Business Studies Part I
Business Studies Part II

Importance of Consumer Protection

Consumer Protection has a wide agenda. It not only includes educating consumers about their rights and responsibilities, but also helps in getting their grievances redressed. It not only requires a judicial machinery for protecting the interests of consumers but also requires the consumers to get together and form The above case is just one of the examples of the many problems that consumers might have to face in the purchase, use and consumption of goods and services. The case also highlights the need for an appropriate legal protection to be provided to consumers to protect them from various forms of exploitation from the seller. Have you ever thought what would be the plight of consumers if adequate protection is not provided to them? Can the present day businesses afford to ignore the interests of consumers? The area of consumer protection has emerged as a very important area of study having significance for both the consumers and businesses alike.  A consumer is said to be a king in a free market economy. The earlier approach of caveat emptor, which means “Let the buyer beware”, has now been changed to caveat venditor (“Let the seller beware”). However, with growing competition and in an attempt to increase their sales and market share, manufacturers and service  providers may be tempted to engage multinational giants would not be allowed to have a free run and exploit a poor country like India by manufacturing and marketing sub-standard products. While giving its ruling, the District Forum relied upon the historic Donald versus Stevenson case, wherein heavy compensation had been awarded to a consumer, who had found rusted nails inside a bottle of ginger beer.  themselves into consumer associations for protection and promotion of their interests. At the same time, consumer protection has a special significance for businesses too. From Consumers’ point of view The importance of consumer protection from the consumers’ point of view can be understood from the following points:

  • Consumer Ignorance: In the light of widespread ignorance of consumers about their rights and reliefs available to them, it becomes necessary to educate them about the same so as to achieve consumer awareness.
  • Unorganised Consumers: Consumers need to be organised in the form of consumer organisations which would take care of their interests. Though, in India, we do have consumer organisations which are working in this direction, adequate protection is required to be given to consumers till these organisations become powerful enough to protect and promote the interests of consumers.
  • Widespread Exploitation of Consumers: Consumers might be Compensation for impurities in cold drinks CONSUMER PROTECTION 365 exploited by unscrupulous, exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black-marketing etc. Consumers need protection against such malpractices of the sellers. From the point of view of Business A business must also lay emphasis on protecting the consumers and adequately satisfying them. This is important because of the following reasons:
  • Long-term Interest of Business: Enlightened businesses realise that it is in their long-term interest to satisfy their customers. Satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers and thus, help in increasing the customer-base of business. Thus, business firms should aim at long-term profit maximisation through customer satisfaction.
  • Business uses Society’s Resources: Business organisations use resources which belong to the society. They, thus, have a responsibility to supply such products and render such services which are in public interest and would not impair public confidence in them.
  • Social Responsibility: A business has social responsibilities towards various interest groups. Business organisations make money by selling goods and providing services to consumers. Thus, consumers form an important group among the many stakeholders of business and like other stakeholders, their interest has to be well taken care of.
  • Moral Justification: It is the moral duty of any business to take care of consumer’s interest and avoid any form of their exploitation. Thus, a business must avoid unscrupulous, exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black marketing etc.
  • Government Intervention: A business engaging in any form of exploitative trade practices would invite government intervention or action. This can impair and tarnish the image of the company. Thus, it is advisable that business organisations voluntarily resort to such practices where the customers’ needs and interests will well be taken care of. In view of the above, the government of India has enacted several regulations designed to provide adequate protection to consumers. We shall now discuss some of these regulations.

In this case, the District Forum relied upon the historic Donald versus Stevenson case, wherein heavy compensation had been awarded to a consumer, who had found rusted nails inside a bottle of ginger beer.

From Consumers’ point of view The importance of consumer protection from the consumers’ point of view can be understood from the following points:

  1. Consumer Ignorance: In the light of widespread ignorance of consumers about their rights and reliefs available to them, it becomes necessary to educate them about the same so as to achieve consumer awareness.
  2. Unorganised Consumers: Consumers need to be organised in the form of consumer organisations which would take care of their interests.
  3. Widespread Exploitation of Consumers: Consumers might be Compensation for impurities in cold drinks, exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black-marketing etc. Consumers need protection against such malpractices of the sellers.

Business firms should aim at long-term profit maximisation through customer satisfaction.

  1. Business uses Society’s Resources: Business organisations use resources which belong to the society. They, thus, have a responsibility to supply such products and render such services which are in public interest and would not impair public confidence in them.
  2. Social Responsibility: A business has social responsibilities towards various interest groups. Business organisations make money by selling goods and providing services to consumers. Thus, consumers form an important group among the many stakeholders of business and like other stakeholders, their interest has to be well taken care of.
  3. Moral Justification: It is the moral duty of any business to take care of consumer’s interest and avoid any form of their exploitation. Thus, a business must avoid unscrupulous, exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black marketing etc.
  4. Government Intervention: A business engaging in any form of exploitative trade practices would invite government intervention or action. This can impair and tarnish the image of the company. Thus, it is advisable that business organisations voluntarily resort to such practices where the customers’ needs and interests will well be taken care of. In view of the above, the government of India has enacted several regulations designed to provide adequate protection to consumers.