Business Consumer Affairs

Advertising claims on ‘green’ products

Grocery shops and other retail operations sell products and packages announcing those products have environmentally friendly features. This may influence your purchasing decisions.

They use the phrases like ‘Environmentally safe’, ‘Recyclable’, ‘Bio degradable’, ‘Ozone friendly’ etc. What do they really mean? There is set of guide lines developed by the FTC for the advertisers to ensure that their environmental marketing claims do not mislead the consumers.

* Environmental claims must be specific

When you evaluate environmental claims on product labels, look for specific information. Determine whether the claim apply to the product or packaging or both. If a label says ‘recycled’ check how much of the product is recycled. Unless the product or package contains 100 per cent recycled material the label must tell how much is recycled.

Consumer products such as newspapers, shopping cartons, plastic bottles, glass containers etc. ‘pre consumer material’ is basically waste.

‘Recycled’ products are made from items recovered or separated from the ‘waste’ that are melted or ground up in to raw materials and then used to make new products.

They may be products that are used, rebuilt, reconditioned, or re-manufactured. If a product is labelled ‘recycled’ because it contains used, rebuilt, reconditioned or remanufactured parts, the label must say that.

If a used auto parts store sell used automobile parts that have been salvaged from other cars, and label them ‘recycled’ without any other description because it’s due to the fact that they are used parts.

But an office copier that is labelled ‘recycled’ because it was rebuilt, reconditioned or remanufactured and then the label recycle must state that the recycled content came from rebuilt, reconditioned or remanufactured parts. That’s because it may not known that it contains used parts.

Some products says that they use less material than competing products. To be meaningful such claims must say exactly what’s been reduced, by how much and compared to what. For example, a claim “20 per cent less waste than previous package” gives more information than “20 per cent less waste”.

* Claims must be meaningful

General claims may sound warm but generally offer little information of value. Claims that a product or a service is ‘environmentally friendly’, ‘environmentally safe’, ‘environmentally preferable’ or ‘eco-safe’ or labels that contain environmental seals are not helpful for 2 reasons.

First, all products packaging and services, have some environmental impact, although some may have less than others. Second, these phrases alone do not provide the specific information needed to compare products, packaging, or services on their environmental merits.

Look for claims that give some evidence/proof to the claim. These are the additional information that explains why the product is environmentally friendly.

* Recyclable and recycled

Recyclable claims on labels mean that the manufacturer or seller of the products has proof that the products can be collected and use again or made in to useful products. Some companies may say ‘Please Recycle’ on their products. Such claims are relevant to the consumers only if these products are collected for recycling in your community.

* Degradable products don’t help save space

Some products claim to be ‘degradable’. ‘Bio degradable’ materials, like food and leaves, breakdown and decompose in to elements found in nature when they are exposed to air, moisture, and bacteria or other organisms.

‘Photo degradable’ materials, usually plastics, disintegrate into smaller pieces when exposed to enough sunlight.

However, degradation of any material occurs very slowly in landfills, where most garbage is taken. Even materials like paper and food may take time to decompose. Cleaning products like detergents and shampoos, often display ‘bio degradable’ claims. Most of these products have always degraded in waste water systems causing no harm to the environment.

* ‘Ozone’ friendly

Some products may claim that they are ‘CFC free’ or ‘zone friendly’. The ozone layer in the upper atmosphere is necessary to prevent the sun’s harmful radiation from reaching the earth.

CFCs (Chloroflurocarbons) are chemicals that can deplete the earth’s protective ozone layer in the upper atmosphere.

CFCs are gradually being phased out in all products and manufacturing processes. If a product does not contain any CFCs it does not necessarily mean that it is safe for the entire atmosphere.

* Symbols to be used

Many products display ‘universal’ recycling symbol often called the three chasing arrows symbol. Some companies use this to mean that the products or package is made of recycled materials; Others use it to mean that the product or package is recyclable.

- Chandrika Thilakaratne,
Director, Consumer Affairs and Information, CAA.

Questions and answers

(Q) As a result of an improper operation done by a private hospital I have had to suffer some ailments. It was once again done by a doctor overseas. Can I recover money paid in this regard?

