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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Will we get our own Nader’s Raiders?

Consumers must protect their rights
20 March, 2007 - 00:00
THE CUSTOMER IS ALWAYS RIGHT / Photo by Maksym LEVIN, Boiarka

Germans live by the principle “The consumer is king.” Ukraine has a long way to go to reach this standard. But things are slowly shifting. The State Committee of Ukraine on Technical Regulation and Consumer Policy (Derzhspozhyvstandart) reports that last year the number of citizens’ appeals about infringements of consumer rights exceeded the previous year by nine percent.

Derzhspozhyvstandart attributes this consumer activity — 40,000 complaints filed with local consumer rights protection authorities — not only to an increase in consumer rights violations, but also to the fact that people are more knowledgeable in the legal domain. Most complaints were from Donetsk and Poltava oblasts (over 7,000 and 5,000 respectively), as well as Kyiv (more than 2,000). An analysis of these complaints shows that Ukrainian consumers are mostly concerned about the substandard quality of nonfoods (46 percent) and paid services (40 percent).

Derzhspozhyvstandart statistics indicate that in 87 percent of such cases consumers’ complaints were satisfied, with refunds amounting to some 11 million hryvnias. Ukrainians are obviously starting to defend their rights. Here the main thing is determination.

Thanks to the resolve of several individuals not to use low-quality foods and to use safe transport, enjoy quality services in hospitals, shopping centers, etc., consumer rights protection associations and movements were formed in the US, UK, Germany, and other European countries several decades ago. Today these organizations have hundreds of thousands of members. They cooperate with the authorities and have an opportunity to help improve all kinds of social services: schools, hospitals, railways, telecommunications, passport issuing offices, the police, and post offices. There is much for us to learn from their experience.

In Leslie Waller’s novel The Banker, set in New York City in the early 1960s, the hero ponders things that are topical on World Consumer Rights Day (observed every year on March 15, as proclaimed by the United Nations in 1983). Everything around us is becoming second-rate, worsening with every passing day without anyone noticing how quickly this is happening, Waller’s hero says. The quality of products is deteriorating so that they can be sold cheaper and quicker. There are obsolete and deliberately understated durability and quality standards for textiles, other products, building materials — you name it.

The hero is most surprised by the fact that no one complains or even reacts to any of this. Why bother? Why should one worry about bad electric razors that can’t even trim your sideburns? So no one remembers the aroma of fresh orange juice or freshly brewed coffee, so what? What does it matter that wide-frame films are always out of focus on the screen despite their immense width? Or that the seats in new car models are designed to literally cripple their occupants and that windshield wipers only smear the mud?

In the mid-1960s a team of young lawyers led by the Washington-based lawyer Ralph Nader gave decisive answers to many questions that troubled the hero of The Banker, its author, and the entire American society. Nader was the head of a movement known as Naderism and his adherents were known as “Nader’s Raiders.” A summary of the achievements of Nader and his supporters is useful here, because we have to learn to live a normal life.

What is Nader’s claim to fame? This American activist was simply interested in the question of the worsening quality of products (or their non-improvement, which is the same thing). He started with the inviolable American icon, the automobile. His analysis of cars manufactured by the famous company General Motors, eloquently titled Unsafe at Any Speed, was an eye-opener. The roots of today’s exacting US consumer safety requirements for all Western car manufacturers, including special car body design that can withstand shattering impacts, and air bags to protect the driver and passengers from injuries in an accident, may be traced to the activities of American activists of the 1960s, who launched a number of lawsuits against manufacturers of shoddy products. Their ideas gave an impetus to the sluggish Department of Justice and the federal agency responsible for the quality of consumer goods.

The exhausting struggle with General Motors and the Automobile Manufacturers Association, which supported GM at the time, continued for a lengthy period of time. The Nader group bought GM stock, and since there were millions of GM car owners among the stockholders, proceeded to table resolutions that procedurally had to be made known to all stockholders, thus forcing the corporation to disseminate their ideas. Car manufacturers steadily capitulated to well-informed public opinion, and car safety standards improved accordingly. Nader succeeded in proving in court that GM cars were unsafe. In the end, the company had to pay him 450,000 dollars for moral damages, and the popular lawyer-activist ran several times for president of the United States.

