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.