Class actions were introduced into Law No 19.496 of the Protection of Consumers’ Rights (the “Consumer Law”) in 2004, through Law No 19.955. Since then, the procedure for these actions has undergone several amendments.
Specifically, the requirements for admissibility of class actions have been revised several times (Law No 20.543 and Law No 21.081). All these amendments are designed to expedite the processing of class actions. Now, the only prerequisites are that the action must be initiated by a party with legal standing and meet the requirements applicable to lawsuits as set out in the Code of Civil Procedure (Article 52(1) in conjunction with Article 51(1)(1) of the Consumer Law).
Key reforms introduced to the Consumer Law by Law No 21.081 include:
Law No 20.945 explicitly allows class actions seeking damages for violations of Decree Law No 211 on the Defence of Competition, which must be brought before the Antitrust Court (Tribunal de Defensa de la Libre Competencia or TDLC) (Article 51(2) of the Consumer Law).
Previously, class actions were focused on the financial sector but have since expanded to virtually all markets, including those governed by special laws, sparking both doctrinal and jurisprudential debate.
Finally, it should be noted that the Chilean government recently presented to the Congress a new bill to reform the Consumer Law titled “SERNAC Protects You”. Among other things, the bill seeks to give SERNAC powers to impose fines on suppliers who violate the law (Reform No 16.271-03).
The inclusion of class actions in Chile in the 2004 reform of the Consumer Law was based on Rule 23 of the Federal Rules of Civil Procedure.
Thus, Article 52 of the Consumer Law established a strict admissibility test for the purpose of verifying:
However, the admissibility test has been amended on several occasions to expedite the processing of class actions. This stage is now condensed to a formal examination of two criteria:
In addition, the Chilean legislature relied on Spain’s Law 26/1984, General for the Defence of Consumers and Users, as a model for delegating the representation of collective consumer interests to consumer associations. Article 20 of Law 26/1984 – now repealed – established that consumer associations were responsible for “representing their members and exercising the corresponding actions in defence of their members, the association or the general interests of consumers and users”. A similar provision exists in Chile, enabling consumer associations to act as legal representatives for the collective interest of consumers in court.
There is no applicable information in this jurisdiction.
The third paragraph of Title IV of the Consumer Law regulates the procedure for the defence of the collective or diffuse interests of consumers (collective action or class action) (Article 51 and subsequent articles of the Consumer Law).
Article 2 of the Consumer Law lists the legal acts that are subject to this law. In general terms, it applies whenever there is a business exchange between a consumer and a supplier.
Consumers are defined as natural or legal entities who acquire, use, or enjoy goods or services as end-users through any form of legal transaction. Suppliers, whether natural or legal entities and either public or private, are those who regularly engage in the production, manufacturing, import, construction, distribution, or sale of goods, or provision of services to consumers, in exchange for a price or fee.
Therefore, in general terms, the Consumer Law applies to all types of mass consumption industries. In addition, the Consumer Law contemplates certain rules directed at specific suppliers: financial product and service providers, parking service providers, continuous service providers, and airlines, among others.
Article 2 bis provides that the Consumer Law shall not apply to the activities of production, manufacture, import, construction, distribution and marketing of goods or provision of services regulated by special laws, with the exception of:
Based on the exceptions contemplated in this rule, SERNAC and other parties with legal standing, have brought class actions against suppliers regulated by special laws. This has sparked extensive doctrinal and jurisprudential debates on the scope of the speciality principle.
Law No 21.398 incorporates into the Consumer Law a new Article 15 bis, which establishes that the provisions contained in Articles 2 bis (b), 58 and 58 bis of the Consumer Law “will be applicable with respect to the personal data of consumers, within the framework of consumer relations, unless the powers contained in said articles are within the scope of the legal powers of another body.” This means that class actions can be initiated against suppliers who violate rules on personal data processing.
Finally, the Consumer Law establishes that the rights of all consumers are those established by laws, regulations and other rules containing provisions relating to the protection of their rights (Article 3, final paragraph of the Consumer Law). Therefore, the infringement of these rights would also give rise to the filing of a class action.
The Consumer Law regulates the Procedure for the Defence of the Collective or Diffuse Interests of Consumers (Class Actions), in the third paragraph of Title IV (Article 51 and subsequent articles of the Consumer Law).
Article 50 of the Consumer Law establishes that actions may be brought either on an individual basis or for the benefit of the collective or diffuse interests of consumers.
