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Source: Manual on Consumer Protection United Nations Conference on Trade and Development (UNCTAD) 2004
Consumerism, especially in the developing world, is now seen as a fundamental part of the strategy to eradicate poverty and to bring socio-economic justice to the sociounderprivileged.
Consumer Rights
John F. Kennedy s Message to Congress on March 15, 1962 Four basic rights
Right to Right to Right to Right to safety be informed choose be heard
Rights further re-enforced by adoption of reUN Guidelines on Consumer Protection in 1985 and 1999
5. Redress
Establish and publicize mechanisms that are fair, affordable and accessible
Especially taking into consideration the needs of lowlow-income consumers
Food production
Sustainable agricultural polices and practices Conservation of biodiversity Traditional knowledge
Drinking water
National policies should be developed to improve supply, distribution and quality of water for drinking and other purposes
Pharmaceuticals
Develop national policies to ensure appropriate use, procurement, distribution, production, licensing arrangements, registration systems and information to consumers
Consumer organizations
Need for an independent party that is nonnonpolitical and non-commercial nonNeed for views of the under-represented and undervulnerable groups Some have wide membership and broad spectrum of concerns Democracy involves participatory decisiondecisionmaking ; consultation with these groups is part of the nation-building process nation-
Engage in public interest litigation on behalf of consumers Conduct surveys and research to study problems faced by consumers or the impact of government policies on consumers Engage in dialogue with government and business to inform, persuade or negotiate on behalf of consumers
Consult with stakeholders to understand consumer issues and develop policy to address problem areas Organize public education programs Register and issue licenses for certain business activities Issue administrative rules to regulate business entities
In constitutions adopted since 1980 s, consumer rights recognized as human rights Thus included in the constitutions of many countries Recognize disparity of knowledge, resources and bargaining power and provide for consumer rights
Consumer Redress
Problems include:
Expense Length of time Alienation Adversarial
Alternatives
Facilitating access to courts
Legal aid for the needy Contingent fee system Permit paralegals to perform attorney functions
Fairness
Independent
Transparency Effectiveness
Scope comprehensive Procedures simple Rules of evidence relaxed Speedy Decisions binding on industry
Part II: Consumer Protection in the Marketplace Consumer Information and Choice
Consumer information ideally is meant to provide standardized, objective and impartial information direct to consumers at the point of sale, in order for them to decide which of the many branded products and services available will best suit their own needs.
Where information is regulated (e.g., labels subject to mandatory labeling laws, such as pharmaceuticals) consumers have relatively few problems Where information is unregulated (e.g., advertising or unregulated labels) consumers have more problems
Sometimes offset by information from independent consumer groups
2. Regulatory action
Development of product safety standards
3. Monitoring action
Testing by government or reliable independent consumer organizations
4. Corrective action
Impose product bans Warning notices Product recalls Seize stocks Destroy stocks Require modifications of the product
5. Compensatory actions
Compensate consumers for loss Deter future wrongdoing
Consumer Credit
Credit increases demand for and consumption of goods and services Critical to economic growth Unfettered growth of credit has negative consequences
Impulse buying Extra costs associated with credit Excessive debt
Credit often advanced to individuals with a history of default Increased complexity of transactions (e.g. home equity loans/lines of credit) require more complex documents
More difficult to understand and compare terms, including cost of credit
Electronic commerce
1996 fewer than 40 million connected to internet 1997 number increased to 96 million 2005 predicted to be nearly 1 billion 1998 27.6 million buying goods and services online worth $32 million 2002 more than 128 million spending over $425 million
Issues:
Consumer redress in cyberspace disputes Privacy Identification of provider Security of payments Fraud
Organization for Economic Cooperation and Development (OECD) United Nations Commission on International Trade Law (UNCITRAL) Alliance for Global Business (AGB)
International trade associations
Become knowledgeable about the law and consumer rights, in order to participate effectively and confidently in the marketplace and take appropriate action to seek redress Develop an understanding of the citizen s role in the economic, social and government systems and to influence those systems to make them responsive to consumer needs
By exercising free choice, based on knowledge of the facts, the consumer will be able to make the best use of his resources, money, time, knowledge and ability. He will thereby contribute to the proper functioning of the economy and stimulating effective and fair competition and he will thereby contribute to social and economic development.
