sense, SENACON edited a rule making the media plan more flexible (Technical Note No 4/2020). Thus, depending on the traceability of the product to be recalled, the company promoting the recall campaign may agree with SENACON which media the recall notice to consumers should be broadcast in.

There are currently no proposals for reform relating to product liability. The current challenge is to make existing recall campaigns more effective.

In the context of the pandemic caused by COVID-19, it was even more challenging to promote effective recall campaigns. Companies have designed, together with SENACON, alternative channels for the return of defective products to discourage potentially infection-spreading crowds.

In 2020, SENACON started to promote the dividing of a recall campaign into two stages. For defects found before 10 March 2020 (the day immediately before the World Health Organization issued the pandemic alert), the company should present the recall campaign, preferably in two stages (first the communication and then the recall/correction of the defect). For defects found after 10 March 2020, the deadlines for submitting the risk investigation communication and the recall campaign were suspended. In this case, a company may present a recall campaign if it has the necessary elements to do so.

In addition, SENACON has instructed companies to adjust old recall campaigns (Order No 266/2020 from SENACON).

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Trends and Developments


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Machado Meyer Advogados strives to offer intelligent legal solutions that drive businesses forward and transform the reality of both clients and society. As a truly full-service law firm, it counts on more than 1,000 staff members, including 98 partners and 460 lawyers distributed in 42 areas of practice, with offices in the cities of São Paulo (head office and administrative office), Rio de Janeiro, Brasília, Belo Horizonte, and New York. Machado Meyer was recognised as Firm of the Year 2022 in the Public Law category of the Chambers Brazil awards, alongside 12 other practice areas and 32 lawyers recognised in Chambers Global 2022. Being full-service means Machado Meyer has relevant work in every practice area and is therefore often involved in the most important cases in the country.

The Brazilian Framework for Consumer Law and Recent Innovations in Consumer Legislation

This commentary provides an overview of the Brazilian framework on consumer law and the enforcement of such legislation in Brazil, as well as presenting insights that may be relevant for foreign investors and agents interested in the Brazilian consumer market.

It will also present examples of recent and very relevant innovation in consumer legislation, including changes enacted to reflect advances in the field of technology. In this sense, it will cover recent legal standards such as the E-Commerce Act, the Over-Indebtedness Act and new guidelines for digital influencers and how some of these measures seek to address and reflect technological advances, as well as briefly addressing current trends such as cryptocurrencies, the metaverse and ESG from a consumer protection perspective.

The legal framework and main stakeholders in the consumer market

Brazil became a democracy in 1988 and, two years later, Congress had already approved the most important piece of legislation concerning consumer affairs: Federal Law No 8,078/1990, commonly referred to as the Consumer Code, which is the main legal standard regulating consumer relationships in Brazil.

Although it has been more than 30 years since its enactment, the Consumer Code remains up to date. As it is a very comprehensive law, it allows players in the legal community – including lawyers, judges and consumer administrative entities such as the Consumer Protection and Defence Foundation (Procon) – to extract the relevant general principles that govern consumer relationships from the Code and adapt them to the current reality and needs of Brazilian consumers.

For instance, the Consumer Code – reflecting and expanding on constitutional provisions – sets out the fundamental rights of consumers, such as the rights to (i) life, health and safety; (ii) be educated on the adequate consumption of goods and services; (iii) receive clear and adequate information; (iv) be protected from abusive and misleading advertisements; (v) the revision/adaptation of abusive contractual clauses; (vi) compensation for individual and/or collective damages; (vii) broad access to the justice system; (viii) the simplification of the means to uphold and defend their rights; (ix) adequate public services; (x) responsible credit practices; (xi) the preservation of minimum economic conditions to ensure their survival; and (xii) information about the amounts (eg, weight and volume) of goods purchased. Such rights guide all consumer relationships and are usually broad enough to be applied in every type of relationship.

Nevertheless, the Consumer Code has not remained unchanged while society evolved. It has been updated and improved over the years and constantly adapted to suit the needs of modern society.