“Individual interest actions” are solely for defending the rights of an individual consumer.
“Collective interest actions” are for defending the rights of a specific group of consumers linked to a supplier contractually.
Finally, “diffuse interest actions” are for defending the rights of an undefined group of affected consumers.
Class actions are heard by the ordinary courts of justice, in accordance with the general rules (Article 50 A(1) of the Consumer Law) – ie, the court with civil jurisdiction (Article 134 and subsequent articles of the Organic Code of Courts).
Exceptionally, class actions for damages for violations of Decree Law No 211 on the Defence of Competition must be brought before the TDLC (Article 51(2) of the Consumer Law).
As indicated in 1.1 History and Policy Drivers of the Legislative Regimeand 1.2 Basis for the Legislative Regime, Including Analogous International Laws, class actions must comply with the following admissibility requirements:
Article 254 of the Code of Civil Procedure states: “The complaint must contain: 1) the designation of the court before which it is filed; 2) the name, address and profession or trade of the plaintiff and of the persons representing him, and the nature of the representation, as well as a means of electronic notification of the sponsoring attorney and of the legal representative if not designated; 3) the name, address and profession or trade of the defendant; 4) a clear statement of the facts and legal grounds on which it is based; and 5) the precise and clear statement, recorded in the conclusion of the petitions that are submitted to the court’s decision”.
The procedure for class actions is the same throughout the country, being heard by the competent ordinary court.
The class action is filed before the competent ordinary court, which conducts an admissibility test (Article 52(1) of the Consumer Law) (Sections 1.1, 1.2 and 4.1).
Once the action has been deemed admissible, the defendant supplier has ten days to reply (Article 52(2) of the Consumer Law). In addition, the court will order the publication of a notice in the media so that consumers who may have been affected by the conduct in question may take part in the class action (Article 53 of the Consumer Law).
Once the claim has been answered, the parties are summoned to a conciliation hearing (Article 52(9) of the Consumer Law). If no agreement is reached, the court will issue a resolution with the substantial, pertinent, and disputed facts, and an evidentiary period of twenty days commences (Article 52(12) of the Consumer Law).
At the end of the evidentiary period, the court must issue its judgment, accepting or rejecting the class action. The judgment accepting the class action must comply with a series of requirements (Article 53(C) of the Consumer Law, in accordance with Article 170 of the Code of Civil Procedure).
An appeal may be filed against the final judgment, which is heard by the corresponding Court of Appeal (Article 53(C)(3) of the Consumer Law). An appeal may also be made to the Supreme Court against the judgment of the Court of Appeal.
Finally, it should be noted that the enforceable judgment declaring the liability of the defendant will have an erga omnes effect (Article 54(1) of the Consumer Law).
Class actions may only be initiated by a party entitled to do so, namely:
The enforceable judgment declaring the liability of the defendant(s) will have an erga omnes effect (Article 54(1) of the Consumer Law). However, an exception exists for those reserving their rights under Article 53, for whom the erga omnes effect does not apply.
The judgment will be made public, allowing others affected by the same issue to seek compensation or appropriate redress (Article 54(2) of the Consumer Law).
Interested parties have 90 calendar days from the last notice to exercise their rights before the same court that processed the trial (Article 54(C)(1) of the Consumer Law).
Within this 90-day period, interested parties may reserve their rights to pursue civil liability for both financial and moral damages in a separate trial. Importantly, the existence of the infringement, already established in the initial judgment, cannot be contested in this new trial. The judgment from the first case serves as conclusive evidence of both the infringement and the plaintiff’s entitlement to damages. Therefore, the focus of the new lawsuit is solely on determining the amount of such damages (Article 54(C)(2) of the Consumer Law).
Whoever exercises his rights under Article 54(C)(1) of the Consumer Law shall not be entitled to bring another action based on the same facts. Likewise, those who do not reserve their rights shall not be entitled to initiate another action based on the same facts (Article 54(C)(3) of the Consumer Law).
As such, there is an opt-out mechanism for joining an action.
Class actions are heard by the ordinary courts (Article 50(A) of the Consumer Law in connection with Article 76 of the Political Constitution of the Republic and Article 1 of the Organic Code of Courts). In particular, class actions are heard by the civil courts corresponding to the domicile of the defendant supplier (Article 134 of the Organic Code of Courts).
