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Name
and shame policy for errant traders
The Consumer Affairs Authority is keen to see that the public is
more civic conscious and that professionals disclose their fees.
The creation of a strong consumer movement will go a large way in
solving problems faced by consumers, says the authority's Director
General Kithsiri Gunawardena in this interview with The Sunday Times
FT reporter Suren Gnanaraj.
How
has the new authority performed to date since its inception?
To date, we have received 700 complaints, of which 150
have been resolved. 56 complaints have been referred to other statutory
authorities such as the Securities and Exchange Commission, to avoid
duplicity of tasks. Basically, under the Act consumers can refer
a complaint within three months of the date of purchase of a product
to the Authority.
What
is the general procedure that is followed once a complaint has been
received?
Initially, when we get a complaint, we determine whether
the alleged complaint comes within the scope of the Act. If it does,
we then call for observations from the particular trader. Depending
on these observations, we then determine as to whether a settlement
is possible. If the traders do not agree to come to a settlement,
we then summon both the consumer and the trader to the Authority
within 14 days. It must be noted that many of these complaints have
been settled expeditiously, avoiding court costs and delays.
If the parties
refuse to come to a settlement, then the authority is bound to make
a ruling, according to which, if the parties fail to comply, the
ruling would be referred to and enforced by a court of law. Serious
malpractices, which are hazardous to a person's health, such as
the recent discovery of red dye in a sack of rice have also been
reported. In such an instance, the authority is compelled to act
expeditiously and obtain a sample, which is despatched for testing
to the Government Analysts Department.
What
is the general approach adopted by the Authority when conducting
an investigation?
We send out officers to investigate retail and wholesale
outlets thrice a week. We believe that just filing action against
an errant trader who fails to label a jam bottle correctly is not
the best method to attain consumer rights. It is a matter of making
everyone understand and creating a consumer movement, because 90
percent of all shops, which have been inspected so far, have maintained
a healthy average of around 80 percent of all goods being properly
marked.
We then wrote
to these shops informing them that there was no problem with regards
to 80 percent of the items, but as far as the other 20 percent is
concerned, we urged them to comply with the law, and most of these
shops have been very receptive.
What
are the main areas in which consumer complaints have been received
so far?
A general complaint that we have received is that hospital
bills contain only a 'medicine or drugs' column, but it is impossible
to ascertain what exactly those drugs are, and how much it costs.
Patients could even be charged for drugs, which were not prescribed
to them during treatment, resulting in a severe financial burden
on the consumer.
What
is the exact legal position in relation to a receipt?
Section 28 of the CAA Act states that "every trader
who sells any goods, shall on demand, issue to the purchaser thereof
a receipt…." We feel we need to put an end to this and
insist that hospitals furnish a detailed bill. We have written to
the Director General in charge of private hospitals in the Health
Department informing him that this is an offence and that measures
must be taken to ensure that there is maximum disclosure.
At the moment,
our aim is not to file action against hospitals but to inform them
of their statutory duties which must be complied with. However,
there is no mandatory requirement to provide a receipt in exchange
for a service. According to the law if you buy any goods (as opposed
to services) you are legally entitled to obtain a receipt 'on demand',
containing the date, description and quantity of the goods.
Personally I
felt that it would have been better if the provision stated, "shall
issue" a receipt. However, a practical problem will arise in
the sense that a non-issuance of a receipt, would amount to an offence
under the Act.
What
are the essential details which should be included in a receipt?
The date of the sale, the quantity of goods purchased and the nature
of the transaction; whether wholesale or retail. In relation to
the 'quantity of goods', it is important that the consumer, where
necessary, obtains a receipt which can be connected to the product
which is purchased.
For example,
if one buys a radio, it is important that details such as the serial
number of the radio is included in the receipt, in order to be able
to clearly identify the product, so that action can be taken against
a trader who sells a defective product.
Any
measures to curb the high cost of medical care?
I must, in defence, point out, that each medical professional
levies his fee according to his skill and experience. Therefore,
it is unfair on the part of the Authority to control prices of professionals,
because this is a free market, in which there is a level of competition
and the consumer is given a choice. If we were to regulate fees
levied by professionals, they will probably leave the island in
search of greener pastures, which would affect the quality of services
available in the island.