For instance, in 2008, the Code was amended to provide that suppliers are not allowed to advertise over the phone while consumers were on hold waiting for technical support. This amendment was a reaction to a problem that consumers were frequently facing at the time and sought to reinforce the need for respect for consumers and loyalty in consumer relations, by barring suppliers from implementing abusive and undesired advertising practices.

Moreover, in 2009 and 2012, the Code was amended to determine an increase in the amount of information that should be made available to consumers, as a means to ensure their right to make informed decisions, which is also an essential right set out in Brazilian law.

In 2021, through the enactment of Federal Law No 14,871 (referred to as the Over-Indebtedness Act), Congress revised the Code to regulate the conditions under which lines of credit are offered to consumers, seeking to address and reduce the problem of over-indebtedness, which increasingly afflicts Brazilian consumers and families and which was aggravated by the COVID-19 pandemic.

In addition, it is worth mentioning that, over the years, the effectiveness of the provisions set out in the Code have also increased, since the Brazilian government has created a set of agencies tasked with the defence of consumer rights. This initiative was implemented by a network of laws and decrees that created entities in charge of overseeing the market and compliance with consumer law, thereby contributing to the enforcement of the Consumer Code and the rights recognised therein.

One of the most important of these agencies is the National Consumer Bureau (the “Secretaria Nacional do Consumidor”, also known as Senacon). Senacon is an entity within the Ministry of Justice (a branch of the Federal Government) and, since its creation, the agency has focused on the planning, drafting, co-ordination and execution of a National Policy on Consumer Relations, with the objectives of:

  • guaranteeing the protection and exercise of consumer rights;
  • promoting harmony in consumer relationships;
  • encouraging the integration and joint action of the members of the National Consumer System – which encompasses Procon offices, the Public Prosecutor’s Offices for Consumer Protection, the Public Defender’s Offices, the Consumer Protection Precincts and civil organisations for consumer protection – who operate in an integrated and co-ordinated way with Senacon; and
  • participating in national and international bodies, forums, commissions or committees dealing with consumer protection and defence or matters of consumer interest, among other such objectives.

Therefore, it can be said that Senacon is the public organisation responsible for the co-ordination of the whole network of government entities that are tasked with promoting and enforcing the provisions of the Consumer Code. Together with Senacon, there many other entities that assist in the enforcement of the Consumer Code in Brazil, as will be shown herein.

Procon offices are administrative bodies that operate at the state and municipal levels and whose main task is promoting the education, protection and defence of consumers by preparing and executing public policies that regulate the relationships between consumers and suppliers. Procons – which are present in several cities – can also act to combat the violation of consumers’ individual and collective rights and, as a result, are usually the first entities that Brazilian consumers who believe their rights have been violated reach out to.

On the other hand, the Public Prosecutor’s Offices for Consumer Protection act mostly in defence of collective consumer rights (with social relevance). Therefore, in general, they are not involved in the protection of strictly individual interests. These entities, in short, are responsible for representing consumers before the judiciary system collectively.

The Public Defender’s Offices are responsible for the representation of individual consumers. For example, if a consumer wishes to seek a judicial remedy for a violation of their rights and cannot afford a lawyer, a Public Defender may be appointed to represent them.

The Consumer Protection Precincts, in turn, are specialised in and tasked with investigating crimes related to consumer relationships.

Finally, civil organisations are made up of individuals and/or suppliers that defend and represent the interests of certain groups within the wider consumer market. For instance, there are associations related to different industry sectors, the civil construction sector, start-ups, etc, and such entities understand the interests of their respective members and seek to represent them (in and out of court) in a consistent and effective manner.

From the summary above, it is clear that Brazil is well equipped to make sure that the Consumer Code and the principles and provisions it enshrines are enforced and that suppliers and consumers can interact in harmony. As a result, foreign investors and other interested parties can assess risks associated with the consumer market with considerable predictability and feel secure when bringing their activities to Brazil.

