The 12th International Consumer Law Conference Blog

Organised by NALSAR and the International Association for Consumer Law

26th February: Financial Services

Chair: Prof. Christopher Peterson, S.J. Quinney College of LAw, University of Utah, (USA), Transnational Consumer Debt Collection

Prof. Christopher Peterson, S.J. Quinney College of Law, University of Utah, USA: Transnational Consumer Debt Collection:-

The speaker started by quoting from Adam Smith’s book, The Wealth of Nations; It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The taylor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a taylor…What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the product of our own industry, employed in a way in which we have some advantage. So, if a foreign country can collect our debts better than we ourselves can, better to outsource them with some part of the product of our own industry, employed in a way in which we have some advantage. The basic premise of his paper was therefore to see how this was true or wasn’t and why.
The speaker spoke of how debt collection practices have great potential for consumer abuse such as harassment and the psychology of failure, over-charging, reputational captivity, identity theft, “Zombie” debts which keep coming back like zombies and issues of suicide.
He gave the example of how with millions of people fluent with English in India, in particular, has lead to providing product support, reservations and marketing for companies in the US, Canada, Australia, Ireland and UK. Indian companies are also providing consumer debt collection services for creditors in post-industrial countries.
He concluded by recommending that policy makers should anticipate that financial predators from both developed and developing countries are likely to attempt to exploit the various regulatory weaknesses that exist.

Prof. Jenny Hamilton, University of Strathclyde: Choice, information and education–the illusion of consumer empowerment in financial services:-

Talking about the explosion of the number of retail financial products designed by the industry for the mass retail market in the UK, it is not co-incidental but in response to the government desire to structure its public finances so as to reduce or withdraw from communitarian welfare provision. At the same time, social and familial structures mean that citizens are expected to make individual and private provision for their retirement and elderly care through market mechanism. The citizen has now become the consumer of financial services.
Various regulations have embarked on campaigns to improve the financial literacy and education of consumers in relation to savings, investment and debt. Here, the speaker posed the question of- Why, in the retail financial sector, information disclosure and financial education and capability regimes have not produced the anticipated benefits for consumers and why, despite continued consumer detriment, is there continued support for unfettered consumer choice?
The speaker suggests that the reason that information disclosure and financial literacy and education campaigns have produced only limited benefits for individual consumers of financial products and services, and in some cases the effects have been detrimental, while research into the effect of choice suggests that too much choice can be debilitating rather than liberating.
She concludes by laying emphasis on membership of a community rather than freedom of the individual, that doesn’t necessarily centre on choice as expressed through markets, and where outcomes don’t depend on possessing the ‘calculating framework’ of the ‘rational consumer’.
Rapporteur: Disket Angmo
IInd Year
NALSAR University of Law
Hyderabad, India.

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Filed under: Uncategorized

27th February: Creating a Legal Infrastructure to protect Consumers in a Global Economy Consumers Rights and Poverty

Chair: Dr. A. Rajendra Prasad, Head, Department of Law, Andhra University

Joyeeta Chatterjee, Gujarat National Law University: Vulnerable Consumers and Poverty as an Issue of Consumer Law.

 

In the present era of globalization, the ‘cause and effect’ phenomenon relates to poverty has become immensely entangled and the present and the present surge of consumerism in its most aggressive mien has added fuel to the fire. It is largely contented that globalization policies have failed to strike a healthy balance between growth, development and its negative side- effects.

 

Competition between producers to attract customers is expected to create economic efficiency, innovation and better quality products at lower prices. However, instead of offering choices and lower prices, liberlisation has led to the creation of monopolies and cartels thereby denying consumer the very benefit which it is supposed to promote. It is thus imperative that competition is promoted with the benefit to the consumer in mind.

 

Consumer over- indebtedness has too been a central legal policies, procedures, law and cases from a consumer welfare perspective. It would throw light on the existing legislation in over- indebtedness and consumer bankruptcy along with consumer bankruptcy along with consumer insolvency regulation, and consumer credit legislations. Apart from linking debt relief to poverty reductions, it would analyze the nexus between bankruptcy and poverty. It would further suggest methods that can be adopted in the realm of consumer law to alleviate the poverty.