What
about professionals who charge exorbitant fees without a patient's
knowledge?
I wish to stress that professionals, whenever possible,
should maintain full disclosure as to the nature of the services
they are to provide and the costs involved, in order that the consumer
may be able to make an informed decision.
For example, a doctor must explain the cost of the operation he
is to perform on the patient and any subsequent operations he might
have to perform, in order that the patient has peace of mind that
he can afford it. The same principle should apply to all other professionals
such as lawyers.
Does
the Consumer Affairs Authority Act insist on full disclosure by
professionals?
Section 30 states, "No trader (includes both businessman
and service providers) shall in the course of trade or business,
engage in any type of conduct that is misleading or deceptive, or
is likely to mislead or deceive the consumer." The word 'deception'
could be broadly interpreted in this case, if a professional has
deceived or mislead a client in relation to the nature of his services
and its costs.
It
is a common problem that vendors cheat consumers as to the correct
weight and measurements of goods. What type of action has the authority
taken in this regard?
The area of 'Weights' and 'Measures' is a notable problem area.
The general complaints are that the weights and scales are not accurate.
Consumers are never sure whether they get the correct quantity,
and even if the difference is 100 grammes, it is still a substantial
loss to the consumer. There must be a mechanism in place to ensure
that 500 grammes is 500 grammes. This is an area in which lot of
work has to be done, because it would definitely come within the
definition of 'deception'.
We have brought
this to the notice of the Minister of Commerce and Consumer Affairs,
and currently there is a re-structuring process being carried out
in the Weights and Measures Department. Presently only 59 officers
are employed to provide services for the entire island, which is
terribly insufficient. The Minister has planned to employ around
3000 unemployed graduates to this department, and has also set up
plans for the Department to be managed by the private sector, so
that questions of corruption would not arise. The Authority also
plans to make use of the services of the Department, to outsource
its routine investigations.
How
can one prove deception in a court of law in relation to the sale
of under-weight goods? Would the prosecution have to prove an intention
to deceive, or is there an element of strict liability?
I would say it's a question of strict liability. The scale
is in the man's possession and therefore he cannot say that he was
unaware as to its inaccuracy. It could also be argued that the intention
of the trader can be deduced. After all, the scale can be calibrated.
Therefore, traders
may not be able to use 'lack of knowledge' as a defence. There is
also a responsibility on the Weights and Measurements Department
to give a certification on whether the weights are accurate. These
scales will be checked at least twice a year. We hope to commence
our pilot project in Hambantota.
Does
the authority protect consumers who buy cheap goods from way-side
vendors?
It is important to note that if your buying goods which
are being sold at a much cheaper price by wayside vendors, one inevitably
accepts a risk, that the goods could be sub-standard, and such vendors
may not be traceable. In such an instance, the Authority cannot
do anything to protect the consumer, unless the trader is apprehended.
What
is the role of the Authority in terms of regulating the prices of
goods?
Pricing is divided in two areas. One is that five items
have been declared as essential items, which are gas, milk food,
cement, mosquito coils and boxes of matches. A price increase with
regards to these items can only be made with the approval of the
authority and such an increase would be permitted only if it is
considered 'reasonable'.
As opposed to
these items, there are 34 items, which, with effect from November
1, 2003, the maximum retail price; the batch number and the expiry
date should be marked on the product. However, the authority does
not regulate these prices.
An exception
to the above was made with regard to pharmaceuticals, is that correct?
The Chamber of Commerce for the Pharmaceutical Industry
met us and raised their concerns that when they import certain items
in bulk it is not practical to have a maximum retail price tagged
on each product at the point of import. We suggested that they could
determine the maximum retail price and get their dealers to attach
the price tags.
The importers
are requested to prepare a list containing all the prices of the
drugs, which is given to the Authority as well as the dealers, so
that consumers are able to cross-check whether the price which is
tagged, is in accordance with the previously determined price list.
Both the Authority and the Chamber can take action against errant
traders in the industry.
What
are the deterrents and punishments specified under the Act?
