Honeyman: CONSUMERISM

Monday, November 7, 2011

‘THE state shall protect consumers from trade malpractices and from substandard or hazardous products’ Sec 9 Art XVI 1987 Constitution.

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In June, Executive Order No.45 designated the Department of Justice as the home of the Competition Authority. Its role is to ensure that competition policies and laws are in place to prevent consumers from ‘abusive, fraudulent, or harmful business practices.

The Competition Authority is therefore mandated to deal with cases where suppliers, ostensibly in competition with each other, are, in fact, colluding to their mutual benefit but against the public interest. For example, oligopolistic price fixing in the oil industry is often quoted as an unfair practice, although the oil companies vehemently deny that they do this.

We believe, however, that in the majority of cases where consumers are abused, defrauded or subject to harmful business practices, it is from a questionable supplier to an individual customer. In other words, it does not come within the purview of the Competition Authority which is tasked only to deal with generalized abuses, frauds and harm.

There is much to be done before the Constitutionally-mandated adequate consumer protection from trade malpractices and substandard or hazardous products is achieved.

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What is needed are independent arbitration and conciliation bodies which are explicitly designed to cope with situations where the consumer and the supplier are in dispute which they are not able to resolve. At present, the supplier can, with impunity, unilaterally disengage from the dispute leaving the customer dissatisfied. This falls short of the level of consumer protection required by the Constitution.

Setting aside the Constitutional mandate relating to substandard or hazardous products, we focus on trade malpractices.

Firstly, there is the question of defining a trade malpractice. This is where the independent arbitration and conciliation bodies may be most useful. Precedents will be set, so that given a similar situation, it will be clear how disputes should be resolved.

We believe that much useful progress may be made in relation to unsatisfactory suppliers in several key sectors, including telecommunications, banking, insurance, and transportation.

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Telecommunications

The convergence of computer and telecommunication technologies has resulted in an explosion of demand for telecommunications resources.
For several years we have subscribed to Globe’s telecommunications products.

Recently we have had severe problems in gaining Internet access. We have made representations to Globe whose knowledgeable and helpful engineers have done their best to rectify our disappointingly intermittent Internet availability. But the problem remains. We are concerned that Globe’s infrastructure is insufficient to handle its demand. We are more concerned that potential new subscribers are being enticed by inducements which mean that they are paying less than long-serving customers.

I do not know whether or not this situation comes within the purview of the Competition Authority. If it does, then I hope the problem is examined. If not, then some other government body should be empowered to deal with the problem.

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Conclusions:

The whole question of consumerism is ultimately of benefit to the suppliers as well the consumers. Whole sectors are underrepresented in the Philippines due to abuse of consumers. For example the purpose of House Bill 4867 dealing with Insurance Code amendments is ‘to accelerate the growth of the insurance industry and to ensure a fair and equitable treatment of consumers.’ Whether the House Bill will have the desired effect remains to be seen. One questionable item is to allow payment of insurance premiums and loan obligations by government employees through salary deductions. We have had past abuses of school teachers in Bacolod in relation to insurance premiums which seemingly never reached the insurance company [Prudential Asia]. As far as we know, GSIS has never satisfactorily resolved the issue.

Our own experience was with Philamlife which at that time was the Bancassurance partner of BDO. Money was taken by Philamlife from our BDO account for an insurance policy which never materialized. Incoming Philamlife CEO Rex Mendoza said that he would address the issue ‘soonest’ but that was months ago and we have heard nothing since.

Nobody tells us that Philamlife is worse than anyone else, so we can only conclude that the insurance sector is still defective.

We hope there will be less consumer abuse from Philamlife’s truculent organization. We do not think Mendoza will effectively address our case so Philamlife’s flaws will remain. This is to the detriment of not only Philamlife but to the whole insurance sector.

Caveat Emptor!