Sunday, 2 November 2014

New rights?

For the last four weeks I’ve been describing the variety of protections that our Consumer Protection Regulations offer us. There might be cynics out there that think we’re not well protected consumer in Botswana but they’d be wrong. The protections that exist are comprehensive and powerful.

But are they good enough? Do they need to be updated?

Given that the Regulations were only published in 2001 I think it’s a tribute that they don’t need any major overhaul. They’re sufficiently well worded that they apply just as well today as they did 13 years ago but they would probably benefit from some minor updates.

There’s a theme that runs through several of the regulations that I think is important. Section 13 (1) (b) forbids a supplier from causing “a probability of confusion or misunderstanding as to (a product’s) source, sponsorship, approval, or certification”. Suppliers have to be very clear about where an item comes from and whether it’s approved or not. For instance a cellphone store that sells a “grey import” phone must be perfectly honest about it.

Section 17 (1) (c) forbids “causing a probability of confusion or of misunderstanding with respect to the authority of a salesperson, representative, or agent to negotiate the final terms
of a transaction”. So the phrase “My boss says I can’t give you a discount” might be forbidden if it’s not actually true.

One of my personal favorites, Section 17 (1) (d) forbids a store from “causing a probability of confusion or of misunderstanding as to the legal rights, obligations, or remedies of a party to a transaction”. A store must be 100% clear about payment terms, your consumer rights, their obligations to you and even what might happen if you stop paying your installments. Any lack of clarity is strictly forbidden.

Section 17 (1) (g) forbids a store from “taking advantage of a consumer's inability reasonably to protect his interests by reason of disability, illiteracy or inability to understand the language of an agreement”. In other words a store can’t use long words to confuse people. The language in an agreement must be simple and clear enough that anyone can understand it. More importantly it must also be in a language that the customer speaks and understands. English isn’t permitted if the customer only speaks Setswana for instance.

The theme that runs through all of these regulations is that causing confusion is forbidden. Anyone selling you something is forbidden from confusing you, or even of bringing about “a probability of confusion”.

I think that’s a brilliant concept. It just needs to be expanded a little bit.

Anyone reading the newspapers in the last couple of years will remember the Eurextrade scam that cost so many people in Botswana so much money. This scheme offered people the “opportunity” (always a warning word) to invest their money and earn “up to 2.9%” every day. Not each year, every day. Unfortunately the vast majority of people who were suckered into joining the scheme couldn’t do maths because if they could they would have realized how extraordinary that figure is. The facts are simple. If you invest P1,000 at 2.9% per day after a day you’ve earned P29, giving you a total of P1,029. Another 2.9% each day on top of the previous day’s balance gives you P1,187 after a week, P2,291 after a month, P13,103 after 3 months and after a whole year, the massive sum of P33 million.

Everyone knows that’s simply impossible, it must be a scam but thanks to a number of very persuasive recruiters many, MANY people willingly handed over their money, giving into greed, temptation and gullibility. In fact Eurextrade was a Ponzi scheme, where the “investments” each victim makes are split between the people running the scam and the previous person who joined. If I join on Monday and you join on Tuesday part of the money you pay in goes directly to me, and you get some of the money from the sucker who joins on Wednesday. It’s “robbing Peter to pay Paul”. It’s a scam.

We don’t know how many people lost money when the scheme eventually collapsed (as all Ponzi schemes eventually do) or how much money the scammers got away with but I know for a fact it was at least tens of millions.

But what could have been done to prevent people falling for it? Consumer Watchdog did its best to warn people as did NBFIRA, the regulator of financial services in Botswana but clearly that wasn’t enough.

That’s where I think an addition to the Consumer Protection Regulations might help. I think a new regulation should be added, saying that it would be “an unfair business practice” to “cause a probability of confusion or of misunderstanding as to the origin, amount or likelihood of any income or profits from any business or investment mechanism”.

That would go some way to preventing the sort of lies and exaggerations that the recruiters for Eurextrade and all the other Ponzi schemes, pyramid schemes and Get Rich Quick schemes tell us to part us from our money.

It might also go some way to curbing the excesses of the Multi Level Marketing industry with their promises of a new “lifestyle” when all the figures that the companies are forced to disclose show that it’s incredibly unlikely that any new recruit will make anything at all.

The only challenge would be enforcement but that’s where we consumers have a powerful weapon: the law. If we complain the Consumer Protection Unit in the Ministry of Trade and Industry is then required to investigate and establish whether the rules have been breached. I think would be worth the effort, don’t you?

No comments: