Consumer Protection

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Consumer Protection

• Source Manual on Consumer Protection
• United Nations Conference on Trade and
  Development (UNCTAD)
• 2004

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Part I Rationale for consumer protection

• Addresses disparities in consumer-supplier
  relationship
• Bargaining power
• Knowledge
• Resources

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• State intervention premised on grounds of
• Lack of economic efficiency
• Individual rights
• Distributive justice
• Achieving bargaining equality between consumer
  and producer interests
• Alleviating the problems of the particularly
  disadvantaged
• Poor, elderly, children
• Positive communal values
• Right to development

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• Consumer protection when properly constituted is
  an essential part of the states obligations to
  establish minimum standards in the market place,
  provide equal access to consumption opportunities
  and enforce rights. It helps redistribute power
  and resources from the wealthy to the weak and
  alleviates problems of poverty and disadvantage.

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Consumer Rights

• John F. Kennedys Message to Congress (March 15,
  1962)
• Right to safety
• Right to be informed
• Right to choose
• Right to be heard

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• 1982 CI Charter of Consumer Rights
• Right to basic needs
• Food, clothing, shelter, health care, education,
  water, sanitation
• Right to redress
• Right to education
• Right to healthy environment

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• UN Guidelines on Consumer Protection
• 1985
• 1999 (sustainable consumption)

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U.N. Guidelines on Consumer Protection (UNGCP)

• Provide framework for governments to develop and
  strengthen consumer protection policies and
  legislation
• Guarantee that the measures will be undertaken

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Obligations imposed on governments by the UNGCP

• 1. Physical Safety
• Assure that products are safe and conform to
  safety standards
• Consumers receive information on proper use of
  goods and risks involved
• Measures are in place for notification and recall
  of unsafe goods

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• 2. Consumers economic interests
• Consumers obtain optimum benefit from their
  economic resources
• Ensuring that goods meet production and
  performance standards
• Adequate distribution channels and after sales
  services
• Fair business practices are employed
• Protection against contractual abuses
• Information is adequate for consumers to make
  informed decisions and exercise choice

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• 3. Distribution facilities for essential goods
  and services
• Especially to consumers who are disadvantaged,
  e.g., in rural areas

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• 4. Redress
• Establish mechanisms that are fair, affordable
  and accessible
• Especially taking into consideration needs of
  low-income consumers

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• 5. Education and information programs
• Particular attention to disadvantaged consumers
  in urban and rural areas
• Should be included in school curriculum

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• 6. Promotion of sustainable consumption practices

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• 7. Measures relating to food, water and
  pharmaceuticals should be prioritized
• Food production
• Sustainable agricultural polices and practices
• Conservation of biodiversity
• Drinking water
• Develop national policies to improve supply,
  distribution and quality of water
• Pharmaceuticals
• Develop national policies to ensure appropriate
  use, procurement, distribution, production,
  licensing arrangements, registration systems and
  information to consumers

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Consumer Redress

• Problems include
• Expense
• Timeliness of process
• Alienation from process
• Adversarial nature of process

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• Facilitating access to courts
• Legal aid for the needy
• Contingent fee system
• Court substitutes (ADR)
• Statute-based tribunals
• Arbitration
• Ombudsperson

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Part II Consumer Protection in the
MarketplaceConsumer Information and Choice

• Consumer information is especially needed where
• Products and services are high priced
• Products and services are technically complex
• No basis of assessment at point of sale

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Consumer concerns with advertising

• Ads for products proven to be unsafe and/or
  addictive
• alcohol and tobacco
• Ads that target and mislead vulnerable
  communities about the product
• Ads that aggressively target children to sell
  foods high in fat, sugar and salt

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Product Safety Laws

• Rationale for product safety laws
• Minimum and uniform standards ensure developing
  countries do not become dumping grounds for
  sub-standard products rejected in the country of
  origin

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Components of a comprehensive product safety
policy

• Regulatory action
• Development of product safety standards
• Monitoring action
• Testing by government or reliable independent
  consumer organizations
• Corrective action
• Impose product bans
• Warning notices
• Product recalls
• Seize/destroy stocks
• Require modifications of the product

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Consumer Credit

• Credit increases demand for and consumption of
  goods and services
• Unfettered growth of credit has negative
  consequences
• Impulse buying
• Extra costs associated with credit
• Excessive debt

