Consumer protection: How real is it?

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By Kevin Motaroki

When in 2013 then minister for Trade Moses Wetangula declared operational the Consumer Protection Act (CPA), 2012, consumers breathed a collective sigh of relief. At last, there was a way of dealing with businesses – companies and individuals – that breached the doctrines of fair trade.

The Consumer Federation of Kenya (Cofek), an independent, multi-sectoral lobby group, expressed optimism that the law would deliver a fair, just and safe marketplace for all Kenyan and regional consumers in all sectors of the economy.

“We are glad the law is now active because it was the last hurdle in taking the fight to firms that knowingly breach consumer rights,” Cofek secretary-general Stephen Mutoro said at the time.

However, it is emerging that if the Act had any effect, it was fleeting because even after then, Kenyans have still taken issue with the quality of some products in the market, and hold the impression that, perhaps, its implementers are not up to the task.

CPA provides for the punishment of individuals and corporates which knowingly sell sub-standard goods and lie on pricing, as well as provides for warranties for damaged or injurious goods. An example is last month’s expose that Nakumatt Holdings, Kenya’s largest retail chain, among other retailers, manipulates prices to swindle customers, which led its manager to declare an audit of its pricing system.

CPA also requires regulators to involve consumers – through Cofek and other lobby groups – when making major decisions regarding services and products. According to the Act, those who fail to make full disclosure of information on their goods and services will be liable on conviction to imprisonment for a term not exceeding five years, or to a fine not exceeding Sh10 million, or both.

Listing banks, consultancies and insurance firms as key service providers, analysts predicted that banks and insurance firms would improve disclosure of information to customers. Also included in the list were companies that are involved in the provision of, or the use or enjoyment of facilities for amusement, entertainment, transport, broadcasting, tourism, recreation, education or instruction.

Last year, Edwin Limbus was in an accident – his car landed in a ditch after he swerved to avoid hitting a motorcyclist using the wrong side of the road – that damaged his car’s front bumper. Naturally, he thought, since he had comprehensive insurance, he didn’t have to worry about repair costs. After the necessary police processes, he had the car repaired.

Two months later, he was shocked to receive a surcharge requiring him to pay Sh23, 000 in “excess” – a contribution one is required to pay towards a claim made on a car insurance policy. When he had taken the policy, he had been told there would be no excess, and had happily paid a higher premium than what regular comprehensive cover costs.

He followed it up with his insurer, where he was told that “some repairs” required the payment of “excess”. When he pointed out that that had not been specified in the certificate of insurance, and indicated he would seek recourse elsewhere, he was hastily assured a mistake had been made, and promised a refund that would be “paid soon”. However, five months and several follow-ups later, he gave up and has now decided that he will change companies at the expiry of his cover.

 “I got confirmation from a manager there that I would be refunded, and had no reason to doubt him – the insurer is, after all, one of the largest in Kenya. I don’t think they had any intention of paying me back,” he laments.

“What it means is that I paid almost double my premium. Looking back, I should have gone with my gut and sought help elsewhere.”

In another incident, Sylvia began making savings contributions to a sacco affiliated with a local media house where her spouse works. On the tenth month, she reckoned she had saved enough to use as security for a loan – she was saving Sh20,000 every month – but was told, upon enquiry, that she only qualified for Sh80,000. The sacco extends loan of up to three times a member’s savings and, accordingly, she qualified for Sh600,000. She was asked to produce banking slips for her deposits, which she didn’t have – she hadn’t thought to keep them.

Her respite came when she received her half year statement, which had a record of all her deposits. She quickly notified the sacco through e-mail, but was told unless she produced the slips, the statement was useless. She wrote a letter to the Sacco Societies Regulatory Authority last month, which has launched investigations. And, unlike Edwin, she says she won’t let the institution get away with it.

“Even though I am confident I will recover my money, I have stopped contributing and will pull out as soon as they rectify that. I have even advised a few friends who had expressed interest in joining the sacco against that idea,” says Sylvia.

These instances, while the victims clearly have avenues to seek remedies, demonstrate that the Act is yet to impact policies and decision-making regarding business practices. Even after the adoption of the law, financial institutions, for example, are often accused of opaqueness in their dealings with clients, with claims rife of “hidden charges” associated with operating accounts and credit facilities.

The law, too, prohibits the use of misleading information to sell goods and services, a provision that was expected to make companies more responsible in designing advertisements, but corporates have often disregarded this clause, and placed adverts on TV and in newspapers that are obviously ambiguous or deceptive.