(A) You can bring your problem to the attention of the director appointed in this regard by the Ministry of health. It can be referred to the CAA as well.

(Q) The expiry date of a bottle of soft drink purchased has been tampered with.

Having further inspected, we found many bottles left inside the shop. Who is responsible for the act? the company or the seller?

(A) Both the company and the seller should be held responsible.

(Q) Notices with regard to the interest charged for the items mortgaged are displayed.

But the customers are given different rates of interest as mentioned overleaf of the receipt, Is this an offence?

(A) It is a fraudulent act to charge interests in excess of the rates noticed by the mortgager.

Legal action can be initiated as per the provisions of the CAA Act against the mortgager.

(Q) I am a small businessman and purchased some items from a wholeseller. But I was not issued a bill though I requested for.

(A) It is a legal requirement to issue bills for the items purchased from any market place.

(Q) It was noticed that some damages occurred to asbestos purchased by me. Neither trader nor manufacturer is responsible for the damage.

(A) It is your duty to follow the instructions properly when covering up the roof.

If it is a manufacturing defect, the manufacturer should be responsible.

(Q) I was unable to pay Instalments for a vehicle purchased by me on a lease agreement due to a natural disaster. Then, it was seized by the company.

(A) If you have failed to comply with the conditions of the agreement signed by you with the company, the company can act accordingly.

(Q) Being a vegetarian I ordered a vegetable meal. Having noticed some pieces of egg, I got really embarrassed. Can I get a redress.

(A) Yes, it is the duty of the hotelier to comply with the needs of the customer. You can be compensated.

(Q) I paid the due amount for a ticket to travel my destination, but I was not issued a ticket for the amount.

When inquired I was blamed by the conductor. What can I do?

(A) Passengers should be issued a ticket for the due amount paid by them.

You can make your complaint to the Passenger Transport Authority or the Consumer Affairs Authority.

(Q) I purchased a shirt for Rs. 150 from a vendor from the Pettah pavement.

When I tried to put it on, I noticed that some stitches had come out.

(A) There is no accepted rule and regulation imposed for the venders on the streets.

You should have bought your shirt from a registered shop which conducts business according to the rules and regulations.

Product quality through overall quality of an organisation

In the modern world, the consumer attraction for products and services are changing drastically, when compared with the era of mass production processes. One of the important factors of attracting a product is the quality and it can be defined as “fitness for purpose” which is a very basic definition. It means therefore, that the quality will change according to the situation or the requirement (purpose).

From the overall quality of an organisation, product quality is a small part which can be experienced by the consumer. Therefore quality can be described based on consumer perspective and on the organizational perspective.

Quality based on the consumer’s point of view, is the only product quality which ultimately any consumer is looked for. The Consumer never asked for a new product, like a mobile with GPRS or a car with all advance technology but he can only consider or evaluate in terms of what you and your competitor offers.

Therefore, the important factor is the consumer’s need and the desire, with a condition of satisfying the requirement more effectively than the competitor. An organization spending Rs. 10 to improve quality in such a way that the consumer evaluate the quality improvement at Rs. 20. Then the company can raise price by Rs. 15 which is a win win situation.

The overall quality of an organisation is a broader picture where the product quality is also included within it.

This begins before designing a product & ends after selling a product. Before designing a product the organization has to do a feasibility analysis for the target market and for the required organizational strength to market the product. It ends after the selling product means it is not enough to bring a consumer back but the real quality is where the consumer brings a friend with him.

The quality has to be rooted from the top level of an organisation, where the decision making system is carried out, and from there it has to flow to all the processes and functions such as designing, production, human resource management, financial management, IT and marketing factions.

The fundamental of quality crisis is the out dated management system that focuses on short-term results at the expense of the process,the consumer and ultimately long-term achievement.

To carry out any function or process, the human resource is the most important element of improving the overall quality of an organization. Proper and adequate training and also development processes are essential as well as the working environment is the ground for exceptional performance of employees.

Quality comes from improving functions and processes, not from inspecting very activities of an organisation. Therefore to improve the quality of such processes, it needs quality strategies where overall functions and processes of an organization are critically evaluated.