 

Ashish Krupakar, IInd Year, Gujarat National Law University: Vulnerable Consumers and Poverty as an Issue of Consumer Law:-

 

The speaker put forth his main aim, to address the need for the presence of a consumer law coupled with a procedure which would address the need of vulnerable consumers which the mainstream laws fail to address. He firstly defined a consumer as per Indian laws, the definition provided by the Consumer Protection Act of 1986 which was enacted in furtherance of the United Nations Guidelines. As per this Act, a Consumer is one: -who buys goods for a consideration, or someone who buys services for a consideration.

He says that the Consumer Protection Act of 1986 does not make any special provisions with regard to uneducated consumers and the poor whose access to legal remedy is restricted. He suggested that the Consumer Protection Laws should be further expanded with a view to include the following:

  1. Protection of consumers from hazardous goods and the right to safety and health.
  2. The promotion and protection of economic interests of the poor.
  3. Access to adequate information.
  4. Control of misleading advertisements and deceptive information.
  5. Consumer Education.
  6. Effective Vulnerable Consumer Redress.

His final recommendations were that we need in India the following:

  1. Consumer Education
  2. Adequate Consumer Information
  3. Presence of a non – litigation form of a redress mechanism to settle minor disputes as a measure to tackle expensive litigation.
  4. Simplify existing procedures in cases where litigation is a must and provide poor litigants with the right to free legal aid. 

                         Rapporteurs

         Ayushi Mittal, IInd Year, NALSAR University of Law Hyderabad

         Disket Angmo, IInd Year, NALSAR University of Law, Hyderabad.

 

 

 

          

Filed under: Sessions

26th February: Over Indebtedness and Possible Solutions

Chair: Dr.P.V.R.Jagan Mohan Rao, Director, Finance and Comapny Secretary, Ind- Barath Power Infra Ltd (India)

Phumudzo Munyai, Professor, UNISA (South Africa) :How to Crub Over- Indebtedness and Enhance Consumer Welfare in South Africa: Lessons from Islamic Law

 

Over spending and easy credit is singled out as the single biggest cause of consumer over indebtedness in many countries. Little attention is paid to economic and monetary polices and practices as possible causes of consumer over indebtedness. In South Africa easy credit is generally blamed for consumer over indebtedness. The National Credit Act, 34 of 2005, was premised fundamentally on these assumptions. The Act protects unworthy borrowers from unscrupulous credit providers, there is little attention paid to the welfare of those credit worthy borrowers, once the credit transaction is concluded. A comparative study reveals that there are valuable consumer protection lessons South Africa can learn from Islamic Law, which denounces payments or receipt of interest. By efficiently protecting consumers against higher prices, in the form of interest, Islamic law provides obvious benefits for consumers, especially the poor who would otherwise not be able to avail the certain basic needs. The benefit of this approach is that is that resulting consumer satisfaction will boast confidence in our credit system while at the same time ensuring equitable resource distribution and balanced economic growth in the long term.

 

 

Vincente Gozalo Lopez, Assistant Proffesor, Universaity of Cantabria (Spain): Over Indebtedness in EU

 

House hold over indebtedness has been a wide spread problem for years, but Spanish law makes no specific provision for it. At most the Spanish legislation has created a number of institutions designed more as a means to prevent over borrowing by placing constraints on lenders advertising. Looking at statutory provisions, it is a fact that consumers in Spain are unprotected in insolvency proceedings. This is unusual, since leading European Union countries have implemented frameworks that enable a consumer who is undergoing economic hardship to negotiate a grace period for her debts, or once her attachable assets have been fortified, she may even have liability extinguished for any debts that still remain outstanding. It is the nonetheless to be borne in mind that law in these European states is very careful to ensure that this fresh start afforded to a household so that it can sustainable rebuild its domestic finances is not granted blindly or indiscriminately in the form of an absolute discharge, rather the law deliuates the conditions of varying strictness under which it is fair for a consumer to enjoy protection.  The consumer insolvency calls for a range of legislative decisions that remain unachievable by any interpretative approach to the positive law now in place. Any reform should preserve a number of principles that have been worked out in the legal doctrine has so far addressed the issue.

