The Role of Consumer Protection Authorities during Crises and Disasters - Term Paper Example

Name: Institution: Course: Instructor: Date: The Role of Consumer Protection Authorities during Crises and Disasters Introduction The consumer protection laws are statutes that govern credit and sales practices that involve consumer products. These statutes regulate and prohibit unconscionable and deceptive sales and advertising practices, product quality, and any other issues concerning consumer transactions. The consumer protection authorities implement the consumer protection laws by placing average individuals at par with other citizens or companies during business exchanges. As such, during emergencies, these authorities play an important role in ensuring that the highly vulnerable victims of disasters, who are also consumers are placed at par with individuals who are not affected by a disaster in terms of accessibility of resources. In most disaster cases, the suppliers tend to embrace some practices such as price gouging, which limit accessibility to some products. In addition, some fraud artists see disasters as opportunities to exploit individuals for their benefit. The consumer protection authorities ensure that the consumers are thus protected from such cases of infringement of consumer rights. This paper reviews price gouging and scams related to door-to-door sales and repairs after disasters, and later focuses on the roles of the consumer protection authorities in protecting the consumer rights during such situations, with a concentration on the Public Authority for Consumer Protection (PACP) in Oman Sultanate. Consumer Problems during Disasters Price gouging During emergencies, individuals are highly uncertain of the duration that it would take to restore the environment and business premises to their initial status, an aspect that promotes increased anxiety among them and thus leads to increase shopping in preparation for worse outcomes. Such intensified shopping leads to a shortage of some of the items that are highly in demand. With such rise in demand, most businesses exploit the desperate nature of the consumers and thus hike the commodity prices in order to maximize the profits attained from the items, a behaviors known as “price gouging” (Mankiw 84). As much as some countries and states have not prohibited this practice, it viewed as immoral and exploitative on a general scale. One of the objectionable concerns of price gouging during emergency situations is its coercive nature (Mankiw 84). Accounts of coercion vary between different philosophers, making it difficult to develop a single refutation of the claims of coercion as a consequence of price gouging. When differentiating price gouging from other problems that consumers go through during emergency situations, there are three characteristics of interest. The purchasers who fall victim of price gouging consent to the business interaction and thus it is not forceful in any way. Besides, price gouging cases do not involve any misinformation, deceit, or irrationality in reference to the buyer (Deflem 30). This is an aspect that has made proposers of the practice to term it as morally sound and an important part of macroeconomics. Considering the two features of price gouging, the idea of voluntary entry by the buyers into the exchange is supported but not established. Lastly, it is evident that with great distinction from other standard coercion cases, the harm towards which the victim is exposed as a result of the price gouging practice is not directly perpetrated by the gouger (Favor, Gaus and Lamont 360). Instead, it is as a consequence of the very emergency that exposed the buyer to such price gouging. With reference to a different baseline that involves no exchange, proposers of price gouging believe that price gouging is aimed at improving the lives of the buyers and not to aggravate their situations (Favor, Gaus and Lamont 361). Even with the supporting factors of price gouging, there are two ways through which one could effectively explain price gouging as a coercive practice, involving varied ways of viewing the baseline that the situation of the buyers is laid against. This is important as it enables a clear determination of whether the offer towards which the buyer is subjected is non-coercive or coercive. First, one may choose to assume that the individual selling the commodity is morally obligated to sell the commodity at a price less than the clearing price in the market, and to clearly understand the concept of coercion as related to the moralized baseline (Sarat 174). Considering such assumption, it would be clear that when a seller tells the consumers to take a product or leave it in emergency situation, even after gouging prices, they are threatening the buyer and not extending an offer. In such a case, the seller is threatening his or her moral obligation to offer a reasonable price to the individual in need, with violation. Such a line of thought clearly defines any offer whose alternative is unacceptable or of no compatibility with the lowest conditions of life that is worthwhile, as coercive (Mankiw 84). It is important to show properly not only how much the buyer feels coerced but also how much the gouger is acting in a coercive manner. During emergencies, consumers affected by the emergency are highly vulnerable since most of them may be cut from their livelihoods and commodity distribution chains (Mankiw 84). Also, such individuals may not have a clear picture of the duration that it may take authorities to restore the status of the affected area (Walden and Thoms 417). As such, the anxiety experienced by such individuals pushes them towards shopping not only for their present situations but also for their near future. During emergencies, thus, sellers are obligated to act in a manner that would not suggest that they are taking vulnerability of the victim for their advantage. The unfavorable terms of the proposals made in price gouging during emergencies are thus more categorized as threats as opposed to offers, an aspect that makes the practice coercive and thus morally incomprehensible. Another way through which one can understanding price gouging as being coercive is by defining coercion in itself in relation to a statistical