New consumer protection law will lack teeth without several amendments, say experts

A woman walks past an advertisement at a shopping center in downtown Hanoi. Vietnam’s first-ever Consumer Protection Law will take effect this July.

The Consumer Protection Law that will take effect this July is a good first step, but one that needs to be followed up with clarifications and revisions if it is to be really effective, experts say.

The law, which was passed by the National Assembly last November to replace the 1999 Ordinance on Protection of Consumers Rights, contains a variety of provisions that strengthen consumers’ rights.

For example, consumers will have the right to have their personal information kept confidential when they engage in business transactions or use goods and services. This aims to redress the current situation in which consumers’ information is sold to businesses that deluge prospective clients with emails, text messages and even direct phone calls to market their products and services.

Under the new law, businesses are also banned from marketing activities that have undesirable effects on consumers’ daily life. For instance, they are prohibited from distributing leaflets at crossroads and shops are not allowed to use loudspeakers at high volume.

The law stipulates that business contracts will be invalid if they allow goods and services suppliers to unilaterally change terms and conditions; do not include responsibilities of suppliers; or do not permit consumers any legal recourse.

The law has been uniformly welcomed by experts as a much-needed shot in the arm for Vietnamese consumers who they say do not have sufficient protection from knockoffs, forgeries, low-quality products, and many other unfair trade practices.

“There is no business sector where consumers’ rights are not violated,” said Nguyen Nam Vinh, head of the southern branch of the Vietnam Standard and Consumers Association.

“We have exposed many cases including gasoline mixed with acetone, milk products with much lower protein content than indicated on the labels, fake electricity meters, and poor quality crash helmets.”

Vinh said there were three major reasons that caused the rampant violation.

“First, the current penalties are too small and fail to act as a deterrent. Gas stations overcharging by tampering with fuel gauges are subject to the highest fine of VND30 million (US$1,500). How can this fine prevent them from violating the law again?

Second, local authorities have not coordinated well and this has led to some “ridiculous stories,” Vinh said.

“For example, made-in-China drinking glasses that contain a lot of lead and other toxic substances flooded Vietnam in January, and are still on the shelves,” he said. “This is because three ministries [Health, Science and Technology, Industry and Trade] are involved in the import of drinking glasses. It is not clear which ministry is responsible in this case.”

The third reason, he said, was that Vietnamese consumers are hesitant to sue even if they are cheated.

Vinh said his association receives around 1,000 complaints per year, a very low figure, given the country’s population of 87 million people.

In a recent case, lawyers and consumer advocates said Toyota customers could file lawsuits against the largest carmaker in Vietnam for failing to take immediate action on thousands of flawed cars in the local market.

Toyota admitted, on April 1, that around 8,830 Innova model cars suffered from technical flaws, but declined to issue a recall until two weeks later.

Despite the admission of the flaw, not a single case has been filed against the company so far.

On April 15, the carmaker announced that nearly 66,000 units of both Fortuner and Innova models would need to be recalled for repair. It said all units of the two models, produced before December 23, 2010, would be checked and repaired for free.

However, many customers are unaware of this repairing campaign as they have not received any communication about it, the

Saigon Tiep Thi newspaper reported on May 20, adding that Toyota only sent the information to relevant authorities and media.

More work needed

As the Ministry of Industry and Trade is drafting a decree that guides implementation of the Consumer Protection Law, experts say details and clarifications have to be added and several revisions made.

Under the draft, consumer protection agencies will be eligible to get state budget grants if their operational scope is of provincial or higher level and they have already operated for at least one year.

“Why must they be of provincial or higher level? Why must they have at least one year of operation? Where would they find money for their activities during that first year?” asked Vinh.

He said his association, which has 37 branches, is so stretched for resources that its southern office is currently using the premises of the Department of Standards, Metrology, and Quality.

“We lack staff and resources to take any of the complaints received to court,” Vinh said.

He also said the draft doesn’t give any information about procedures consumer protection agencies must follow to get state budget funds.

A lawyer, who wished to remain unnamed, said the draft failed to mention who consumers could sue if their suppliers are based in foreign countries.

“In some cases such as the one when user data of Sony’s PlayStation video game online network was stolen last month, who can the local users complain to or file a lawsuit against?” he asked.

According to the draft, businesses that supply essential goods and services like electricity, water, and air transport must submit sample sales contracts to the Ministry of Industry and Trade if more than two provinces are involved. In other cases, they must hand in the contract to the provincial People’s Committee for assessment.

The lawyer said this meant the trade ministry as well as People’s Committees have to set up teams to assess contracts.

“It would take some time to prepare establishment procedures, ask for funds, recruit staff and train them. But in just a little more than a month the law will come into effect, can relevant agencies do this work in time?” he worried.

Apart from amendments to the draft, Vinh said it was necessary to set up a consumer protection committee under the National Assembly and a government body for competition management and consumer protection to help implement the law.

“Currently, we just have a consumer protection division under the Vietnam Competition Authority, which is under the Ministry of Industry and Trade. Therefore, both human resources and authority needed to make the law effective are very limited.”

Source: Thanh Nien, Thoi Bao Kinh Te Saigon