Plaintiffs who are parties to a class action may not subsequently file an individual action based on the same facts (Article 51(1)(5) of the Consumer Law).
Once the class action has been declared admissible, and the appeals filed against the resolution declaring it admissible have been dismissed, a notice must be published in the media. After such publication, no person may file another lawsuit against the defendant based on the same facts (Article 53(3) of the Consumer Law). In such case, the parties entitled to bring an action may only be joined as third-party interveners of the plaintiff.
Those class actions filed prior to the publication of the aforementioned notice, which have been filed against the same supplier and are based on the same facts, will be joined to the oldest lawsuit.
In this regard, SERNAC has stated that “with respect to the accumulation of proceedings, it is a good practice that, regardless of the ex officio actions that may be taken by the judges and the defendant’s own actions, those parties with legal standing other than the SERNAC that bring class actions for the same facts against the same supplier, should notify this agency in a timely manner and request, when appropriate, that it decree the accumulation of proceedings, to decree the joinder of proceedings, so that the controversy may be resolved through the issuance of a judgment, or through a single alternative mechanism, safeguarding the effectiveness in the protection of consumer rights, the speed of judicial proceedings and the strengthening of the class action system” (Exempt Resolution No 71 of 5 February 2021).
Finally, the SERNAC may not initiate a Collective Voluntary Procedure (Procedimiento Voluntario Colectivo or PVC) (paragraph four of Title IV of the Consumer Law) once class actions have been brought in respect of the same facts and while such actions are pending.
On the other hand, once a PVC has been initiated, no one may bring a class action with respect to the same facts while the proceeding is pending (Article 54(H)(4) of the Consumer Law).
The Consumer Law does not establish special rules on this matter.
See 3.1 Scope of Areas of Law to Which the Legislation Appliesand 4.2 Overview of Procedure.
There are no general procedural mechanisms to expedite processing times, with two exceptions: the preferential hearing of appeals and limitations on appeals in small claims cases.
Article 51 of the Consumer Law mandates a faster resolution for appeals filed in cases concerning the collective or diffuse interests of consumers, compared to those in ordinary proceedings.
Article 50(H) of the Consumer Law establishes that individual actions for an amount of less than UTM25 (UTM = Unidad Tributaria Mensual or Monthly Tax Unit) will be processed in single proceedings, and the decisions issued in such proceedings will not be subject to appeal.
There is no special provision in the Consumer Law.
The general rule provided for in Article 144 of the Code of Civil Procedure applies, according to which the losing party in a lawsuit will be ordered to pay the procedural and personal costs incurred.
See 1.1 History and Policy Drivers of the Legislative Regime, 1.3 Implementation, 4.1Mechanisms for Bringing Collective Redress/Class Actions, and 4.3Standing.
First, violations of the Consumer Law are punishable by fines of up to UTM300, unless a different sanction has been established (Article 24(1) of the Consumer Law). For example, false or misleading advertising will incur a fine of up to UTM1,500 (Article 24(2) of the Consumer Law). Failure to comply with the obligations established with respect to products whose use is potentially dangerous, or the provision of high-risk services, is punishable by a fine of up to UTM2,250 (Article 45, final paragraph of the Consumer Law).
In cases where violations affect multiple consumers, the court may apply a fine for each consumer affected (Article 24(A)(2) of the Consumer Law and Article 53(C)(1)(b) of the Consumer Law), but it may not exceed 45,000 Annual Tax Units.
Second, class actions may request compensation for damages, including pecuniary damage, and may also extend to moral damages provided that the physical or psychological well-being or dignity of consumers has been affected (Article 51(2)(2) of the Consumer Law).
Finally, the Consumer Law provides, among others, the following remedies:
The PVC is an alternative dispute resolution mechanism for consumer disputes. The PVC is defined as a procedure that “aims to obtain an expeditious, complete and transparent solution in cases that may affect the collective or diffuse interest of consumers”, which is achieved through an agreement (Article 54(H) of the Consumer Law).
In class actions, the parties may reach an agreement to terminate the lawsuit at the conciliation stage. This stage must be decreed prior to the beginning of the evidentiary period. Here, the judge acts as mediator, striving for a full or partial resolution (Article 52(19) of the Consumer Law). In any case, the judge may call for conciliation as many times as he/she deems necessary (Article 53(B) of the Consumer Law).
Both agreements reached in the framework of a class action, or a PVC, must have subsequent judicial approval.
