Business Consumer Affairs

Consumer Code of Ethics

For any society to prosper, it is necessary to be guided by a set of ethics.

It is mainly the business community who are responsible to maintain an ethical market place but consumers too have a responsibility.

The most significant factor in earning consumer respect is to act and conduct business in an ethical manner. Consumers however also share the responsibility for maintaining an ethical market place.

The objective of this article is to review the consumers’ responsibility towards an ethical market place. When doing transactions with any organization, be it a super market, professional service or a large corporation, today’s consumers have to conduct their business following some basic ethical practices such as follows.

Consumer Education

Consumers must know their rights as well as responsibilities and must try to perform the responsibilities while taking proper action when their rights are not properly ensured in business transactions. Consumers must be aware how to take proper action when their rights are violated.

They must always try to get the correct information on the products/services that they purchase.

They must also know that they have the right to select the specific product to suit with their budget and interest. When a consumer is misled by a trader/manufacturer the consumer must know that he has the right to obtain redress from the errant trader/manufacturer.

Also the consumers must actively participate in bringing forward their proposals to relevant policy making Authorities on matters affecting consumers’ interest.

They must organize themselves as consumer societies/organizations/clubs in order to have a strong voice on behalf of the rights of consumers.

Truthfulness

Consumers must act genuinely in the business transactions. They are not expected to return used goods pretending they are damaged when they are not. The instances like shoplifting will create bad image towards all consumers and this will be a cost to the other consumers.

Honesty

Exhibit the same kind of honesty you expect to receive from business firms. If a sales clerk makes a mistake in your favour, point it out.

Integrity

It is expected that consumers will perform their obligations. Consumers too have to enter into agreements with good faith and pay their instalments when they are due.

If there is an unexpected problem it is necessary to discuss with the other party in order to workout a feasible solution.

Courtesy

It is expected to have a courteous behaviour in the market. Being emotional leads to negative results both for consumers and businessmen.

Sensibility

It is expected that the consumers respect the rights of the company to limit the services and products offered and make reasonable demands. If the companies as well as the consumers respect each others rights and practise them that will help to prosper the economy in the long run.

Chandrika Thilakaratne, Director Consumer Affairs and Information, CAA.

New CAA Chairman

New Chairman of the Consumer Affairs Authority Rumy Marzook, a former Magistrate and Commissioner General of Prisons assumed duties last Tuesday. He was given a warm welcome by the staff and the Executive Directors, Messrs Mohideen Bawa, Hemalal Thalgaswatte and the Acting Director General Mrs. Deepthi Tissera and other Directors were among those present at the reception that followed.

New prices of Shell Gas districtwise

The Consumer Affairs Authority has granted approval for the Shell gas cylinders to be sold at prices indicated below, district wise, with effect from 1st November 2007:

District Retail Price
		12.5 kg		2.3 kg 		

		cylinder	cylinder
		Rs. Cts		Rs. Cts
Colombo		1,313.00	242.00
Gampaha		1,321.00	254.00
Kalutara	1,326.00	255.00
Putlam		1,339.00	257.00
Kegalle		1,341.00	258.00
Kurunegala	1,341.00	258.00
Galle		1,342.00	258.00
Ratnapura	1,344.00	258.00
Kandy		1,351.00	259.00
Matara		1,351.00	259.00
Matale		1,354.00	260.00
Trincomalee	1,367.00	261.00
Anuradhapura	1,367.00	261.00
Polonnaruwa	1,367.00	261.00
Vavuniya	1,383.00	262.00
Mannar		1,403.00	262.52
Hambantota	1,371.00	263.00
Moneragala	1,390.00	263.00
Badulla		1,383.00	263.00
Ampara		1,392.00	263.00
Nuwara Eliya	1,383.00	263.00
Batticaloa	1,392.00	264.00
Jaffna		1,478.00	266.00

CAA promotes healthy competition while restricting unfair trade practices

In a highly competitive globalized business environment, no person or any organisation can survive without the influence of competition. It applies to the markets which are in developed countries as well as markets in developing countries.

Therefore competitive competence against the competitors is required to survive and to grow as an organisation. Same as an organisational competence, the overall industrial competition is vital for an industry to exist and to grow.

The organisational competence is the most influential factor in any organisation for survival in a particular industry as well as for a consumer to be attracted for a particular product or a service. There are various types of assets which can be utilised to generate competitive advantage over other competitors.

Ownership of physical assets, like strong chain of retail outlets, huge factories, buildings where an organisation can sell or produce a very large quantity at once, is a competitive advantage.

For the most global manufacturing companies those who apply advance technology in production and producing a large quantity in one batch creates synergic effect where the cost per unit is reduced by having economies of scale.

