Why is consumer protection needed?

University Degree Business and Administrative studies

GNVQ INTERMEDIATE BUSINESS

UNIT 6 CONSUMER PROTECTION

ASSIGNMENT 1

TASK 1

Why is Consumer Protection needed?

Consumer protection is the rights granted by law to those who buy goods or services as private citizens for their own use. Consumers are given protection both in the quality of the goods and their safety. In other words consumer protection is the legislative protection of the consumer from unsafe products and unfair business practices.

In our lives we consume, or simply come into contact with numerous different products and we should be able to believe that those products, which we use, are safe. However, that is not possible for all products or services. Therefore one of the aims of the Consumer Protection Act is to help protect the consumer from products that do not reach a reasonable level of safety. It is clear the consumer gains from this legislation however many firms will also recognize that they too can benefit in a few ways.

So that products/services are reliable.

Businesses are expected to produce goods or services of a high standard or quality. The English law requires that products must be of a quality that is fit for the purpose for which it is usually used i.e. if a washing machine does not spin clothes it is not reliable. If this guarantee is broken, the consumer can return the goods and get a refund of the payment made, if the person acts as soon as possible. Also, the consumer can claim damages for the breach.

For example, if a consumer purchases a CD from a shop and finds there are many scratches on the CD, the CD will not work properly and will only play parts of the song. The quality of the sound will be poor and if the scratches are really bad the CD may not even work. Therefore this product is not of a quality that is fit for the purpose that is used and the guarantee is broken. Therefore consumers can reject the product and ask for their money back providing they do so quickly. Alternatively, they can request a repair or replacement or even claim compensation depending on the circumstances.

Even if the consumer is given a refund or is satisfied the company may have lost out on future buyers as the consumer may feel that the products from that company are not of a good quality and may recommend other buyers not to buy the product. This gives a negative image of the company and may mean that other future buyers may be aware of this image and decide not to buy any products from that company as they have heard the products are of a poor quality and are not reliable. This means that there is a loss in customers, which means there is a loss in money, which is not good for the company.

Consumer protection is essential in cases relating to the reliability of the product as it protects consumers from defective products, which are not of a good quality.

So that products/services are produced safely

The safety of the product is one of the most important topics relating to Consumer Protection. This is because businesses are expected to produce products or services of the highest quality, which are safe. The product or service must be fit for its purpose and safe, i.e. a television with an electrical fault could be harmful to the consumer and other people.

For example, a consumer purchases a gas and hires a plumber to fit the gas and the gas is badly fitted. If the plumber has fitted the gas very bad, carbon monoxide gases can be released into the air. If somebody in the house falls ill or even dies due to carbon monoxide poisoning, the consumer can sue under the Consumer Protection Act for compensation for death or personal injury. Also, if somebody dies due to the badly fitted gas the media are likely to be interested. Therefore the nation will know about this plumber and the company, which the plumber works for. This can damage the reputation of the company and cases like these usually result in the company shutting down. If the company gains a big lawsuit, especially if it involves serious injury or death, the company may lose a huge sum of money. When a case like this ruins the company’s reputation it is very hard to regain its good reputation, as everybody is aware of an incident, which happened in the past and people do not forget incidents like these.

The Consumer Protection Act 1987 was brought out to protect against defective products. It meant that the manufacturers of a faulty product would be liable for damage caused by the product, unless they can prove otherwise. People injured by faulty products may have the right to sue for damages; product liability is the term given to laws affecting those rights.

A person can sue under the Act for compensation for:

Death
Personal injury
Private property (providing the loss or damage is at a cost of £275 or more).

Therefore Consumer Protection is essential in cases relating to the ...

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The Consumer Protection Act 1987 was brought out to protect against defective products. It meant that the manufacturers of a faulty product would be liable for damage caused by the product, unless they can prove otherwise. People injured by faulty products may have the right to sue for damages; product liability is the term given to laws affecting those rights.

A person can sue under the Act for compensation for:

Death
Personal injury
Private property (providing the loss or damage is at a cost of £275 or more).

Therefore Consumer Protection is essential in cases relating to the safety of the product as they protect the consumer from defective products.

So that we can have good after sales service.

