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The Ethics of Consumer Protection

Customer’s information needs

The information needs of customers are:

• Detailed legal records with reference to products and services, such as product liability, injury and unsubstantiated death claims over all jurisdictions for five years; penalties inflicted and citations for regulatory non-compliance, detailing each incident and corresponding penalty, settlement effected and such related information.

3

• Risks of injury from normal usage of product/service;

• Noise, odour and other nuisances/problems associated with use of the product/service;

• Design for recycling;

• Biodegradability of products and packaging;

• Unusual life cycle costs;

Customer’s information needs (Contd.)

• Warnings, with appropriate detail;

• Content, additives and treatments of food and medicines, sufficient to allow reasonably-informed consumers to make rational market decisions and to protect themselves and their families; and

• Hidden characteristics

Customer’s information needs (Contd.)

A consumer is any person who, or firm, or association which

•buys or hires (fully/partly paid for) any goods or service.

•the purpose of purchase of goods should not be for resale or any commercial purpose (except self-employment).

•the services availed does not include free service or services under a personal contract.

Consumer Protection refers to the steps necessary to be taken or measures required to be accepted to protect consumers from business malpractices

Consumer and Consumer Protection

a. Consumers: should know their rights and exercise them

b. Businessmen: producers, distributors, dealers, wholesalers as well as retailers should pay due attention to consumer rights in their own interest, by ensuring supply of quality goods and services at reasonable prices

c. Government: the government should enforce various laws and amend existing laws to protect consumer interests

Parties to Consumer Protection

• 1920's: efforts in US to reduce the exaggerated claims of advertisers of goods and services and demands made for impartial testing of goods.

• 1930's: growth of consumer cooperatives, the first federal consumer agency, Food and Drug Administration, demands for labelling of products and the introduction of USDA stamps.

History and growth of consumer protection

• 1940's: 150 local consumer councils across the United States eventually drew together to form the National Association of Consumers.

• 1950's: The American Council of Consumer Interests was established by 750 members from universities, schools and consumer research organizations.

History and growth of consumer protection (Contd.)

• He coined the term “consumer advocate.”

• He called for the accountability of carmakers

• He worked towards improved environment, healthcare, insurance, pension and disability rights.

• He is the founder of numerous non-profit organizations

Ralph Nader’s Contribution to Consumer Protection

Ralph Nader’s Contribution to Consumer Protection (Contd.)

• He educated America's consumers

• He started the U.S. Public Interest Group (PIRG)

• He founded the Center for Study of Responsive Law, Center for Auto Safety, the Disability Rights Center, the Pension Rights Center, the Project for Corporate Responsibility, and the Clean Water Action Project.

1) Substantiate the Complaint

2) Listen to Seller

3) Cooperate with the Seller if Needed

4) Avoid Inconvenience to Others

5) Do not Personalize Issues

6) Not lend self to others

Consumer Duties and Responsibilities

7) Be Well Informed

8) Understand the Grievances Redressal process

9) Avoid Impulsive Buying

10)Buy Goods from Authorized Agents

Consumer Duties and Responsibilities (Contd.)

1) Exorbitant Prices of Products and Services

2) Deceptive Selling Practices

3) False and Misleading Advertisements

4) Defective Quality, Higher Prices

5) Sale of Hazardous Products to Ignorant Consumers

6) Suppression of Material Information

How are Indian consumers exploited?

7) False Product Differentiation

8) Producers’/Sellers’ Collusion

9) Supply of Adulterated and Substandard Products

10)Cheating Consumers by Giving Lesser Quantity for the Price

11)Dishonoured Guarantees and Warranties

12)Poor Redressal of Customers’ Genuine Grievances

How are Indian consumers exploited? (Contd.)

13)Creating a Scare out of Scarcity

14)Making Consumer buy Unwanted Goods

15)Misleading Representation on Utility of Products

16)Manipulating Conditions of Delivery

17)Customers pay for Numerous Intermediaries

18)Fall in Prices Never Passed to Consumers


19)Buying unaffordable goods

20)Advertisement cost

21)Counterfeits: These constitute a substantial quantity of goods on store shelves

22)Hoarding and Blackmarketing

23)Tie-in-Sales

24)Gifts for products/services


A number of laws have been passed by the Government of India over the years to protect the interest of consumers.

1. Agricultural Products (Grading and Marketing) Act, 1937

2. Industries (Development and Regulation) Act, 1951

3. Prevention of Food Adulteration Act, 1954

4. Essential Commodities Act, 1955

Legal protection to consumers

5. The Standards of Weights and Measures Act, 1956

6. Monopolies and Restrictive Trade Practices Act, 1969

7. Prevention of Black-marketing and Maintenance of Essential Supplies Act, 1980

8. Bureau of Indian Standards Act, 1986

9. Consumer Protection Act, 1986

Legal protection to consumers (Contd.)

The Consumer Protection Act (COPRA), 1986, conferred a legal right to the individual consumer to seek legal redress or recover costs and damages for injury or loans suffered by him/her as a result of faulty, defective goods and services, bought or secured for valuable consideration.

CONSUMER PROTECTION ACT 1986

The SIX RIGHTS of the consumer as enunciated under Section 6 of the COPRA are:

I. The Right to Safety

II. The Right to be Informed

III. The Right to Choose

IV. The Right to be Heard

V. The Right to Seek Redressal

VI. The Right to Consumer Education

Rights of consumers under COPRA

Redressal agencies for settlement of consumer disputes:

• A Consumer Disputes Redressal Forum known as the District Forum has been established by the State Government in each district of the State by notification.

• A Consumer Disputes Redressal Commission known as the State Commission has been established in each state by the State Government by notification.

• A National Consumer Disputes Redressal Commission known as the National Commission established by the Centre by notification.

Redressal agencies under COPRA

The main changes introduced by the Amendment Act are as follows:

• The District Consumer Redressal Forums can now deal with complaints involving compensation amount upto Rs. 2 million

• For the State Commission the limit is Rs. 10 million

• For the National Commission, the limit is more than Rs. 10 million.

• Setting up of benches and increase in the number of members in the National and State Commissions.

CONSUMER PROTECTION (AMENDMENT) ACT 2002

• A sitting judge of the High Court is to preside over selection committee when the president of the State Commission is absent

• In absence of the incumbent president of the District Forum, State Commission or National Commission, the senior member to act as president of the respective bodies.

• Minimum qualifications prescribed for members of all consumer courts


• For admission of complaints, issue of notices and disposal of complaints a specific time frame has been prescribed

• Exclusion of services used for commercial purposes from the purview of consumer courts

• The court can award punitive damages. • Any affected party to deposit 50 percent of

the amount awarded to the consumer if appealed against the order of the Forum

• If any person fails to pay compensation, the consumer court can order recovery in the same manner as arrears of land revenue.


• Consumer protection councils- both as the centre and states

THREE-TIER CONSUMER DISPUTE REDRESSAL SYSTEM

• District forums

• State Consumer Dispute Redressal Commission

• National commission

INSTITUTIONAL ARRANGEMENTS UNDER COPRA

1) Consumer Associations or Councils

2) Consumer Co-operatives

3) Co-ordination at the National Level

ROLE AND INITIATIVES OF VOLUNTARY ORGANISATIONS

1) National Awards

2) Publicity measures

3) Customer Service Department of RBI

OTHER INITIATIVES TO PROMOTE CONSUMER PROTECTION