Edition 36, Marketing

Should Businesses Respect Consumers?

By: Fernando García

The success of companies’ strategies for finding, attracting and retaining clients and the ability to create a solid pillar of confidence in the market, which can lead to economic development, depends on an understanding of the basic concepts and principles of consumer protection.

Although the individual entrepreneur may have to pay a price to comply with consumer protection laws, in the aggregate, these laws generate social and economic benefits. The restrictions established in the Federal Consumer Protection Law (LFPC) coincide with the legally protected good pursued by other economic regulations, like those regarding the breakup of monopolies and unfair trade practices. The rights of the consumer should not be viewed as an impediment for the business, nor does complying with rules protecting these rights place the business at a disadvantage before the law.

In terms of jurisprudence, we find that in August 2005, the First Chamber of the Mexican Supreme Court of Justice presented the following thesis (registry number 177527): “… promoting and protecting the rights and welfare of the consumer, does not mean that the rights corresponding to merchants are excluded [...] and that therefore the law is discriminatory [...] furthermore, because [...] the law demands respect for the rights and obligations that stem from commercial relations, which lie with both consumers and merchants.”

Considered fairly, the legal framework protecting consumers should be something with which merchants should be spontaneously willing to comply. In other words, if the market is made up of rational agents, it is to be expected that all legal acts, both contractual and extra-contractual, conform to the consumer protection laws, because if all merchants respect them, they create conditions more favorable to competition. Businesses that do not have the capacity to compete in a market where those laws of public order are respected will be expelled, because consumers will no longer prefer them. Put differently, businesses that do not respect consumer protection laws cannot play on the same field as the others.

For example, let’s assume a company sells a product claiming that it has qualities that it does not have, and therefore deceives the consumer. Aside from the damage this might cause, economically or in any other way, such as health, this company competes in an economy by attracting a buyer away from other merchants that do not use false advertising to sell their products. Since money is a scarce resource, the consumer will not buy any other product with that money, because it has been spent, with no individual benefit for the consumer, or for the market, just for the dishonest business. Furthermore, it is likely that a collective damage was caused.

With regard to the possibility that the authorities may act to prevent or remediate collective damage, Judge Leonel Castillo González, in isolated thesis number 169985, in April 2008, noted that “articles 21 and 26 of the Federal Consumer Protection Law recognize the existence of a diffuse or collective interest of consumers, protected through collective or class actions, and they are legitimately represented, in the case of consumers, by the Federal Consumer Protection Agency.”

And if this were not enough, Judge Castillo González himself (thesis 169825) argued for the principle of civic collaboration, encouraging all of us to cooperate to promote and protect the rights and welfare of the consumer, and recognizing that the Federal Consumer Protection Law permits any party to report violations of that law to the consumer protection authorities, a principle that jurisprudence has extended to the authorities as well, as follows:

“This right and civic duty of social solidarity is applicable to the authorities, by overwhelming reason, because these have been created, regulated and, as they function for the undeniable purpose of contributing to the realization of the ends of the Rule of Law, initially organized under the principle of division of labor, but united by the indispensable need for total collaboration, for the pursuit of general common purposes.”

Accordingly, therefore, enforcing consumer protection laws is a matter of collective interest, and is not just a matter for consumers themselves, but for society at large. We all agree that the market must not tolerate antisocial practices like deceit, abusive clauses, failure to meet advertising promises, breach of contract or violation of guarantee, to name but a few.

It is useful to recall the criteria stated in a February 2006 isolated thesis (registry number 171064), by Judge Neófito López Ramos of the Third Collegiate Court of Civil Matters of the First Circuit, stating on behalf of the federal judicial branch:

“The rights protected by the Federal Consumer Protection Law are eminently social in nature, and their purpose is to prevent the economic inferiority of large groups of consumers from leading them to accept unfair commercial relations; it is therefore a body of law aimed at intervention and assistance of the most vulnerable classes of our society, on the premise of guaranteeing that public power will step in to protect the weakest economic groups and avoid injustice by applying to consumer relations some precepts of private law, which are based on the presumed equality of the parties to a transaction, a principle that does not exist between merchants and consumers, because the latter are group in need of protection.”

Even on an international level, there is a movement taking shape among international organizations, of which Mexico is a member, setting forth guidelines for effective protection of consumer rights. Among these is the recommendation that governments should strengthen and implement an energetic consumer protection policy according to the economic and social circumstances of each country, primarily to combat risks to health and safety (UN resolution 39/284).

In 1934, upon analyzing the constitutionality of the Bread Industry Regulation, the Second Chamber of the Supreme Court already perceived the existence of supra-individual interests that warranted protection and interpreted that the rights guaranteed by article 28 of the Mexican Constitution involve “protecting society and collective rights” and rather than impeding the intervention of the State, they actually require it.

Today, robust enforcement of federal consumer protection laws can only strengthen our Rule of Law, market confidence and economic activity, put an end to monopolies, and eliminate unfair trade practices. Consumers and merchants can play a fundamental role in building our economic system. It is definitely worth our while to respect consumers.?

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