Every company has to offer the customer the best opportunity to replace or repair the product i.e., if a vacuum machine breaks down within a week of it’s purchase it may be best to replace the product or give a refund to give customer satisfaction. Customer satisfaction is very important, as a company needs to satisfy consumers in order to gain a good reputation and to gain more consumers. If a company has a reputation for bad after sales service it is likely the company will not do well as there is not any customer satisfaction. This means if a consumer buys a product from the company and it turns out the product is faulty, the consumer will not be given a replacement or refund. This means the consumer has almost been ripped off and is definitely not satisfied with the after sales service of the company. If the product is of a high price such as £1,235 the consumer may decide to turn to newspapers to publish this story. This means the company will gain a bad reputation.

For example, a consumer buys a package of windows and doors from a company and is given 2 years warranty on the doors and windows. This means that the company will be on hand to replace the windows or doors if they are damaged, till 2 years have past. Many warrantees are used on expensive products such as washing machines, fridges, etc. Anyway, in this case the 2year warrantee gives the consumer a little more confidence in buying the product as if there is some fault with the windows such as there is a crack in one of them they can be replaced by the company. By offering a warrantee the company is gaining the consumers trust, which is always a good thing. This gives the consumer some relief and gives the consumer more confidence in the product and company therefore they will be loyal to the company. This relates to customer satisfaction.

Refunds and replacements may not help the company financially but some times it can work to their advantage. Many companies or businesses satisfy the consumers by good customer services and some give free gifts, which satisfies the consumer even more. For example, programs such as Watchdog or Short-change advertise companies or businesses, which have usually ripped off consumers. Usually the cases, which are shown on the programs, are followed up and the company usually answers to the complaint as it is being shown on television. In many cases free gifts such as gift certificates, free company products are given to the consumer. This means that the consumer will feel happy with the company’s customer service and will have a positive image of the company. The consumer may even spread the word, which means many other buyers will become attracted to the company and its products. Therefore even though after sales service can cause a loss to a business financially, sometimes it can come to an advantage to the company if they handle the situation well and satisfy the consumer.

Consumer Protection is essential in cases relating to after sales service as it protects consumers from unfair business practices.

Product/Service did not meet the description. (Trades Description Act)

Trade Descriptions 1968 is designed to prevent misleading or false description of goods. It is also in place to prevent:

Implied description, which gives a false impression.
Misleading and false information about the quantity, size or method of manufacture.
Selling goods, which are wrongly described by the manufacture.

In England and Wales it is a criminal offence under the Trade Descriptions Act 1968 to apply a false description to any goods, or to supply goods or services, which have a false description. A false description may apply in advertising the goods, as well as at the actual point of sale. The Act prevents manufacturer, service industry providers or retailers from misleading consumers as to what they spend their money on. Here are some examples, which cover some of the bullet points:

False information about quantity- On a bar of chocolate the quantity is written as being 50g however in reality the quantity is 30g. This is false information about the quantity of the product and is misleading.

False information about the method of manufacture- On a bag of Walkers crisp it is written that the crisp have been baked which makes them much more healthier however in reality they were actually fried. This is giving false information about the method of manufacture and is misleading the consumer.

Implied description which gives false impression- A company selling alcohol has bottles, which have written “GIRLS WILL LOVE YOU”. This is implying that people who drink the alcohol from this company will receive love from girls. This implied description is giving a false impression or idea.

Consumers getting into contact with their Local Trading Standards authority can resolve all these consumer problems, which have been given as examples.

Many advertisers sometimes push the boundary because of such fierce competition and they make misleading claims about their product. For example, on the cover of a chocolate it says 20% extra for each bar of chocolate, however, in reality the chocolate has only got 5% extra. The manufacturer is misleading the consumers and giving false information as on all the products it is written 20% extra whereas in reality it is only 5% extra. The company may feel that in order to increase sales why not mislead customers and exaggerate about the product so they will chose to by from their company. This is breaking the Trades Description Act, as the information is misleading. Therefore, when any manufacturer, retailer is not selling products, which comply with the Trades Description Act and are breaking the law, as a consumer you can let your local Trading Standards authority know. It is their job to get you any compensation if you have suffered from any disappointment. They will investigate the matter and take whatever steps, are necessary to prevent others from being deceived. The Local Trading Standards authorities are under a legislative duty to implement the requirements of this Act and the Act gives them power of entry, inspection and seizure to help them do it. The address of the nearest office of the local Trading Standards authority will be available at the town hall or community centre.