normalcy that is non-moralized (Walden and Thoms 418). With such considerations, the proposal by a gouger would only be deemed coercive if they make the consequences felt by the buyer in a particular related aspect worse than they would be when the course of events occur normally. This kind of take is highly dependent on the understanding that one develops concerning normalcy. For instance, one might conclude that the gouging change is applicable to long-term merchants who hike their prices during emergencies and not to the entrepreneurs who arise during the emergency, as the former are in a better position to supply the commodities to the buyer (Walden and Thomas 418).Similarly, one may conclude that the applied prices during regular non-disaster situations should be applied during emergency situations, amidst shortages (Walden and Thoms 418). As such, the price used in normal contexts should provide an appropriate measure for coerciveness during emergencies. The second critical objectionable concerns that arise from price gouging during emergency situations is the exploitation of the consumers. As such, the wrongful nature of price gouging is evident in the fact that the price gougers use the vulnerability of the buyers to take advantage with the view of attaining disproportional benefit (Mankiw 85). This is indifferent to the fact that the buyers may be benefiting from the business too. In matters concerning wrongful exploitation, there are various puzzles that ought to be filled outorder to answer questions concerning what is wrong about mutually benefitting from an act of exploitation. In this case, a measure is established of the wrongfulness of the gougers as compared to the wrongfulness of a majority of the non-gougers during emergencies. Such questions arise from the incoherence that individuals hold in their thoughts concerning the requirements of morality in relation to helping those individuals that are in distress (Sarat 175). In the same manner that price gougers are held guilty of benefitting mutually through exploitation, they are also guilty of wrongful actions when morals apply, as much as their actions are beneficial to the victims of the disaster (Sarat 175). On the contrary, most individuals and agencies sit back when it comes to relieving the suffering experience of most of the victims of the disaster. In the same vein, as much as the public sits back while the victims of disaster continually suffer they fail to acknowledge any wrongfulness in their failure to provide such a benefit that would enhance the lives of the victims (Sarat 175). As much as the public views gougers as acting wrongfully with reference to morals, they fail to see themselves acting wrongfully in the same sense given that they can help the victims of disaster through preventing them from being exploited or coerced through price gouging. Nevertheless, it is evident that through ignoring the problems that individuals go through during their moments of vulnerability, one does not show them enough respect as compared to an individual offer such victims with help that would enhance their situations (Mankiw 85). Consumer laws developed by different countries and states against price gouging during disasters are a clear way through which the individuals in distress are dignified and shown respect in relation to their inherent value (Weber 226). The inherent value of other individuals in the society places a claim on those who are in position to help them and thus, when the latter turn around to exploit the distressed or stand-by and watch them being exploited, they fail to honor such a claim. In most cases, the claim is dishonored through neglecting all the necessities for the flourishing or well-being of other persons. Most businesses would always see an opportunity and take advantage of the injustice that consumers experience as a result of emergencies. The need for respect is flaunted by those who interact with others in an exploitative manner, and thus, there is need for society at large to develop mechanisms through which such individuals can be protected (Walden and Thoms 417). Various arguments have also been brought forth in favor of price gouging and its moral permissibility, one of which involves its price allocative function within a market economy. In properly functioning markets, resources tend to be allocated towards the uses that are most valued (Sarat 175). As such, individuals pay a price for goods according to the kind of value they hold on them, in which case more value held means higher price. Each item is thus sold to the individuals who hold the most value for it. Nevertheless, this can only apply if the prices are left to adjust freely in accordance with the changes in demand and supply. The argument is that if such prices on certain items are not left rise beyond a specific exogenous level, then there will be no indicator that can be applied to discriminate between the individuals who value the items higher than the level represented by the price, no method through which the higher prices can be used to ration limited supply, and most of the needs that ought to be satisfied will remain unmet (Sarat 175). The proposers of price gouging thus argue that the highly urgent needs will remain unmet since the scarce items are sold at a very low price that it fails to exclude the consumers who do not have urgent need for the goods (Sarat 176). In the case of an emergency, both the individuals who have fallen victim of the emergency and thus in dire need of some resources are exposed to an equal opportunity of accessing such resources with those individuals who have not been affected by the disaster and thus do not have much need for the item at hand through low prices. By increasing the prices, the individuals who have urgent need of the items in a crisis will be more compelled to buy them since it remains highly valuable to them at the moment due to their situation, as opposed to those who have not been affected by the disaster and thus do not hold the item with high value. It is thus argued that in a market that is lower than perfectly competitive, allocative efficiency is not absolutely a law but only a tendency (Walden and Thomas 418). As such, if a consumer fails to have sufficient money, or if they