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TOPIC 8: CONSUMER PROTECTION

A consumer is someone who acquires goods or services for direct use or ownership rather than
for resale or use in production and manufacturing.
Consumer Protection is a term given to a practice wherein we need to protect the consumer
from the unfair practice, educating them about their rights and responsibilities and also
redressing their grievances.
Consumer protection laws are a form of government regulation that aim to protect the rights
of consumers. For example, a government may require businesses to disclose detailed
information about products—particularly in areas where safety or public health is an issue, such
as food.
Ways in which consumers can be exploited in the market
i) When a consumer is cheated in any way, either by the seller or the producer, by giving him
poor quality or adulterated goods or by charging more price for a commodity or a service, it is
called consumer’s exploitation.
(ii) Consumers may also be exploited in the market in the following ways:–
 Under weighing. Many dishonest sellers weigh less than that they should.
 Adulteration. At times adulterated or defective goods are sold in the market.
 Additional charges. Sometimes traders add charges that were not mentioned before.
 False and incomplete information. To sell more products, generally false information is
passed on through media and other sources to attract consumers.
 Artificial scarcity. Traders sometimes tend to create artificial scarcity of a particular good
by hoarding it to increase the price and earn high profit.
 Monopoly and unfair trade practice
How do we protect the Consumer?
 The consumer should be educated on their rights and responsibilities
 Their grievances should be redressed
 The judicial body requires to provide them with the justice.

Importance of Consumer Protection

1. Consumer protection makes markets work for both businesses and consumers.
 Consumers 

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Consumers need to be able to obtain accurate, unbiased information about the products and
services they purchase. This enables them to make the best choices based on their interests and
prevents them from being mistreated or misled by businesses. Consumer protection policies,
laws and regulations help increase consumer welfare by ensuring that businesses can be held
accountable.

 Businesses

Businesses that are known to treat consumers fairly will gain a good reputation and become more
sought after. This increases their profitability and competitiveness which will also lead to
economic growth in the long run. Consumer protection policies, laws and regulations guarantee
that businesses are kept in check.

2. Economic growth and competitiveness

Consumer protection contributes to dynamic and effective markets for businesses to grow.
Consumer demand drives innovation and economic development as businesses are required to
maintain fair prices and good quality of their products and services.

3. Regional Integration

With the emergence of cross-border and digital trade, cooperation on consumer protection
amongst jurisdiction becomes a necessity.

4. Taking care of consumer Ignorance

Consumer Ignorance needs to be taken care of; they should know how to exercise their rights and
how to seek reliefs.

5. Organised Consumer

Consumer protection leads to creating a Consumer Organisation which can unify the consumers
and help them seek relief with their consumer issues.

6. Limit Consumer Exploitation

Consumer protection laws help in limiting consumer exploitation through the ways of
adulteration, false practice, fake weights, incomplete information on packaged products,
Misleading Advertisements

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Consumer Rights
Generally accepted basic consumer rights are:
i. Right to safety: protection from hazardous goods.
ii. Right to goods and services of reasonable quality
iii. Right to compensation for loss or injury arising from defects in goods or services
iv. Right to be informed: availability of information required for weighing alternatives, and
protection from false and misleading claims in advertising and labeling practices.
v. Right to choose: availability of competing goods and services that offer alternatives in
terms of price, quality, service.
vi. Right to be heard: assurance that government will take full cognizance of the concerns of
consumers, and will act with sympathy and dispatch through statutes and simple and
expeditious administrative procedures.
vii. Right to the protection of their health, safety, and economic interests
viii. Privacy: This includes a right to refuse unwanted direct marketing such as phone calls,
SMSs, letters, or spam emails.

Nature of consumer protection

Consumer protection should:
 Promote a fair, accessible and sustainable marketplace for consumer products and
services
 Establish national norms and standards relating to consumer protection
 Provide for improved standards of consumer information
 Prohibit certain unfair marketing and business practices
 Promote responsible consumer behaviour
 Promote a legislative and enforcement framework relating to consumer transactions and
agreement

FAIR TRADE
Fair Trade is trade between companies in developed countries and producers in developing
countries in which fair prices are paid to the producers.

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Under a fair trade system, developing countries get an opportunity to export goods such as
coffee, bananas, tea, chocolate, gold, sugar, handicrafts, and flowers to developed countries thus
promoting international trade.

Benefits of Fair Trade

1. Consumers
Fair Trade relationships provide the basis for connecting producers with consumers and for
informing consumers of the need for social justice and the opportunities for change.
Consumer support enables Fair Trade Organizations to be advocates and campaigners for
wider reform of international trading rules, to achieve the ultimate goal of a just and
equitable global trading system.
2. Traders/companies
Since its launch in 2002 the FAIRTRADE Mark has become the most widely, recognised social
and development label in the world. Fairtrade offers companies a credible way to ensure that
their trade has a positive impact for the people at the end of the chain.
 
