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Fee levying

Section 15 of the Marketing Practices Act regulates the access to modify existing fees and introduce new one in an ongoing contractual relationship.

Section 15 sets out the that an existing fee may be modified at any time, along with the conditions under which it may take place, must be prominently stated in the contract. Modifications should be notified within reasonable time. Where new fees are introduced, or significant changes to existing fees are invoked in ongoing contractual relationships, consumers must be individually notified before the modification takes effect. Concurrently with such changes, the consumer must be informed of how to revoke the contract, and the conditions which apply to such cancellation.

A definition of fee is set forth in section 13(7) of the Marketing Practices Act:

(7) By a fee is understood a payment for a specific service, function or benefit which is linked to the purchase of a product or service and which is not of the nature of a payment for an independent service.

A fee is a fee irrespective of what it is termed if it is covered by the above definition.

Section 15 does not apply to fees regulated under other legislation, and the provision only applies to consumers.

Moreover, the above rule in section 15 does not apply to business subject to the Financial Business Act, cf. section 2(3).

Businesses that violate section 15(3) on notification on significant modifications to existing fees and the introduction/collection of a new fee where individual notification is required may be penalised with a fine.

The previous Marketing Practices Act and the repealed Price Marking and Display Act did not set out requirements as to the notification of consumers in the event of changes to existing fees. The conditions which apply to both the modification and the introduction of new fees must be prominently stated in the contract. The introduction of the above rule in section 15 has come about as the result of an enhanced focus on the use of fees.

Fees subject to section 15, cf. the definition set forth in section 13(7), also covers the fee levied in ongoing contractual relationships which forms part of the total purchase price and must be stated. However, fees that may be invoked occasionally are also covered by this section. This goes for fees which may be invoked as a result of a change of address or cancellation as well as new fees which may be imposed on the consumer at a later point pursuant to the contract.

It is only fees that practically constitute the price for independent services or functionalities which do not fall within the scope of the ongoing contractual relationship, cf. section 15.

The criterion for determining whether a notification should take place individually is that it must be significant (or because a new fee is imposed). Whether that is the case, must be decided on an individual basis. The fee previously imposed as well as the value of the main service must be taken into consideration. Precedent judgments and decisions rendered by the appeal boards and at the courts should obviously form part of an assessment to establish whether the imposition of a larger fee or expense incurs a significant burden on the individual consumer.

Information may be laid against businesses which violate the provision. An interim injunction issued in pursuance of the Marketing Practices Act is also an option available to the DCO.

Where a business acts in breach of section 15(3) by failing to meet its duty to notify its customers of e.g. the imposition of a new fee, the DCO will be able to demand that the business reimburse the consumers for the fee charged in pursuance of section 20 of the Marketing Practices Act.

Frequent and minor modifications to fees within a short span of time may, depending on the circumstances, be considered an attempt to circumvent the provision.

See section 15 of the Marketing Practices Act.