Consumer protection has become a cornerstone of a fair and competitive marketplace in an era of global digital transformation in 2024. In third-world countries, this can be a daunting task to achieve, primarily when every large corporation aims to create a monopolistic marketplace for them.
However, the United States Federal Trade Commission (FTC) offers a robust model for enforcing consumer protection and competition laws. We can follow some of these guidelines in our marketing efforts individually.
Let’s examine the FTC’s practices and explore how they can be adapted to enhance Sri Lanka’s regulatory framework for consumer protection, with a particular focus on the digital marketing sector.
Overview of the FTC’s Jurisdiction and Functions
The FTC, established to protect American consumers and ensure a competitive marketplace, has broad jurisdiction over most economic activities within the United States. It addresses issues ranging from misleading advertising and improper business practices to privacy breaches and anti-competitive behavior. The agency’s comprehensive approach includes:
Regulating Advertising: Ensuring that advertising is truthful and evidence-based.
Consumer Privacy: Safeguarding personal information and enforcing data security.
Maintaining Competition: Preventing anti-competitive practices that can harm consumers.
How Can We Establish Strong Consumer Protection?
To effectively safeguard consumers in Sri Lanka, it is essential to draw on the strengths of the FTC’s model and adapt them to local needs.
Legislative Framework
Sri Lanka needs a robust legislative framework that mirrors aspects of the FTC’s regulatory approach. This includes laws that:
Prevent Deceptive Advertising: Legislation should require all advertisements to be honest and substantiated, preventing businesses from making unfounded claims.
Protect Consumer Data: Data protection laws must ensure that personal data is collected and processed transparently and safeguarded against breaches.
The Consumer Affairs Authority (CAA) Act No. 9 of 2003 already provides a foundation for this by protecting consumers against unfair trade practices and ensuring access to goods and services at competitive prices. If these practices are followed, the incidents we witnessed from the PayHere and Sri Lanka’s Ministry of Defence website, such as data breaches, may be controlled with a higher focus on security.
Dedicated Regulatory Body
Establishing a dedicated regulatory authority similar to the FTC could significantly strengthen enforcement and oversight in Sri Lanka. This body would be responsible for:
Monitoring and Enforcement: Regular checks and the ability to impose penalties to deter deceptive practices and protect consumer rights.
Consumer Education: Initiatives to educate consumers about their rights and how to seek redress for grievances.
The CAA currently undertakes these roles, including conducting market surveillance, violation raids, and awareness programs.
Regulation of Digital and Cross-Border Commerce
As digital commerce grows, regulations must evolve to address the complexities of online transactions, including,
Digital Advertising and E-commerce: Clear guidelines and standards for online advertising and sales to prevent fraud and ensure consumer safety.
International Cooperation: Engaging in treaties and agreements for cross-border consumer protection, enhancing the ability to handle international consumer issues.
Promoting Fair Competition
To foster a competitive market that benefits consumers, Sri Lanka can implement:
Anti-Competition Measures: Laws that prevent large corporations from engaging in monopolistic practices or mergers that limit market competition.
Support for Small Businesses: Encouraging fair competition by supporting small and medium enterprises (SMEs) to ensure they can compete effectively against larger companies.
Consumer Rights and Redress
Establishing transparent processes for consumers to lodge complaints and seek redress is essential. This could involve:
Consumer Complaints Boards: Boards or online platforms where consumers can report unfair practices.
Legal Redress: Mechanisms that allow consumers to efficiently and effectively challenge deceptive or inequitable practices through legal channels.
Sri Lanka recently established a data protection framework. The CAA’s existing framework includes provisions for handling consumer complaints, conducting inquiries, and providing compensation for breaches of implied warranties. While it’s still evolving, there’s a designated body to report data breaches: The Data Protection Authority (DPA) is the place to go if you have personal information. However, the Reporting procedure may still need to be fully established in 2024.
How Businesses Can Individually Adopt Fair Practices
As a business, you must uphold consumer protection and push the country forward. Here are some practical steps that individual companies can take:
Adopt Transparent Advertising Practices
- Ensure all marketing materials are honest and evidence-based.
- Avoid making exaggerated or unfounded claims about products or services.
Protect Consumer Data
- Implement robust data protection measures to safeguard personal information.
- Ensure transparent data collection and processing practices, informing consumers how their data is used.
Maintain Ethical Standards
- Follow fair competition guidelines, avoiding monopolistic practices.
- Support small businesses and foster a healthy competitive environment.
Educate Consumers
- Provide clear and accessible information about products and services.
- Develop educational content to inform consumers about their rights and how to protect themselves.
Establish Complaint and Redress Mechanisms
- Set up easy-to-access platforms for consumers to lodge complaints.
- Ensure efficient handling of complaints and provide fair compensation where necessary.
Conclusion
Adopting FTC-like regulations and enforcement mechanisms can benefit Sri Lanka by protecting consumers, ensuring fair business practices, and enhancing the overall market environment. Strengthening the legislative framework, creating a dedicated enforcement body, and promoting fair competition are crucial steps towards achieving these goals. By learning from the FTC’s comprehensive approach, Sri Lanka can create a more secure and equitable marketplace for all stakeholders. As individual businesses, we can contribute significantly by adopting these fair practices and pushing the country forward.
References
- Consumer Affairs Authority Act, No. 9 of 2003.
- Consumer Affairs Authority Corporate Plan 2020-2022.
- https://www.dailymirror.lk/top_story/Sensitive-info-of-state-owned-websites-leaked/155-255546
- https://www.twingate.com/blog/tips/payhere-data-breach
- https://www.dlapiperdataprotection.com/index.html?t=breach-notification&c=LK
