In this analysis, ONYEKORMAKA ASABOR mirrors some of the misconceptions of consumers about redress and UNCTAD’s perspective
If there is any area in consumer protection that is often misconceived and mythicised, it is a situation where consumers become unaware of their rights. When a problem with a particular purchase crops up, consumers are wont to become more determined to get a solution from the seller.
According to Mr Joe Odia, a consumer rights activist, consumers are only entitled to a remedy when there is something wrong with the purchase. “Such determination is good and beneficial to consumers. Sometimes, however, this may lead to over-confidence, and consumers may not only demand a solution when they have a right to, but also when they do not,” he added.
There are, in fact, many misconceptions about what consumers are and are not entitled to.
Return and exchange
Edith Ogiewonyi said, “One of the most common myths concerns the return and exchange of purchased goods. Most consumers think they can return anything as long as the purchase is still unused and as long as they have the receipt.
“In actual fact, the law does not give consumers this right. To have the right to exchange or return a purchase it should be either defective or not as agreed during the sale. The right to exchange wrongly chosen goods depends completely on the shop’s return and exchange policies. It is, therefore, in the consumer’s best interest to check out these policies before any purchase.”
Another misconception concerns the type of solution consumers are entitled to when goods are faulty. Sometimes, it is assumed that a money refund is an automatic right in such situations. In reality, consumers are only entitled to a remedy when there is something wrong with the goods purchased.
But it is the extant law that stipulates the kind of remedies consumers may request. Money refund may only be demanded when repair or replacement are either not possible or, if opted for, may cause a significant inconvenience to consumers.
Cooling off period
Yet another misconception is that after signing a contract, consumers still have a short period of time to can change their mind. In reality, a cooling off period only applies to sales carried out through a distance means of communication or from a door-to-door seller. In other circumstances, most contracts are binding from the moment they are signed. Thus consumers must be sure of their buying decision before they sign anything.
It is also a myth that mispriced items have to be sold at the price displayed. This is especially the case when the price displayed is clearly a mistake. For example, a camera is labelled on sale for just N2,900 when its normal price is N29,000. If at the cash point the salesperson realises the mistake and informs the consumer accordingly, the consumer cannot legally demand to purchase the camera at N2,900. However, when the seller’s attention is drawn to such mistakes, these should be rectified immediately. If not, the ‘mistake’ may be considered misleading.
Also, upon purchasing or receiving gift vouchers, very often, consumers have the wrong impression that if when trying to use the voucher the shop does not have anything to their liking, then the voucher can be redeemed for cash. This is not the case at all. In fact, very often, gift vouchers have terms and conditions attached to them, which have to be observed.
The ‘sales’ season also brings with it a number of misconceptions. Consumers often think, or are led to believe, that because they are purchasing something at a reduced price, their rights for redress or compensation are also diminished. In reality, consumer rights remain the same all year long. Should there be a problem with something bought at a reduced price, the law gives consumers the same protection as if the product was bought at its original price.
Against the foregoing, there is no denying that the postulation of the United Nations Conference on Trade and Development comes handy in this context in straightening some of the myths and misconceptions that characterise consumer redress.
The global trade body states, “Redress functions of Consumer Protection Law include regulating behaviour, correcting misconduct by service providers and providing redress for consumers when something goes wrong. However, the second function is somewhat overlooked by both international and national consumer policy and law. The consumer does not care how splendid the law is, the main point is, who can help when problems arise and how to get a satisfactory result in the simplest way.”
Citing a recent case, UNCTAD said “consumer frustration comes from the Consumers International member survey” carried out in 2012/131 where CI members were asked: “Has any of the following enforcement actions been used in your country by the authorities in response to consumer protection violations?” Among the measures listed, out of 62 countries responding, fines were imposed in 92 per cent of cases, but compensation orders were granted in only 53 per cent.
The European Commission has estimated aggregate losses to consumers and to the economy.
It noted, “In 2010, one in five European consumers experienced problems when buying goods and services in the single market, and the cost of unresolved consumer disputes is estimated at 0.4 per cent of the EU’s Gross Domestic Product. This includes the money lost by European consumers due to problems when shopping from other EU countries, which is estimated between €500mn and €1bn.
“In the United States of America, it seems that Class Action is a very powerful tool to obtain redress for consumers by very punitive compensation. In contrast, U.S.-style Class Action has been described as a ‘toxic cocktail’ by the EU, which has placed emphasis rather on Consumer Alternative Dispute Resolution. EU adopted two new pieces of legislation on May 21; Consumer ADR and Consumer Online Dispute Resolution.”
China, Europe and U.S.
Meanwhile, China is undertaking a reform of consumer protection law with consumer redress as one of the most significant topics. Chinese legislators and consumer specialists anchor their hopes on introducing Class Action into Chinese consumer law to move away from the dilemmas caused by the present deficient consumer redress mechanisms. But whether Class Action will function well in every legal system is not known. The EU has already indicated its view that Class Action does not provide an effective way to redress consumer grievances in most cases, and that ADR does provide a more promising approach.
In its ‘Best Practices of Consumer Redress’, the UNCTAD noted, “In the area of financial services, the Financial Ombudsman Service in the United Kingdom turns out to have been a very successful Consumer ADR mechanism, judging from the volume of adjudications. In e-commerce area, payment medium seems very effective to ensure the consumer redress. ‘Chargeback’ for payment card-holders originated from the U.S. as a legal right of consumers and was applied in the EU as a contractual right for consumers, and now functions as a very effective tool for consumer redress both in U.S. and EU.
“In China, Escrow is widely accepted by e-commerce consumers to guarantee their transactions, but is only a lex mercatoria not backed by legislation. It functions much better than statutory routes for consumer redress in China, but has been well developed in jurisdictions with a common law system for more than 500 years.”
UNCTAD says one area of increasing importance is cross-border redress, as the volume of cross-border transactions rises following the development of e-commerce, migration and tourism. Difficulties in resolving potential cross-border problems have been found to inhibit cross-border transactions for some years now. Networks such as the ECC-Net have been set up to coordinate responses by consumer protection agencies in different countries and to advice consumers affected. Such networks have limited judicial powers, but merit investigation nonetheless.
It added that developing countries (such as China), very much need to learn from the valuable experiences of other jurisdictions, while assessing their own successes and failures as basis from which to judge good practice, noting that Best Practice research with a global perspective is, therefore, highly suitable and in demand.
It explained that the objective of its research was to compare and analyse some of the best practices of effective consumer redress in different jurisdictions, and draw a clear picture of the circumstances under which the individual practices function well, saying that that will help developing countries to reach an objective approach to the orientation of their consumer redress policy. It added that the research would come up with suggestions regarding the possibility and the practical approach to building up an ADR (ODR) Platform of Cross-Border Consumer Redress globally.
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