In the case of PVCs, it is established that the judge may reject the erga omnes effect if the agreement does not comply with the following minimum criteria: “1. The cessation of the conduct that could have affected the collective or diffuse interest of the consumers. 2. The calculation of the respective refunds, compensations, or indemnities for each of the affected consumers, when applicable. 3. A solution that is proportional to the damages caused, that extends to all the affected consumers and that is based on objective elements. 4. The way in which the terms of the agreement will be enforced and the procedure by which the supplier will make refunds, compensate, or indemnify the affected consumers. 5. The procedures through which compliance with the agreement will be enforced, at the expense of the supplier” (Article 54(Q)(2) of the Consumer Law in relation to Article 54(P)(2) of the Consumer Law).
In the case of class actions, it is stated that “[a]ny settlement, conciliation or transaction must be submitted to the judge for approval”. It goes on to state that “[i]n order to approve it, the judge must verify its conformity with the rules for the protection of consumer rights. The approval shall be without prejudice to the possible application of fines in case of violations of this law. However, the court shall consider the reparation of the damages caused by the supplier to reduce the amount of the fine up to 50%” (Article 53(B)(4) of the Consumer Law).
Further, in the case of class actions: (i) while there is no stipulated minimum content for these agreements, they must adhere to consumer protection rules; and (ii) even if an agreement is reached, the supplier may still face penalties in the proceedings.
The judgements serve both punitive and civil functions: they declare how the collective or diffuse interests of consumers have been affected and establish the liability of suppliers, and also declare the appropriate compensation or reparations (Article 53(C)(1)(a), (b) and (c) of the Consumer Law).
If the judge determines that the supplier has the necessary information to identify the consumers, he/she may order that the indemnities, repairs, or refunds be made without the need for the interested consumers to appear in the process.
Additionally, the judge has the authority to impose upon the supplier the responsibility of appointing a third party to disburse the appropriate amounts.
Each year, SERNAC publishes an Annual Audit Planoutlining its focus areas for the upcoming year. The key focus areas of the 2023 plan are outlined below.
Regional Approach and Territorial Deployment
SERNAC aims to tailor its enforcement activities to the specific needs of consumers based on their location, their environment and the functioning of the different markets in their territory. This involves extending enforcement beyond regional capitals, requiring a significant institutional effort and transfer of powers to effectively deploy enforcement activities nationwide.
SERNAC is committed to tackling discriminatory conduct that perpetuates gender stereotypes, sexism, and violence across various platforms like media, advertising, and social networks.
Multitask Integrated Enforcement
SERNAC promotes collaborative work with other public services to create synergies that enhance consumer protection. Partners include the Ministry of Transport and the Undersecretary of Telecommunications.
Oversight of Practices Affecting Vulnerable Groups
The oversight of commercial practices affecting vulnerable groups is a focus for SERNAC. Through this approach, SERNAC aims to address and reduce imbalances in consumer relations that particularly impact vulnerable groups, including the elderly, individuals with limited mobility or physical disabilities, and children and adolescents.
Regarding the framework for the exercise of collective actions, the most relevant change to be introduced by Reform No 16.271-03 is the elimination of the need to prove a contractual link between the group of affected consumers and the supplier in order to claim damages through this type of procedure.
Currently, Article 50 of the Consumer Law requires a contractual link between the consumer group represented in a collective action and the supplier against whom the action is brought. This has led to the dismissal of lawsuits aimed at protecting the collective interests of consumers against companies that have violated various regulations, particularly those related to fair competition under Decree Law No 211. Courts have dismissed these cases due to the absence of a direct contractual link between the offending supplier and the affected consumers. As a result, companies involved in illicit activities like collusion, but who are upstream in the production/distribution chain and lack a direct relationship with consumers, have been exonerated from paying damages in class actions.
The government’s proposed amendment aims to rectify this issue by eliminating the need to prove a contractual link between the consumer group and the offending supplier, thereby broadening the scope for collective actions.
Given that Chile is not a member of the European Union, Brexit has had no impact on the issues outlined in other sections.
One of the proposed amendments under Reform No 16.271-03 is the incorporation of a new Article 28(C), which seeks to prohibit sexist advertising and advertising that promotes gender stereotypes, based on the following wording: “Anyone who, through any type of advertising message, uses or promotes stereotypes that justify or naturalise relations of subordination, inequality or discrimination based on sex, gender or sexual orientation, commits an infringement of the provisions of this law”.