- Murthaza Mohsin
Cost Trainee, CAA

National competition law and policy, regulation and consumer welfare

In principle, competition and consumer protection policies share the same goals. In an ideal world the market should protect consumers, but in reality markets fail regularly, mainly because of misinformation, and thus the benefits of competition are often lost.

Examples of market failure in this respect which were cited included cases where consumers were inexperienced or confused by product information; where the basis of comparison was confusing, for example when different units of measurements were used for like products; and where sellers had no interest in protecting their reputation. Such problems were likely to increase with the use of the internet for the sale and purchase of goods and services.

In a number of developing countries the introduction of economic reforms opened the door to poor quality goods and services. Market forces were expected to regulate prices through fair competition, but frequently this did not happen. Despite the existence of competition authorities and consumer protection legislation in many developing countries, asymmetric information still placed consumers at a great disadvantage.

Several experts reported that consumer protection legislation, which could encompass amendments to the existing consumer protection Acts or competition laws, were either under consideration or had been introduced.

The approach to consumer protection sought to achieve greater redress in terms of the imbalance in knowledge and power between suppliers and consumers. Another issue that was discussed was how, in the absence of specific legislation, common law would function to protect consumers effectively in cases of misinformation.

The experience of one common-law country indicated that since different groups of consumers were likely to have different tastes and preferences, it was important that the provisions of consumer protection laws be flexible enough to accommodate different consumer perspectives.

In some legislations various common-law provisions worked effectively to secure redress through the Sale of Goods Acts, which dealt with merchantability, and/or the General Law of Contracts, which dealt with misrepresentation.

The interface between competition policy, consumer protection and competitiveness, particularly in economics in transition, was questioned by some experts. Evidence of a causal relationship at both the national and international levels was called for.

The American automobile industry and the fast-food industry were presented as cases in point, where competition from foreign competitors led to new products and more competitiveness.

The point was made that for many developing countries the protection of national industries was still the priority and that this necessitated careful monitoring of local and imported products. In the light of low incomes and widespread poverty, it was necessary to ensure the availability of cheap local substitutes.

In response to these concerns, it was pointed out that competition law and policy were intended to protect competition and not the competitor. Foreign competition represented an opportunity for local producers to upgrade their products, and consumers were presented with a choice of products.

It was to be expected that producers that proved non-competitive would be driven out of the market; this was acceptable if it meant that the consumer would have access to better-quality goods at a competitive price.

If consumers were left unable to afford expensive imports and more affordable local substitutes were driven out of the market, there might be sufficient grounds for anti-dumping measures to be instituted in order to preserve competition.

It was emphasised that there was a strong link between consumer protection and competitiveness. The need for consumer sensitisation and education was stressed particularly in the case of developing countries, where the majority of consumers were hampered by illiteracy and other information deficiencies.

Very often poor consumers accepted defective goods, attributing their purchase to bad luck, and neglected to lodge a complaint. In many cases, the informal sector’s clientele believed that that sector provided cheaper and perhaps better-quality goods.

However, a study in Venezuela revealed that prices were cheaper only in the case of prepared food - all other goods were more expensive than in the formal sector.

Import inspection scheme

With the introduction of the free economy in 1977, imported goods began to flood into the country. Many local manufacturers were complaining about the poor quality of these imported products.

Eventually, the local manufacturers began to urge the government to impose restrictions to curb the low quality imported products. Subsequently, a steering committee had been appointed to look into the matter and suggest ways and means in managing the situation.

As a result the Import Inspection Scheme (II scheme) was launched in 1986 only for eleven designated products.

The mechanism of the scheme was to impose regulations by the Minister in charge of the Imports and Exports (Control) Act and gazette those designated products making their conformity mandatory to the relevant Sri Lanka Standard Specifications when the products are imported to the country.

The implementation of this regulation was generally executed by the Sri Lanka Customs in conjunction with the Sri Lanka Standards Institution (SLSI). Once a consignment of a designated product arrives at the port, it is referred to SLSI to determine the conformity to the relevant standard.

The result of the quality determination is reported back to the Sri Lanka Customs and also to the Import and Export Control Department. Accordingly, the release or detaining of goods would be executed.

