Dhaka Thursday February 25, 2010

'Consumer redress' and 'empty pocket blues'

Tureen Afroz

CONSUMER protection is an institutional mechanism, based on enactment of legislation followed by establishment of grievance to redress the system. Consumers have eight basic rights. These basic rights are internationally recognised and have been approved by the United Nations. These are: (i) the right to satisfaction of basic needs; (ii) the right to safety; (iii) the right to be informed; (iv) the right to choose; (v) the right to consumer education; (vi) the right to a healthy environment; (vii) the right to be heard; and (viii) the right to redress. Therefore, we can see that "right to redress" is one of the basic rights of the consumers.

"Redress" refers to compensation for economic harm. In Bangladesh, the consumers' right to redress is ignored in most occasions. Consumer redress mechanism under the formal justice system suffers from unnecessary "over-criminalization syndrome", irrational "bureaucratisation phobia", and lack of specialized consumer redress forums. Alternatively, consumer redress mechanism under the informal justice system, though visible, needs to be developed and popularised. In this regards, establishment of specialized consumer courts and appropriate amendment(s) to the Consumer Rights Protection Act, 2009 is a must and a necessity of time.

Understanding consumer redress
Consumer disputes are quite common in modern business world. Finding an effective consumer dispute resolution mechanism is therefore very much a need of the modern society. The availability of effective dispute resolution and redress mechanisms can increase consumer confidence and trust in the marketplace. They encourage fair business practices, too. Notionally, 'dispute resolution' refers to the use of mechanisms designed to provide compensations to the consumers who have suffered 'economic harm' resulting from transactions involving goods and services. (The term 'dispute resolution' is inclusive and encompasses informal and formal mechanisms, online and offline mechanisms, private and public sector mechanisms, and administrative and judicial mechanisms.)

It is important that the national system of any country should provide cost effective and simple procedures to its consumers to enable them to obtain "redress" for the economic harm suffered. According to the OECD recommendations on Consumer Dispute Resolution and Redress (2007), adopted by the OECD Council on July 12, 2007, "redress" refers to compensation for economic harm, whether in the form of a monetary remedy (e.g. a voluntary payment, restitution, or other monetary relief) or a conduct remedy with a restorative element (e.g. exchange of a good or service, specific performance or rescission of a contract).

Access to consumer redress mechanisms can be understood from two perspectives, when consumers are acting individually; and when consumers are acting collectively.

When consumers are acting individually to resolve their individual disputes, it is expected that the redress mechanisms be cost effective, user-friendly, less formal, and speedy. When a number of consumers allege that "they have suffered economic harm as a result of the similar conduct of the same entity or related entities, and it is not practicable or efficient for them to act individually to resolve their disputes, those consumers should have access to mechanisms that provide for the collective resolution of those disputes." It is expected that collective redress mechanisms be transparent, efficient and fair to both consumers and businesses.

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The underlying principle of consumer redress is that if a consumer actually sustained any loss or damage, he should be entitled to compensation (Padmanav Dash v. Divisional Railway Manager, S E Rly, 199.4 (I) CPR 77). Consumer protection laws of various countries therefore include within their ambit a very clear set of remedies to compensate economic harms suffered by their consumers. For example, section 14 of the Indian Consumer Protection Act, 1986 empowers the consumer dispute redressal forums to issue orders, inter alia, directing the consumer offender to remove the defect in goods and services, to replace the goods with new goods of similar description which shall be free from any defect; to return to the complainant the price, or, as the case may be, the charges paid by the complainants; to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the offender; etc. Similar provisions can be found in section 112 of the Consumer Protection Act, 1999 of Malaysia, section 7 of the Consumer Protection (Fair Trading) Act, 2003 of Singapore, in the North West Frontier Province Consumer Protection Act, 1997, the Balochistan Consumer Protection Act, 2003 and the Punjab Consumer Protection Act, 2005 of Pakistan, and even in section 113 of the draft Consumer Protection Act of the Kingdom of Bhutan, 2007.

Consumer redress mechanism in Bangladesh
Consumer redress mechanism in Bangladesh can be viewed from two perspectives. Firstly, redress mechanism under formal justice system. The formal justice system comprises the police, judiciary (including courts, prosecutors and defence counsel) and the prisons. Secondly, redress mechanism under informal justice system. The informal justice system includes both traditional and non-formal conflict resolution mechanisms. Traditional (customary) forms of conflict resolution mechanism include the Salish or village mediation. Non-traditional or the contemporary Alternative Dispute Resolution (ADR) mechanism include mediation by NGOs, village-level groups or members of the Union Parishad.