This amendment is in line with the implementation of ESG criteria in consumer protection regulations. Importantly, the rule proposed by the bill extends beyond the traditional scope of consumer rights. Unlike Article 28 of the Consumer Law, which focuses on misleading advertising, this amendment addresses the broader societal issue of perpetuating gender stereotypes and inequality through advertising.
Class Actions in Chile and the Class Action in the Consumer Protection Law (LPDC)
Scope of class actions in the Chilean legal system and their prominence in consumer law
Chilean law does not have a general class action regime, as exists in the United States with Rule 23. Instead, class actions are regulated in specific areas of law, such as environmental damage, torts, and consumer law. This article focuses on consumer law, given its greater prevalence and public interest.
The Consumer Protection Law (La Ley de Protección al Consumidor or LPDC) provides general rules for class actions in consumer cases, even when special laws apply. Article 2 bis of the LPDC establishes that the LPDC applies to “the procedure in cases in which the collective or diffuse interest of consumers or users is involved, and the right to request compensation through said procedure.”
Evolution of consumer law in Chile and evolution of class actions in the LPDC
The regulation of consumer protection issues in Chile dates back to 1932, when the first institution was created to alleviate the effects of the 1929 crisis. Until 1990, when the National Consumer Service (SERNAC) was created, the institutional framework was focused on economic public order issues such as avoiding monopolies and ensuring transparency in the markets. Consumer protection was limited to price regulation and complaint handling.
One of SERNAC’s first tasks was to create a more modern institutional and legal framework to ensure the rights of consumers, who until then had been at a clear disadvantage. In 1997, the Consumer Protection Law No 19,496 (LPDC) was enacted, establishing rights and obligations for consumers and suppliers, defining the consumer relationship, and covering the various areas relevant to consumer and user protection.
However, this seemingly modern legislation was still lacking in some respects. It was not until the beginning of the 21st century that a more complete and effective protection system was put in place, including tools such as class actions. The first class action lawsuit in Chile was filed by SERNAC in 2005 against a group of retail stores.
Despite these advancements, the LPDC remained an inadequate tool for consumer protection. Concerns about potential misuse made the class action procedure overly complicated and protracted. High-profile cases, such as the collusion among pharmacy chains and the financial fraud exposed in the La Polar department store case, expedited reforms. These led to significant changes in the procedure, encapsulated in Law No 20.555 on Financial SERNAC. One of the most impactful modifications was to the admissibility stage, which had previously been a major hurdle, effectively serving as a pre-trial phase.
Recent reforms have further enhanced the legal framework, bolstering the rights and protections of consumers and users. These include provisions for compensation for moral damages, punitive damages, and specific rules for protection in financial matters, protection of personal data, and electronic commerce. They have also strengthened the role of SERNAC, as well as collective mediation processes, and have introduced a pro-consumer principle, among other key changes (as per Laws No 21.081 and No 21.398).
In September 2023, the government proposed a new draft of amendments to the LPDC to give SERNAC new and more powerful powers, including supervisory and sanctioning powers.
The consumer relationship and notions of consumer and supplier
The consumer relationship is not explicitly defined in the LPDC, but it can be inferred from its provisions and is expressly mentioned in Article 15 bis. Consumers are defined in the LPDC as those who “by virtue of any legal transaction, acquire, use, or enjoy, as end-users, goods or services.” However, it is now generally accepted that the definition of consumer includes those who have been affected by a good or service during the consumption process, even if they have not acquired it.
Suppliers are defined in the LPDC as those who “regularly engage in the production, manufacturing, import, construction, distribution, or sale of goods, or provision of services to consumers, in exchange for a price or fee.” This definition allows consumers to hold any entity along the production chain accountable when enforcing their rights.
While these definitions are still debated, the evolving case law has led to a more flexible understanding of the notions of consumer, supplier, and consumer relationship. This flexibility allows for consumer protections to extend beyond the confines of a traditional contractual relationship. Class actions, particularly those defending the diffuse interests of consumers, further reflect this evolving landscape.
Class actions in the LPDC
Collective or class actions were introduced with the enactment of Law 19.955 in 2004. These actions aim to hold suppliers accountable for civil and infractional liabilities when their actions have broadly infringed upon the rights of consumers and the provisions of the LPDC. The key elements and procedures of these actions are outlined below.