3. Producers
For producers Fairtrade is unique in offering four important benefits:
 stable prices that cover the costs of sustainable production
 market access that enables buyers to trade with producers who would otherwise be
excluded from market
 partnership - develop knowledge, skills and resources to exert more control and influence
over their lives. producers are involved in decisions that affect their future
 empowerment of farmers and workers - assistance for producer organisations to
understand more about market conditions

Principles of Fair Trade
World Fair Trade Organization (WFTO) prescribes 10 Principles that Fair Trade Organizations
must follow in their day-to-day work and carries out monitoring to ensure these principles are
upheld:

 Principle 1: Creating Opportunities for Economically Disadvantaged Producers

 Principle 2: Transparency and Accountability
 Principle 3: Fair Trading Practices
 Principle 4: Payment of a Fair Price
 Principle 5: Ensuring no Child Labor and Forced Labor

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 Principle 6: Commitment to Non Discrimination, Gender Equity and Freedom of

Association
 Principle 7: Ensuring Good Working Conditions
 Principle 8: Providing Capacity Building
 Principle 9: Promoting Fair Trade
 Principle 10: Respect for the Environment
FAIR TRADE STANDARDS AND PRACTICES
Fair Trade is a way of doing business that ultimately aims to keep small farmers an active part of
the world marketplace, and aims to empower consumers to make purchases that support their
values. Fair Trade is a set of business practices voluntarily adopted by the producers and buyers
of agricultural commodities and hand-made crafts that are designed to advance many economic,
social and environmental goals, including:
 Raising and stabilizing the incomes of small-scale farmers, farm workers, and artisans
 More equitably distributing the economic gains, opportunities and risks associated with
the production and sale of these goods
 Increasing the organizational and commercial capacities of producer groups
 Supporting democratically owned and controlled producer organizations
 Promoting labor rights and the right of workers to organize
 Promoting safe and sustainable farming methods and working conditions
 Connecting consumers and producers
 Increasing consumer awareness and engagement with issues affecting producers

The Fair Trade practices that advance these goals typically, but not always, include:
 Direct trade relationships and long term contracts between importers and producer groups
 Sourcing from small-farmer or artisan co-operatives
 Higher than conventional market prices, either through above-market premiums and/or
price floors
 The provision of affordable credit
 Adherence to the policies of the International Labor Organization, especially those
concerning child and forced labor and the right to collective bargaining
 The prohibition of the use of the more dangerous pesticides and herbicides
 Substantial price premiums for the production of certified organic crops
 External monitoring, auditing, and certification of these practices by independent third-
parties

MANUFACTURERS AND SELLERS LIABILITY IN CONSUMER PROTECTION

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Manufacturer’s liability, is a legal concept or doctrine that holds manufacturers or sellers

responsible, or liable, for harm caused by defective products sold in the marketplace.
Manufacturer’s liability is usually determined on any of three bases:
i. Negligence, which is the failure to exercise reasonable care to prevent product defects
arising out of the manufacturing process, or which is the failure to give consumers
appropriate warning of a danger attending the use of a manufactured product
ii. Breach of Warranty, which entails failure to fulfill the terms of a claim or promise
concerning the quality or performance of a particular product.
iii. Strict Liability, in which a seller or manufacturer can be held liable for a defective
product even if the conditions of negligence or breach of warranty do not apply.
Ways manufacturers and Seller’s protect consumers from exploitation:

 Setting standards for goods and services provided by members of consumers

 Enlightening members on the importance of providing customers with quality products
 Receiving complaints from consumers and acting upon them.
 Investigating reported cases of exploitation by member
 Taking punitive action against members found to have exploited consumers
 Warning consumers about potential risks
 Providing information to help consumers understand the risks
 Monitoring the safety of products
 Taking action if a safety problem is found

Remedies available to consumers under the Consumer Protections Act

(a) Removal of Defects:
If after proper testing the product proves to be defective, then the ‘remove its defects’ order can
be passed by the authority concerned.
(b) Replacement of Goods:
Orders can be passed to replace the defective product by a new non-defective product of the
same type.
(c) Refund of Price:
Orders can be passed to refund the price paid by the complainant for the product.
(d) Award of Compensation:
If because of the negligence of the seller a consumer suffers physical or any other loss, then
compensation for that loss can be demanded for.

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(e) Removal of Deficiency in Service:

If there is any deficiency in delivery of service, then orders can be passed to remove that
deficiency.
(f) Discontinuance of Unfair/Restrictive Trade Practice:
If a complaint is filed against unfair/restrictive trade practice, then under the Act that practice can
be banned with immediate effect. For instance, if a gas company makes it compulsory for a
consumer to buy gas stove with the gas connection, then this type of restrictive trade practice can
be checked with immediate effect.
(g) Stopping the Sale of Hazardous Goods:
Products which can prove hazardous for life, their sale can be stopped.
(h) Withdrawal of Hazardous Goods from the Market:
On seeing the serious adverse effects of hazardous goods on the consumers, such goods can be
withdrawn from the market. The objective of doing so is that such products should not be offered
for sale.