are not making rational judgements, or if they are not aware of the opportunity to buy given items, or if they are in the wrong time at the wrong time, no matter how much value they hold on certain items, the market will not allocate the items to this consumer (Walden and Thoms 418). The second argument in support of price gouging involves the price system’s function of information-conveying (Mankiw 85). This is based on the argument that the market system is not within a competitive equilibrium in which supply and demand are equal. On the contrary, unlike the view in the equilibrium models, the real world constantly involves changing factors. The desires of people change over time, and so does the availability of goods in terms of quality and quantity. When such changes take place, it is natural for the prices to change in response. Proposers of this argument thus maintain that through the changes in price, the market actors are conveyed with information concerning the emergent demand and supply of goods, and they are provided with an incentive that influences their behavior at conveyance of such information (Mankiw 85). An increase in prices during emergencies is viewed to be a source of information thus to both the sellers of goods and the consumers. As such, it is argued that such an increase sends information to consumers regarding the need to economize in order to ensure that they uphold sustainability of their status (Mankiw 85). When a certain commodity is supplied with higher prices, the consumers are more likely to seek other alternatives including improvisation in order to minimize the amount that they spend during the recovery process. Nevertheless, this idea is highly refutable as it fails to recognize the impact of such prices on commodities that can only be obtained through purchase. In such a case, the consumers are exposed to increased expenditure, which affects their sustainability during the recovery stages, especially with regards to basic needs such as food. Door-To-Door Repairs and Sales After the occurrence of disasters, either natural or man-made, individuals flock to the houses of the victims from door to door with claims that they are selling necessities or that they offer repair and clean up services. As much as most of these individuals are reputable and honest, some of them are not. Fraud artists would always take advantage of the vulnerability of persons during disaster periods to draw benefits from their misfortunes (Pearce 33). In most cases, they prey on the elderly and the highly desperate, whose lives have been uprooted by the disaster. The consumer is thus exposed to contractual arrangements that are worsening their situations instead of benefitting them at their hour of need. In most countries and states, the consumer protection authorities have established contractual laws that would allow individuals to cancel contracts that they find unsuitable or in which cases they become uncertain with after deep consideration within a particular period (Pearce 33). As such, the buyers of goods are provided a chance to return such goods and recover their money when such goods are found to be faulty or inappropriate in their situation. As much as consumer protection laws have been established by different jurisdictions to ensure that individuals are protected from such acts, the implementation of such laws and regulations completely lies in the hands of the consumer protection authorities. These authorities advocate for the consumer rights especially in the wake of an emergency when the consumers are highly targeted by salespersons, some of whom do not have good intentions (IBP Inc. 254). As such, a well-developed consumer protection authority body would ensure that all laws and regulations are well in check and provide a proper framework for the reporting and follow-up of fraud during emergencies, where the consumers are victimized. The Role of Consumer Protection Authorities As earlier noted, consumer protection authorities play important roles to the safeguarding of consumers during emergency situations. Oman Sultanate has been a world leading nation when it comes to protecting consumers from the cruel market that is comprised of individuals and organizations that would grab any opportunity to exploit them. Emergency situations provide for special occasions that allow for the exercise of the roles and responsibilities of the authority in protecting the consumers due to the increase in demand for various commodities as well as the decrease in supply. These expose the consumers to various practices such as price gouging and scams from door-to-door sales. Protecting consumers from fluctuations in prices The most important role of the PACP in Oman Sultanate involves protecting the consumer against price fluctuations that are unreasonable, improper services or goods, and to uphold transparency and fair treatment for the consumers as they deal with retailers and suppliers (IBP Inc. 256). Therefore, PACP inspects and monitors the practices and sales policies of different companies within its jurisdiction in order to ensure that a clear pricing framework is in place, one that would ensure that the consumers are protected from unnecessary increases in prices of products or services owned by such companies in the wake of disasters. In addition, the quality of services and goods that are produced, sold or supplied by different providers to the consumers is also monitored to ensure that they are consistent with the standards provided concerning different goods (IBP Inc. 256). For instance, individual suppliers or organizations are required to meet all the safety and health conditions necessary in the production and supply of commodities, and to acquire the necessary permits or licenses required for production or supply of the commodities from the relevant body in accordance with the provided regulations (IBP Inc. 256). In this case, individuals are bound by law to ensure that the quality of the services or goods supplied is high even in the wake of disasters, in which case demand arises. In the Oman Sultanate Consumer Protection Law, it is clearly stated that in occurrence of natural disasters, emergency cases, exceptional circumstances, or any special nature and extraordinary situations that may