What Israel’s Consumer Protection Law gives you

Service page: Class actions and consumer claims lawyer.

What you are owed under the Law

The Consumer Protection Law has existed for decades. But most people who tell me “I knew there was a law” do not actually know what it says. The Law does not settle for general statements. It sets detailed duties. They cover what a business must disclose to you before you sign, when you can cancel, and what happens if a business breaks the Law.

The basic principle: if a business hides material information, deceives, or advertises in a misleading way, it is exposed to a civil claim. It may also face criminal charges.

Which transactions does the Consumer Protection Law apply to?

The Law applies to a transaction between a “dealer” and a “consumer” (section 1). A dealer is someone who sells an asset or provides a service in the course of business, including a manufacturer. A consumer is someone who buys an asset or receives a service from a dealer in the course of the dealer’s business. The use must be mainly personal, domestic or family use. So a sale between two private individuals is usually not a consumer transaction. An example is the sale of a used car between neighbors. The Sale Law, 5728-1968, and contract law apply to it. Someone who buys for the purposes of their business is not a “consumer” either. But a dealer harmed in the course of its business by misleading conduct is entitled to remedies for the civil wrong (section 31(a1)).

What must a business disclose to you before you buy?

The duty of disclosure is one of the strictest requirements in the Law. Before you sign anything, the business must disclose several things. These are the full price including VAT and any additional payment, the existence of known defects in the product, and the cancellation terms and returns policy. It must also say who is selling (the business name and contact details). If it is a subscription contract, it must give the terms for ending it.

Not disclosing material information may be misleading by omission. When the misleading is material, the consumer may cancel the transaction within a reasonable time from when they learned of it, even if they signed (section 32).

When can you cancel a transaction without a penalty?

In a distance sale (internet, phone or mail), you can cancel up to 14 days from one of two dates, whichever is later (section 14C(c)). One is receiving the product, and the other is receiving the document with the details of the transaction. In a door-to-door sale, when the seller came to you, the same 14-day rule applies, counted from delivery of the product or from receiving the details of the transaction (section 14(a)). If you cancel a distance sale within the 14 days for a reason other than a defect or non-conformity, the business may charge a “cancellation fee” of no more than 5% of the price of the product or NIS 100, whichever is lower. It must refund the rest of the money within 14 days of receiving the cancellation notice (section 14E of the Law). In a door-to-door sale, the dealer returns the money you paid, without a cancellation fee (section 14(b)). When you cancel because of a defect or non-conformity, there is no cancellation fee at all. The right to cancel itself is subject to specific exceptions in the Law, such as a product that can be copied whose packaging was opened.

For a defective product, your rights are not limited to the 14 days. Take a new electrical, electronic or gas product whose price is above NIS 150. The manufacturer or importer must repair, without charge, any fault discovered in the warranty year (regulation 2 of the Consumer Protection Regulations (Warranty and After-Sale Service), 5766-2006). If the repair did not restore the product to its condition, it must supply a new product or refund the amount paid, at its choice (regulation 6(c)). Alongside this, the conformity duties in the Sale Law apply.

“Sale price”: when is it a scam?

Some sellers show a “sale” price when there was never a regular price. They mislead about “the regular or usual price or the price asked in the past” (section 2(a)(13)). “Reduced from NIS 599 to NIS 299” when the original price was never NIS 599 is an offense under the Consumer Protection Law. The same applies to advertising a “limited sale” without holding enough stock, and to publishing a picture that does not reflect the actual product.

One of the classic cases: an advertisement for “free insurance in the first year” when a monthly charge is hidden in the small print. This is misleading advertising, and the regulator has the power to fine and enforce.

What happens to a business that breaks the law?

A business in breach is exposed to any or all of the following. First, cancellation of the transaction and monetary compensation to the consumer. Second, monetary sanctions (administrative fines) from the Consumer Protection and Fair Trade Authority, which can reach tens of thousands of shekels for each breach. Third, criminal charges in cases of deliberate and systematic misleading. Fourth, in cases of fraud that affected thousands of people, a class action requiring it to return money to all those harmed.

For the consumer: the Small Claims Court is the fastest and least expensive way to enforce these rights. The court fee is 1% of the amount of the claim and no less than NIS 50. The judgment is given at the end of the hearing or within 7 days of it. This is under regulations 6 and 15 of the Small Claims Adjudication (Rules of Procedure) Regulations, 5737-1976 (תקנות שיפוט בתביעות קטנות (סדרי דין), התשל״ז-1976).