Written by: Adv. Omer Loboshitz, Partner, Commercial Department ABADI & CO. and leader of the firm’s Consumer Law practice
Are you a manager or business owner who sells products or provide services to consumers?
Have you ever feared a consumer lawsuit that could jeopardize the business you built through hard work?
If the answer is yes, this guide was written specifically for you.
In the modern era, legal risk in the field of consumer protection is among the highest faced by businesses. Evolving legislation, which continually adapts to technological developments and market changes, seeks to establish standards of professionalism and reliability, and to provide consumers with essential tools to balance the power dynamics between businesses and customers and enable them to protect themselves and act against businesses that do not act in accordance with the law.
For example, the Consumer Protection Authority established the “Do Not Call Me” registry, allowing Israeli citizens to register in order to avoid receiving marketing calls from businesses. Additionally, legislation grants consumers compensation in certain circumstances for delays by technicians or service providers.
Technological developments, evolving regulation, and the activities of supervisory and enforcement authorities in the field of consumer protection have provided consumers with many tools to address violations of their rights.
Over the past decade, various websites - such as the “Kol Zchut” (All Rights) platform - have been established to make these rights more accessible. These platforms enable individuals to review their rights easily through comprehensive, user-friendly databases that provide clear information about residents’ rights and how to exercise them.
All of this has led to growing awareness among individuals of their rights. Many now actively enforce them, particularly given that the Consumer Protection Law grants powerful enforcement mechanisms - tools that individuals do not hesitate to use. At the same time, businesses must adopt more sophisticated and attentive practices when dealing with the “new consumer.”
This guide is designed to provide you with concrete information and practical recommendations to help you address these challenges effectively. It offers a concise overview of key risks, suggested strategies to minimize exposure to lawsuits, and practical tools for implementation at all organizational levels.
Whether you are a long-established corporation or a young startup, whether you maintain a large in-house legal department or rely on external counsel, this guide can assist you by providing a solid foundation and a shared framework for embedding consumer protection principles into the core of your business operations. After all, only a business that respects its customers and acts in accordance with the law is a sustainable business.
Legal Disclaimer:
The information in this article is provided for general informational purposes only and does not constitute legal advice. The author and/or publisher are not responsible for any actions or decisions made based on this content. For any legal matter, professional legal counsel should be consulted. We hope you find it useful.
Chapter 1: What Is Consumer Misrepresentation and Exploitation of Consumer Distress – and How to Avoid It
Consumer misrepresentation occurs when a business engages in conduct - whether before or after the transaction, by act or omission - that could mislead the consumer regarding a material aspect of the transaction. This may take various forms, from presenting partial, incorrect, or misleading information about a product; making false representations regarding features, availability, or prices; or changing flavors or package sizes without informing consumers.
Under the Consumer Protection Law, misrepresentation is prohibited with respect to the characteristics of a product or service, the terms of a transaction, the identity of the business, and more. The rationale is to protect consumers from exploitation of information and power gaps between them and businesses, and to enable informed purchasing decisions.
Common examples of consumer misrepresentation include:
- Advertising non-final prices that do not include all associated costs (VAT, shipping, etc.)
- Changing package size or flavors without notifying consumers
- Creating false impressions regarding product features, capabilities, or quality
- Failing to disclose material defects, disadvantages, or risks
- Misleading statements regarding product availability
- Exaggerated or unsubstantiated claims about promotions and discounts
- Misrepresentation regarding compliance with mandatory standards
- Misrepresentation regarding compliance with mandatory standards
To reduce the risk of claims of consumer misrepresentation, it is advisable to take the following preventive steps:
- Conduct a thorough preliminary review - Examine all advertisements and representations against applicable legal requirements and identify potential risk areas.
- Establish marketing communication procedures - Create a standard for fair and clear marketing language, with review and control mechanisms before publication.
- Train and guide employees - Provide training to service, support, and sales representatives on key principles and “red lines” in customer communication.
- Ongoing monitoring and enforcement - Appoint a responsible party to oversee compliance, conduct sample reviews, mystery shopper checks, and maintain documentation.