It may be stated that both formal and informal justice system of Bangladesh has its own pros and cons. For example, the formal justice system in Bangladesh is found to be "essentially impoverished; crime is underreported and poorly investigated by the police, the court system is slow and inadequate and the prisons are dilapidated and overcrowded." On the other side, the informal justice system does often show some bias in favour of the rich and powerful and a gender bias in favour of men.

Consumer redress under formal justice system
The Constitution of Bangladesh, under its "Fundamental Principles of State Policy" part, recognises the rights of consumers to a limited extent. The provisions of consumer protection can be found at Article 15 and Article 18 of the Constitution. However, these provisions are mainly focused on the vital issues of "health" and "food", rather than on other consumer rights. Moreover, the said provisions are mentioned under the "fundamental principles of state policy" part and not under the "fundamental rights" part of the Constitution. Hence, they remain mostly non-enforceable in the courts of law.

It is stated that consumer disputes might be directed towards a constitutional remedy by filing a Public Interest Litigation (PIL) under Article 102 of the Constitution of Bangladesh at the High Court Division of the Supreme Court of Bangladesh. PIL enables individuals to bring action on behalf of the community. Very specifically the word "public interest" means "a commonality of interest, a single interest that a certain group of people or citizens are presumed to share." It is stated that PIL in Bangladesh has for long allowed the millions of voiceless consumers an access to the formal justice system. A few of the renowned PILs for consumer protection include: Syed Borhan Kabir v. Bangladesh and others (Paracetamol Syrup Case); Dr. Mohiuddin Faruque v. Bangladesh and Others (Doctors' Strike Case); Dr. Mohiuddin Faruque v. Bangladesh and Others (Radioactive Powdered Milk Case); Bangladesh Legal Aid and Services Trust v. Bangladesh (Iodine Salt Case); Prof. Nurul Islam and Others v. Government of Bangladesh and Others (Cigarrette Advertising Case); Mohiuddin Faruque v. Bangladesh and Others (Pepsi Cola Case); Kazi Faruque, Secretary, CAB v. Ministry of Shipping and others (Launch Casualty Case); Sheikh Rafiqul Islam v. Bangladesh and Others (Thames Cigarette Promotion Case); etc.

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Apart from the said Constitutional provisions, Bangladesh has a few specific consumer protection legislations. Some of such specific legislations include the Essential Articles (Price Control and Anti-Hoarding) Act, 1953; the Control of Essential Commodities Act, 1956; the Food (Special Court) Act, 1956; the Essential Commodities Act, 1957; the Pure Food Ordinance, 1959; the Eye Surgery (Restriction) Ordinance, 1960; the Tea (Control of Prices, Distribution and Movement) Ordinance, 1960; the Allopathic System (Prevention of Misuse) Ordinance, 1962; the Agricultural Produce Markets Regulation Act, 1964; the Price and Distribution of Essential Commodities Ordinance, 1970; the Control of Essential Commodities (Extension to the Chittagong Hill-Tracts) Ordinance, 1970; the Bangladesh Drugs (Control) Ordinance, 1982; the Breast-Milk Substitute (Regulation of Marketing) Ordinance, 1984; the Iodine Deficiency Disease Prevention Act, 1989; the Bangladesh Pure Food (Amendment) Act, 2005; the Smoking and Tobacco Products Usage (Control) Act, 2005; etc.

Further, there are certain legislations, part of which has got direct bearings on consumer protection. For example, sections 264-267, 272-276, and 478-483 of the Penal Code, 1860; the Poisons Act, 1919; the Sale of Goods Act, 1930; the Dangerous Drugs Act 1930; the Drugs Act, 1940; the Animals Slaughter (Restriction) and Meat Control Act, 1957; the Special Powers Act, 1974; the Medical Practice and Private Clinics and Laboratories (Regulation) Ordinance, 1982; the Standards of Weights and Measures Ordinance, 1982; the Fish and Fish Products (Inspection and Quality Control) Ordinance, 1983; the Bangladesh Standards and Testing Institute Ordinance, 1985; the Narcotics (Control) Act, 1990; and the Safe Blood Transfusion Act, 2002; the Trade Marks Act, 2009; etc.