Product is not fit for the purpose it was brought (Sales of Goods Act)

The Sales of Goods Act 1979 & 1995 relates to consumers getting what they want. The act states that traders must sell products that:

Conforms to their description.
Are of satisfactory quality in relation to the price paid.
Are fit for the purpose of which the products have been made for.

If consumers discover that products do not meet these requirements they can reject the product and ask for a refund providing they do so quickly. Alternatively, they can request repair or replacement or even claim compensation. Depending on the situation the consumer can even sue the manufacturer if the case is very serious however it tends to be a last resort as court dealings can take a lot of time and money. Here are some examples, which cover the three bullet points:

Product is not fit for its purpose- A consumer buys a hair straightner and finds that it doesn’t heat up therefore the consumer cannot use it as it can’t straighten hair without the heat. Therefore the product is not fit for the purpose of which it has been made for. The consumer can ask for a refund or replacement as long as he/she acts quickly.

Product is not of satisfactory quality- A consumer buys a computer. When the consumer first uses it he/she finds that it has poor quality graphic effects whereas it cost £1000. The consumer finds that the product is not of a satisfactory quality in relation to the price paid. The consumer can ask for a refund as long as he/she does so quickly.

Conforms to their description- A consumer visits a mobile phone shop and orders a camera phone, which is open to all networks. When he/she receives the mobile phone they find that there is no camera and it is simply just a plain phone. The product does not conform to it description as it is described as a camera phone yet it has no camera. The consumer can get into contact with the retailer to complain and ask for a refund or also report this to the Local Trading Standards authority.

Another example is, a consumer buys a washing machine for £700 from a company. When they receive the washing machine they find it does not spin clothes properly and when it does it causes damage to the clothes. This is breaking the Sales of Goods Act, as the washing machine is not fit for its purpose. A washing machine is meant to spin and wash clothes properly however this washing machine doesn’t spin clothes properly and also damages them. It is not fit for its purpose nor is it of a satisfactory quality in relation to the high price of £600, which the consumer has paid. The consumer must contact the company as soon as possible and ask for a refund, a replacement of the washing machine or for it to be repaired.

Product/Service caused injury to the consumer (Consumer Protection Act)

The Consumer Protection Act 1987 was brought out to protect consumers from defective products. It meant that the manufacturers of a defective product would be liable for damage caused by the product, unless they can prove other wise. The Act introduces strict liability and establishes that anyone injured by a defective product can sue the supplier.

This Act made it a criminal offence to sell goods that do not meet safety standards. One of the aims of the Consumer Protection Act is to help protect the consumer from products that do not reach a reasonable level of safety. It is clear the consumer gains from this legislation.

The Consumer Protection Act 1987 relates to the price and safety of goods and services. It is there to prevent manufacturers or retailers from:

Misleading customers as to the price of goods and services.
Supplying goods, which are not reasonably safe.
Misleading over sale prices and claim exaggerated reductions.

Here are some examples, which cover the three bullet points:

Claim exaggerated reductions- A company announces that all the products from their store have got 50% off prices whereas in reality it is just 20% reduction. Basically the company is exaggerating the price reductions. The consumers can report the company to the Local Trading Standards authority.

Misleading customers as to the price of goods- A fridge is advertised on a leaflet as being priced £500 and when customers visit the store it is priced £800. This is misleading customers as to the price of goods. The consumer can get into contact with the store and complain or report this to the Local Trading Standards authority.

Supplying goods which are unreasonably safe- A consumer buys a brand new car from a company. After a few hours, when the consumer is actually driving the car, the breaks fail in the car. This results in a serious car crash in which the consumer dies. The company has supplied a car, which is unreasonably safe and which has had such a devastating effect on the consumer. The consumers family can claim compensation and sue the company under the Consumer Protection Act.

Another example is, if a consumer buys a television and just starts using it. When the television is first switched on it explodes and injures the consumer. The explosion causes serious injuries to the consumer and has left the consumer with a major disability.

Basically the television is a defective product and is very dangerous to the consumer and other people who use it. Therefore the consumer can sue under the Act for compensation of personal injury. If the explosion was to cause death or damage to the property the consumer also has the right to sue under the Act.

If the product is defective the consumer can ask for a refund, replacement or repair as long as they do so as soon as possible. The consumer also has the right to sue under the Act for compensation for personal injury, death or damage of property providing the amount of loss or damage is £275 or more.

The Consumer Protection Act is essential as it protects consumers from unfair business practices and defective products.