- Prompt correction of deficiencies - Immediately correct any identified inaccuracies and implement systemic lessons learned.
In practice, businesses must adopt a culture of full transparency and fairness toward consumers. Proper and accurate disclosure of all relevant information is not only a legal obligation, but also a moral and business imperative that can strengthen reputation and customer trust, through integrity rather than marketing “manipulations.”
Close cooperation between management, marketing, and legal advisors is essential to ensure that the business’s messaging complies fully with the law. While not always simple, the investment pays off through reduced legal risk, improved reputation, and stronger long-term customer loyalty.
Chapter 2: The Consumer’s Right of Cancellation in Distance Selling Transactions
Remote sales transactions, whether conducted online, by phone, or through direct marketing, provide customers with enhanced protection in the form of a “right of cancellation.” For example, in most transactions involving the purchase of goods, the Consumer Protection Law allows the consumer to cancel the transaction within 14 days of receiving the product or the disclosure document, whichever occurs later, without needing to provide any justification for the cancellation.
This right does not apply in certain cases, including perishable goods, services that have already been fully provided, or customized products. Additionally, certain populations (senior citizens, persons with disabilities, and new immigrants) are entitled to an extended cancellation period of four months.
Upon cancellation, the business must refund the full consideration paid within 14 days, including shipping costs. In certain circumstances, the consumer may be charged limited cancellation fees (5% of the transaction or NIS 100, whichever is lower).
Practical recommendations for businesses:
- Develop a cancellation policy that fully complies with legal requirements
- Fully inform customers of their cancellation rights and exceptions at the time of purchase
- Provide proper disclosure and cancellation forms as part of the transaction process
- Maintain careful documentation of transaction stages for deadline calculations
- Process refunds promptly and fully
In summary, the right of cancellation provides broad protection in distance transactions, reflecting the rationale that the consumer did not physically examine the product in-store but only viewed a photo or description. Refusing cancellation or reimbursement may result in lawsuits, significant costs, and reputational harm, whereas compliance significantly reduces legal exposure.
Chapter 3: Class Actions – The Sword Hanging Over Businesses
Consumer class actions are a powerful legal tool that allows one individual to file a lawsuit on behalf of a larger group of people who are affected in a similar way. Instead of pursuing separate claims, the alleged harm is consolidated into a single proceeding, and damages are assessed on an aggregate basis. For businesses, this creates significant exposure, as potential liability can reach tens or even hundreds of millions of shekels. Beyond the financial risk, class actions can harm a company’s reputation and require substantial time and resources to defend.
Common grounds for consumer class actions include misleading representations, overcharging, breaches of contractual obligations, warranty violations, and claims involving defective products.
Chapter 4: A Managerial Roadmap for Reducing Consumer Legal Risks
As managers, the responsibility for protecting the organization from consumer lawsuits rests on your shoulders. The correct approach is through a continuous, multi-stage plan:
- Assessment – Map current compliance levels, identify risks and gaps, and set improvement goals.
- Alignment – Update all documents, agreements, and internal procedures to align with consumer protection principles.
- Training and implementation – Provide comprehensive training and practical tools to employees.
- Monitoring and enforcement – Establish ongoing compliance oversight mechanisms.
- Continuous improvement – Update policies in light of legal developments, customer feedback, and lessons learned.
Success depends on integrating consumer protection requirements into routine operations at all organizational levels. Only then will legal protection not be a “patch,” but part of the organization’s DNA.
Conclusion – Five Golden Rules for Fair Business Conduct
- Adopt a policy of full transparency and ensure honesty and complete disclosure in all customer interactions
- Know the law – deep familiarity with consumer law and case law is critical
- Turn every complaint into an opportunity for improvement
- Do not ignore warning signs – monitor legal risks and consult experts
- Embed a consumer-oriented culture – make consumer rights a core organizational value
At the end of the day, put the customer at the center and you will benefit. The safest way to avoid legal trouble is simply to act honestly and in accordance with the law, and that responsibility begins at the top and permeates the entire organization.
