Exemplary Compensation

What is exemplary compensation?

It is a monetary penalty used by the legislature through the courts (the legal system). The purpose of this penalty is to send a strong warning to the recipient of the penalty and to the general public.

Under the new law, if a business misleads the consumer on purpose, it can be fined up to 10,000 shekels without the consumer having to prove he suffered any damage whatsoever.

As of January 2009, a business cannot claim that they are out of stock when there is a sale just to bring in customers. From now on, the business must inform the public from the first day of the sale how many items are available from the sale stock (this only applies when the item value exceeds 50 shekels).

Returning Merchandise

The new law does not obligate the owner of the store to publicly show a sign stating the store’s return policy. If the owner does not clearly publicize the store’s return policy, then he is obligated to reimburse the buyer in cash within seven days, providing that the returned item(s) is in the same condition as when purchased. Would you choose to buy from a seller who states that he will not give cash refunds if you return your merchandise, or if you have only 24 hours to return the item?

Please note – if you paid with a credit card and wish to receive a refund, you will not receive a cash refund, but you will receive credit on the credit card used for the purchase.

The buyer is not obligated to accept a store credit in lieu of a cash refund. You are not a hostage of the store! It is also important to know that when returning merchandise that you had opened, the seller is still obligated to give you a cash or credit refund and cannot claim that you returned merchandise in bad condition just because the package was opened.

Be aware that this example applies only to direct in-person purchases and not non-direct purchases such as any purchase which is made by phone, internet, or any other media outlet. In this case the law obligates the seller (such as web sites, etc.) to give you a full refund within 14 days. It is strongly advised not to buy anything from a web site that states that the merchandise is non-returnable.

Discounts

When a discount applies, the percentage of the given discount and how much it applies in monetary terms must be advertised. The business will have to hold in its inventory a reasonable quantity of the items for sale. When the item is sold out, the store cannot advertise this item outside the premises of the business.

Quantity of Sale Items Available

In addition, there are other rules that apply for a sale transaction. The business must inform the customer of the minimum and maximum number of items for sale available on the day the sale starts, and not after the customer walks into the store only to discover that all the sale merchandise has been sold out (e.g., the business only intends to sell 20 of a particular item at the sale price, or only had 20 in stock to sell at the beginning of the sale).

Product and Shelf Labeling

Any store with an area larger than 100 m (300 ft), must display prices per item and in addition prices by kilo, 100 gram, meter, liter or any measure suitable for the specific product—this is in order to allow the customer to compare prices. With this tool the customer will know in advance of making a purchase the real price for every measured amount.

Cancelling a Credit Card Payment

Unfortunately we are still waiting for the new law to come into effect. Today to cancel a credit card purchase you must have the agreement of the seller. Even if the seller goes bankrupt before you receive your paid merchandise it is still not completely clear if it is possible to cancel the payment. If you want to cancel, know that it won’t be easy!

Service Contract Cancellations/Renewals

Companies providing services are not allowed to charge any client beyond the end of the date of the contract. If you made a deal for 18 months, the seller is not able to automatically “renew” the contract. The seller is required to receive the consumer’s permission to renew the contract. Even if there is a clause in the contract that states the contract can be renewed, this clause is void without consumer consent. There are strict rules for those companies providing services which must inform the consumer their renewal of the contract. This cannot be done by just sending a laconic letter posted by regular mail.

In the case that the consumer asks (preferably done by registered mail) to cancel the “renewal” of the contract and the provider of the service refuses, the 10,000 shekel compensation favorable to the consumer is applicable.

Every business charging you by automatic monthly payment (through the bank or credit card) is required to send you a statement and a receipt at least once every six months.

The new law also deals with long-term continuous purchases, such as with cell phone companies, internet services, newspaper and magazine subscriptions, etc. Companies must verbally explain to the consumer the main points of the deal, including the right of the consumer to cancel the deal, how to do it, how much it will cost the consumer, for how long the deal will transpire, and any other important detail of the deal (including how to contact the business or provider).

The law also stipulates that a consumer can inform the business or provider about his wish to cancel a contract: either in person, by phone, fax, or e-mail and not necessarily by letter. The contract automatically expires three (3) days after the consumer informs the provider.

Penalties for Refusing to Cancel a Contract

If the provider of the service continues to charge the consumer after being officially notified by the consumer of intent to cancel, the consumer is entitled to the 10,000 shekel compensation.

How, When and Where should I complain?

If you have a specific problem concerning one of the issues above, please feel free to contact us by e-mail with the details of your situation. We generally take care of the problem immediately by phone or by letter and in most cases the problem is solved very fast after our intervention. This is part of our free services to new immigrants and you won’t be charged if the problem is solved with a letter or a phone call.

A word of conclusion: the level of service provided in Israel is a far cry from that you may be accustomed to in the US or Europe. Sometimes it can be frustrating to return even a small item, turning a simple transaction into a “big deal”. It will only get better when people like you are aware of the law and stand up for your rights. Only this can improve the standard of service in Israel.
 

Tzvi Szajnbrum, Attorney at Law