The 2013 E-Commerce Act

In addition to the changes to the Consumer Code outlined in the previous section, another amendment worth mentioning was made to the Code in 2013. Given the increasing importance of the internet in consumer relationships, Congress enacted Federal Decree No 7,962/2013, which sets out rules to be observed in the context of e-commerce agreements.

This new law is known as the E-Commerce Act and seeks to apply principles of consumer law to the virtual world, including the duty to properly inform consumers, the duty to facilitate communication between suppliers and consumers, and consumer’s right to buyer’s remorse.

In short, the E-Commerce Act establishes standards that must be observed by suppliers in the internet age, so that online purchases can be carried out more efficiently and with more security for both consumers and suppliers, since the Consumer Code, without a doubt, also applies to online transactions.

These provisions are beneficial both for the consumer and the supplier. For example, by requiring that suppliers clearly and properly inform consumers, the law reduces the risk that a consumer will decide to invoke their right of regret (embodied in the possibility of cancelling a deal within seven days of the delivery of the product). On the other hand, the right of regret protects the consumer against false or incorrect information provided by the supplier.

In any case, it is worth noting that, due to the speed at which technology advances, there is already a draft bill (the House of Representatives’ draft bill No 3,514) being studied by the Brazilian Congress to supplement and expand the current legal framework for e-commerce in Brazil.

Frequent amendments to existing consumer laws suggest that the Brazilian legal framework is constantly adapting and evolving in accordance with society’s needs and the development of new technologies. In fact, the E-Commerce Act is a clear example of this evolution: once the government realised that online transactions were becoming a central part of consumer relationships, the Decree was enacted to reinforce that the provisions of the Consumer Code also applied to those transactions, as well as to clarify how they may apply in certain situations that are specific to online transactions.

However, it should not be forgotten that legislation is always at least a step behind the latest tendencies and that legislators must work continuously to catch up on reality. An example of this is that, while the E-Commerce Act establishes rules for transactions that are concluded on suppliers’ websites, there is still no specific regulation of transactions carried out through intermediaries on marketplaces, even though the number of such transactions is consistently increasing.

In any case, while transactions carried out in online marketplaces are not expressly regulated, the principles and general rules established in the Consumer Code can be applied to such transactions and adapted to address their specific characteristics.

Ground-breaking initiatives: the Over-Indebtedness Act and CONAR’s guidelines for digital influencers

Other recent ground-breaking legislative and civilian initiatives in Brazil also further evidence policymakers’ intent to constantly update and renovate the consumer law framework, so that it is up to date with the latest trends and technological innovation. Such initiatives may also spark the interest of investors and other interested parties, as they draw attention to these trends.

As mentioned above, the Over-Indebtedness Act was enacted in 2021 and aimed to regulate how lines of credit are offered to consumers. For example, the Consumer Code was altered to establish the need for credit providers to properly inform consumers of the total costs involved in such agreements, as well as to reinforce credit providers’ duties to respect consumers’ right of regret and to avoid any kind of coercion leading consumers to consent to the terms of credit agreements, among other changes.

Moreover, the Over-Indebtedness Act also sets out measures that may be adopted by both suppliers and consumers in cases of consumer over-indebtedness – such as methods that may be adopted to resolve disputes – and even expressly provides that the judiciary may review the credit agreements and alter (or void) clauses that are abusive.

According to the reasons provided by Congress to justify the enactment of the Over-Indebtedness Act, this new legal standard aims to reduce the number of over-indebted consumers – ie, consumers who are in so much debt that they are virtually insolvent and, if they are made to pay their debts, will lack the resources to meet the minimum requirements for their subsistence – and protect those consumers who are most vulnerable and most likely to become over-indebted (usually, less educated and/or elderly consumers).

By providing such protection, Brazil is enforcing the general principles set out in the Consumer Code, as well as contributing to the economic recovery of its over-indebted population, especially those individuals who experienced sharp economic losses during the COVID-19 pandemic.

In short, the Over-Indebtedness Act is another example of Brazilian legislators consistently pursuing innovative measures to solve everyday and current problems and protect rights that are actively being threatened.

