The Ethics of Consumer Protection: Business Ethics: An Indian Perspective

Copyright© Dorling Kindersley India Pvt Ltd
10
The Ethics of Consumer
Protection
Business Ethics: An Indian Perspective

Hidden taxation on society
Dr. Estes’ contention was that the profit and loss statements
revealed only the costs companies had internalized and not the
uncompensated costs to society, namely the external
diseconomies. For the persons affected, these represented
"coerced assessments," a form of hidden taxation.

Hidden taxation on society

 An external diseconomy occurs when a
person or business imposes some cost or
hardship on others without having to
compensate them. The classic example is
a factory that has a smokestack that is
dirtying the property of those living
nearby. In this case, it isn’t economically
feasible to go around & compensate
individual property owners for the cost of
exposing them to particulate matter.

Stakeholder alliance
A North American Advocacy Group, “The Stakeholder Alliance”, is

pressing corporations to become fully accountable to their
stakeholders. The Alliance has come out with the Sunshine Standards
with the objective that Corporations must provide information that
stakeholders need in order to make rational, informed decisions in a
free market system, and to protect themselves from the negative
consequences of corporate actions. Disclosure must be complete,
accurate, timely, objective, understandable, and public.

Customer’s information needs
The information needs of customers are:

• Detailed legal records with reference to products and services,
such as product liability, injury and unsubstantiated death
claims over all jurisdictions for five years; penalties inflicted
and citations for regulatory non-compliance, detailing each
incident and corresponding penalty, settlement effected and
such related information.

Customer’s information needs (Contd.)
• Risks of injury from normal usage of product/service;

• Noise, odour and other nuisances/problems associated with
use of the product/service;
• Design for recycling;
• Biodegradability of products and packaging;
• Unusual life cycle costs;

Customer’s information needs (Contd.)
• Warnings, with appropriate detail;

• Content, additives and treatments of food and medicines,
sufficient to allow reasonably-informed consumers to make
rational market decisions and to protect themselves and their
families; and
• Hidden characteristics

Consumer and Consumer Protection
A consumer is any person who, or firm, Hindu Undivided Family
(HUF), co-operative, or association which
• buys or hires (fully/partly paid for) any goods or service.
• the purpose of purchase of goods should not be for resale or any
commercial purpose (except self-employment).
• the services availed does not include free service or services under a
personal contract.
Consumer Protection refers to the steps necessary to be taken or

measures required to be accepted to protect consumers from business
malpractices

Parties to Consumer Protection
a. Consumers: should know their rights and exercise them

b. Businessmen: producers, distributors, dealers, wholesalers as well
as retailers should pay due attention to consumer rights in their
own interest, by ensuring supply of quality goods and services at
reasonable prices
c. Government: the government should enforce various laws and
amend existing laws to protect consumer interests

History and growth of consumer protection
• 1920's: efforts in US to reduce the exaggerated claims of

advertisers of goods and services and demands made for impartial
testing of goods.
• 1930's: growth of consumer cooperatives, the first federal
consumer agency, Food and Drug Administration, demands for
labelling of products and the introduction of USDA stamps.

History and growth of consumer protection
(Contd.)
• 1940's: 150 local consumer councils across the United
States eventually drew together to form the National
Association of Consumers.
• 1950's: The American Council of Consumer Interests was
established by 750 members from universities, schools and
consumer research organizations.

Ralph Nader’s Contribution to Consumer
Protection
• He coined the term “consumer advocate.”
• He called for the accountability of carmakers
• He worked towards improved environment, healthcare, insurance,
pension and disability rights.
• He is the founder of numerous non-profit organizations

Ralph Nader’s Contribution to Consumer
Protection (Contd.)
• He educated America's consumers

• He started the U.S. Public Interest Group (PIRG)
• He founded the Center for Study of Responsive Law, Center
for Auto Safety, the Disability Rights Center, the Pension
Rights Center, the Project for Corporate Responsibility, and
the Clean Water Action Project.

