A consumer can be defined broadly as a person who needs, uses or has used a particular service or product. In this sense, we are all consumers. Consumers make up the largest economic group, affecting and effected by almost every public and private economic decision. Yet often their views are not heard.
Individual consumers tend to be dispersed, while producers and traders can be organised and powerful, with greater access to information. Consumers are therefore more vulnerable to exploitation through deceptive advertising and selling, provision of substandard, fake and adulterated products, predatory loans and fraudulent, unethical and monopolistic trade practices. This can result in not only poor value for money, which undermines welfare and efficiency, but also presents risks to health and safety. Children, elderly people, disabled people, the poor, uneducated and illiterate are particularly vulnerable.
The principle of ‘Caveat Emptor’ (buyer beware) is not sufficient, and consumers need specific protections, and the rights to safety, choice, information, and redress. Consumer protection supports economic prosperity as it enables honest and efficient businesses to compete, and enables consumers to make the best use of resources.
The choices people make as consumers can have impacts on their health, safety, welfare and financial security, and that of those around them, and the wider environment. They also offer a means, by which, people can influence society. Demographic changes, economic growth, international trade and technology innovation are opening up new opportunities for consumer welfare, but are also creating new challenges. Enabling people to be informed and active consumers is critical to developing a participative, critical and competent citizenship.
In 1985 the UN General Assembly adopted the Guidelines on Consumer Protection (the “UN Guidelines for Consumer Protection”) to assist countries in the development of legislation and policies to meet key ‘legitimate needs’ for consumers:
- Protection from hazards to health and safety;
- Promotion and protection of economic interests;
- Access to adequate information to make informed choices;
- Consumer education, including on environmental, social and economic impacts;
- Availability of effective consumer redress;
- Freedom to form consumer and other relevant groups and the opportunity to present their views in decision-making processes;
- Promotion of sustainable consumption patterns.
Other closely related topics in this guide are Public Services and Privacy (forthcoming).
- Consumers International
- OECD Committee on Consumer Policy
- Competition and Consumer Policies Branch (CCPB), UNCTAD
- Foundation for Effective Markets and Governance (FEMAG)
- ASEAN Committee on Consumer Protection
- EU Consumer Protection Cooperation Network
- International Consumer Protection and Enforcement Network (ICPEN)
- IberoAmerican Forum of Consumer Protection Agencies (FIAGC)
This topic was developed by Consumers International, led by Indrani Thuraisingham and Satya Sharma
Examples in Practice
Argentina’s Consumer Arbitration Tribunals help solve consumer disputes
Argentina’s Consumer Protection Act from 1994 provides the legal framework for the establishment of Arbitration Tribunals. These Tribunals were initiated in 1998. They have received more than 35,000 requests for arbitration and have solved more than 10,000 cases.
For cases that comprise more than USD 100, the tribunals have three arbiters: one representing consumers, one representing businesses and the third one representing the government. For cases below that sum, there is a single arbiter provided by the government.
The procedure is easy and quick, whereby consumers can file a case using a form. The arbitral audience is normally held in the next 15 days. Most cases are solved in a single audience, and if the arbitral decision is not obeyed, it can be pursued in a Court. Most decisions from the Arbitration Tribunals are reached by consensus.
Brazil developed a consumer protection system before hosting the World Cup
For the FIFA Football World Cup 2014 in Brazil, the Brazilian government developed a series of initiatives to protect foreign consumers. The Secretary of Consumer Defence (SENACON) was in charge of these duties.
A key strength of the Brazilian strategy was the ‘Integrated Centre for Foreign Consumer Protection’, a special service created specifically to operate during the tournament. The ‘Integrated Centre’, was a partnership created in April 2013 between the Federal Government and states, municipalities and market representatives; with the mandate to act pre-emptively in order to protect and ensure the rights of consumers quickly and effectively during the event.
Under this system, consumers received protection for their transactions within all main sectors of tourism, including air and ground transportation, hospitality, food, healthcare and telecommunications. In the event of a claim, the consumer protection agency of the relevant host city was the first to be notified, and was called upon to mediate the conflict locally. If the conflict was not resolved at the local level, SENACON, as Executive Director of the Integrated Centre, took up the matter as appropriate with the help of any necessary technical resources.
Another initiative developed for the World Cup was the ‘Technical Committee for Consumption and Tourism’, which monitored matters relating to consumer protection for national and foreign tourists. Different agencies supported monitoring at the local level close to stadiums and airports. The actions of the Committee continue after the World Cup and will be applied to the 2016 Olympic Games.
In addition, SENACON, in partnership with Embratur (the Brazilian Tourism Board), launched a “Foreign Consumer Guide” in Portuguese, English and Spanish providing guidance to tourists about their rights.
In addition to SENACON, the Integrated Centre and the Committee were also joined by a number of federal government bodies, including the Ministry of Tourism, the Civil Aviation Secretariat, the Ministry of Health, the Ministry of Transport, Embratur, the Brazilian Airport Infrastructure Company (Infraero), ANAC, the National Health Surveillance Agency (ANVISA) and the National Ground Transportation Agency (ANTT).
Brazil’s infrastructure for consumer protection also included a newly-launched web portal (www.consumidor.gov.br), functioning as an alternative channel to resolve disputes between consumers and providers of goods and services. The portal discloses data on the Brazilian market and consumer complaints.