Another kind of physical asset is the possession of a well-built mode of transportation, such as fleet of ships, aircrafts, vehicles or pipe lines which facilities to get the raw materials to the production process and to deliver products to the markets quicker than the competitor.

Having expert human asset is also a competitive advantage where the overall functions and processes are carried out by employees. So the staff who possess experience, innovative and creative talents to understand the potential consumer requirement before identifying those requirements by a competitor and also employees with the leadership skills to carry out planned strategies, can create a big difference from those organisations having general or non-expert staff.

There are other types of competitive assets, such as the location, brand name, management and/or production systems, also the patent right.

To get the full advantage of competitive assets and to identify the strengths and weaknesses of a particular organisation, it is critical to benchmark with the competitors and/or with other organisations those who have performed their best. There are 4 types of benchmarks where any organisational performance can be compared with.

1) Internal benchmark: A division or department can be compared with another division or department within the same company or within the same industry.

2) Functional benchmark: Is comparing a particular function (production) with a similar function without organisational or industrial barriers.

3) Competitive benchmark: Is comparing directly with the best performing competitor. 4) Strategic benchmark: A firm’s strategic decisions, like investment on designing a new product or investment to enter into a new market segment, compares with another firm which has already experienced the same situations or circumstances.

The overall industrial competition is the key for crafting or creating changes in a single organisational competence. The industrial competition will be changed based on the consumers’ preference, technological, environmental (natural, social, legal) changes or the way of risk managed by the organisation.

The risk is managed by merging (integrating) or acquiring firms which are in the same industry. There are two kinds of merging or acquisition categories which are used to manage the risk or to change an industrial competition.

1) Vertical merger or acquisition: A particular organisation integrates with the suppliers and/or with the buyers. In other words two firms operating in different stages in the production of same good integrates or one acquires other. As an e.g. A cement manufacturing firm integrates or purchases a raw material supplier and/or a distributor of cement

2) Horizontal merger or acquisition: A firm mergers or buys the competitor’s firm, whereas those who are in the same stage of producing the same good. As an e.g. A cement manufacturer integrates or purchases another cement manufacturing firm.

Vertical and horizontal categories of mergers or acquisitions can generate synergy where the cost will be reduced in the long run. The bad side of these integrations or acquisitions is that it will create a monopoly in the industry and ultimately it can end up performing anticompetitive activities and/or unfair trade practices.

Therefore the Consumer Affairs Authority is playing the most important role to promote healthy competition and to restrict unfair trade practices to protect the organisations and also consumers.

An organisational competence is the overall ability of a particular organisation to exist in its industry. Therefore, the all organisations’ competence generates industrial competition whereas the overall industrial competition influences existing and potential organisations and the consumers of that particular industry.

Murthaza Mohsin Cost Trainee, CAA

Why consumer education?

As a consumer educator we must have a background and understanding of the main concepts of consumerism and consumer education. This background will act as a foundation in disseminating knowledge to our intended target group.

This article discuss the following key concepts of consumer education:

* Who is a consumer?

* What is consumer education?

* Why do we need consumer education?

Who is a consumer?

As per the CA Act, consumer is defined as an actual or potential user of any goods or services made available for a consideration by any trader or manufacturer.

According to working definition of federation of Malaysian Consumers Association. A consumer is a person who consume goods, services and gifts of nature for his/her satisfaction and general well-being.

In both definitions there are three important concepts:

* A consumer is a person. In this context everyone from the young to the old is a consumer. A business person is also a consumer and he plays a dual role. As a business person he supplies goods and services and as a consumer he also consumes the goods and services.

What is consumer education?

‘Consumer education’ means different things to different people:

* To a consumer, education is viewed as information to help him/her made better choices of goods and services in the market place.

* To a business person it is an activity that assists him in selling products and services.

* Government officials in the field of consumer affairs view consumer education as a programme to enforce consumer laws and regulations that foster the market competition. They believe that healthy competition and an educated body of consumers will ensure protection for the consumers.

* A consumer advocate sees consumer education as providing information to consumers to protect them from exploitative market practices.

* An educator sees consumer education as development of skills and knowledge that assist consumers to be active consumers in the market place.

Why do we need consumer education?

We need consumer education to build our skills, knowledge, attitudes and values and capacity to act as a rational and responsible consumer. There are five basic aspects in consumer education:

(1) Informed choice

We are living in a turbulent business environment today. It is constantly changing. The lifetime of products become shorter and new products and new features to the existing products are introduced very frequently. Therefore, as consumers we must learn how to obtain correct information on the products and services. Also we must understand the psychology of buying and selling. Learn to purchase rationally, distinguish between needs and wants, and understand the alternatives of conserving and saving are more important.