 

Philip Stoop, Lecturer,University of South Africa: South African consumer credit policy: measures indirectly aimed at resolving and preventing consumer’s over indebtedness

 

The Global economy has boomed during the last two decades and the boom is largely due to an increase in granting of credit and easy access thereto. However this economic boom came at a price since the number if individuals and business that are over indebted has reached new heights. Legislation protecting debtors and aimed at directly of indirectly preventing the problems of over spending in various ways is therefore an international phenomenon and this legislation differs from country to country depending on the needs of the specific country. Due to a considerable imbalance of power between the credit providers and consumers, low education levels, poorly informed consumers, weak disclosure and deceptive marketing practice, South African consumers also entered into unaffordable credit contracts and this over indebtedness caused many social problems. In order to align new consumer protection, the National Credit Act introduces regulatory measures directly and indirectly aimed at resolving over indebtedness of consumers. The purpose of this paper was to thoroughly address some of the indirect measures aimed at resolving and curbing over indebtedness in the South African credit industry and the role the indirect measures play in relieving problems connected with poverty and over- indebtedness in the context of the global economy

 

                        Rapporteur

                      – Ayushi Mittal, IInd Year, NALSAR University of Law, Hyderabad     

 

Filed under: Sessions

In a presentation entitled “Agriculturist Debtors – A Vulnerable Consumer Group”, Namrata Sharma and Priya Sharma of HNLU, Raipur brought out the plight of Indian farmers, caught up in the vicious cycle of debt compounding debt. Typically, the process starts with the deadly trio of the WTO, IMF and the WB laying down the guidelines for developing countries which are, more often than not, agro-based. The villainous trio of IMF, World Bank and WTO are in connivance with each other. With institutional credit also falling short of requirements, the recourse to unofficial sources – the village moneylender and mahajan – had increased enormously. Working in a completely unregulated environment, these agents often felt at liberty to charge extortionate rates of interest. In conclusion, various measures taken by the government were enumerated and suggestions given for further improvement. Avni Chari of NALSAR spoke about the ascendancy of MNCs over the seed industry, particularly in India. Talking about India’s first bout of farmers’ suicides in 1997, she pointed out that the cardinal reason for the suicides is the abysmal arrears the cultivators find themselves in. Moving on to the specific issue of commercialization of seeds, the researcher revealed that over the last few decades, scientists developed the ability to modify the blueprint of life i.e. DNA and it is in response to this novel scientific venture that intellectual property laws were adapted to encompass living organisms. Furthermore, India announced its globalization policy during the Narsimha Rao tenure in the early 1990’s. This prompted an effusion of MNC involvement (such as the agro-MNC of Monsanto) with India. Prior to its grand commercialization, seeds were under the ambit of the public domain. Now, seeds are owned by those patent a particular variety. The introduction and failure of Bt Cotton in India was thus discussed followed by the reasons for failure of compensation schemes for affected farmers. For instance a new survey in India has found genetically engineered cotton (Bt Cotton) is causing negative health effects among farm workers. In conclusion it was pointed out that it is government policy that needs to be cajoled out of its present position before any amount of consumer protection can be afforded. The team from RMLNLU and GNLU presented their perspective on “Multinational Companies: Consumer Protection Laws in India.” A brief introduction on multinational companies was first given wherein it was pointed out that Section 591 the Companies Act, 1956 defines “Foreign Company” as a Multinational Company having its head offfice outside India is a foreign Company. While talking about consumer protection at the international level, the role of United Nations Draft Code of Conduct on Transnational Corporations, 1977 and other declarations was also discussed. In addition, the role of consumer protection in India was discussed through a cursory presentation on the Competition Act, 2002 and the Foreign Exchange Management Act, 1999 among others. The drawbacks at the international and national level were discussed and recommendations were given. In conclusion it was said that the final hypothesis that is drawn in the paper is that though there are provisions in various enactments dealing with consumer protection as far as offences by companies are concerned, stronger laws both at national as well international level are required to protect the vulnerable consumers of developing country like India.

Rapporteured by

Arushi Garg, 1st Year

Gautam Swarup, 1st Year

Filed under: Uncategorized

The first presenter for the stream “The Rights and Responsibilities of Service Providers in a Global Economy” on the third day of the conference was Mr. Alan M. White from Valparaiso University School of Law.

 

The subject of his paper was “Regulating Credit for the Poor: Lessons from Micro-lending in Developing Nations.” He began with a discussion on the access to capital available to the poverty-stricken people of the world, juxtaposing their low capital access with their exploited status.