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• The poor pay more
• Increased complexity of transactions require more
  complex documents
• Hire-purchase transactions

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Part III Consumer Protection and Basic
NeedsConsumer Education

• Purpose to develop skills to make informed
  decisions in the purchase of goods and services
  in light of
• Personal values
• Maximum utilization of resources
• Ecological considerations

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• Six fields of content Personal finances
• Rights and obligations
• Commercial persuasion
• Consumption, environment and ethics
• Food
• Safety

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Utilities

• 1.6 billion people do not have access to energy
  supply
• Over 1 billion lack access to clean water
• One half of worlds population has made a phone
  call
• 5 of world uses the internet
• 88 of those are in developed world
• 15 of worlds population

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• Utilities present unique problems for consumers
• Generally involve basic and essential services
• Peculiar economic characteristics that make
  competition difficult
• Public policy has focused on regulating
  monopolies for public protection
• Price and other controls
• Public ownership
• Privatization movement threatens both

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Food Security and Safety

• Food security--defined by FAO
• safe, nutritious and culturally acceptable and
  is available, accessible and affordable to all
  people

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• International law recognizes the right to food
• Physical and economic access to food
• Access to food of adequate quality and quantity
• Over 800 million people suffer from hunger and
  food insecurity
• 99 are in the developing world
• 21 of population of India
• 11 of population of China
• 58 of population of Central Africa

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Hunger Facts

• There is enough food to feed all the people in
  the world
• 4.5 pounds per person per day
• Real causes of hunger are
• Poverty
• Inequality
• Lack of access

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• Rapid increase in food production doesnt
  necessarily result in food security
• 78 of countries reporting child malnourishment
  export food!
• India had 42 million ton grain surplus in 2000
• 5,000 Indian children die each day of
  malnutrition

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• Prosperity of a country no guarantee that
  citizens wont go hungry
• US has highest GDP in world
• 4.2 million households (4.1) experience hunger
  at least part of the year

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Role of food imports

• Removal of import restrictions and lower food
  tariffs make importation of highly subsidized
  food an attractive alternative
• Potential problems
• Vulnerability to price and supply fluctuations
  and political upheaval
• Subject to manipulation by transnational
  corporations
• Undermine livelihood of farmers

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• Consumer groups should focus government attention
  on
• Reconciling demand for cheap food with adequate
  compensation to farmers
• Addressing underlying causes of poverty
• Giving priority to production of staple foods for
  domestic consumption
• Addressing issues that contribute to food
  security
• Urbanization
• Land degradation
• Water scarcity

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Sustainable ConsumptionThe concept of
sustainable consumption

• Ever-increasing consumption putting a strain on
  the environment
• Outcome of the development model the North
  follows and the South emulates
• Sustainable consumption viewed as the only
  long-term strategy for survival

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• Satisfaction of basic needs to improve quality of
  life
• Improving efficiency in resource use
• Minimizing emissions of wastes taking into
  consideration the capacity of the earth to
  assimilate the wastes
• Adopting consumption patterns that will not
  jeopardize the needs of current and future
  generations
• Ensuring equity in consumption within countries
  and between countries

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Obligations of consumers

• CI urges consumer organizations to
• Educate members on sustainable consumption in
  order to change attitudes and behavior
• Provide information to consumers on products and
  services and demand that same be provided by
  merchants
• Regularly assess environmental aspects of products

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• Cause environmental degradation during the
  extraction of natural resources or during their
  manufacture, use and disposal
• Utilize large amounts of energy during their
  manufacture, use or disposal
• Cause unnecessary waste, due to over-packaging or
  unduly short life span
• Utilize materials derived from threatened species
  or environments
• Adversely affect other countries and communities,
  especially those in the South

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• Consumers may be willing to take easy steps that
  benefit the environment but may not make
  significant changes in buying habits, pay
  markedly higher costs, or make changes in basic
  lifestyles. Yet sustainable consumption calls for
  such effective approaches. Consumer conscience
  has to be sufficiently modified such as to effect
  changes in behavior. This is the ultimate
  challenge for the consumer movement. Consumers
  have to be convinced that when they vote with
  their pockets they are in fact exercising a
  social, moral and political responsibility that
  goes beyond their own parochial interests and
  their present generation.