CI to contribute to revision of UN’s consumer protection guidelines

Indrani Thuraisingham, Head of CI Office for Asia Pacific and the Middle East, reports on activities from the United Nations Conference on Trade and Development.

I was very pleased to be part of CI’s delegation to the United Nations Conference on Trade and Development (UNCTAD) recently. 

This was an important moment for consumer rights - when CI was named to give input into the revision of the UN’s Guidelines on Consumer Protection (UNGCP).

The decision to revise the guidelines was the major outcome of the UNCTAD Ad Hoc Expert Meeting on Consumer Protection: The interface between competition and consumer policies. Its proposals are to be tabled at the General Assembly in July 2014. 

The CI delegation to UNCTAD included myself as the head of the Asia Pacific and Middle East Regional Office and lead on the global coordination of CI’s Consumer Justice and Protection priority programme; Jeremy Malcolm who leads CI’s Consumers in the Digital Age priority programme; and Robin Simpson, CI’s senior policy officer from London who spoke on financial services, another of CI’s priority programme areas. 

We were accompanied by Connie Lau, retiring CEO of the Hong Kong Consumer Council who gave the key note address; and Pradeep Mehta from CI member CUTS India.

A number of ideas for areas in which the Guidelines could be improved were discussed, including the need to strengthen enforcement activities, and the addition of provisions on financial services, energy, consumer representation, and access to knowledge. 

CI also highlighted the need to add “access to basic needs” as part of the legitimate needs in Article 3 of the Guidelines as well as to have a clear definition of ”consumer” in terms of addressing the needs of poor and vulnerable consumers.
 
The agreed conclusions of the meeting specify that UNCTAD is to collaborate with CI, as well as with other relevant bodies such as the OECD, in developing the content of potential revisions.  

To this end, the next step in this process will be for CI to consult with its members on the areas that should be covered and to develop some suggested text for submission to UNCTAD that will be tabled at the upcoming 13th Intergovernmental Group of Experts (IGE) meeting in July 2013 during which the process of negotiations will begin and be approved by July 2014.

This is an exciting time. It means that all CI members will have the opportunity to comment and bring their experience in consumer rights to bear on the Guidelines. I for one look forward to being a part of this important step for consumer rights.

UN’s consumer protection guidelines must reflect the digital age

CI’s Jeremy Malcolm looks at why it’s imperative that the UNGCP include the rights of consumers in the digital age.

When the United Nation Guidelines on Consumer Protection (UNGCP) were last amended, the iPod had not yet been invented, Wikipedia would not exist for another couple of years (nor Facebook for another five), and a new PC had one-eighth as much memory as a modern smartphone.

This means that, remarkably, there is no global standard or benchmark that deals directly with the impact of the digital age on consumers.

Here's why this matters:

Say that when signing up to a legal music download service, a link to its terms and conditions of use is given. If you follow the link, you find 20 pages of small text, including a condition prohibiting you from making copies of the music you download, and another reserving the site’s right to change the terms and conditions without notice to you. 

You skim through the first few pages of this agreement and then proceed to sign up and pay your subscription.

Then, you download a few songs, and then copy them from your computer to your portable music player. 

Frustratingly, it seems that they are encrypted, but luckily you find a small programme online that you use to strip this encryption off, so that you can enjoy your music on the go.

Some days later, the site changes so that files are no longer downloadable, but can only be streamed live. This means that you can no longer play new downloads on your music player.

Some of the questions that arise are:

1. Are you bound by the terms and conditions (T&Cs), even if you didn't read all of them?
2. Are you allowed to copy songs that you purchased as a download onto your music player?
3. If so, are you also entitled to remove the encryption from the music files?
4. Is the site entitled to switch from a download to a streaming service?

The answers will of course depend on consumer law in your country. 

We believe that any modern consumer law should answer those questions as follows:

1. You should only be bound by the T&Cs if they were adequately brought to your attention - important terms can't be buried in 20 pages of small text.
2. Yes, you should be able to copy music that you have purchased online.
3. Yes, you should be able to de-encrypt if your purpose in doing so is simply to enable you to listen to the music.
4. No, the site should not switch its service without offering you a refund.

Through our Consumers in the digital age programme, we’re pushing for a global benchmark so that such consumer rights are seen as the international standard.   

That’s why we think that it’s about time that the UNGCP were updated for the digital age, to protect consumers in situations like those outlined above, and in many other novel situations involving digital goods and services, consumers as creators, and online communications.

This doesn't mean that the UNGCP are no longer working - on the contrary, they have stood up very well over the years; a testament to the hard work that went into developing them to begin with. But there are some areas that they don't clearly cover, and we have a plan to fill those gaps.

Whilst the UN Conference on Trade and Development (UNCTAD) has only recently signalled its intention to review the UNGCP, CI is well ahead of the game. 

We have already come up with a set of proposed amendments to cover the rights of consumers in the digital age. These were developed by a CI member working group that was convened in January 2011 and released its final draft for a three-month public comment period in June the same year.

Amongst the proposed amendments, which are shown in their entirety at http://A2Knetwork.org/guidelines, are provisions that would:

• Prevent the removal of functions from digital products or services after purchase
• Support consumer access to and fair use of copyright works
• Set minimum standards for the privacy of consumers online
• Require product safety information and standards to be made available online

CI is now proceeding to supplement these suggested amendments with national level research, to demonstrate why they are important, and how they reflect some emerging best practices around the world. This research is being conducted by our members and partners in India, Brazil and South Africa, with smaller case studies having been contributed from South Korea and Canada.

The next step will be to integrate these proposals, along with other amendments that CI is still developing (such as on financial services), into the draft text that will be tabled before UNCTAD's members for consideration at their next meeting in mid 2013.

If we are fortunate, the UNGCP will soon be at the forefront of modern consumer policy again, providing a useful benchmark for policy makers around the world.

Financial services on the agenda at UNCTAD

Financial services—it’s complicated. And that’s why we need to ensure consumers are protected.  CI’s Robin Simpson urges inclusion of financial services in the UN’s Guidelines on Consumer Protection. 

At the United Nations Conference on Trade and Development (UNCTAD) meeting in Geneva recently, CI made the case for inclusion of financial services in the Guidelines on Consumer Protection (UNGCP), including:

• universal access to basic financial services;
• better design and disclosure of information;
• mandatory requirements for comprehensibility of financial products; and
• representation of consumer interests in the governance of the sector, both regulation and redress.

 We believe that, where states have bailed out ailing banks, competition enquiries should be carried out to ascertain whether these assistance packages have increased concentration. This is sensitive territory for a conference whose agenda was dominated by competition issues.

We also called for measures to guarantee stability of deposits stronger than the diluted provisions that were included in the G20/OECD high level principles that we found too limited.

There was a strong measure of agreement in the hall that FS is not, or no longer, solely a rich country issue. Indeed, one of the encouraging aspects of the present troubled times is the emergence of innovative services such as branchless banking in developing countries, whose consumers report savings ratios far in excess of those of the OECD countries, between 30-40% of household income.

As CI board member Connie Lau of the Hong Kong Consumer Council pointed out, these dwarf the puny rates to be found in the first decade of this century in the US where some estimates show a negative rate in some years. 

Our colleague Sothi Racahagan from Malaysia made a clarion call for stronger regulatory action and Phil Evans from the UK Competition Commission made the strong case on behavioural grounds for FS not being treated like any other sector.

Complex products with long-term effects, the impacts of which will not be known for years to come, all add up to a dangerous cocktail of ingredients that require far stronger measures than we have seen so far.

Maybe inclusion of FS in the UNGCP will make some much-needed changes a reality.

Now for the hard part.