Approaches to Consumer Protection

Important Methods of Consumer Protection:

How to ensure consumer protection from unfair, restrictive, deceptive and exploitative practices of manufacturers and suppliers?

The important ways for consumer protection are:

1. Imposition of self-regulation and discipline by the manufacturers and suppliers of goods and services for working in the interests of consumers.
2. The role of government which can enact laws for the protection of consumers and make arrangements for their enforcement.
3. Voluntary organisation of consumers to form groups such as NGO, cooperative societies to safeguard the interests of consumers.

We explain below in detail the above three ways of protection of consumers.

Imposition of Self-Regulation and Discipline by Manufacturers and Dealers:

The important way for consumer protection is the voluntary imposition of self-regulation and discipline by the manufacturers and others engaged in supplying and distributing goods and services. If they are self-enlightened, they would pay due attention to the consumer rights. Of course, producers’ main aim is to maximize their profits but this should be achieved by raising their efficiency in production and quality of their products rather than deceiving and exploiting consumers.

The socially responsible producers and distributors must not form cartels and adopt monopolistic practices to fleece consumers by charging high prices. Prime Minister Dr. Manmohan Singh in the annual session of Confederation of Indian Industry (CII) in May 2007 rightly urged the captains of Indian industries to exercise self-restraint in charging and raising prices by using their monopolistic power.

To quote him, “The operation of cartels by groups of companies to keep prices high must end. It is unacceptable to obstruct the forces of competition from having free play. It is even more distressing in a country where the poor are severely affected by rising commodity prices. Cartels are a crime and go against the grain of an open economy”.

He further adds. “Maximisation of profits should be within the bounds of decency and greed’. Similarly, long ago, Mr. T. Thomas, a former chairman of Hindustan Lever Limited in his speech at the 44th Annual General Body Meeting in 1977 stated, “Restraint is best exercised voluntarily than through legislation which will otherwise become inevitable. Advertising agencies and marketing management have a very important role to play in this respect. By over-playing the claims they will be cutting the very branch on which they are perched”.

However, in our opinion it is idle to expect that private business executives will impose self-discipline on them and exercise restraint on deceiving and exploiting the consumers for maximising their profits. The fact is they regard making large profits as a symbol of their success in business and it has therefore become a mission of their life.

However, a novel way to ensure compliance of business for paying due regard to the consumer rights and the promotion of social welfare is to ‘publicize’ certain important information about proper code of conduct and require businesses to report their degree of compliance to this information. For example, in the USA, the government provides and widely publicizes information about industrial pollutants and require the manufacturers to report about the extent of pollution generation by them.

The submission of reports about their emission of pollutants and Government’s publicity about them induces some compliance by them in maintaining standards of safety. A noted example is the ‘US Toxic Release Inventory’. According to this, manufacturers are required to submit reports about the toxic materials they release in the environment. This induces them to reduce pollution to maintain their reputation.

Voluntary Organisation of Consumers to Protect their Rights:

In some countries the consumers have organised themselves on a voluntary basis to form consumer groups or councils. They are non-government organisations (NGOs) to protect consumer rights.

These voluntary consumer groups or councils protect consumer rights in the following ways:

1. They issue leaflets providing information so as to educate consumers on matters affecting them.
2. They have been pressing for proper labeling of the products with maximum price to be charged, the contents of the product, especially drugs, side effects if any, of the product etc.
3. Organizing movements against the malpractices of manufacturers and traders of the products.

In Delhi, Mumbai and other important cities voluntary consumer organisations came into existence in sixties and seventies when prices of goods rose very high to resist the hike in prices by traders arbitrarily. The idea of Super Bazar on cooperative principles emerged from this price resistance movements of consumers. Besides, an organisation named ‘Common Cause’ established by late. Mr. H.D. Shourie and based in Delhi did a very useful work in protecting the rights of consumers.

Consumer cooperative movement also started to protect the consumers against the malpractices and traders of goods. A consumer cooperative is a voluntary association of consumers formed to promote their interests. The consumers enhance their bargaining power as against traders and manufacturers.

The consumer cooperatives protect the consumers in the following ways:

1. Since these cooperatives purchase commodities in bulk and generally directly from the manufacturers they are able to provide goods to the consumers at reasonable prices.
2. Secondly, the consumers themselves control the cooperatives. They are therefore assured of standard quality and unadulterated goods.
3. Correct weights and measures are used by the cooperative societies and therefore consumers are saved from any deception in this regard.
4. In India consumer cooperatives are especially engaged in distributing essential commodities at controlled prices.

Despite the efforts of voluntary organisations to protect consumers and safeguard their legitimate rights, these voluntary organisations have not succeeded much in protecting consumers. Their growth has been limited mainly to house building societies.

Other voluntary cooperative societies work at the level of distributing goods and are able to eliminate malpractices of middlemen. But, the real problem is to save the consumers from monopolistic, unfair and restrictive trade practices of manufacturers of goods and services and misleading advertisements by them to exploit the consumers.

Government Role in Consumer Protection:

The government can play an important role for protection of consumers. It can enact various legislations for protection of consumers. According to the UN Guidelines for Consumer Protection, “the government role in consumer protection is vital and finds expression through policy making legislations and establishment of institutional authority for its enforcement. To provide a legal basis for its enforcing basic consumer rights every country needs to have irreducible minimum of consumer protection legislation covering physical safety, promotion and protection of consumers’ economic interests, standards for the safety and quality of goods and services, distribution facilities, redress, education and information programmes. Governments also require the necessary machinery to enforce such legislation.”

In both the developed and developing countries the governments have taken several measures to protect consumers. Laws relating to cooperative societies have been enforced in India for quite some time now. Besides, consumers have been sought to be protected by enactment of several laws by government. The important laws have been passed by the government to protect consumers and uphold their rights.

These laws include:

(1) Prevention of Food Adulteration Act, 1954,

(2) the Essential Commodities Act, 1985,

(3) Agricultural Produce (Grading and Marketing) Act,

(4) Drugs Control Act,

(5) Drugs and Cosmetics Act,

(6) Standards of Weights and Measures Act,

(7) Drugs and Magic Remedies (Objectional Advertisement) Act,

(8) Water (Prevention and Control of Pollution) Act,

(9) Prevention of Black Marketing and Maintenance of Essential Commodities Act, and

(10) Air (Prevention and Control of Pollution) Act.

Besides, Monopolistic and Restrictive Trade Practices (MRTP) Act was passed in 1969 to check monopolistic and restrictive trade practices. This Act was based on the economic theory that control of monopolies and prevention of mergers will lead to competition among the manufacturers and suppliers of goods and therefore cause expansion in their output and will therefore also provide benefits to the consumers. Under Section 12B of the MRTP Act, MRTP Commission has been given the necessary powers to award compensation in the matter of unfair trade practices.

Above all, in 1986, the Indian government passed Consumer Protection Act. Under it the consumers have the right to approach appropriate consumer forum or commission set up under the Act to get their complaints redressed. In what follows we will explain the provisions of Consumer Protection Act 1986.