 

            He mentioned the usury driven credit structures that have typically been employed by low-income groups. The fact that this section of the financial services industry has typically been deregulated has lead to exploitation of people procuring small amounts of money, leading to over-indebtedness of consumers.

 

            He discussed Welfare Economics, the utility as well as the disutility. The utility comes from income-producing investments while disutility results from such factors as overconfidence bias leading to negative returns.

 

            The substance of his discussion came with discussions of such microfinance organisations as the successful Grameen Bank of Bangladesh.  Delineating the successful model employed by them, he mentioned their high level of controls leading to comparatively excellent rates of repayment. The welfare impact of such organisations has been tremendous.

 

            Contrasting this to the debt cycle and over-indebtedness created by small-consumer loans in the U.S., he discussed the paternalism of such microcredit organisations. He also discussed similar situations in Bolivia and South Africa and how their debt-remedy measures may be applied to the U.S. small-consumer loan systems.

 

 The second presenter of the day was Ms. Wenette Jacobs, from the University of South Africa, presenting a paper on “The Liability Insurer’s Right to Defend and Settle Claims against the Insured by Third Parties and Legal Protection Insurance in the Context of Liability Insurance.”

            The researcher presented the participants with keen and penetrating insights into the liability insurer’s right to defend and settle claims against the insured by third parties and legal protection insurance in the context of liability insurance. The presentation dealt with liability insurer’s right to defend and settle claims and the scope of  legal protection insurance in liability policies. The pros and cons of a separate legal protection insurance were gone into.

           

Regarding the liability insurer’s right to defend and settle, it was said that the Insurer may take over and conduct the defence and settlement of any claim and have the right to use the insured’s name for this purpose. Therefore it becomes imperative to compare the right to subrogation with the right to conduct the insured’s defence and settlement. The liability insurer’s duty to defend was contrasted with its right to defend. The conflicts of interest between the liability insurer and the insured and the conduct of the proceedings by the liability insurer were then discussed.

 

After a riveting discussion on legal protection insurance it was concluded that there remain limitations in a defence by the liability insurer and the provision of legal protection insurance in a liability policy. Perhaps the time has come to seriously start considering a separate legal protection insurance.

 

The third presenter for the day was Ms. Surabhi Singh presenting a paper by herself and Ms. Renu Arora.

 

Professor Surabhi Singh sought to present before the august gathering the pros and cons of banking institutions. These were classified these into public, private and foreign banks.

            Starting off with the definition of banks as community based and business organizations, the researcher pointed out that banks play a role of considerable economic significance. It has been observed that in India the bank system is facing stiff competition and advancement of technology. Banking in India is considered as fairly mature in terms of supply, product range and reach but well computerized foreign banks are beginning to compete seriously with the nationalized banks.

The services provided by banks have become more easy and convenient. The Indian banking industry is passing through a phase of customer market. A few of the electronic banking services are offered viz. ATM, ECS, EFT, tele-banking, internet banking and so on. To provide continual customer satisfaction, banks are now required to continually improve the quality of services.

            Primarily three research questions were identified.

l      What are the major factors affecting customers’ satisfaction with the quality of services?

 

l      What is the level of customers satisfaction with the quality of services provided by public sector, private sector and foreign banks?

 

l      Do customers switch over to the IT adoption in public sector banks and to which extent?

 

A survey of 60 people was undertaken and their relationship with banking systems was studied and it was confirmed that the younger generation is starting to switch over on private and foreign banks. Reasons for selection of nationalized banks include faith, old bank and near the residence. Good services and more facilities were  the primary reasons for choosing private and foreign banks. Respondents of nationalized banks were not satisfied with employee behavior and infrastructure. Respondents of private and foreign banks were not satisfied with high charges, accessibility and communication.

                           

Session rapporteured by

Shuchita Thapar, 1st year

Arushi Garg, 1st year

 

 Note: The previous session was rapporteured by

Shuchita Thapar, 1st year.

Filed under: Uncategorized

The second day began with two presentations from two South African delegates, both dealing with two facets of the South African National Credit Act.

