Consumer Protection Source: Manual on Consumer Protection United Nations Conference on Trade and Development (UNCTAD)
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Consumer Protection Source: Manual on Consumer Protection United Nations Conference on Trade and Development (UNCTAD) 2004 Part I Rationale for consumer protection Addresses disparities in consumersupplier relationship • Bargaining power • Knowledge • Resources 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 • “Consumer protection when properly constituted is … an essential part of the state’s 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.” Consumer Rights John F. Kennedy’s Message to Congress (March 15, 1962) 1. Right to safety 2. Right to be informed 3. Right to choose 4. Right to be heard 1982 CI Charter of Consumer Rights 1. Right to basic needs 2. 3. 4. Food, clothing, shelter, health care, education, water, sanitation Right to redress Right to education Right to healthy environment UN Guidelines on Consumer Protection • 1985 • 1999 (sustainable consumption) 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 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 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 3. Distribution facilities for essential goods and services • Especially to consumers who are disadvantaged, e.g., in rural areas 4. Redress Establish mechanisms that are fair, affordable and accessible • Especially taking into consideration needs of low-income consumers 5. Education and information programs Particular attention to disadvantaged consumers in urban and rural areas Should be included in school curriculum 6. Promotion of sustainable consumption practices 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 Consumer Redress Problems include: • Expense • Timeliness of process • Alienation from process • Adversarial nature of process Facilitating access to courts • Legal aid for the needy • Contingent fee system Court substitutes (ADR) • Statute-based tribunals • Arbitration • Ombudsperson Part II: Consumer Protection in the Marketplace Consumer 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 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 Product Safety Laws Rationale for product safety laws Minimum and uniform standards ensure developing countries do not become dumping grounds for substandard products rejected in the country of origin Components of a comprehensive product safety policy 1. Regulatory action • Development of product safety standards 2. Monitoring action • Testing by government or reliable independent consumer organizations 3. Corrective action • • • • • Impose product bans Warning notices Product recalls Seize/destroy stocks Require modifications of the product 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 The poor pay more Increased complexity of transactions require more complex documents Hire-purchase transactions Part III: Consumer Protection and Basic Needs Consumer 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 Six fields of content Personal finances Rights and obligations Commercial persuasion Consumption, environment and ethics Food Safety Utilities 1.6 billion people do not have access to energy supply Over 1 billion lack access to clean water One half of world’s population has made a phone call 5% of world uses the internet • 88% of those are in developed world 15% of world’s population 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 Food: Security and Safety Food security--defined by FAO • “safe, nutritious and culturally acceptable and is available, accessible and affordable to all people” 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 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 Rapid increase in food production doesn’t 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 Prosperity of a country no guarantee that citizens won’t go hungry • US has highest GDP in world • 4.2 million households (4.1%) experience hunger at least part of the year 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 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 Sustainable Consumption The 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 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 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 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 overpackaging or unduly short life span Utilize materials derived from threatened species or environments Adversely affect other countries and communities, especially those in the South “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.”