The originally selected eleven products for this scheme were gazetted under the provision of the Imports and Exports (Control) Act. Subsequently, the list was increased time to time by adding more products and at present 102 products are subjected to quality checks under this Scheme. These products include a variety of items such as food items, building materials, electrical appliances, cosmetics, etc.

An importer, who brings a consignment of any product out of the 102 designated products, shall notify the SLSI before the consignment is cleared from the port. For this purpose, the importer needs to furnish a notification form (in triplicate) together with the supporting documents. SLSI then has to determine the conformity of the consignment against the relevant Sri Lanka Standard Specification.

Basically, the SLSI uses two optional methods to determine this conformity. The first option is that the importer is allowed to prove the conformity of the product to the relevant Sri Lanka Standard Specification. This could be done by producing a conformity certificate or by marking the products with a product certification mark.

However, when a conformity certificate is produced, it should be obtained from an organization acceptable to SLSI. This acceptance will depend on the capability of the organization (by which the certificate had been issued) in carrying out tests according to the relevant Sri Lanka Standard.

The SLSI has basically, identified two types of organizations for this acceptance, Viz.1) Accredited laboratories which comply with the SLSI’s acceptance criteria for Laboratories, and 2) Manufacturers who comply with the SLSI’s acceptance criteria for manufacturers.

When a product certification mark is appearing on the product, the certification mark should be either the SLS mark or a certification mark given by the national standards body of the exporting country.

Granting the SLS Mark to an overseas product could be considered by SLSI if the brand name owner makes such a request. If the certification mark has been granted by the national standards body of the exporting country, it should be compatible to the relevant Sri Lanka Standard Specification.

Importers are encouraged to go for the above-mentioned first option (i.e. importer providing proof for the conformity), as it eases the approval process by limiting it to perusal of documentation or certification mark, which enables quick release of consignments.

Details of the Import Inspection Scheme could be obtained by visiting the SLSI’s web site www.slsi.lk

Directions issued by CAA

The consumer Affairs Authority has recently issued two directions for the attention of all manufacturers, traders, suppliers and members of the public. These directions read as follows:

Direction No. 16

Acting under the powers vested in it by Section 12(1) of the Consumer Affairs Authority Act No. 09 of 2003, the Consumer Affairs Authority directs that all manufacturers and traders shall manufacture, sell or display for sale, expose for sale or offer for sale any locally manufactured or locally produced Sivuru, Atapirikara or Pathra unless such Sivuru, Atapirikara or Pathra are in conformity with the corresponding Sri Lanka Standards SLS 1257 (amendment 1:2006), SLS 1258 (amendment 1:2007) and SLS 1308/2007 respectively.

Direction No. 17

Acting under the powers vested in it by Section 10(1)(b) (ii) of the Consumer Affairs Authority Act No. 09 of 2003, the Consumer Affairs Authority directs that no manufacturer, traders or supplier shall manufacture, market, import, distribute, store, stock, sell or expose for sale any items of food or drink containing the word “Halaal” or any expression picture or symbol denoting the term Halaal, unless the said item of food or drink is certified as Halaal, by a recognized body in the relevant field.

These two directions have been published in the Gazette, extraordinary (1515/22) dated September 21, 2007 and they will be effective from November 1, 2007.

Regulatory Agencies

This article highlights key issues relating to independence of regulatory agencies by giving an account of some civilised countries in the West.

The notion of an independent regulation system is an important theme in regulation literature.

Although it is accepted that independence is necessary to attribute for an effective regulator, the concept is difficult to define because it has multiple admissions.

Moreover, to be independent, a regulator should not only be physically and operationally separated from those it regulates, but also be empowered to effectively carry out policy. This can be done by making objectives, well-reasoned, written decision arrived at through transparent procedures and based on a complete public record.

Regulators should be free from undue political influence during this process, and impartial decisions, based on public record, should not be undermined for political reasons.

Finally,the scope and substance of a regulator’s jurisdiction should be clearly worded by statute, and there should be adequate funding to carry out its responsibilities.

In markets such as air transport telecom services in Sri Lanka where there was no longer any direct state participation, the trend was toward allowing new competitors to enter these sectors, and to introduce or strengthen competition.

- Executive Director - Consumer Affairs Authority