Ethics of Consumer Protection

TMH Copyright © 2010

Ethics in Business and Corporate 1
Governance
 What is Consumer Protection?
 Consumer: refers to any individuals or households that use goods and
services generated within the economy
 Consumer protection: a concept that are designed to ensure fair
competition and the free flow of truthful information in the marketplace
 Government- enacting & enforcement of laws
 Non government – consumer activism
 IMPORTANCE OF CONSUMER
PROTECTION
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 Role of ethics in the marketplace – manifested through the marketing and

servicing personnel or the organisations itself – in producing, selling and
protecting the consumers is as important as ethics within and inside the
organisation.

 Ethics are even more important when the products marketed are for
children or those that may adversely affect the health of citizens.

 Individuals engaged in marketing should be encouraged and empowered

to be moral and ethical in their dealings – as a priority over profits.
 WHO ARE CONSUMERS?
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 Consumers are those who buy and use products with the intention of
fulfilling their basic, self-perceived or introduced needs.

 Consumers buy with the belief that goods they are buying would fulfill
their needs; they have right to be protected for any deviation, if it exists.
 WHAT DOES CONSUMER
PROTECTION MEAN?
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 Consumer protection and consumer safety in marketing goods and services

are best served in a ‘free market’ condition.

 The driving force behind ethical behavior in a free market is the force of
competition.

 For a truly free market situation, not only is the cardinal rule of listening to
the ‘voice of the consumer’ fulfilled in a business, but the customers are
also enabled to buy only those goods which they want, without loss of
value.

 Consumer education plays a big role in a free market society for effective
consumer protection.
 APPROACHES TO CONSUMER
PROTECTION
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1. The ‘contract view’ of duties to consumers in business

2. The obligations for ‘due care’ in business dealings
3. The ‘social costs’ view
 The Contract View
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 According to this view in business, relationships between customers and

suppliers are essentially contractual in nature, whereby the supplier’s
moral duty is created by the contracted terms.

 The contract view lays four moral duties upon the business:
(a) comply with the terms of the sales contract;
(b) make full disclosures about the nature of the product;
(c)avoid intentional misinterpretation; and,
(d) prevent the use of undue influence or duress.
 Cont…
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 Any affirmation of the fact or promise made by the seller to the buyer,
relating to the goods and service, becomes part of the basis of the
bargain, and creates an express warranty that the product shall conform
to that affirmation or promise.

 In general, a product or service is offered in terms of four variables:

reliability, maintainability, safety and service life. Products should perform
in keeping with these pre-determined or promised expectations of
consumers. Manufacturers have the duty to satisfy consumer expectations
in order to protect consumer interest.
 The Due Care View
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 This view, in effect, not only makes it obligatory for the manufacturers to
ensure that buyers get the goods and services that live up to all the
explicit and implied product claims, but also makes it their duty to exercise
care so as to prevent harm or injury by the products.

 Due care is based on the principles of ‘relationship of dependence’.

 Here, the doctrine of ‘buyers beware’ – applicable to the contract view – is

replaced by ‘sellers take care’.
 Cont…
10

 Due care make the manufacturers responsible for:

(a) designing the product or services using the latest technology to make
the product less liable to harm or injury;
(b) care and control during manufacturing with the help of known
techniques and technology to prevent defects (or liability); and
(c) information about product disclosures made with labels, notices or
instructions on the product that warn consumers of dangers or
precautions (if any) involved in usage.
 The Social Costs View
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 According to this view, a manufacturer should pay for any damage or

injury sustained by a consumer or public owing to any defect in the
product –despite the fact that the manufacturer had exercised all due care
in the design and manufacture of the product, and had taken reasonable
measures to warn users of any possible danger.

 The aim of this approach to consumer protection is ensure that

manufacturer do not escape or evade their responsibility in the case of
any harm or damage to consumers, howsoever unforeseen it would have
been at the start.

 This approach is based on the ‘sellers take care’ doctrine and forms the
basis of legal liability founded on utilitarian logic.
 What are consumer rights?
 Right to basic needs
 Right of safety
 Right to information
 Right to choice
 Right to representation
 Right to redress
 Right to consumer
education
 Right to a healthy
environment
 What are consumer rights?
 Right to basic needs: which guarantee survival, adequate
food, clothing, shelter, health care, education and
sanitation
 Right to safety: to be protected against the marketing of
goods or the provision of services that are hazardous to
health and life.
 Right to information: to be protected against dishonest
or misleading advertising or labeling and the right to be
given the facts and information needed to make an
informed choice.
 Right to choice: to choose products at competitive prices
with an assurance of satisfactory quality.
 What are consumer rights?
 Right to representation: to express consumer interests in
the making and execution of government policies.
 Right to redress: to be compensated for misrepresentation,
shoddy goods or unsatisfactory services.
 Right to consumer education: to acquire the knowledge and
skills necessary to be an informed customer
 Right to health environment: to live and work in an
environment which is neither threatening nor dangerous
and which permits a life of dignity and well-being