Beefing up consumer protection

Beefing up consumer protection

By Stefanus Haryanto

BATAM, Riau (JP): The bill on consumer protection, which has
been unanimously approved by the House of Representatives (DPR),
will provide a strong legal basis for consumer organizations to
file lawsuits against manufacturers of certain defective products
after it is enacted by the President.

Producers, therefore, have to change their practices,
particularly with regard to the quality of their products and
their marketing strategies.

It is widely known that in Indonesia, producers often use a
"dirty" marketing strategy in offering their products to
consumers. Fraudulent misrepresentation can easily be found in
the advertisement of real estate, consumer goods and sex-related
commodities.

Although consumer organizations like the Indonesian Consumers
Foundation (YLKI) have been aware of such fraudulent practices,
they have had difficulty taking legal action because they have no
legal standing (ius standi) to initiate a lawsuit on their own.

By the enactment of the new consumer law, organizations will
be empowered to assist consumers in filing class-action suits
against producers whose products and/or marketing strategies are
proven to be detrimental.

In general, a consumer protection act usually stipulates
certain prohibited conduct and product liability. Under the
Australian Trade Practices Act, for example, conduct is defined
as "doing or refusing to do any act".

By this definition, "conduct" can include sellers' or
producers' statements of opinion which imply false
representation; misleading or deceiving information; promises
that are not kept; statements which are literally true but can
create a false impression; and precontractual statements which
prove to be false after contracts are signed.

Therefore, a developer which promises that his real estate
location is flood-free will be held liable to pay for
compensation if it is proven that the location is inundated after
a heavy downpour. In the past, such an irresponsible developer
would get away easily and people were reluctant to initiate a
costly and lengthy "legal battle" with the developer.

In addition to certain prohibited conduct, a consumer law is
very important in providing legal protection to consumers from
defective products and services. In other jurisdictions, product
liability usually deals with the liability of manufacturers and
importers of defective goods. For the protection of the public,
product liability usually adopts strict liability that does not
need to prove the fault or negligence on the part of the
manufacturers. In Australia, under the Trade Practices Amendment
Act 1992, if a product has a defect and an individual or his
property is injured or damaged because of the defect, its
manufacturer is liable to compensate the person suffering the
loss.

To ensure that consumers are able to enjoy their rights,
consumer laws usually permit a representative or representatives
of the affected individuals to file a class-action suit. In the
United States, for instance, a class-action suit is stipulated in
the Federal Rule of Civil Procedure 23. According to this rule, a
class-action suit may be filed if the issues in the dispute are
common to all members of the class and the persons affected are
so numerous that makes it impracticable to bring them all before
the court.

In Indonesia, a class-action suit is an exception to the
general rule of the civil law, so that lawsuits can only be
brought by, and bind the persons named as parties to the
litigation. Therefore, Indonesian courts have thus far rejected
several "class-action suits" for lack of a legal basis to
accommodate such suits. Moreover, the lawsuits cannot be regarded
as class action ones because they are not filed by "members" of
the class. For example, in a "class-action" suit filed by a
Jakarta lawyer against cigarette manufacturer PT Bentoel, the
court rejected the suit on the basis of lack of cause of action.
This verdict was right because the lawyer argued that PT
Bentoel's advertisement was detrimental to the younger
generation, whereas the lawyer himself was not a member of the
class of "younger generation". In other class-action suits, the
courts usually rejected the suits merely on the ground that class
action was not recognized in Indonesia law.

As a matter of practicality, it is unreasonable to refuse the
use of class action in a product liability case because it is
beneficial to both the plaintiffs and defendants. Without class
action, the defendants will have to face lawsuits from different
plaintiffs and the plaintiffs will also have to file their
lawsuits individually in different courts. Regardless of the
substance of the suit, sensible defendants would rather choose to
have a class-action suit than to have hundreds or thousands of
lawsuits at the same time. For the plaintiffs, class action is
also beneficial because, as former U.S. Supreme Court justice
William O. Douglas aptly stated, "class action is one of the few
legal remedies the small claimant has against those who command
the status quo".

In conclusion, class action is a very important tool to
protect consumer rights. In the past, Indonesian consumers were
powerless in dealing with producers of good and services.
However, class-action suits will make sure that all errant
producers of goods and services will have to pay dearly for their
wrongdoings. To assure this, it is indispensable that Indonesian
judges clearly understand the concept of class action. Otherwise,
the new consumer law will only be good on paper but unenforceable
in reality.

The writer is a lawyer at the law firm of Hanafiah & Ponggawa
Office on Batam, Riau. The opinions expressed in this article are
his personal views.