Similarly, another commendable recent initiative was the guide for digital influencers drafted by the National Advertising Self-Regulation Council (Conselho Nacional da Auto Regulamentação Publicitária, popularly known as CONAR). CONAR is a civil organisation that is widely known and respected by advertising professionals in Brazil. CONAR’s members include some of the most relevant players in the Brazilian consumer market, which is why its central publication (the Brazilian Advertising Self-Regulation Code, also known as CBAP) is respected not only by suppliers in general but also by the courts of law.

It is worth highlighting that the CBAP sets out the rules for advertising in Brazil, basically restating the principles and rights established in the Consumer Code and applying them to the field of advertisements; which is ultimately the means of communication between suppliers and the consumer market.

In this scenario, CONAR recently decided that it was time to issue guidelines for digital influencers, mostly because such professionals are increasingly involved in the production of advertising content (through social media), but do not always observe the rules that govern the advertising sector and the consumer market.

Thus, in its new guide (issued in 2021), CONAR encourages digital influencers to become familiar with the CBAP and the rules and principles set out therein, as well as those provided in the Consumer Code, and advises influencers to, for instance, identify advertising content as such, consider child and adolescent viewers when posting ad content, and properly inform potential consumers of the features of the products or services advertised.

CONAR’s guidelines for digital influencers also illustrate the ability of players in the Brazilian consumer market to swiftly adapt to current demands and the reality of that ever-evolving market, as well as the real efforts made in Brazil to ensure compliance with the applicable rules, such as the CBAP and, indirectly, the Consumer Code.

Other trends in the consumer market

So far, we have shown that the competent Brazilian authorities and relevant stakeholders are paying close attention to the latest developments in technology and consumer demand, always seeking to ensure that the applicable legislation and directives adequately address current practices, so that consumer relationships can be safer in a quickly changing world.

By analysing the latest developments in other legal systems in contrast with Brazilian law, we can also identify other legal initiatives that may be effective in Brazil.

ESG

A good example of this is environmental, social, and corporate governance (ESG) practices. As the world promotes initiatives related to ESG, the Brazilian market is no different. As a result, the Brazilian Securities and Exchange Commission (CVM) recently began asking the companies subject to its regulation to provide information about ESG initiatives they implement, so that investors can have access to information on measures adopted by regulated companies related to the subject. Similar actions are expected in the context of consumer relationships, in line with the principle of transparency that governs the consumer market, especially given that suppliers are increasingly using ESG content to draw consumers’ attention and gain preference.

Brazil currently lacks specific laws requiring sustainable practices of production, logistics and consumption from a consumer perspective. Except for regulation of specific products, environmental legislation related to sustainable production is still insufficient and lacks enforcement. To solve this, legislative bills on the matter have been presented in the House of Representatives.

In any case, despite the absence of general and broad legislation related to sustainable consumer practices, governmental authorities, competitors, associations, and consumers in general still seek to ensure compliance with sustainable consumer practices by applying the principles set out in the Consumer Code and consumer regulation to those practices.

Cryptocurrencies, NFTs and the metaverse

Another topic that is expected to be addressed soon by Brazilian law is the negotiation of cryptocurrencies, as the Brazilian Senate is currently studying how domestic financial laws can be adapted/amended to regulate transactions using this new form of currency, which is being used increasingly worldwide.

The crypto market is especially popular in Brazil and, as such, it is expected to be regulated at the domestic level soon, despite its transnational nature. Such regulation will surely address consumer matters, such as the possibility of ordinary investors carrying out transactions to purchase and sell these currencies.

In fact, Brazilian authorities have recognised that providers are liable for service defects that cause damage to customers, including those arising from the loss, theft, or misplacement of crypto-assets.

In this sense, Brazilian courts have issued decisions recognising the applicability of the Consumer Code to transactions carried out by brokers dealing in cryptocurrencies. The Appellate Court of the State of São Paulo, for example, recently delivered a decision stating that an agent providing intermediation and custody services related to crypto-assets meets the definition of a “supplier” provided in the Consumer Code. Thus, agents must compensate damages incurred by consumers as a result of defects related to the provision of such services.

