Snags in consumer protection law

By Destivano Wibowo

JAKARTA (JP): The passing of Law No. 8/1999 on Consumer Protection, which will become effective on April 20, indicates the government's earnestness in protecting the rights of consumers to obtain and consume quality goods and/or services. This law will provide consumers with convenience, health and security.

The long-awaited law is expected to protect consumers of goods and services produced and marketed by businesses in the country, and goods and services imported from other countries and marketed domestically.

The government, as the party most responsible for the supervision of consumer protection, will establish the Coordinating Body for Consumer Protection (BPKN). This body will suggest and recommend to the government policies on consumer protection, conduct studies on relevant prevailing regulations and examine goods and/or services related to consumer safety.

However, settling consumer disputes will fall under the authority of the Consumer Dispute Settlement Body (BPSK), which will be established in all regencies.

The obvious problem is that we have yet to see the establishment of these two crucial bodies. If the government wants the law on consumer protection to become effective on schedule, it should at least indicate a timetable for the necessary preparations leading to this law taking effect.

To settle possible disputes between consumers and business agents, the law provides three alternatives:

a. Peaceful settlement between a consumer and a business agent without the intervention of a third party;

b. Dispute settlement via the Consumer Dispute Settlement Body;

c. Settlement via the judiciary, namely the district courts.

In terms of settling disputes peacefully, there needs to be an agreement applicable to the concerned parties. In the event of a breach of the agreement, the impaired party could turn to the courts. A final settlement could then be expected to take a long time, because a party dissatisfied with the court's ruling could file an appeal.

In the event of a dispute being brought directly to the BPSK, this body is required to issue a final and binding ruling within 21 days of receiving the dispute, meaning that there would be no appeal. This is reasonable because disputes between consumers and business agents would be differentiated from other civil cases.

However, for no clear reason Article 56 of the law stipulates that should a party object to a ruling by the BPSK, this party may file an objection with the district court. If it is still not satisfied, it may appeal to the Supreme Court -- so the BPSK's ruling would be neither final nor binding.

Compare this provision with that of the Arbitration Law which basically states that the ruling of the arbitration committee shall be binding and final, and that there shall be no further legal recourse.

Another matter of no less importance is the provision on standard clauses in Article 18. These clauses are regulations or provisions and conditions in a document binding to consumers.

A common example found in contracts between businesses and consumers is, "Goods which have been purchased shall not be exchanged or returned." When the law on consumer protection becomes effective, such clauses shall be deemed null and void.

The question here is: What about the standard clauses which existed prior to the law; how much time do business agents have to adjust their standard clauses? Article 18 says businesses are required to adjust their agreements which contradict the law, but the adjustment period is not specified.

This would certainly cause uneasiness to business agents who in good faith make changes to their agreements, given the sanctions for violating Article 18.

Strict liability in consumer laws, such as is seen in the United States, should also be applied and provided for. The principle of strict liability suggests that business agents shall be directly responsible to consumers of their goods and services.

The "consumer" is extended to not only include the purchaser or user of the goods or services, but also other parties falling victim to defective goods and services.

For instance, a motorist hits a pedestrian crossing the road due to the car's faulty brakes. Should the car brake producer, in addition to the motorist, be held liable to compensate the pedestrian? The answer is yes, if strict liability is applied.

And what about the settlement of disputes between consumers and business agents involving small claims? The cost of registering such a case with the courts and the lawyer fees would be too high compared to a claim of only several hundred thousand rupiah.

Further, if such a dispute was brought to the BPSK, it would eventually be settled by the courts given the law's inconsistency, as described above. It is thus necessary to seek a settlement which is inexpensive, fast, final, binding and direct for cases entailing relatively small amounts of compensation.

Irrespective of the above weaknesses, business agents have a moral obligation to apply and comply with the law's provisions. Producing quality goods and services would prevent frequent consumer claims.

Consumers also need to be encouraged to exercise their rights and control over businesses, as the success of this law depends on the function of checks and balances by consumers.

The writer graduated from Boston University's School of Law and works at Lubis Ganie Surowidjojo Law Office in Jakarta.