Council of Europe (1981)
Modern conception of consumer education reflects the inter-relationship between the interprivate household and societal responsibilities Concepts such as sustainable consumption are woven into education about the impact of modern consumer lifestyles on the environment In developing countries, consumer education is a tool to ensure that scarce resources of poorer consumers are not fritted away by unethical business practices
Strategies for implementing consumer education A comprehensive program is directed to all consumers
Schools
Skills to make informed decisions Skills to understand the impact of decisions of individuals, businesses and governments on the lives of others
Special focus on
Rural areas Low income Vulnerable groups (seniors; disabled)
Utilities
Utili Utilities are considered basic needs Universal Declaration of Human Rights states that everyone has the right of equal access to public services in his/her country
1.6 billion do not have access to energy supply Over 1 billion lack access to clean water One half of the world s population has made a phone call 5% of the world uses the internet
88% of those are in developed world (15% of world s population)
Consequences
Consumption is encouraged No incentive to conserve shortages Governments don t have the money to invest in infrastructure improvements or pay off debts
Privatization is controversial
Results in increased cost to consumers Some consumers may not be able to afford it
Governments must raise prices to make sale possible; profit of buyers factored in
Potential abuses of monopoly power Improvements to infrastructure and potential extension of service to additional consumers may be offset by refusal to extend to non-profitable areas non-
Buyers tend to be western multi-nationals multiLoss of economic independence Foreign owners dictating terms Concentration of developing world resources in western ownership
Food security defined by FAO as food that is safe, nutritious and culturally acceptable and is available, accessible and affordable to all people
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
1996 World Food Summit, 185 countries and the EC made a commitment to achieve universal food security. Pledged to reduce number of hungry people in world to half (to 400 million) by 2015 According to FAO, number of undernourished falling at rate of 8 million per year (target of 20) Thus goal won t be reached until 2030
Hunger Facts
There is enough food to feed all the people in the world
4.5 pounds per person per day
Consumer groups should focus government attention on: Promoting food security and improved access to food Reconciling demand for cheap food with adequate compensation to farmers
Often involves scrutiny of middlemen
Address underlying causes of poverty Give priority to production of staple foods for domestic consumption Address issues that contribute to food security
Urbanization Land degradation Water scarcity
Food safety
Food safety risks are increasing
Movement of food and live animals across borders Changes in food handling Emergence of new pathogens
Many developing countries lack the resources and expertise to implement food safety policies
Codex committees
Meat and poultry hygiene Food additives and contaminants Pesticide residues Residues of veterinary drugs in foods Food hygiene Animal feeding Biotechnology
Groups have called for moratorium on planting GE crops until safety concerns are addressed and appropriate controls put in place
Sustainable Consumption
The concept of sustainable consumption EverEver-increasing consumption is putting a strain the environment Outcome of the development model the North follows and the South emulates Sustainable consumption is viewed as the only long-term strategy for survival long-
Obstacles
Ignorance
We don t know level of per capita consumption the planet can sustain
Inequality
Differences within and between nations make developing a common agenda difficult
Institutions
Existing political and economic mechanisms for addressing major international problems of the environment are inadequate
Successes
Growth in use of material resources has slowed as a result of shifts in demand towards less material-intensive products materialEmissions have been reduced as a result of tighter regulations and incentives Municipal waste growth has slowed or declined
Obligations of government
UN Guidelines on Consumer Protection: Minimize resource utilization
E.g., greater efficiency in use of energy
Exercise leadership
Adopt and enforce regulations
Reinforce values
Consumer education programs for consumers on impacts of their choices and behavior
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 Represent the environmental interests of consumers at all relevant national and international forums
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.