Chile has a fund for Consumer Associations projects
In Chile, the consumer law establishes a fund that twice a year awards consumer associations with resources to carry on and implement projects. A call for projects is made every year, and consumer groups can present them to the national consumer authority (SERNAC). A panel of experts analyse each project proposal, and award funds following a strict criteria that is settled each year.
India’s consumer protection system enables inexpensive and speedy redress
The Indian Consumer Protection Act from 1986 enables ordinary consumers to secure redress of their grievances using a three-tier structure of National and State Commissions and District Forums. To provide inexpensive, speedy and summary redressal of consumer disputes, quasi-judicial bodies have been set up in each District and State and at the National level, called the District Forums, the State Consumer Disputes Redressal Commissions and the National Consumer Disputes Redressal Commission respectively. At present, there are 629 District Forums and 35 State Commissions with the National Consumer Disputes Redressal Commission (NCDRC) at the apex.
Kenya’s Consumer Protection Act gives consumers the right to demand quality goods and services
Kenya’s Consumer Protection Act 2012 (CPA) provides punishment for businesses that knowingly sell substandard goods and lie on pricing. It also provides for warranties for damaged or injurious goods. According to the Act, firms which have been proven to have supplied substandard or injurious products will be liable to a raft of punitive measures including recalling such products from the market, repairing defects, replacing faulty products or issuing refunds to aggrieved customers. Such firms would be required to publicly disclose the nature and danger of defects on their products in conjunction with a newly created regulatory agency, The Competition Authority.
The law prohibits unfair trade practices and transactions that affect consumer rights like under-cutting and over-pricing of goods and services. The law will also seek to create consumer awareness on goods and services in the market to ensure they are of high quality and meet health standards. The law also prohibits misleading information to sell goods and services, which is expected to make companies more responsible in designing advertisements.
The CPA lists banks, consultancies, and insurance firms as service providers. It also includes all those involved in the provision of, or the use or enjoyment of facilities for amusement, entertainment, transport, broadcasting, tourism, recreation, education or instruction. Analysts say that banks and insurance firms are expected to improve disclosure of information to customers.
Finally, Kenya’s CPA requires regulators to involve consumers when making major decisions about services and products.
Malaysia introduced a Tribunal for consumer claims enabling consumers to seek redress without going to court
Malaysia’s Consumer Protection Act 1999 introduced a specific consumer redress mechanism for the Malaysian consumer by establishing the Malaysian Tribunal for Consumer Claims (MTCC). MTCC is an independent body recognised to hear and adjudicate consumer claims subject to the provisions under the Act. Its objective is to provide a channel and alternative dispute resolution facilities to consumers. The jurisdictions of the tribunal include hearing any matter within its jurisdiction as provided for under the Act where the total amount claimed does not exceed RM 25, 000; and hearing any other matters prescribed by the Minister’s order published in the Gazette.
Nepal’s Consumer Protection Act protects the rights of consumers
Nepal’s Consumer Protection Act from 1998 clearly states that any activity that intends to deceive consumers is strictly punishable by law. Provisions of the Act protect consumers from irregularities such as the quality, quantity and prices of consumer goods or services; ensuring that no one lowers or removes the attributes or usefulness of consumer goods or services; preventing circumstances in which monopolies and unfair trading practices may lead to an increase in prices, as well as false and misleading propaganda about the use and usefulness of consumer goods or services. The Act includes provisions on selling, supplying, importing, exporting and storing safe and quality consumer goods or services, and protecting the rights and interests of consumers through the establishment of an agency for redress.
Sri Lanka has a Consumer Protection Fund that supports consumer organisations and finances consumer education
In Sri Lanka all fines imposed under the Consumer Protection Act, 50% of the proceeds of the sale of any articles forfeited under the Act, and any other public allocations of resources for consumer education are paid into a Consumer Protection Fund. The Fund is used to support the promotion, assistance and encouragement of consumer organisations, and consumer education and the dissemination of information.
The Government of the Philippines promotes consumer rights through various initiatives
In the Philippines, the Department of Education has initiated a pilot project to train teachers on the use of consumer education instruction materials. Consumer rights and responsibilities are posted in public areas with infomercials on consumer rights in cinemas, and a consumer welfare ‘month’ in October. In addition, the Department of Trade and Industry (DTI) awards a ‘Seal of Excellence’ to any certified responsible establishment that upholds the rights and welfare of consumers. The ‘Bagwis’ (wing) award is classified into gold, silver and bronze levels ranging from legal compliance, basic business ethics and development of a consumer welfare desk to advanced quality management.
The UK government is working with industry to release more data back to consumers
The UK government has established a ‘midata project’ to work with businesses to give consumers better access to the electronic personal data that companies retain on them and to give consumers greater control of their data. Following a public consultation the government announced in November 2012 that it would use the law to compel businesses to release consumers’ electronic personal data if they did not do it voluntarily. The power to do this was approved by Parliament through the Enterprise and Regulatory Reform Act 2013. Initially the government will be working with banks, mobile phone companies and energy companies to voluntarily release data.
The US Federal Trade Commission publishes five year strategic plans
The US Federal Trade Commission’s Strategic Plan for 2009 – 2014 aims to prevent business practices that are anti-competitive, deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.