There has been a lot of criticism on the statutory protection of consumer rights in Bangladesh. It has been argued for long that such specific consumer protection legislations in Bangladesh are "scanty", "scattered over a whole range of enactments" and are "only indirectly related to the protection of consumer interests." Some comments that (until recently) the current regime of legislative protection to the consumers of Bangladesh is "so outdated that little or no protection is provided to the consumers." The above criticisms therefore justify the demand for enacting a comprehensive consumer law for Bangladesh. It was envisaged that a comprehensive consumer legislation would not only protect and promote the rights and interests of its consumers, but also would enhance various socio-economic targets of the macro economy, for example, poverty alleviation, efficient, fair and transparent market mechanism, good governance and above all, socio-economic justice for its citizens. Very recently on April 6, 2009, the House of the Nation has thus enacted the long-cherished Consumer Rights Protection Act, 2009 in Bangladesh.

The Consumer Rights Protection Act, 2009 is claimed to be very comprehensive "to take care of the details of the existing laws and its implications with the free market economy." It is expected to address many problems the market is now witnessing in terms of "unbridled monopoly and the soaring profiteering of businessmen." The Consumer Rights Protection Act, 2009 lays out provisions for establishing the National Consumer Right Protection Council (section 5) and the National Consumer Right Protection Directorate (section 18). The Act clearly defines consumer offences and sets out the punishments for the same (sections 37-53). However, there is no provision for separate tribunals or courts to try consumer offences as it is the case in India's Consumer Protection Act of 1986 or Malaysia's Consumer Protection Act of 1999.

Under the Consumer Rights Protection Act, 2009, the courts of first class magistrates or the metropolitan magistrates are empowered to try consumer offences (section 57). However, an aggrieved consumer cannot go directly to such courts to take action against consumer offences (section 71). Neither the consumer organizations can do so as it is possible under Thailand's Consumer Protection Act of 1979 where recognized consumer associations can go to the court directly. The aggrieved consumers of Bangladesh can only lodge a complaint to the Director General of the consumer directorate (within 30 days) (section 60) and then must wait for the directorate to take further action, if required. It is obviously a decision of the Directorate whether to take or not further actions on a complaint so lodged.

Having discussed all major statutes on consumer protection in Bangladesh, it is now time to address the issue of "consumer redress" in any real sense. As mentioned earlier, consumer redress, in its most simplistic expression, would mean "compensation for economic harm." If that is so, then it is argued that the consumers in Bangladesh, under the formal justice system, have no appropriate or adequate redressal mechanism. Most of the legislative efforts discussed above only tried to "over-criminalize" the whole spectrum of activities of the consumer rights offenders. Imprisonment or fine, whatever may be the sentence for committing consumer offences, the formal justice system of Bangladesh does not at all come to rescue the consumers who have suffered "economic harm." The truth is that at the end of the day, the consumers remain without any compensation and continue to suffer "empty pocket blues."

Similarly, the recent Consumer Rights Protection Act, 2009 was enacted in the spirit of "additional crimes, increased punishments." This too has continued the "criminalization" process of consumer misconducts. Moreover, the Act has successfully ensured a 'dramatic enlargement in governmental authority." Therefore, it is claimed that the "consumer rights" Protection Act, 2009, not only did maintain the ongoing progressive "over-criminalization" process but also legitimised and/or endorsed the "bureaucratisation" of the entire prodigy of consumer rights protection in Bangladesh.

It may be mentioned that the Consumer Rights Protection Act, 2009 established that if a fine is imposed (both under administrative and criminal procedure) on the consumer offender(s), either by the Consumer Directorate or by the courts, the aggrieved consumer shall have a right to share at least 25% of the fined amount (section 76). It may now be a question whether a 25% share in such fined amount would be adequate to bring the aggrieved consumer out of his/her "empty pocket blue." As a matter of fact, in certain cases, the cost of "economic harm" to the consumers might amount to quite larger than the statutory fine amount. The Consumer Rights Protection Act, 2009 does also have provision for aggrieved consumers to take recourse to the civil court claiming for "monetary compensation" (section 66). The amount of compensation could be five times more to the economic harm suffered. However, the aggrieved consumer can only seek such compensation after the Consumer Directorate has actually initiated the criminal procedure in the Magistrates' Courts.