His experience had a powerful ripple effect, demonstrating that a good example is the most eloquent lesson. Law students at George Washington University, who received dispensation to miss lectures, traveled throughout Washington, researching examples of consumer rights’ violations. As a result of their work, the students sent petitions to the Federal Trade Commission, which eventually led to the regulation of gasoline advertising, the introduction of smoking restrictions on board planes and in public places, an anti-smoking campaign undertaken by tobacco companies, and improvements to automobile bumper designs.

Those young Americans demonstrated that ordinary citizens can and must change life and be its masters. A group known as Soup focused on soup manufacturers, accusing one of them, the Campbell Soup Company, of discrepancies in the vegetable content of their soups advertised in television commercials and in the actual product. Although the federal commission dismissed the students’ first petition, they continued their fight and in a year’s time succeeded in gaining support for their position.

The consumer rights movement forced the US Food and Drug Administration (FDA) to release a public warning after a New York man died of botulism after eating a can of Bon Vivant Soup. Despite the company’s hundred-year reputation and assurances that the tragedy was just an accident, the FDA commenced a product recall of all Bon Vivant Soup products. Within one week all leading US newspapers carried information about the recall. Soup production was halted, and all cans were carefully examined. Only five cans were found to contain traces of botulism. I cannot a recall anything on this scale in Ukraine. Bon Vivant went bankrupt three weeks later. Accusing federal inspectors of misrepresenting the situation, the company complained that the sale of 1.5 million cans was suspended because of five bad cans. The lawsuit lasted a while longer and ended with the company going bankrupt and all its products destroyed.

Another company, Campbell Soup, which the student watchdog group had caught for the vegetable content discrepancy in its soups, had learned its bitter lesson. So when traces of botulism (without lethal consequences) were found in a couple of cans at around the same time, they issued an announcement, recalled the products, and survived.

Since then it has become standard practice in the United States: if you produce defective goods, get ready for bankruptcy, because they will wring you inside out anyway. When two cans of Pepsi were found to be contaminated by foreign objects, the mighty corporation trembled for the next couple of months.

These stories, which are typical of the United States, boil down to this: the consumer will never get anywhere with the government or manufacturer — not even with cans of soup — without self-respect. In this sense, the US is a good example for us because it gave rise to the consumer rights protection movement. A legal framework for the protection of consumer rights was initiated in the late 19th century, along with pertinent literature. The first consumer rights protection periodical started publication in 1934. Two years later the Consumers Union was founded in the US, further proof that consumers’ lawful rights and interests were recognized as an inalienable component of human rights.

So it is not surprising that institutions tasked to protect consumer rights are so strong and influential in the US. Today they number over a million members. Do their activities have any practical effect? Reliable sources indicate that almost 90 million lawsuits are heard every year; every three seconds a consumer complaint is filed. You may draw your own conclusions.

I believe that the US is the only country where the role of consumer sovereignty could have been theoretically substantiated. Central to this role is the rational expectations theory developed by economists John F. Muth, Robert E. Lucas, Jr., and Leonard A. Rapping. It quickly became influential in American society, challenging the “scientific organization” of mass consumer consciousness in new conditions, proving that the consumer has been and will always be the sole market demand trendsetter.

CITIZEN’S CHARTER HELPS IMPROVE PUBLIC SERVICES

The movement for the restoration of consumer sovereignty, which began in the West in the late 1970s and was aimed at protecting consumers against fraud by means of counter-expertise and counteradvertising, should be regarded as an offshoot of the contemporary democratic movement. “A true revolution occurred in the early 1990s in the sphere of public services in Great Britain,” wrote the magazine Anglia (no. 127, 1993), which was published at the time in Russian. “People will not put up with second-rate or any kind of inadequate service.”

The Citizen’s Charter, aimed at improving all kinds of public services, ranging from schools and hospitals, tax-collecting authorities and telecommunications, water supply, passport and driver’s license-issuing offices, police force, public housing, to post offices and penitentiaries, found itself at the center of the public service reforms launched by John Major’s cabinet in July 1991.