The first, presented by Mr. Matome Melford Rabisa was a study of the role of the Act in preventing irresponsible borrowing and lending, viewed in context of the genesis of the global economic meltdown and how it might have been prevented by certain provisions of this Act.
The act aims “to promote responsible credit granting and use and to prohibit reckless credit granting.” Its implementation has received mixed reviews, but its worth can be seen in the light of the economic crisis which potentially may have been averted if the provisions of NCA were employed.
The presentation was divided into three portions, first being a discussion of the U.S. crisis and its beginnings followed by a brief discussion of the concept of securitisation, third coming a detailing of the provisions of the NCA culminating in an analysis of the concepts.
One of the major reasons said to be leading up to the global financial crisis was the crisis in housing that followed massive numbers of subprime loans given by banks to high-risk consumers. Eventually, the bubble burst when borrowers began to default en masse, which lead banks to foreclose on several loans leading to large scale failures of several financial institutions.
The concept of securitisation says “securitisation is a financial technique in terms of which pools of similar claims are grouped together to sell them to an entity established for the specific purpose of acquiring such claims.”
The NCA is aimed at preventing securitisation crises.
Some of the important provisions of this Act include prevention of over-indebtedness of borrowers and reckless lending of lenders at several transactional stages, and if such over-indebtedness is detected, debt restructuring comes into play. If reckless lending is detected then there are penalties imposed. Thus by forcing consumers to live within their means, no point of collapse would come about.
The major point emphasised was the need for regulation of lending practices to prevent situations like the one current from arising.

The second presentation of the day was by Prof. Michelle Kelly-Louw, dealing with the necessity of consumer protection against rapid and repeated hikes in interest rates. Again viewing the fallout of the NCA, she first delineated the objects of the act thus: “to encourage responsible borrowing, the avoidance of over-indebtedness and reckless lending, and to provide for a system of debt restructuring.”
Under this Act, to prevent over-indebtedness, a loan amount is adjudged based upon half a persons net income minus his value of necessities. The determination of loans allowed to be taken is based on data available at the time at which such a determination is made. Where a credit provider makes a proper assessment and finds that a consumer will be able to satisfy in a timely manner all the obligations under all his credit agreements, the credit provider will conclude the credit agreement, e.g., mortgage loan (home loan).
An ‘affordability assessment’ made will depend on the prevailing interest rates at the time. However, there has been a failure to consider what happens if the interest rate increases drastically after the agreement is concluded, causing the consumer to no longer be in a position where he can satisfy his obligations under his credit agreements? These agreements are often in the nature of housing loans, etc.
The increase in interest rates may also cause the consumer to become over-indebted and, in the end, he may even end up, e.g., losing his home. This phenomenon usually occurs in the low-income groups, since, the rich and middle income groups may always downgrade their accommodation but the poor have no choice to go lower from the homes they currently are attempting to buy.
There have been several interest rate hikes over the past few years, causing large practical impact upon low-income house owners.
The South African government provides free housing to certain members of the public, but the people whose homes have been foreclosed upon are not applicable for them since they are meant for those who have never previously owned homes. The NCA has failed to take into its purview cases such as these, and consequently there is no sort of consumer protection available for those who fall into over indebtedness thanks to constantly rising interest rates.
There is a necessity to redress this injustice, but the exact means are yet to be worked out.

Filed under: Uncategorized

25th February, 2009: Rights and Responsibilities of Service Providers in a Global Economy

Dr. Dulio Álvarez Rubio University of Cantabria (Spain): Fight against poverty and climate change as advertising weapons and European Directive of Unfair Commercial Practices :-