Types of actions and rights contemplated
According to Article 51 of the LPDC, class actions are designed to protect two types of collective interests: actions in defence of the collective interest and the diffuse interest of consumers. The former pertains to rights shared by a “determined or determinable” group of consumers and users. The latter applies to an “indeterminate” set of affected consumers.
Legal standing in the LPDC is unique, as it is restricted to only three possible parties. As per Article 51(1) of the LPDC, lawsuits defending the collective or diffuse interests of consumers can only be initiated by SERNAC, by a consumers association that has been established at least six months prior to filing the lawsuit and has received authorisation from its board of directors, or a specially assembled group of 50 or more consumers, who must be individually identified. This constitutes a case of special legal standing.
Under the original Law 19.955, the class action process included a lengthy admissibility stage that preceded the discussion of the substantive issues. This stage effectively served as a pre-trial and, in more complex cases, could extend for up to five years. However, this changed in 2011 with the enactment of Law 20.543, which simplified the admissibility stage into a mere formal component. Now, the judge’s role during the admissibility stage is solely to verify that certain requirements are met.
According to Article 52 of the LPDC, the presiding judge must only verify that the claim has been filed by a party with the appropriate legal standing and that it meets the general filing requirements outlined in Article 254 of the Code of Civil Procedure. These requirements include: (i) specifying the court, (ii) identifying the plaintiff, (iii) identifying the defendant, (iv) clearly stating the facts and legal grounds, and (v) making precise and clear requests to the court.
The Chilean legislature takes a different approach compared to other jurisdictions like the US. It aims to make class actions more accessible by simplifying the admissibility process. However, it also mitigates the risk of misuse or frivolous litigation by restricting legal standing to specific parties. Unlike the US, which has a certification stage that considers various elements such as the impossibility of a litis consortium, common legal or factual questions among consumers, typicality, and adequate representation, Chilean law dispenses with such requirements. The issue of adequate representation, for instance, is resolved through the principle of de lege lata.
Integration mechanism: opt-out
In terms of the judgment’s impact on consumers, Chilean law has opted for an opt-out mechanism rather than an opt-in one, making it easier for consumers to be part of the class action. According to Article 51(3) of the LPDC, while “any person with standing to act” can freely join the proceedings, individual consumers can join solely to exercise a “reservation of rights”. This reservation means that the lawsuit’s outcome will not be binding on consumers who opt for this route, allowing them the option to file an individual lawsuit should the class action not succeed. Additionally, the law provides for the possibility of exercising this reservation even after the judgment has been rendered, enabling consumers to pursue individual claims for financial and moral damages (as per Article 54(C) of the LPDC).
The judgment will thus have general effects on all affected consumers. To benefit from the judgment, they must comply with the conditions set by the judge, without needing to have participated in the trial beforehand.
As a counterbalance to this opt-out mechanism, the law mandates extensive publicity for class actions at various stages. Notices must be published in national media to inform consumers about the admissibility of the claim and any judgments issued. These notices must also explicitly state the time limit for consumers to exercise their rights, ensuring they are well informed and can make timely decisions.
Evidentiary system and burden of proof
The LPDC employs a system of evidence evaluation known as “sound criticism”, granting judges greater flexibility compared to the legal or assessed evidence system used in Chilean civil law. This is particularly useful in cases where plaintiffs, including the state when SERNAC is the litigant, face significant challenges in accessing relevant background information on the cases. It is worth noting that the Chilean legal process does not include a discovery phase. Instead, it is the responsibility of the parties to present evidence or explicitly request it from the opposing side, with no obligation to disclose or provide it during the trial.
To address this limitation, the LPDC incorporates specific mechanisms. For instance, Article 51(10), final paragraph, states, “The defendant suppliers shall be obliged to deliver to the court all the instruments that the court orders, ex officio or at the request of a party, provided that such instruments are or should be in their possession and that they are directly related to the debated issue”. This provision aims to facilitate the gathering of evidence relevant to the case.
Additionally, the judge has the discretion to rule that the defendant supplier directly complies with any indemnities, repairs, or refunds, without requiring affected consumers to appear in court. This is based on the assumption that the supplier possesses the necessary knowledge and information to adequately identify the affected users (as per Article 53(C)(e)).