Consumer Duties and Responsibilities
1) Substantiate the Complaint

2) Listen to Seller
3) Cooperate with the Seller if Needed
4) Avoid Inconvenience to Others
5) Do not Personalize Issues
6) Not lend self to others

Consumer Duties and Responsibilities (Contd.)
7) Be Well Informed
8) Understand the Grievances Redressal process
9) Avoid Impulsive Buying
10) Buy Goods from Authorized Agents

How are Bangladeshi consumers exploited?
1) Exorbitant Prices of Products and Services

2) Deceptive Selling Practices
3) False and Misleading Advertisements
4) Defective Quality, Higher Prices
5) Sale of Hazardous Products to Ignorant Consumers
6) Suppression of Material Information

(Contd.)
7) False Product Differentiation
8) Producers’/Sellers’ Collusion
9) Supply of Adulterated and Substandard Products
10) Cheating Consumers by Giving Lesser Quantity for the Price
11) Dishonoured Guarantees and Warranties
12) Poor Redressal of Customers’ Genuine Grievances

(Contd.)
13) Creating a Scare out of Scarcity
14) Making Consumer buy Unwanted Goods
15) Misleading Representation on Utility of Products
16) Manipulating Conditions of Delivery
17) Customers pay for Numerous Intermediaries
18) Fall in Prices Never Passed to Consumers

(Contd.)
19) Buying unaffordable goods
20) Advertisement cost
21) Counterfeits: These constitute a substantial quantity of goods on
store shelves
22) Hoarding and Black marketing
23) Tie-in-Sales: Marketing arrangement in which a seller sells an in
demand product to a buyer on one stated condition that he
would have to buy a lesser popular product along with it.
24) Gifts for products/services

The Consumer’s Right Protection Act,2009
Establishment of Council.
For carrying out the purposes of this Act, there shall be a Council to be called the National Consumers’ Right Protection
Council, which shall consist of the following members, namely :
(1) The Minister in charge of the Ministry of Commerce, who shall also be its Chairman;
(2) The Secretary of the Ministry of Commerce, ex officio;
(3) The Director General of the National Security Intelligence Department, ex officio;
(4) The Director General of the Bangladesh Standard and Testing Institution, ex officio;
(5) An officer from the Ministry of Industries, not below the rank of the Joint Secretary;
(6) An officer from the Ministry of Agriculture, not below the rank of the Joint Secretary;
(7) An officer from the Ministry of Fisheries and Livestock, not below the rank of the Joint Secretary;
(8) An officer from the Ministry of Food and Disaster Management, not below the rank of the Joint
Secretary;
(9) An officer from the Ministry of Home, not below the rank of the Joint Secretary;
(10) An officer from the Energy and Mineral Resources Division, not below the rank of the Joint
Secretary;
(11) An officer from the Ministry of Law, Justice and Parliamentary Affairs, not below the rank of
the Joint Secretary;
(12) The Chairperson of the National Women Organization, ex officio;
(13) An officer of the rank of the Additional Inspector General of Police;

Establishment of Council.
(14) The President of the Federation of Bangladesh Chamber of
Commerce and Industries, ex officio;
(15) The President of the Association of Pharmaceutical Industries,
ex officio;
(16) The President of the Consumers Association of Bangladesh, ex
officio;
(17) The President of the National Press Club, ex officio;
(18) The Director of the Directorate of Drug Administration, ex
officio;
(19) Three eminent citizens nominated by the Government;
(20) not less than four members including two women members,
nominated by the Government, who are experienced in market
economics, commerce, industries and public administration;
(21) One teacher representative nominated by the Government;
(22) One labor representative nominated by the Government;
(23) One farmer representative nominated by the Government;
and
(24) The Director General, who shall also beEthics:
Business its Secretary.
An Indian Perspective
“Anti-Consumer Right Practice”
“anti-consumer right practice” means, (a) to sell or
offer to sell any goods, medicine or service at a higher
price than the fixed price under any Act or rules; (b) to
sell or offer to sell adulterated goods or medicine
knowingly; (c) to sell or offer to sell any goods
containing any ingredient which is extremely injurious
to human health and the mixing of which with any food
item is prohibited under any Act or rules; (d) to deceive
consumers by untrue or false advertisement for the
purpose of selling any goods or service; (e) not to sell
or deliver properly any goods or services promised to
sell or deliver in consideration of money; (f) to sell or
deliver less quantity of goods than the weight offered to
the consumers while delivering or selling any goods;
“Anti-Consumer Right Practice”
(g) to show more than the actual weight by the weight stone or
any other weight measuring instrument used for measuring weight
in selling or delivering goods in a commercial enterprise; (h) to
sell or deliver less quantity of goods than the promised amount
while delivering or selling any goods; (i) to show more than the
actual length by the length measuring gauge or anything else used
for measuring length in selling or delivering goods in a commercial
enterprise; (j) to make or manufacture any fake goods or
medicine; (k) to sell or offer to sell goods or medicine the date of
which has expired; or (l) to do an act which may endanger life or
security of the consumer and which is prohibited by any Act or
rules;