The speaker firstly, brought forth the problem with classic dictionary definitions of advertising not always including indirect means of advertisement, which poses a problem when misleading commercial practices need to be checked. He then emphasized on the fact that advertising needed to be defined before you begin with any analysis of the concept. He used the definition given in Art. 2.1 Council Directive 84/450/EEC of 10 September 1984 -“making of a representation in any form in connection with a trade, business, craft or profession in order to promote the supply of goods or services, including immovable property, rights and obligations”.
Upon an anlysis of the new concept of advertising, which was implicit in the European Directive of unfair commercial practices (Art.2.d), he came up with the observation that the definition of commercial communication and advertising addresses commercial practices directly related to influencing consumers’ transactional decisions in relation to products. It does not address commercial practices carried out primarily for other purposes, including for example commercial communication aimed at investors, such as annual reports and corporate promotional literature. It could allow enterprises to use strategies of misleading in fileds as the ones we are talking about without any punishment, a fact that is particularly dangerous as these days, most of the companies use subtle, “indirect” tecniques.
According to him, companies use commitments against poverty, global warming, etc and other social problems. This according to him is also advertising as their main aim is to promote the brand image and name.
A question which he wanted to answer was whether the public showing of corporate responsibility plans be considered advertising?, or, by extension, the major question that was sought to be answered was – Can information in commercial practice that helps form a brand image be controlled? The question was answered eventually with the fact that even if it is not always, based on the changing nature of commercial practices, it should be.
There are five types of social marketing. The first three are covered by a controlling directive, whereas the last two have no controls upon them despite the fact that they also form consumer impressions.
1. Advertising with social commitments mixed with concrete commercial offers.
2. Advertising with concrete references to quality of goods produced.
3. Advertising with references to abstract commitment with rekation to goods promoted.
4. Advertising with reference to abstract commitments without any relation to goods promoted.
5. Advertisements with concrete references with no relation to goods promoted.
Since the last two forms have no controls placed upon them by the directive, they may very easily be used to mislead. They often are, as well.
He referred to the case of Nike v. Kasky, a US case to interpret with accuracy, what must be considered as advertising from a legal point of view in order to avoid misleading practices. The judgement recognised the varied nature of social advertising, and considering the importance of image and branding, agreed that socially targeted marketing also required controls upon it.

Professor Madabhusi Sridhar Acharyulu, NALSAR University of Law, Hyderabad, India: Is the consumer consumed?:-

He began with an anecdote about the slick marketing strategies employed by hell, segueing into corporate commercial practices, which attempt to “sell you hell at an exorbitant price.” He talked about how marketing departments create and sell fake images of the brand and products. How the media was being used to propagate their schemes and reach people in a very impressive way while also increasing the price. Global market in cyber space through satellite media is now a very fertile premise for launching products simultaneously all over the world and enhances the scope for selling adopting manipulated truth.
The paper essentially dealt with three cases: that of tobacco companies, Amway and Securities scams while examining company liability in light of misleading commercial practices (advertising and otherwise), both in a present-day scenario as well as historically. A 2002 Philip Morris judgement gave large amounts of compensation to a woman who had been a lifelong smoker since she was convinced by tobacco advertising that lung cancer was not a reasonable danger. Indian courts are however, not up to the point where consumers can seek redressal for their troubles.
The main question to ponder over that who should be blamed for all this? The producer, or the manufacturer, or the advertiser?
There is, as pointed out, a great necessity for regulation of such unfair trade practices. The FTC Act in the US acts as a deterrent, but despite all the acts such as the CPA, MRTP and Competition Act, the Indian consumer cannot be said to be adequately protected.

Savita Hanspal, Reader in Commerce, Kamla Nehru College, India & Prof. Shri Ram Khanna: Regulating and Misleading Advertising: Role of ASCI:-

The speaker discussed the measurement and reporting of Television Rating Points (TRP), which are used to indicate the popularity of the channel or program. The system of measuring TRPs in India is heavily biased in favour of the rich and powerful with purchasing power. The broadcasters of all 400 TV channels in the country follow the skewed ratings calculated by one of two companies, which have a very limited and biased sample to judge from. This means the broadcasters tend to show only what the rich will want to watch, ignoring the entertainment requirements of the vast majority of the country.
The TRAI or Telecom Regulating Authority of India conducted a fact finding mission, which was intended finally to recommend regulations regarding the TRP ratings.
In May 2008, India had 78 million cable and satellite TV possessing homes. 1.2 million also have direct broadcast services to their homes. Two companies in India are in charge of gathering TRPs for the whole country, TAM and EMAN. They have unconscionably small sample sizes- 6000 and 7000 homes- to gather ratings for the entire country. However, their samples are skewed based on regions, age groups, societies, which in the end trickle down to the bias related to purchasing power. Despite the availability of technology to measure in real-time the television that is being watched, such mechanism is not employed, leading to suspicions of fiddling with data gathered.
The paper finally suggests that in order to maximise social welfare, government should by regulation mandate a reliable scientific, accurate and transparent measurement system and in doing so should not be involved in its management but should only ensure its independence, scientific basis and accuracy.
Rapporteurs: Disket Angmo, IInd Year
NALSAR University of Law
Shuchita Thapar, Ist Year
NALSAR University of Law.