The Citizen’s Charter has six main principles: setting a required standard; information; openness; availability of choice; access to consulting services; and the rewarding of services for their quality and worth. These principles have been implemented in Great Britain for a number of years, with a constant emphasis on raising public services to a higher level and bringing them into conformity with consumers’ needs. This charter is a constant reminder of the fact that taxpayers need to be sure that their money is being well spent. With the emergence of the Citizen’s Charter the emphasis in the program of reforms started shifting to the public face of services, in other words, relations between these services and consumers. In keeping with its principles, all major public services formulated and published their own charters. One of the first to be adopted early in 1992 was the Patient’s Charter, which established standards and guaranteed patients’ rights in order to improve health service nationwide. This was followed by the Parent’s Charter, which recognizes parental rights in regard to schooling. There is also a Passenger’s Charter, aimed at introducing changes to make the railways work on schedule. Now all passengers know that they are entitled to receive compensation for any shortcomings in their performance. There is even a Taxpayer’s Charter, setting national service standards that are binding on centers responsible for responding to people’s inquiries in the sphere of taxation.

In addition to this important British government initiative, the UK has a so-called Charter Emblem, conferred on public services that maintain a high service level. The first 36 services, including schools, hospitals, government agencies, local councils, and police departments, received this distinction in September 1992. One of the recipients of this award was a penitentiary. Those who receive the Charter Emblem are entitled to incorporate it into their trademarks, use it in ads and commercials, and place stickers on their cars and other vehicles so that the general public can see how well they provide services to the population.

THE CUSTOMER IS KING

Thanks to the Citizen’s Charter, the public service sector in Great Britain launched one of the boldest reform programs in its long history. It was based on the simple principle of better organized and understanding public services. This is something that every government in the world can only dream about. John Major made his point perfectly clear when he declared that the charter was aimed at giving more power to the people.

The German Consumer Protection Association has also accumulated considerable experience along these lines. It receives generous financial assistance from the government, which funds two- thirds of the association’s budget. Also active in Germany is the Stiftung Warentest, the leading consumer safety group founded more than 40 years ago. Its experts run regular comparison checks on goods and services. Consumer rights in Germany are further protected by a system of civic organizations, including the German Association of Housewives, German Tenants Union, German Association of Railroad Passengers, etc. So it was only natural for the expression “The consumer is king” to originate in Germany; it is the Germans’ pet phrase.

Many Ukrainians do not believe that consumer rights can be protected in any way. Even worse, many people simply do not know how to go about it. In other countries people are taught such techniques. A special course called “How to Live” is included in Dutch educational institutions. “The Fundamentals of Consumer Knowledge” is a subject experimentally included in the curriculum of several schools in Russia, including School No. 1741, part of the Western Administrative District of Moscow. These unusual classes started being taught here in 1996, when work began on a textbook that is still in use today.

In the beginning, it was difficult for the school administration to choose the right grade for introducing the class on consumer rights. After lengthy discussions, the school administrators decided on Grade 9, when students start shopping independently. Pavel Pankin, the school principal, says that during school meetings parents gratefully applaud the project. So they should, considering that there are many cases on record where students with sufficient consumer training have forced retailers to honor established rules of commerce. This kind of school subject would be invaluable if it were introduced in Ukraine. I am reminded of J. Berti, one of the representatives of France’s new right wing, who says: “Within the system of free private ownership the customer is supreme because he has the means to encourage the economically correct behavior of manufacturers and punish their faulty behavior.” Manufacturers who are not controlled by consumers turn into an industrial Mafia that loots the country. Their interests have a corporate nature, which run counter to the interests of society. Berti emphasizes that this is precisely the point that is overlooked by Marxist theory, which links private ownership to entrepreneurs’ authority over workers, but does not see the authority of the consumer over the producer. The general democratic essence of small business is primarily manifested in the fact that it wholly depends on the will of millions of consumers.

The harder we work to explain consumer rights in Ukraine, the fewer the number of consumer complaints will be submitted to businessmen and bureaucrats. “The law, as they say, protects those who don’t sleep,” Leonid Shkolnyk, the head of the Consumers Association of Ukraine, has written in the periodical Potrebitel+rynok [Consumer+ Market]. “To expect that someone will be there to protect our consumer rights, in other words our wallets, our health and property, would be not only naive but also sometimes fatally risky. To date, no one has assumed responsibility for those horrifying statistics that show that tens of thousands of men die every year in Ukraine from alcohol poisoning and contaminated food products. A company with a lax attitude to consumers is not likely to stay on the market for long in any civilized country. Unfortunately, habits and morals are different in Ukraine. This faulty practice must be discarded, and the sooner the better.”

I think Shkolnyk has a point there. What do you think?

By Yurii KYLYMNYK, Kyiv
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