Offences, Punishment, etc.
Punishment for not using cover of goods etc. If
any person violates any obligation, imposed by
any Act or rules, of selling any goods within
cover and inscribing weight, amount,
ingredients, instructions for use, maximum,
retail; price, date of manufacture, date of
packaging and date of expiry of that goods on
the label, he shall be punished with
imprisonment for a term not exceeding 1 (one)
year, or with fine not exceeding Taka 50 (fifty)
thousands, or with both.

Punishment for not showing price-list. If any

person violates any obligation, imposed by any
Act or rules, of displaying the price-list of goods
by affixing it at a conspicuous place of his shop
or organization, he shall be punished with
imprisonment for a term not exceeding 1 (one)
year, or with fine not exceeding Taka 50 (fifty)

Punishment for not preserving and displaying

price-list of services. If any person violates the
obligation, imposed under any Act or rules, of
preserving price-list of service of his shop or
organization and displaying it by affixing at a
relevant or conspicuous place, he shall be
punished with imprisonment for a term not
exceeding 1 (one) year or with fine not
exceeding Taka 50 (fifty) thousands, or with
both.

• Punishment for selling goods, medicine or

service at higher price than fixed one. If any
person sells or offers to sell any goods,
medicine or service at a price higher than the
price fixed under any Act or rules, he shall be
exceeding 1 (one) year, or with fine not
exceeding Taka 50 (fifty) thousands, or with
both.

Punishment for selling adulterated goods or

medicine. If any person knowingly sells or
offers to sell any adulterated goods or
medicine, he shall be punished with
imprisonment for a term not exceeding 3
(three) years, or with fine not exceeding Taka 2
(two) lacs, or with both.

Punishment for mixing prohibited materials in

foodstuff. If any person mixes with foodstuff
any ingredient which is injurious to human life
or health and the mixing of which with foodstuff
is prohibited by any Act or rules, he shall be
exceeding 3 (three) years, or with fine not
exceeding Taka 2 (two) lacs, or with both.

Punishment for manufacturing or processing goods

in illegal process. If any person manufactures
or processes any goods in a process which is
injurious to human life or health and prohibited
under any Act or rules, he shall be punished
with imprisonment for a term not exceeding 2
(two) years, or with fine not exceeding Taka 1
(one) lac, or with both.

Punishment for deceiving buyers by false advertisement. If any person

deceives any buyer by any false or untrue advertisement for the
purpose of selling any goods or service, he shall be punished with
imprisonment for a term not exceeding 1 (one) year, or with fine not
Punishment for not selling or delivering properly any goods or service

promised. If any person does not sell or deliver properly any goods
or service promised in consideration of money, he shall be punished
with imprisonment for a term not exceeding 1 (one) year, or with
fine not exceeding Taka 50 (fifty) thousands, or with both.

Punishment for deceiving in weight. If any person sells or supplies
any goods to consumer less than the offered weight, at the time of
supplying or selling, he shall be punished with imprisonment for not
exceeding 1 (one) year, or with fine not exceeding Taka 50 (fifty)
Punishment for deceiving in weight stone or weight measuring
instrument. If any weight stone or weight measuring instrument used
for measuring weight for the purpose of selling or delivering goods in
any shop or commercial organization of any person, shows more than
the actual weight, he shall be punished with imprisonment for a term
not exceeding 1 (one) year, or with fine not exceeding Taka 50 (fifty)
Punishment for deceiving in measurement. If any person sells or
delivers any goods to the consumer less than the offered
measurement at the time of delivering or selling, he shall be punished
with imprisonment for a term not exceeding 1 (one) year, or with fine
not exceeding Taka 50 (fifty) thousands, or with both.

Punishment for deceiving in measuring gauge or anything used for
measuring length. If any fraud is committed in measuring gauge or
anything used for measuring length in selling or delivering goods in
any shop or commercial organization of any person, he shall be
punished with imprisonment for a term not exceeding 1 (one) year, or
with fine not exceeding Taka 50 (fifty) thousands, or with both.
Punishment for making or manufacturing fake goods. If any person
makes or manufactures fake goods, he shall be punished with
imprisonment for a term not exceeding 3 (three) years, or with fine not
Punishment for selling any date expired goods or medicine. If any
person sells or offers to sell any date expired goods or medicine, he
shall be punished with imprisonment for a term not exceeding 1 (one)
year, or with fine not exceeding Taka 50 (fifty) thousands, or with
both.
Punishment for doing any act detrimental to life or security of service
receiver. If any person, in violation of any prohibition imposed under
any Act or rules, does any act which is detrimental to the life or
security of any service receiver, he shall be punished with
Business Ethics:
imprisonment for a term not exceeding 3 (three) years, Anor
Indian
withPerspective
fine not
Punishment for damaging money, health or life etc. of service
receiver by negligence etc.If any service provider, by negligence,
irresponsibility or carelessness, damaging money, health or life of a service
receiver, he shall be punished with imprisonment for a term not exceeding 3
(three) years, or with fine not exceeding Taka 2 (two) lacs, or with both.
Punishment for filing false or vexatious cases.If any person, with a
motive to harass any person, businessman or service provider or to defame
him publicly or to damage his business reputation, files any false or
vexatious case, he shall be punished with imprisonment for a term not
exceeding 3 (three) years, or with fine not exceeding Taka 50 (fifty)
Punishment for reoccurring offence. If any person convicted of any
offence mentioned in this Act does the same offence again, he shall be
punished with twice the maximum punishment provided for that offence.
Confiscation, etc.If the court thinks fit, it may, in addition to the
punishment provided in the foregoing sections of this Chapter, pass an order
to forfeit the illegal goods of manufacturing ingredients, materials etc.
related to the offence in favour of the State.

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Copyright© Dorling Kindersley India Pvt Ltd

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Copyright© Dorling Kindersley India Pvt Ltd

Business Ethics: An Indian Perspective

A North American Advocacy Group, “The Stakeholder Alliance”, is

Business Ethics: An Indian Perspective

The information needs of customers are:

Business Ethics: An Indian Perspective

• Risks of injury from normal usage of product/service;

Business Ethics: An Indian Perspective

• Warnings, with appropriate detail;

Business Ethics: An Indian Perspective

Consumer Protection refers to the steps necessary to be taken or

Business Ethics: An Indian Perspective

a. Consumers: should know their rights and exercise them

Business Ethics: An Indian Perspective

• 1920's: efforts in US to reduce the exaggerated claims of

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

• He educated America's consumers

Business Ethics: An Indian Perspective

1) Substantiate the Complaint

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

1) Exorbitant Prices of Products and Services

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Punishment for not showing price-list. If any

Business Ethics: An Indian Perspective

Punishment for not preserving and displaying

Business Ethics: An Indian Perspective

• Punishment for selling goods, medicine or

Business Ethics: An Indian Perspective

Punishment for selling adulterated goods or

Business Ethics: An Indian Perspective

Punishment for mixing prohibited materials in

Business Ethics: An Indian Perspective

Punishment for manufacturing or processing goods

Business Ethics: An Indian Perspective

Punishment for deceiving buyers by false advertisement. If any person

Punishment for not selling or delivering properly any goods or service

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

Business Ethics: An Indian Perspective

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