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It is strongly argued that the Consumer Rights Protection Act, 2009 has actually introduced a bureaucratic hurdle over the aggrieved consumers seeking economic redress. Earlier, whatever might have been the state of statutory protection to the consumers, the aggrieved consumers could always directly file Damage Suits (though less utilized) claiming compensations under common law of tort. Litigation on behalf of the consumers could always be brought as a tort under negligence, nuisance, and the rule of strict liability as was established in Donoghue v. Stevenson and/or Rylands v. Fletcher. For example, the Bangladesh Legal Aid and Services Trust (BLAST) filed a damage money suit claiming compensation amounting Tk. 290 million on behalf of 121 plaintiffs for the victims of M V Nasreen launch. Similar compensation claims were made at the civil courts for Mohiuddin Faruque v. Bangladesh and others (Pepsi Cola Case) and Sheikh Rafiqul Islam v. Bangladesh and others (Thames Cigarette Promotion Case) without there being pre-determination of any criminal liability. Furthermore, earlier the aggrieved consumers, if desired, could go to Small Claims Courts, where redress may include monetary awards, rescission, restitution, reformation, or specific performance. After the Consumer Rights Protection Act, 2009, the aggrieved consumers would need to wait for the initiation of criminal proceeding by the Consumer Directorate before taking recourse to the civil court for such monetary compensation.

Furthermore, specific consumer courts for ensuring economic redress to the aggrieved consumers is very important and very much needed in Bangladesh. Consumer court or tribunal is not at all a new phenomenon in neighbouring South Asian countries. In India, consumer complaints can be filed either in National Commission, State Commission or District Forum depending on the total amount of money involved as costs and compensation. So is the case of Pakistan. For example, consumer Courts have already been established and started functioning in 11 districts of Punjab under the Punjab Consumer Protection Act, 2005. The first consumer court was set up in Sri Lanka on 4 March 2008 and the court soon became quite effective in protecting the rights of Sri Lankan consumers. Also in recent times, the issue relating to the need of establishing consumer courts has remained a much-debated issue in Nepal. Therefore, consumer redress mechanism in Bangladesh under its formal justice system suffers from unnecessary "over-criminalization syndrome," irrational "bureaucratization phobia" as well as lack of specialized consumer redress forums.

Consumer redress under informal justice system
In Bangladesh, the role of consumer redress mechanism under informal justice system has always failed to achieve attention of the mainstream policy makers, scholars, activists and professionals. While the formal justice system has relentlessly tried to "criminalize" and "bureaucratise" the consumer redress mechanism, the informal justice system in Bangladesh has actually gone a long way (in its limited capacity) to ensure economic redress to the consumers in any real sense. As earlier mentioned, the informal justice system in Bangladesh includes both traditional and non-formal conflict resolution mechanisms. Traditional (customary) forms of conflict resolution mechanism include the Salish or village mediation. Non-traditional or the contemporary Alternative Dispute Resolution (ADR) mechanism include mediation by NGO village-level groups, members of the Union Parishad, corporate negotiation, and/or industry based ADR.

The Local Salish System in Bangladesh has long been considered an effective way of consumer redress. The EU-UNIDO BQSP intervention in Northern Bangladesh has experienced that local salish system has been tremendously effective in resolving consumer disputes and awarding monetary compensation. The local system of salish is generally conducted by local elites and/or opinion leaders, such as, social workers, school, college and madrassa headmasters and teachers, imams, entrepreneurs, leader of local market committee etc. It is done in the most informal way; though at times, the parties in dispute produce witnesses to prove their positions. However, it is found that most salish resolves consumer dispute as a matter of "economic wrong" or "economic right;" not being able to term the same as "violation of consumer rights" as such. Also, there is general dissatisfaction among common people that salish system shows bias in favour of the rich and powerful and a gender bias in favour of men.

Many NGOs in Bangladesh do conduct and facilitate ADRs at village levels. Their interventions have achieved a positive outcome in Bangladesh. They contributed in building up awareness on basic legal rights of people. However, they lack direct focus on consumer rights issues. Consumer disputes, again, get resolved without the same being identified as a "consumer dispute." For example, a survey conducted upon CAB local committees to find out the nature and number of consumer disputes handled by each committee in 2007, shows that many of such committee has identified ADRs on "divorce matter" or "domestic violence" as consumer disputes.