More than court action, I believe a more severe action,
which we would adopt is the 'Name and Shame' policy. Errant traders
who have been found to have violated the law repeatedly would be
given publicity in the media, causing severe loss and problems to
such enterprises.
According to
the law, all traders will be required to register with the Authority.
Files would be maintained of each trader against whom a complaint
is made. The amount of the fine payable would increase depending
on the amount of times in which the particular trader has committed
an offence.
What
are the best methods of self-regulation, in order to provide consumers
with a better service?
With the CAA coming in to force and taking action against
banks who were not providing the appropriate services, the banks
thought it fit to create an Ombudsman to regulate their problems,
which I think is one of the greatest victories that consumers received
as a result of this decision. It is similar to a Customer Care Unit
of a company in which the company tries to be responsible in arriving
at a solution without having to make a settlement under a statutory
regulatory framework.
How
important is the role of the regulator?
The solution also lies with the regulator. In India, pressure
groups are aware that if a complaint is made which cannot be settled,
the regulator would take expedient action on the matter without
delay. Therefore, there is an element of faith in the system.
Therefore, I
must say that the proof of the pudding as far as this authority
is concerned is in the eating! Therefore, the Authority has taken
a general policy decision to conclude a complaint in a maximum amount
of two months. I don't think people are unreasonable as to their
expectations when they make a complaint. I think they expect us
to look in to the matter and to do whatever is possible in order
to uphold their rights.
It could even
extend to an acknowledgement letter stating that he or she has no
right of action under the Act and why; even that must be sent immediately
so that people will build their faith in the Authority, that it
is in fact functioning effectively.
What
do you perceive is the most effective method in which a regulator
can function?
From the experience I received in the financial markets,
I believe that regulation is all about setting the right incentive.
Markets will always find a way to work around the law. For example,
if you try to bring in a stringent price control mechanism, manufacturers
would compromise on quality in order to make the goods cheaper.
Many people ask me why I can't take action against these new teak
investment companies, which have re-defined themselves out of the
scope of the Central Bank. My answer is that it is time that all
such financial companies register with the Central Bank.
The relevant
laws must be amended to compel such registration. There is no point
in having a regulator and permitting companies to opt out of the
regulator. Where's the incentive for these companies to come under
the purview of the Central Bank?
How
does the Authority aim to make the local mind-set more pro-active
in asserting their rights?
In Europe people are much more civic conscious about their
consumer rights as a result of their culture. How we can create
something of use is not by mandatory regulation. That is why it
is important to organise oneself as a powerful lobby group together
with other groups such as the House Wives Association, who have
joined us as a Consumer Association. As a popular Consumer Association
we would be able to change the popular mindset, and make people
more pro-active in ensuring their rights. There needs to be a change
in the mindset of people. The Indians are extremely civic conscious
as a result of the dynamic progress made by their pressure groups.
What
type of role have the chambers agreed to play in the main functions
of the authority?
The Chambers of Commerce have also expressed their willingness to
enter in to a partnership with the Authority, in which the Authority
would periodically update the Chamber about the problems and complaints
made by their customers.
The Authority would then urge a settlement of futile problems, which
can be solved almost instantly, since litigation has proved costly
and time consuming.
How
do you foresee consumer rights taking effect in the future?
The development of consumer rights will depend on the faith that
people will have in the ability of the Authority to attend to their
complaints and find an expedient solution. However, most of the
super markets we have written to, and even some of the small boutiques
have been very receptive. I believe that now that a regulator is
in place, traders will be less inclined to flout the law.
What
is the advice you would give consumers?
Whenever you purchase goods always make sure that you obtain
a receipt, with all the relevant details. Ensure that the goods
have an expiry date and that date has not been tampered with. People
must first understand their consumer rights and thereafter realise
the responsibility that is placed on the individuals as members
of the society.
If you come
across a food item where the expiry date has been tampered with,
we urge you not to just wait without purchasing that item, but to
bring it to the notice of the trader, to send a clear warning sign
that such acts would not be tolerated. I would also tell the consumer
to be responsible. Be civic conscious. Professionals must maintain
full disclosure relating to their fees and their services. It is
the creation of a consumer movement that will go a large way in
solving this problem.
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