Early this year, at the height of the digital migration battle between government and some media houses, NTV, Citizen, KTN, QTV ran an infomercial advising its viewers to refrain from buying GOtv and Star Times decoders, and instead wait for new decoders, which would be provided by the media houses, and through which they would distribute their content. The gist of the action by the four stations was that GOtv and Star Times had violated the intellectual rights of the four stations, by airing their content without consent.

The Communications Authority (CA), however, through its director-general Francis Wangusi, said the advertisement was “misleading to the public, offensive to the market” and “in gross violation of the legal and regulatory framework governing the sector”. Clearly, the four stations had erred as their infomercial was in violation of the constitutional right of the public to information. Further, the move went against the doctrine of fair competition and ethical advertising.

Cases of companies that offer services to the public behaving badly have not, by any estimation, reduced. But people are not always eager to report them, perhaps disillusioned by inaction by those concerned. Cofek says it receives complaints regularly regarding misdemeanours against consumers, even as Mutoro points out that the number could be higher if people took the initiative to report.

“A majority of the complaints we receive involve the ICT sector, and they include anything from disregard or absence of warranties. But I do not think it is so much about choice as it is ignorance; most Kenyans simply don’t know they can report and seek recourse from Cofek,” Mutoro says. “Even acknowledging that there is only so much we can do, it helps if we know about such things.”

In 2013, The Business Daily reported that Procter & Gamble East Africa (PGEA), the makers of popular detergent Ariel, had been sued the UK-owned Unilever Kenya, manufacturers of Omo, with respect to PGEA’s “one wash” detergent advertising campaign for Ariel, which the Omo manufacturer alleges is non-factual. The advert in question promoted Ariel as the best stain removal detergent “in one wash”, endorsing it as a superior choice to the “other popular powder detergent in the market” an alleged reference to Omo. Unilever argued that the advert depicted Omo as incapable of removing the stains in “one wash”, arguing that the claim is not based on any independent research.

The ethical issue here is whether or not the advert was misleading consumers, who could have been inclined to buy Ariel at the expense of Omo, in the belief that it could remove stains in one wash. Whether or not the claim is true was not established, but the court rejected the suit by Unilever only on the basis that the “other” detergent being referred to was not necessarily Omo.

In May 2014, 83 people died after drinking homemade brew that was said to be laced with the industrial chemical methanol. Investigations revealed that the methanol had been auctioned as ethanol hence the “confusion”. Unscrupulous traders, it was reported afterwards, had mixed the local brew with methanol in an attempt to make more sales out of lesser quantities served.

Investigations showed high levels of methanol in Sacramento Cane Spirit and Country Man Liquor – brands produced by M/S Comrades Investments Company – which also manufactures Hardyman Brandy, Hardyman Gin, Hardyman Vodka, Georges Vodka, Georges Brandy, Rhyneberg Brandy, Pamoja Brandy and Pamoja Gin. Three people associated with the company were arrested and the firm closed. Interestingly, the products had the Kenya Bureau of Standards mark of quality, even as the watchdog denied claims it had supplied the stickers.

How did M/S Comrades get the stickers? Did Kebs collude with the firm to certify the killer alcohol? And shouldn’t Kebs have, at the very least, acknowledged responsibility for the obvious lapse and committed to do better job safeguarding the lives of Kenyans?

The question here is, when the market is supplied with substandard products despite the existence of pre-emptive laws, and the public misled through erroneous advertising, where should consumers turn to for help?

Properly, says Cofek, the onus lies with government agencies charged with enforcing existing laws, such as the Kenya Bureau of Standards, and the line ministries.

Every day, Kenyans buy bad milk, dirty bread and substandard consumables. What happens when, for instance, someone finds plastic in bread or buys milk that has gone bad, is to return the item, upon which the retailer substitutes the spoilt item with a fresh one. What the consumers don’t realise is that the milk could have gone bad because of poor packaging – posing the risk of contamination – or that the bread has a piece of plastic in it because of negligence or poor hygiene. And in the few instances that someone actually wants to lodge a complaint, retailers either try to play it down, or do not have an official channel of recording or reporting such incidents.

According to Mutoro, this culture abounds because consumers “allow” retailers and other merchants to continue it by taking short cuts.

 

“Section 5 (i) of the Cofek constitution provide for ways to address such ills, but we can only act if a complaint is made. And if everyone took time to read and understand the Consumer Protection Act, 2012, I’m sure we would have set a very different culture from what is currently the case.”

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