Who's protecting the consumer - pt. 1

Mon, Feb 16th 2015, 01:00 AM

"Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer."
- Adam Smith

Many modern societies have established laws and organizations that are designed to protect the rights of consumers, to ensure fair trade and competition in an orderly economic environment and to provide for the dissemination of accurate consumer information in the marketplace. Therefore this week, we would like to Consider This... in The Bahamas, who is protecting the consumer?

Consumers
The consumer normally acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing. Consumers often stand alone in a complex world that is dominated by big business and big government, where often the former seems to have little or no recourse for consumer complaints or violations by unscrupulous or unethical vendors. It is therefore essential that consumers become more knowledgeable and proactive in protecting themselves against those establishments that take advantage of them.

Protecting the consumer
Consumers are generally protected through two methods: consumer protection laws and the proactive measures taken by consumer advocacy individuals or groups. Consumer protection laws and organizations are frequently designed to ensure consumers' rights, to foster fair trade competition and the free flow of truthful information in the marketplace.

Governments frequently use consumer protection laws to regulate businesses or to protect the rights of consumers. These laws normally prevent businesses from engaging in fraudulent or unfair practices that would enable vendors to gain an unfair advantage over competitors or to mislead consumers.

For example, the United States has developed sophisticated consumer protection laws and organizations such as the Federal Trade Commission to achieve this objective. In addition, self-regulating business organizations have emerged such as consumer protection agencies, ombudsmen, and Better Business Bureaus to whom consumers can make formal complaints if they believe that they have been aggrieved. One of the most prominent American consumer advocates of the latter 20th Century was Ralph Nader who demanded many businesses, large and small, to properly account to and compensate the consumer for valid grievances. He was an extremely effective consumer advocate.

The United Kingdom has several statutes to protect consumers in specific areas of consumer credit and contract terms. The Australian Competition and Consumer Commission, along with individual State Consumer Affairs agencies, are responsible for consumer protection. Germany has a federal cabinet minister who is responsible for consumer rights and protection. In India, the Consumer Protection Act of 1986 governs consumer protection.

The Bahamas Parliament passed a Consumer Protection Act in 2006 which was intended to provide consumers who are disadvantaged by exorbitant prices, substandard products and the unscrupulous practices of merchants and service providers with a forum to have their complaints addressed on a timely basis by a Consumer Protection Commission. The law requires merchants and service providers to be more responsive to consumer complaints and ensures that in their dealings with consumers, value is exchanged for goods and services provided.

The Bahamian experience: commercial banks
Today there are many areas where consumer protection can be greatly enhanced in The Bahamas. In the area of commercial banking, we are all familiar with the practice of some banks overcharging their customers for various
"services" of which consumers are unaware until they are directed to the fine print in the bank mandates - a document that most consumers fail to read or understand when opening bank accounts.

Often, when called out, commercial banks have reversed such charges. Unless the vigilant consumer closely scrutinizes his bank statement, he could end up paying excessive charges that are neither appropriate nor justified. Then there is the famous "float", that is, consumers' funds that banks hold onto without giving immediate credit to depositors.

Despite the introduction of an automatic checks-clearing system, it is commonplace for commercial banks to hastily withdraw funds from customers' accounts, while simultaneously placing a "hold" on deposited funds for several days. The consequence is that this practice could place the customer's account into an overdrawn position if funds are disbursed by the customer before the "hold" is released.  Invariably, this results in consumer bank charges of $25-$35 for having "insufficient funds" on the account because the deposited funds were still "on hold".

Banks even charge a $5 fee for cashing checks for a customer who does not have an account with the bank on which the check was written. This is unethical at best, and should be criminal at worst. This practice should not be allowed to continue. Unfortunately, there is absolutely no one to whom the consumer can turn for relief from this practice, not even The Central Bank of The Bahamas.

One of the most egregious abuses by some of the Canadian banks in The Bahamas is their continued refusal to accept funds from web shop operators and their employees or service providers, although web shops have been legalized. This is an unconscionable travesty which will require government intervention, but we will have much more to say about that in a future column in the weeks ahead. In the meantime there is no agency of the government that is protecting the interest of the consumer from unfair banking practices.

BTC
Since our telephone company, BaTelCo, was virtually "given away" at a bargain basement price to Cable & Wireless by the FNM government, there continues to be a plethora of complaints about the delivery of substandard service by that public corporation, newly named BTC, which, since it was privatized, some aspects of its service has drastically deteriorated. It appears that there has been marginal improvement at BTC since Mr. Leon Williams has taken over as its president, but the annoyance of dropped calls remains a daily experience of almost everyone who owns a cell phone.

URCA, which regulates the telecommunications industry, seems more engaged in customer complaints against BTC, but there is still a general perception that there is still little recourse for the customer who has complaints against BTC.

BEC
Where is the consumer agency to which Bahamians can turn when they lose thousands of dollars in appliances that are destroyed by BEC excessive blackouts, brown-outs or power surges? There certainly is no one to turn to when your business itself has been impacted by a lack of power, resulting in loss revenue and production.

Again, it is very difficult to expect any real satisfaction for such disruptions of power from the agency that is supposed to protect consumers from abuses by the cable company. URCA, which does little to compensate consumers from the telephone company abuses, performs an equally unimpressive job in protecting Cable TV and Internet consumers from poor service from that provider, so we cannot even begin to look to them to address the abuse of the consumer by BEC.

Essentially, when it comes to most our major utilities, consumers are voices crying in the wilderness with no one to hear or come to our aid.

Conclusion
In Part II of this series next week, we will look at areas that touch consumers of all ages: what we eat and how we get around. It is extremely important for Bahamians to be educated and vigilant about our rights as consumers. It is equally important to be able to turn to a Government Protection Agency or a consumer advocacy group where consumer abuses can be seriously redressed and real results can be obtained.

Until we become educated consumers, we will not be good customers. Instead, we will indeterminately wander and wallow in the quagmire of ignorance and abuse. We must no longer put up with things we should not even tolerate for a moment. We must become empowered not only to stop those abuses for ourselves but end them for each and every Bahamian consumer.

o Philip C. Galanis is the managing partner of HLB Galanis and Co., Chartered Accountants, Forensic & Litigation Support Services. He served 15 years in parliament. Please send your comments to pgalanis@gmail.com.

Click here to read more at The Nassau Guardian

 Sponsored Ads