Lastly, the LPDC introduces, for the first time in the Chilean legal system, the concept of “dynamic burden of proof”. This is outlined in Article 50(H) and allows the judge to allocate the burden of proof based on the “availability and ease of proof” of the parties. Although this provision is primarily designed for individual lawsuits, it represents a significant innovation, offering judges greater flexibility in managing evidentiary challenges.
Reparation of damages
The general principle in Chilean law is to fully compensate for damages, as set out in the Civil Code (Article 2329). However, this principle was not applied to consumer law, especially class actions, until the 2018 reform. Before that, the law did not expressly allow for compensation for non-material damages, such as moral damages. Now, the law allows for compensation for both material and moral damages.
The Chilean Consumer Protection Law (LPDC) is unique in the Chilean legal system in that it allows for punitive damages, in addition to compensation for moral damages. In general, punitive damages are not awarded in Chilean tort cases. However, since 2018, punitive damages can be awarded in consumer protection cases when there are aggravating factors in the supplier's conduct. These aggravating factors include:
If any of these factors are met, the amount of compensation awarded to the consumer can be increased by up to 25%.
In 2021, Law 21.398 amended the LPDC to expressly include the protection of users’ personal data as one of the matters covered by the collective actions regulated therein.
Special powers of the judge and other relevant institutions or mechanisms
In addition to the main aspects mentioned above, the LPDC also has some unique features.
First, the LPDC gives the judge a special role in lawsuits in defence of the collective or diffuse interest of consumers. This is evidenced by some of the powers expressly granted to the judge, such as:
Second, the LPDC has mechanisms to expedite the hearing of appeals filed by the parties by adding them to the table of the Court of Appeals on an extraordinary basis. In the case of appeals of final judgments, these are added to the table of the following week, thus substantially accelerating the processing of these actions.
Finally, the LPDC also includes a system of Collective Voluntary Procedures (Procedimiento Voluntario Colectivo or PVC), which was introduced in 2019 to replace collective mediations. PVCs are an alternative dispute resolution mechanism between suppliers and SERNAC that seeks to obtain an expeditious, complete, and transparent solution that safeguards the collective interest of consumers. The initiation of a PVC inhibits the initiation of class actions by other parties with standing.
Role of the State: the SERNAC “Problem”
Although SERNAC has a strong institutional framework, the scope of its powers has been controversial in recent years. In 2018, the Constitutional Court rejected as unconstitutional the sanctioning, regulatory, and information-requesting powers that SERNAC was intended to have. The bill, which was introduced by the executive, sought to give SERNAC greater powers to correct the fact that in practice, the vast majority of individual consumer cases remain unsolved. Although the Constitutional Court did not reject all parts of the bill, such as increased penalties, supervisory powers for SERNAC, and improved user protections, the decision was a setback for the government, which had made efforts to strengthen the agency.
On 7 September 2023, the executive introduced a new bill called “SERNAC Protects You”, which seeks to grant sanctioning powers to SERNAC, just as the bill that was rejected by the Constitutional Court did.
Contribution of Civil Society: Consumer Organisations
In addition to SERNAC, consumer organisations play an important role in protecting consumers in Chile. Consumer organisations are non-profit organisations that are dedicated to protecting, informing, and educating consumers. They also represent and defend the rights of their members and other consumers who request their assistance.
Consumer organisations have been particularly active in bringing class actions on behalf of consumers. This fills a void that is sometimes left by SERNAC, which does not always pursue cases where consumers’ rights have been violated. According to SERNAC, there are currently 46 consumer organisations in Chile, most of them concentrated in the Metropolitan Region.
One of the most important consumer organisations in Chile is the Chilean Consumers and Users Organisation (Organización de Consumidores y Usuarios or ODECU). ODECU has over sixty years of experience in defending Chilean consumers and users.
Relationship Between Class Actions Under the LPDC and Antitrust Law
Pursuant to Article 51 No 10 of the LPDC, if a final judgment by the Chilean Antitrust Court (Tribunal de Defensa de la Libre Competencia or TDLC) is issued, a damages claim can be initiated under the LPDC’s framework when the collective and diffuse of users are impacted. This stands as an alternative to the direct action for damages before the TDLC, as outlined in Article 30 of Decree Law 211.
The ability to bring an action under the LPDC is particularly beneficial for consumers who have suffered damages as a result of the anticompetitive conduct of suppliers. In the absence of direct compensation to users following a TDLC judgment, this mechanism allows consumers to pursue compensation for the damages they have suffered.