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Sun 5 Mar 2017 11:31 AM

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GCC consumers need to be better protected

Governments must make it easier to complain, while better enforcing regulations.

GCC consumers need to be better protected
Governing body: the consumer protection division of the Department of Economic Development promotes consumer protection and fair trading in Dubai.

With incomes in the region rising and new infrastructure being built, GCC countries are enjoying higher standards of living. As consumption levels increase in both shops and online, key actions need to be taken to safeguard GCC consumers from fraud, misinformation and other possible threats.

Consumer protection and awareness are to the benefit of businesses as well, because increased consumer sophistication and knowledge ultimately enables a fairer competitive market.

GCC countries have been late to start their consumer protection efforts. Although some countries are making progress on this front, most of them still lack a modern and comprehensive consumer protection regulatory framework that copes with the rapidly evolving dynamics between consumers and sellers.

Policymakers in the GCC should focus on five elements typically in place in countries that are the most advanced in consumer protection.

The first is regulations that are as comprehensive as they are flexible. Countries that are effective at protecting consumers have highly detailed laws in this area. The details are crucial to cover the wide spectrum of unfair practices that consumers can encounter. Nevertheless, these laws must be flexible enough so that they can adapt to a continuously evolving and dynamic market place, especially with the fast growth in online commerce and the sharing economy.

The second revolves around having the appropriate operating model in place. This includes setting up dedicated bodies (whether an agency, a unit, or a department) to handle core consumer protection functions and enable them with well thought-out processes for complaint handling, inspection and research.

Oman already has an independent consumer protection agency, the Public Authority for Consumer Protection. In the rest of the GCC, however, consumer protection agencies are units within government organisations. Saudi Arabia, for example, has a well-established unit within the Ministry of Commerce and Investment.

As for the processes, consumer protection custodians are investing considerable efforts in adopting the right complaint handling mechanisms that would make it easy for consumers to report concerns. A consumer who has had a bad experience with a manufacturer, retailer or trader does not need to suffer additional frustration and stress while trying to report it.

Inspections, in particular, can be highly indicative of a country’s approach to consumer protection. In less advanced countries, inspections are often done on a routine schedule giving them something of a rote quality. The more sophisticated approach in doing inspections is to factor in risk, and pay more attention to businesses that have broken rules in the past or that have higher potential for doing harm because of the type of product or service they provide.

The third is a clearly defined enforcement philosophy. There are two approaches to protecting consumers. One is by preventing harm in the first place; the second is through penalties and other harsh enforcement measures after harm has been done.

While both approaches are needed, the former is usually preferable due to its potential to avoid negative consequences early on.

The enforcement philosophy should be thoughtfully implemented in order to effectively utilise the available measures to achieve consumer protection priorities without harming businesses.

The fourth is engaged consumers. When it comes to the fairness of commercial interactions, no one has a bigger stake than consumers themselves.

This should be capitalised on and consumers should be empowered to watch over their interest by using public awareness campaigns to alert them to the risks inherent in different kinds of commercial transactions. Qatar, Saudi Arabia and the UAE have recently launched such consumer protection awareness initiatives. Governments should also empower advocacy bodies (often with roots in civil society) to protect consumers’ rights — in the GCC only Oman and Saudi Arabia have such bodies.

The fifth is a long-term approach. Advanced countries rely heavily on research to understand and prepare for upcoming threats to consumers and strengthen their defences against them. They analyse data trends based on information collected through their consumer complaint and inspection systems.

Governments that seek to protect their consumers eventually realise that there is no finish line. Instead, consumer protection is about staying ahead — or at least never falling too far behind — the trends.

A successful consumer protection framework is one that is comprehensive, flexible and forward-looking. It will be able to lessen the effect of abuses, prevent them from being repeated, and pre-emptively curtail further abuse. Adopting such a framework will allow GCC countries to better connect with and protect their consumers.

Serge Eid, manager at Strategy&

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