Though corporate negotiation is quite a common mechanism for resolving a consumer dispute in many developed countries, it is only a new practice in Bangladesh. In the developed world, it is widely recognized that consumer disputes can often be resolved directly by the relevant business. It is also expected that consumers and businesses should first attempt to resolve their disputes directly before seeking recourse through third party mechanisms. There are a number of ways that the corporations in Bangladesh try to handle their consumer disputes. A few is discussed below:

Customer Service: The first avenue available to the consumers for dispute resolution is usually through direct dealings with the seller company's customer service or complaints department. Customer service is a private means of dispute resolution that is voluntarily provided by the companies. It is believed that customer service departments are efficient venues for initial dispute resolution. This is because of the company's awareness regarding the nature of consumer complaints and the level of familiarity it has with the purchased products and services.

Guarantees: To reassure consumers when they purchase a product, many companies in Bangladesh offer some kind of guarantee that the consumer will be satisfied with the purchase or otherwise return it for a full, unconditional refund. While these types of guarantees are not legally required, most companies will offer them in the interest of maintaining their business reputation and attracting customers. Sometimes, the companies offer "money back satisfaction guarantee." When such satisfaction guarantee is made to a customer, there is no requirement of a defect in the product for it to be returned. Instead, products may be returned for any or no reason.

Warranties: Warranties are promises made in a consumer contract, but which are less important than a condition. Failure of a warranty results in liability to pay damages but will not be a breach of contract unlike failure of a condition, which does breach the contract. Warranties could be implied or express. In Bangladesh, many products offer warranty to the consumers. It may be stated that if the corporate negotiation fails, the consumers' relief lies mainly with breach of contract for products or services.

It is stated that in Bangladesh, the practice of corporate negotiation with consumers is not that popular a redress mechanism as yet. The pressure on businesses to follow the "corporate code of conduct" is only a recent phenomenon. Therefore, one can assume that consumer redress through corporate negotiation has currently only a limited impact.

Industry-based ADR is another mechanism to resolve consumer disputes. When negotiations and resolution attempts within the company has failed to resolve a dispute, consumers can take the disagreement to a third party, such as, Chamber of Commerce or the Market Advisory Committee. For example, one of the functions of the Dhaka Chamber of Commerce and Industry (DCCI) and the Metropolitan Chamber of Commerce and Industry (MCCI) is to arbitrate settlement of disputes arising out of business transactions. Similarly, the Market Advisory Committee formed under section 9 of the Agricultural Produce Markets Regulation Act, 1964 is empowered to amicably settle, and if required, arbitrate, disputes between agricultural produce purchasers and sellers.

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Problems related to consumer redress
From the ongoing discussion, it is stated that consumer redress mechanism in Bangladesh (both under formal and informal justice system) suffers from various problems.

The following is a list of such problems:
Over-criminalization of the activities of consumer offenders; Bureaucratisation of formal consumer redress mechanism by the Consumer Rights Protection Act, 2009; Lack of specialized formal consumer redress forums (such as, courts, tribunals, etc.); Redress mechanism under informal justice system shows bias in favour of the rich and powerful and a gender bias in favour of men; Corporate practice for customer redress mechanism has not been popularly adopted; Industry based ADR has not been adequately developed; Lack of consumer education and awareness with regard to consumer rights.

Conclusions
Consumer movement in Bangladesh is still in its infancy. Consumer education and awareness building activities must be enhanced in the first place to develop and utilize a meaningful consumer redress system. Bangladesh lacks, if not will, both resource and awareness regarding setting up of an effective consumer redress mechanism. Over-criminalizing the consumer rights offenders does provide a sort of social relief to the nation, but puts no money into the aggrieved consumer's pocket. Further, the irony is that the Consumer Rights Protection Act, 2009 has now put a consumer, who has suffered "economic harm," to face "bureaucratic barrier" before seeking any monetary compensation. Consumer redress mechanism under informal justice system can remain informal but needs to be formally developed. Specialized consumer courts should be established and be linked with informal ADR system. Amendment to the Consumer Rights Protection Act, 2009 is therefore a must and a necessity of time.

The author is an Assistant Professor of the School of Law, BRAC University and the (honorary) Executive Director of the LawDev (Bangladesh). She has served as the National Expert in Legal Affairs and Consumer Complaints under the European Union -- UNIDO funded Bangladesh Quality Support Program (BQSP) during 2007-2010.

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