Can consumers ever organize?

By:  – October 18, 2016, 12:19 AM

from Philippine Daily Inquirer

How can companies providing various goods and services that are part of our daily lives keep getting away with practices amounting to abuse and exploitation of their consumers—the very people that keep their firms alive? Why is it so hard for exploited consumers to band together, organize and collectively assert their rights to get what is due them, or at least what is promised them by the companies they patronize?

Economist Mancur Olson offered the answer in his 1965 book “The Logic of Collective Action: Public Goods and the Theory of Groups.” He noted that large groups face relatively high costs when attempting to organize for collective action, while small groups will find it easier to do so. In large groups, each individual’s gain from successful collective action will also likely be lower. Hence, the incentive to participate in group action is weaker for large groups, so that they are less able to act in their common interest than small ones. Most will be happy to “free ride” on whatever positive outcomes the active ones may achieve. Because of this, situations are likely to occur where a small minority (such as a few large producers/sellers) can trump the interests of the majority (e.g., all consumers)—and this will happen even in the most democratic of societies.

My Friday column on my twin sons’ consumer travails with large firms drew readers to narrate accounts of similar experiences when they felt at the mercy of seemingly heartless business interests. Most affirmed my conclusion that we need a strong and active consumer rights movement, along with a vigilant consumer watchdog agency in government. But the former has perennially eluded us, precisely for the reason I cited. It would help to have a persistent and influential activist champion like the United States’ Ralph Nader, prominent for four decades since the 1960s. But apart from 1980s consumer activist Julie Amargo who spearheaded the Kilusan ng Mamimili sa Pilipinas, such a figure has yet to emerge in the contemporary Philippine scene.

We do have a government agency and a law (Republic Act No. 7394 or the Consumer Act of 1992) designed to protect consumers from unfair business practices. The Fair Trade Enforcement Bureau (FTEB) was established in 2014 under the Department of Trade and Industry. Headed by Trade Undersecretary for Consumer Protection Ted Pascua, the FTEB’s mandate includes curbing deceptive and unfair sales acts and practices, and upholding consumer product and service warranties. At least one reader is happy with how the agency helped him obtain redress from an erring firm. Carlos Juan Tulali writes: “My recent experience of poor customer after sales service, and violation of my rights under the Consumer Act [by a local manufacturer of an electronic tablet] prompted me to file a formal complaint with the FTEB…. Yesterday, I received the check as refund for my purchase. The company was also administratively fined with a penalty of P210,000 for violations of the Consumer Act, based on the accounts of my experience with them.” He urges others not to let bad business practices against consumers pass, and to take up the FTEB’s promise to protect consumers’ rights.

In this age of social media, linking consumers together is no longer as costly as Olson reckoned it to be. The challenge lies in creating a formal organization, defining its purpose, and sustaining members’ interest. People focused on their own individual problems may not necessarily be keen to fight battles for the general public. And even for those with a modicum of consumer rights awareness and advocacy, the track record on filed consumer complaint cases is hardly encouraging, where the process is tedious, resolution is slow, and attention spans are short. Another reader observes that on top of that, government policy appears predisposed more toward the welfare of the producer or entrepreneur, and hardly toward that of the consumer—even as the latter means all of us. This may well be another important change Filipinos have long deserved.