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CONSUMER LAW MORE BARK THAN BITE
BY REHAB EL BAKRY
Mai Ziad’s bright red car began to fade just months after she drove it off the sales lot. But when she took it to the manufacturer’s service station, the engineers there scoffed at her complaint, accusing her of parking in the sun and refusing to offer any remedy to her predicament. While many might have stopped there and given up, Ziad didn’t. Instead she threatened to take the matter to an NGO that would pursue the complaint on her behalf, loudly and publicly if necessary. Suddenly the body shop’s engineers reconsidered their assessment. After further inspection, they acknowledged that the car’s finishing was defective and offered to replace the car with a brand new one.
Score one for the consumer. Ziad, however, knows she got lucky. Until last month, Egypt afforded no legal protection to consumers; any action taken by companies to assuage dissatisfied consumers was purely at the discretion of the company’s management. “Initially, I was told that there was nothing that could force the company to address the situation with my car,” she says. “If the company opted to [change or repaint my car], it would be because they were worried about their own reputation among consumers and would be less hassle for them.”
On May 14, the parliament passed Egypt’s first consumer protection law – legislation that reaffirms the rights of the consumer as outlined in the United Nations Guidelines for Consumer Protection first issued in 1985 and expanded in 1999. These rights include the consumer’s ability to chose between a variety of products that meet their needs, the accessibility to information about the product itself as well as the manufacturer and importer, the ability of the consumer to raise concerns or complaints to the government as well as the right to pursue legal action against manufacturers, importers, distributors or service providers. The long-overdue law, almost 10 years in the making, is a positive step, but some consumer protection NGOs argue it lacks the teeth to make it effective.
“It was a very big disappointment for us,” says Zeinab Awadallah of the National Association for Consumer Protection. “The only real positive development seen is the fact that the NGOs are now allowed to file class action suits against manufacturers, importers or producers of faulty products. Traditionally, we were not permitted to file class action suits because we were not technically a party in the complaints. But now, the new law allows us to do that.”
Amal Refaat, an economist at the Egyptian Center for Economic Studies (ECES) and co-author of a position paper on the draft of the law prior to its passage, insists the law has its bright spots. She notes that creating a framework to protect the consumer and clearly identify the consumer’s rights is important especially in light of the influx of imported goods that are currently available in the market. One of the most important aspects of the law is that it outlines the creation of a state authority for consumer protection, marking the first time that consumers will be able to turn to the government for assistance when they have problems with the goods or services they purchase.
Previously, Refaat explains, the consumer’s only option was to refer to the myriad of NGOs working to various degrees in the field of consumer protection. While the government recognizes over 60 registered consumer protection NGOs, the oldest dating back to 1982, without a legal framework to facilitate their work they were severely handicapped in carrying out their mission. The best most of them could do was to contact the sales outlet, manufacturer or service provider and attempt to persuade them – often simply by nagging until they got the appropriate response – to return a customer’s money. Failing that, they might report the incident to the individual monitoring units within the various ministries such as the Ministry of Health, Environment or Trade and Industry.
The new legislation gives these NGOs more clout with which to protect consumers. “Now we have a law that outlines the fact that there are clear roles and responsibilities, and ultimately a body that will intervene or investigate when needed, as well as a legal course of action that could be pursued if needed,” says Refaat.
Although the executive regulations of the law have yet to be issued, it is expected that the consumer protection authority will report to minister of trade and industry. The authority’s primary role is to set a national strategy for consumer protection, coordinate with the consumer protection units of various ministries and investigate those complaints that NGOs are unable to resolve on their own. The head of the authority will be appointed by the government, while its board will include representatives of consumer protection NGOs and “experts.”
While Refaat maintains the creation of the authority is a positive development, NGOs that have lobbied for its creation for over a decade were expecting a whole lot more. “We have serious issues with the fact that the authority is a body run by the government,” says Awadallah. “The problem becomes how can the government be both referee and adversary if consumers have problems with a government-owned company, importer or service provider. We were hoping to have a more independent body and not one where government appoints people to.”
The new law envisages a three-step process. If the consumer is unable to resolve a dispute with a product or service provider independently, they should take their complaint to a consumer protection NGO. If the NGO fails to secure an amenable settlement, it is referred to the authority, where a dispute resolution committee chaired by a judge issues a non-binding judgement on the complaint.
Refaat suggests the dispute resolution committee may suffer from the same issues that plague Egypt’s court system, which is seriously overburdened with cases. “We had hoped that there would be an arbitration system,” she says, “which would allow both sides to discuss the matter with a neutral arbitrator in an effort to reduce the red tape and the waiting process to help resolve the matter.”
Moreover, the law set no minimum value based on which a compliant with the authority could be filed. Cases involving an entire line of defective automobiles, for instance, could be backlogged by pending cases over individual complaints about, say, a faulty belt buckle.
But one of the biggest gaffes of the new law, argues Refaat, is its limited and often ambiguous terminology. According to the law, a consumer is defined as an individual who buys or acquires a product or service for personal use only. Companies or organizations that purchase a product or service are not afforded any legal protection.
In addition, the law fails to delineate which services are included under the law. “The definition for services is so vague that it is hard to figure out which services are included and which are excluded,” she says. Traditionally, government-provided services are excluded from any such laws. However, with the consumer protection law, nothing is stated in the letter of the law to indicate that. Refaat hopes the executive regulations will clarify the law’s vagueties, which would give it more bite.
Awadallah is also concerned that the law does not convey the spirit of the UN regulations on the consumer’s right to access information. While the UN intended access to information to “give consumers the ability to have information about products that could be dangerous to health and safety as well as any [recalls] on products… in our law, the way the information [dislcosure is] stipulated refers to the ingredients in products, countries of origin, and information about the importer and manufacturer.”
“Surprisingly, the law clearly states that even if the authority is aware that a product is faulty or unhealthy for consumers, the authority and its board members are not allowed to reveal this information to the public. Instead, the onus falls on the manufacturer to provide the public with this information,” she says. “This completely surprised those working in consumer protection, because it is protection that comes too little too late.”
Refaat agrees. However, she says that the mere idea that a law states that not fully disclosing information about products and services is a violation of the law that could result in hefty fines and even criminal charges should be a sufficient enough deterrent for potential violators. Moreover, the law also has some reference of faulty advertising. “This is something completely new in Egypt,” she says. “The notion that advertisers will be accountable for what they tell the public about their products through television, print or radio advertising is a [positive] addition to the market regulations in general. Traditionally, these messages remained unchecked and were unverifiable by the public or any government authority.”
The new law gives NGOs a greater role, but Awadallah warns them against being seduced into the system at the expense of their number one priority, the consumer. “Whenever NGOs are allowed to become active members of the board of directors, they in essence become part of the system, and they have to be very careful when they weigh the interests of one side over another,” she says.
In fact, she believes that those NGOs that remain outside the authority will be the ones that gain the most support and – more importantly – trust from consumers. She believes this trust is essential if the consumer is to actively push for the effective implementation of the law. “The effectiveness of the law will depend on the willingness of the public to make their voices heard when it comes to complaints about products and services,” she argues.
For Ziad, happy to finally own the bright red car she paid for, the new law will give companies more incentive to provide better products and services. “The law [poses] a valid threat of legal action, which is a deterrent… as manufacturers know that a legal settlement or the recall of their faulty products from the market will ultimately cost them more. This is more than we had before.”
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