lead to abnormal hiking of prices, the pursuant to the board of directors’ approval and the chairman employs temporary measures that are aimed at preventing an increase in prices, after such measures have been approved by the council of ministers (Oxford Business Group 182). Promoting equality, freedom of choice, honesty, fair treatment, and credibility towards the consumer Through the implementation of the consumer law and the monitoring of business operations, the PACP in Oman Sultanate enhances efficiency in terms of allocative efficiency, dynamic efficiency, and production efficiency during emergency situations. In this case, allocative efficiency refers to allocating resources to uses that are deemed as most efficient (Oxford Business Group 183). Dynamic efficiency refers to the rate at which new products are introduced, or at which improvements are made on the available products or techniques. Production efficiency refers to production in the most cost-effective way. By reducing monopoly, all firms are provided with the economic freedom to participate in a given market during emergencies. As a result of such freedom, the consumers are also provided with the freedom to choose from a broad range of products according to their preferences and needs. PACP has also led campaigns to promote the judicial control of violations of the consumer laws in order to reduce indulgence in various forms of acts that exploit or coerce the consumers especially during disasters, given that they are highly vulnerable. With such an increase in the level of accountability between PACP and the judiciary, there is a considerable reduction in the number of individuals that may engage in malpractice such as price gouging or fraud as the prices are greatly monitored and fraud is prosecuted (Oxford Business Group 183). Thus, individuals uphold law favored business exchanges during disasters to avoid the stringent penalties imposed by the law. This promotes the level of honesty, equality, and fairness during interactions between buyers and sellers in emergency areas. Raise consumer awareness The PACP has a role to play in enhancing consumer awareness either directly through informing the consumers of the various aspects to observe during their exchanges or indirectly through implementing legislation requirements for suppliers to properly educate their consumers concerning the products or services in exchange (IBP Inc. 257). As such, in Article 294 of the Omani Penal Code, individuals who cheat with regard to the kind of business they engage in are liable to punishment including imprisonment and payment of a fine (PACP). This is to ensure that the suppliers are kept away from any practices that jeopardize the rights of the consumer. In addition, PACP has increasingly warned manufacturers and companies within its jurisdiction of the consequences that accompany any practices such as cheating the consumers or price gouging. This has increased awareness of the consumer law in the country and thus distributed accountability for the actions of each company with regards to the consumer law. Another awareness mechanism that has been recently adopted by PACP is the introduction of a media and outdoor campaign that is directed at consumers, warning them to refrain from buying commodities that are deemed fake, and informing them of their rights, which are applicable not only during normal situations but also during disaster situations. The campaign also educates traders of the rights of the consumers and the importance of upholding such rights (IBP Inc. 257). Suppliers are expected to be conversant with the law and to comply with it in order to avoid possible punishments that may be directed at them as a result of failure to adhere to the provisions. Offering immediate solutions for consumer complaints Given the vulnerability of the consumers during disasters, various opportunists arise, and some of them hold intentions of exploiting the desperate nature of the consumers for their financial benefit. As such, it is at this moment that individuals are faced with increased numbers of cases that ought to be addressed by consumer protection authorities. It is a role of the consumer protection authority to ensure that proper channels for identification and reporting of any complaints are established in order to facilitate timely reporting and response to malpractices (Weber 225). Since disaster stricken consumers are still in recovery, they require quick response to their complaints in order to facilitate their sustainability and to prevent them from experiencing further downfall as a result of fraud or any other form of wrongful opportunism. The PACP has established mechanisms through which it investigates any complaints within the market from consumers in order to ascertain the availability of malpractice and thus initiate proper responses. In cases where the consumer has been subjected to an infringement of their rights, PACP may initiate judicial procedures that allow for the application of the appropriate law and thus safeguarding the consumers from further exploitation from the determined offending party. For instance, by quickly curbing accounts of price gouging, the PACP is able to protect the consumers from increased expenditure during their recovery from a disaster as they are succumbed by multiple needs (Oxford Business Group 183). As such, PACP has a role to play in facilitating the implementation of the principles of law during emergencies and initiating appropriate action against suppliers and traders who breach the law. Fighting swindling, counterfeiting, and monopoly The protection agency plays the leading role in tackling any cases of swindling, monopoly, or counterfeiting. These are practices that directly affect the consumer and thus it is salient that they are curbed at earlier stages especially during emergency situations as they could lead to detrimental consequences including health impacts due to the use of fake commodities. In order to reduce counterfeiting, the PACP in Oman Sultanate has increased its efforts in providing all the players within a market with a level ground for their business practices, an aspect that reduces monopoly of certain organizations (IBP Inc. 257). Since with increased monopoly, cases of counterfeiting