(2) Value system of consumers

Consumer education must emphasise developing a right set of values among the consumer community. Consumers are not individuals living away from the rest of the society and they are a part of the society. Consumer decisions have a major impact on social and economic set up of the country. Their decisions have an overall impact on the allocation of resources within society. In consumer education we must promote value for money, value to people, value to the environment, value to law and justice.

(3) Recognition of responsibilities and rights

In our day-to-day life we perform three distinctive roles as a worker (employee), consumer and a citizen. As consumers we want to buy goods that are safe and durable. Same time as workers (employees) we contribute to the production of goods and services. If we do our job to the best of what we can or up to the expected standard as workers we get the opportunity to consume products with correct attributes. That shows very clearly that if we understand our responsibilities clearly only, we get the opportunity to enjoy our rights as consumers.

(4) Wise decision-making

We need information to make careful, wise decisions and informed choices. We must become aware of our roles, responsibilities and rights. Always consumers must evaluate, assess, and make responsible decisions in their consumption choices. Consumer education should enable consumers to critically evaluate the impact of their purchasing decisions on the economic, social, cultural set up and natural environment of the country.

(5) Act as catalyst for action

Consumer education must perform a catalytic role within the respective consumer groups. Consumers must be aware of the available avenues of consumer complaint and redress and learn to use them for their benefit. Consumer education must help in developing intellectual thinking of problems solving and motivate participation and act as a team to find consumer problems within their community.

Chandrika Thilakaratne, Director, Consumer Affairs and Information, CAA

Court action for commission of offences

The Consumer Affairs Authority continues to carry out raids under Sections 10, 11, 26, 30 and 31 of the Act. During the month of September 2007, statistics reveal that the number of cases filed in the Courts by the Investigation Officers attached to the Head Office against the traders in Colombo, Hambantota and Puttalam were five and the total sum of fines imposed on the traders was Rs. 712,000. With regard to the other areas, a total of 177 cases were filed in the respective Courts by the regional Investigation Officers of the CAA and the fine collected amounts to Rs. 590,000.

Thus the grand total of the fines imposed stood at Rs. 1,302,000 during the month of September. The highest number of cases were reported from Ampara and Ratnapura areas and the cases filed were 24 each.

According to Section 49-subsection (d) of Part V of the Act “one third of every fine imposed for the Commission of Offence under the Act shall be contributed to the Fund of the Authority.”

There is a proposal by the Minister of Trade, Marketing Development, Co-operatives and Consumer Services to increase this contribution to the Fund of the Authority by bringing an amendment to the Act.

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.

However, especially when repeated consignments are imported, whilst giving the approval (when the product conforms to the relevant standard), SLSI keeps the right to draw samples from selected consignments on random basis to verify the authenticity of the conformity certificate produced. In such situations consignment are released immediately after drawing samples.

The importers who do not submit supporting documents (conformity certificate) as described above will have to undergo the second option.

In this situation, having no proof for conformity to the relevant Sri Lanka Standard, SLSI has to determine the conformity by carrying out tests under its responsibility. For this purpose, SLSI officials will draw samples from the consignment for testing. Going for this option is not encouraged as it is time consuming as the consignment are withheld till the laboratory tests are over and the test results are available and conforming.

If the consignment did not conform to the relevant standard, the consignment will not be released. If an importer is not satisfied with the decision taken on any consignment, he could appeal to the Director General of SLSI.

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

Bottled water: are we drinking disease?

The growing trend among the elite and urban middle classes to go for bottled water is in troubled waters with a stunning disclosure by the Sri Lanka Standards Institute.

SLSI quality testing officer Victorine Pasqual told the PMRP that while some 300 varieties of bottled water were being marketed, only 45 varieties had been tested for quality and approved by the SLSI.

That means no one is sure what is in the other 250 varieties of bottled water and many of them may contain water, which is not fit for drinking. With little by way of regulation or monitoring to curb or stop this dangerous trend. Ms. Pasqual urged the consumers themselves to take preventive or remedial action.

According to her, consumers could take a few precautions before buying bottled water;

* Check the label and ascertain whether the SLSI standards seal is stamped on it.

* Check the date of manufacture, expiry, name and address of the manufacturer.

* See whether there are any algae at the bottom of the bottle.

* Check the quality even of the bottle.

* Press the bottle to ascertain that there are no cracks.

* Check the lid to make sure that the polythene seal is intact. Often racketeers or mushroom sellers collect discarded empty bottles and fill them from water sources which are often contaminated.

While taking these precautions we would also like to suggest that the best way out of this dangerous situation is to get back to the old way of boiling and cooling our own water and if necessary carrying some with us in a bottle.

On a world scale we see another disturbing dimension of this bottled water trend.

Manufacturers and consumers are known to spend hundreds of millions of dollars on bottled water while some two billion people have no access to pure drinking water.

Courtesy: PMRP - News