Filed under: Uncategorized

25th February – Creating a Legal Infrastructure to Protect Consumers in a Global Economy; Consumer Protection and Varied Approaches

Session: 2:00 to 3:20 P.M. in Seminar Hall III

Chairs: Prof. Gail Pearson, University of Sydney, Australia – Streamlining Consumer Law Rules: an Australian Perspective, and Prof. N. Vasanthi, Associate Professor, NALSAR, Eco-labeling and its implications for third world farmers

Vasundhara Ravi and Geetanjali Dhankhar, Post-Graduate students of NALSAR (India), Developmetn of Ombudsman’s Role as a Champion of Consumer Interests in Financial Sector: A Study of the Banking Bombudsman Scheme in India.

The session began with Prof. Gail Pearson who discussed the position of consumers in her home country of Australia. One portion of her presentation dealt with the harmonization of consumer protection policies between Australia and New Zealand. This is in light of the recent effects on globalization that has affected the two countries. The next portion dealt with Red Tape with respect to rethinking regulation and  the cost of business and regulating reform. There needs to be a review of consumer protection laws. Also examined was the extent of self-regulation in terms of financial services, which is higher in Australia in comparison to other countries. Government intervention is necessary because the competition policy alone is not enough. In conclusion, Prof. Pearson emphasized the need to get rid of the inconsistencies present in the law and that there was not enough being done to protect the consumer. The advantage with the issuance of a federal law is consistency while the disadvantage might possibly be a loss of innovation. The fact of the matter is that a country needs to compete economically and for best consumer protection.

Vasundhara Ravi and Geetanjali Dhankhar:

The Ombudsman scheme has as its basic philosophy the provision of an inexpensive, expeditious, fair and accessible system of dispute resolution. The word ‘Ombudsman’ meaning a ‘grievance man’ is a public official who is appointed to investigate complaints against the administration. The concept has now been extended to the private sector as well including banks, telecommunication, transport, insurance, energy, and media broadcasting.

The first part of the presentation dealt with the examination of the role of Banking Ombudsman plays in providing expeditious and satisfactory disposal of customer complaints in a time bound manner. In the second part, the revised Scheme of 2006 was discussed. The presentation ended with a view of the lacunae in the Scheme and various ideas to address them.

Prof. N. Vasanthi:

Consumer Law has moved beyond looking at the interests of consumers alone and has taken a holistic approach to concerns of consumers by viewing consumers ultimately as citizens of a nation and increasingly global citizens. The concerns of consumers in any part of the world are tied up to the concerns of the manufacturers in other parts of the world.  With increasing decentralization of manufacturing and a global market opening up for products from smaller countries the issues of consumers in the first world and manufacturers in the third world raises questions that perhaps the earlier laws do not adequately deal with.

The focus was on eco-labelling. Withe the advent of genetically modified crops and the aggressive selling of such seeds in third world countries that move to label goods has the potential to damage the limited access to markets that such countries have. The presentation looked at the experience of the rug mark labeling against the use of child labour and the Harkin bill to prohibit goods from countries where child labour is prevalent and their implications for labeling regarding genetically modified crops.

Filed under: Sessions

Banking System and Growth in India: Forum Constituted for Dispute Resolution of Consumers

Speaker- Mr. D.V. Seetharama Murthy, Advocate, AP High Court.

The growth of the banking sector in India, right from 1969 till the present day, was traced by the speaker.According to the speaker,the adjudication systems  in place for disputes in the banking system are not enough.In bank related disputes, there was no system of compulsory participation of people who had some knowledge of the banking procedures.Lack of people having a banking background in the adjudication of such disputes led to a lot confusion.An instance of this provided by the speaker was that of a hearing of a bank related case where the judge kept getting confused on the difference between the words credit and debit. Such instances hamper the proceedings of the case.Keeping such problems in mind, the Reserve Bank of India came up with the concept of ombudsman.The Chairman of the ombudsman committee was to be of the rank of a manager or a deputy manager of a bank. This provision took care of the problem of having people with no banking knowledge as adjudicators. The main problem was that according to the Superme Court, the ombudsman was to be a tribunal of limited jurisdiction and also that the scheme regarding the ombudsman was just an administrative step taken by the Reserve Bank and had no statutory authority. In case of any dispute regarding the jurisdiction,between a court and an ombudsman,the jurisdiction of the ombudsman would seize to exist.In effect, the position of the ombudsman was reduced. Also, an ombudsman could not award compensation of an amount which was more than the amount lost.Thus, the ombudsman could not take into award any compensation for the cost of litigation or the mental agony suffered by the litigant.  A copy of the award of the ombudsman was to be provided to the bank within 15 days by the consumer or else the award would lapse. In India, where lapses in the time period are very common,the viability of such clauses need to be looked into.Further,no lawyers are allowed to argue in front of the ombudsman.Thus,lay persons,who have absolutely no knowledge of law,end up arguing in a very ineffective and digressing manner and thus hamper the proceedings.

The speaker also spoke about a case, Durga Hotel Complex v. Union of India, 2007 (5) SCC 120,which has sounded the death knell for the authority of the ombudsman.The Supreme Court held that an ombudsman would have jurisdiction is any case only if the case was not pending before any court or tribunal.The provision regarding the ombudsman had no statutory force. According to the speaker,the ombudsman needs to be provided with the necessary teeth and claws to make the adjudication effective.The provision regarding the ombudsman should have statutory authority.For matters involving complex points of law,the litigants need to be given the option of engaging lawyers.The clause regarding the time limitation of 15 days needs to be looked into and the execution of the awards needs to be made simpler.Further, a proper procedure code,to be followed by the ombudsman should be laid down.A legislation addressing all these issues needs to be enected to provide a much needed effective redressal forum.

Filed under: Sessions

25th February, 2009: Architecture of Consumer Protection in a Global Economy

Neera Bhatia, University of Birmingham (UK), Supply and Demand: Survival of the Richest

 

Technological and medical developments of the twentieth and twenty- first centuries have seen great advances in the treatment and cure of serious illnesses. One such area is that of organ transplants, with transplants increasing dramatically. In this paper the main object which has been dealt with is the kidney transplant.  The problems faced during the transplant and the after affects of the transplant. The problem of black market arises when there is a lack of the organs and people in need of the organs tend to fall for the black market of these organs. To get the organs to sell in the black market these people tend to murder and exploit these people. This is a universal problem for both developed as well as a developing country. Internet is a very beneficial part in helping the transaction of selling the organs. People generally tend to sell the organs due to poverty, dowry threat or clearing debts.

 

The number of people on the waiting list for transplants however is growing, resulting in a clear shortage of organs and many patients dying while on the waiting list. This gap in the market has allowed for the creation of booming black market in living donor organ supply.

 

A case in US where a person advertised to sell a kidney on ebay for which there was ample amount of bidding for the same. This gives the owner of ebay a great idea of selling kidneys on line. In UK a young individual who was over burdened by the student debt offered to sell his kidney for 75,000 pounds and landed up paying 100 thousand pounds and three years imprisonment as the sell of organs in such a fashion is illegal.

 

In developing countries selling of organs is coercion and threat or an incentive to earn in quick fix. Selling of kidneys is not a legal procedure. There are operations which take place in the black market and these patients are left within two days without any proper instructions given to them for their bodily health. Though a person can lead a healthy life even with one kidney but still the amount of risk and harm caused is significant.

 

With a basic supply and demand problem, already organs are available to those who can afford them. Clearly   many ethical issues are raised in the donor transplant and trade debate, however these are further exacerbated when cross bordered and cross socio economic donations are involved. The organs trade is particularly strong in under developed countries such as Indonesia, China and India raising concerns regarding the exploitation and commodification of the impoverished.

 

This paper examines the current socio- economic characteristics of the organ trade, and asserts that a market model must be applied to protect the legal and human rights of both consumers (patients) and sellers (donors). Further, this paper will argue that such a model and associated regulations are necessary for the protection of the value of human life, whether rich or poor.

                               Rapoteurs-

                                  – Ayushi Mittal, IInd Year, NALSAR University of Law, Hyderabad

                                  – Ankita Gupta, IInd Yeae, NALSAR University of Law, Hyderabad.

Filed under: Sessions

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