are bound to rise as some players try to imitate the already recognized brands to ensure that they succeed in the market. This is common practice especially during disasters in most jurisdiction as the demand for certain products is high, an aspect that facilitates an increase in the profit margin. In order to reduce cases of swindling, through which some fraudulent suppliers sell fake products to consumers, the Consumer Law in Oman Sultanate requires all the suppliers to offer the consumers with the guarantees that are provided for by the manufacturers of the products (PACP). In addition, the suppliers and manufacturers of such products are required to establish workshops that would enable repairing of the products in case they get damaged. This mechanism allows for increased responsibility of the suppliers in ensuring that only the credible suppliers of commodities are allowed to participate in the market. The consumer law, which provides for penalties applicable to violation of the rights of consumers plays a salient role in the prevention and elimination of counterfeiting and swindling. Facilitate implementation of consumer protection laws The Oman Sultanate consumer protection laws regulate the relationship that exists between the providers of services and goods, and the consumers or such resources. As such, these laws have been established to protect the consumer rights not only during normal operations but also during emergency situations, at which point the consumer is much in need and thus more vulnerable to exploitation. The legislations implemented by the PACP provide punishment for individuals who fail to comply with the rights and duties that have been stipulated within the law during emergencies (IBP Inc. 230). As such, the consumers are more safeguarded from various forms of exploitation and coercion including price gouging and other practices such as the scams involved in door-to-door sales of services and goods during emergency situations. The laws also allow for fair competition and thus aim at mitigating monopoly of major providers in the market, thus creating a fair opportunity for competition in the market. With monopoly comes exploitation as one player that has dominance in the market determines the changes in supply and thus the prices that are offered for goods and services. By mitigating such monopoly, PACP protects the consumer from any unwarranted influences on product availability and prices. The consumer protection law in Oman Sultanate has incorporated stringent penalties, which are commensurate with the magnitude of the wrong practices that may be adopted by individuals during market exchanges (Oxford Business Group 180). Encourage development of societies for consumer protection and support them Another critical role of the consumer protection authority is to facilitate the development of other consumer protection groups and supporting such groups through allocation of resources and other measures to ensure that they promote consumer rights (Weber 226). Development of other consumer protection groups allows for a wider coverage of the groups and thus effective ground monitoring of the market as the consumer protection force is more close to the consumers. As such the consumer problems are quickly identified and reported in the directed manner to facilitate timely responses. In addition, such groups allow for proper education of both the consumers and the sellers of their role in the protection of the consumer rights. As such, the consumers are made aware not only of their rights but also of methods through which they can verify the credibility of the suppliers in order to ensure that they only interact with the most credible players (Weber 226). This also facilitates registration of all the suppliers in the stipulated way to access the consumer base. Through education of the suppliers or the consumer rights, they are also made aware of the interactions that could affect their businesses in a negative manner, including unwarranted price gouging and fraudulent practices. PACP’s role in supporting other consumer protection groups thus localizes consumer protection to each and every part of their jurisdiction to ensure that all the consumers are well reached out, and their needs provided for (Oxford Business Group 186). Conclusion It is evident that consumer protection is an important part of any government, especially during disasters. Such situations leave the consumers ripped apart in terms of their resources and accessibility to resources in the area. With the heightened vulnerability resulting from the increase in needs for certain commodities that are in scarce supply due to the increase in demand, some supplies are presented with an opportunity to exploit the consumers with intentions of increasing their profits. As such, consumers are highly exposed to cases of price gouging, which involves unnecessary increases in prices during emergencies as a result of the increase in demand for certain commodities or services. The consumer protection authorities have an important role to play not only in facilitating the establishment of consumer protection law but also in the implementation of such laws to ensure that the consumers are protected from any natural or market changes that may change the structure of the market. Oman Sultanate provides an example of a nation whose consumer protection authority has put in more effort towards the safeguarding of the consumer rights and promotions of competitive markets in which the suppliers are well aware of the repercussions of breaching the law and thus assume responsibility for their actions. In conjunction with the judiciary, the Public Authority for Consumer Protection ensures that the suppliers who engage in malpractices and other actions contrary to the consumer law such as price gouging and fraud are prosecuted and made to serve the terms of the law including payment of fines, refunds, and even imprisonment. This is aimed at ensuring that suppliers are discouraged from engaging in practices that jeopardize the rights of the consumers. Work Cited Deflem, Mathieu. Disasters, Hazards, and Law. West Yorkshire: Emerald Group Publishing, 2012. Favor, Christi, Gerald Gaus and Julian Lamont. 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