In line with the aforementioned precedent, draft Bill No 4,401, which is currently being studied by Congress, also determines that the Consumer Code will apply to consumer transactions involving the commercialisation of virtual assets, which leads us to believe that there will soon be additional legal certainty on the matter.

Similarly, NFTs are also expected to the subject of new legislation soon, since the matter is drawing significant attention because of the amounts involved in transactions and the fact that NFTs are becoming increasingly popular in the sports/gaming industry, including in sports/games that are very popular among the younger population in Brazil, such as MIR4, Cryptoplanes and Cryptocars. Therefore, it is likely that Brazilian authorities will try to swiftly take measures to ensure that consumers’ rights (and young adults’ civil rights) are being respected in such games and transactions.

Lastly, it is fair to say that Brazilian authorities are also closely monitoring the newest trend in technology: the metaverse. It is still too soon to assess what regulation could arise in relation to this matter, but it is somewhat safe to predict that, in the future, authorities will take action to enforce the law in this new world.

In light of this scenario, it seems clear that the law is catching up with technology and some new, hi-tech issues are already being addressed by authorities and stakeholders within the consumer market – but it is important to stress that such measures must be taken swiftly, so that new challenges can also be equally addressed and resolved as they arise.

Conclusions and perspectives for the future

It is clear that the Consumer Code is crucial to Brazil’s consumer market, especially given its evolution over time, which shows the great concern of government authorities with the applicability of its rules and principles in modern times and a serious commitment to foreseeability and legal certainty in the field.

More than that, the Consumer Code is also fundamental due to its comprehensive nature, which provides most of the necessary guidelines for the legal community to understand and construe the principles provided by the Consumer Code in accordance with the current demands of society, even if there are no specific provisions for some of those demands yet.

Nonetheless, it is undeniable that technological innovations arise faster than the law can predict and/or than it can be adapted, which is why, in addition to the application of general legal principles, self-regulation is also a very good strategy to address the needs of the ever-changing tech field.

Such a solution, together with the consistent application of the general provisions of the Brazilian legal framework, would put Brazil in a very comfortable situation to deal with demands arising from technological innovation, at least for the next 30 years.

Machado Meyer Advogados

Ed. Seculum II - Rua José Gonçalves de Oliveira, nº 116, 5º andar
Itaim Bibi, São Paulo, SP
Brazil
01453-050

+55 99983 2388

+55 3150 7000

tmcordeiro@machadomeyer.com.br www.machadomeyer.com.br/en
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Innocenti Advogados Associados is a trusted partner and ally to its clients in the search for the most appropriate legal solutions to their needs. The firm provides comprehensive expertise, strategic insight, legal intelligence, and global vision in advisory, preventive, and litigation matters for national and multinational companies, banks and investment funds, pension funds, and non-profit organisations. The cases and their legal and procedural developments are analysed and studied individually by Innocenti Advogados Associados’ technical team and key decisions are taken jointly with the managers. This collaboration ensures the accuracy, effectiveness and success of the overall strategy presented. Innocenti Advogados Associados’ professionals have a strong commitment to the needs and expectations of their clients, an attitude that has guided the law firm’s activities since its foundation in 1983.

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Machado Meyer Advogados strives to offer intelligent legal solutions that drive businesses forward and transform the reality of both clients and society. As a truly full-service law firm, it counts on more than 1,000 staff members, including 98 partners and 460 lawyers distributed in 42 areas of practice, with offices in the cities of São Paulo (head office and administrative office), Rio de Janeiro, Brasília, Belo Horizonte, and New York. Machado Meyer was recognised as Firm of the Year 2022 in the Public Law category of the Chambers Brazil awards, alongside 12 other practice areas and 32 lawyers recognised in Chambers Global 2022. Being full-service means Machado Meyer has relevant work in every practice area and is therefore often involved in the most important cases in the country.

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