If you have a company in Latvia you probably know that the Commercial Law contains the lion's share of normative regulation concerning company matters. Early in 2008, however, the Unfair Business Practice Prohibition Law came into effect, with the purpose of "securing consumer rights and economic interest protection, barring unfair commercial business practices against consumers."
The general idea behind the law is positive. After all, who hasn't encountered questionable business practices in an emerging market? It even specifically targets certain reprehensible practices, such as the conducting of pyramid schemes and manipulative advertising targeting children. Yet what may be problematic (we will see) is the wide discretion granted to the regulator to determine the presence of violations and to apply the reasonable person test in ascertaining reasonable expectations. How well the regulator is able to do so will be the measure of how successfully this new law is applied in practice.
Under the law, any one of the three following criteria constitutes an unfair business practice:
1) Where the business practice does not reflect professional care, and it negatively impacts or could negatively impact the average consumer or consumer group's economic conduct to whom the business practice is addressed or who it affects; or
2) Where the business practice is misleading, or
3) Where the business practice is aggressive.
As one would expect, the law sets out a threshold for what constitutes a violation 's that is, the failure to perform to such professional standards as the consumer may justifiably expect that is reflective of the business or professional services sector generally accepted fair market practices and good faith standards.
Curiously, the law "empowers" any business association applicable to the business with the right to establish a code of best business practices (a right that any such business association already had before the introduction of this law) to enhance the prospects for compliance with this law. If a member of a business association violates the code of best business practices it may be in more trouble than violating its membership in the association. Businesses should as a risk management measure monitor what codes of conduct they are explicitly or tacitly consenting to comply with as they may be enforceable.
The law also provides a duty to disclose relevant information to the consumer. Silence, even about maintenance costs, may well be an offense under certain circumstances.
The regulator under the law in general is the Consumer Rights Protection Centre (except in the case of pharmaceuticals and veterinary prescription matters) to be governed by separate regulators. The regulator has the power to conduct inspections, demand written timetables for compliance and to require that the violator cease and desist from the impugned practices. It may also compel a public apology citing the violation, which could be particularly unpalatable for some. In addition, fines may be imposed.
Now if only they could get to those unsolicited e-mail senders who invariably have millions of dollars from some far away place to deposit with the e-mail recipient in exchange for "innocently" holding themselves out as a next of kin and disclosure of personal data and the reimbursement of some modest expenses….
Valters Kronbergs is managing partner at Kronbergs & Cukste, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms which includes Glikman & Partnerid in Estonia and Jurevicius, Balciunas & Bartkus in Lithuania, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics.
