Glass half empty for unhappy consumers?

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While the protection of consumer interests contributes to building a healthy business environment for enterprises and individuals, notable conflicts continue to emerge that call into question consumer ethics as well as the reputations of companies that get dragged into the fray.
1538 p18 glass half empty for unhappy consumers
Major companies can sometimes be at reputational risk if they get into squabbles with consumers over often hard-to-prove allegations, Photo: Shutterstock

Saigon Beer Alcohol Beverage Corporation this month is being dragged into Vietnamese court by a consumer who accused it of selling a bottle of beer less than half full. The consumer is seeking an astonishing $1 million in compensation.

After the petition was raised in 2018, the two sides reportedly tried to settle the issue to no avail. SABECO said it does not accept the contents of the petition and requested the court to suspend the case.

It is never been uncommon for conflicts between consumers and producers to flare up when it comes to customer rights. According to the Ministry of Industry and Trade (MoIT), since 2011, related authorities have checked more than 20,000 complaints.

For customers, disputes can be a source of frustration and inconvenience, while for the company, disputes can be expensive to resolve, as well as causing damage in terms of relationships with customers. It is therefore usually a company’s aim to settle any disputes outside of court.

However, not all businesses agree to compromise with what they often find are exaggerated requirements from customers, and there have been a few high-profile cases in Vietnam in that regard over the years.

Tan Hiep Phat Group, the maker of several popular drinks in Vietnam, complained to police in 2015 when a customer demanded nearly $45,000 to keep quiet about allegedly finding a fly inside one of their bottles. He was subsequently arrested and received a 7-year jail sentence for blackmail.

That same year, the People’s Court of North Tu Liem district in Hanoi dismissed a lawsuit filed by a customer who sued Coca-Cola Vietnam for allegedly selling substandard beverages to its customers.

The petitioner wanted Coca-Cola Vietnam to compensate and make a public apology to a local newspaper after saying she found a soft drink bottle to contain two pieces of broken glass.

However, subsequent testing showed that the bottle cap of the drink was different from the cap of other products at the same plant of the corporation, and that it could easily have been a counterfeit product and not from Coca-Cola Vietnam.

The MoIT has warned that local consumers should not make claims for damages that have no real basis and that inaccurate information that threatens to damage the reputation, honour, or property of an enterprise can lead to the possibility of breaking the law.

Lai Ngoc Thanh – Deputy director, LLA Legal

1538 p18 glass half empty for unhappy consumers

The Law on the Protection of Consumers’ Rights 2010 stipulates some methods to settle disputes between consumers and goods and service traders, including negotiation, mediation, arbitration, and court.

If consumers are said to have violated the rights, this should be based on legal provisions before asking for protection. According to the 2015 Civil Code, consumers can ask for compensation for damages on their properties, health, livelihood, as well as honour, dignity, and prestige.

Based on available information in the SABECO case, for the damage on property, the compensation may be calculated based on use of defective beer bottles, and of course the value of the beer bottle is quite small.

In the case of damage on honour, dignity, and prestige, customers can be compensated for their spiritual damage. If the two sides cannot negotiate, compensation shall be a maximum at 10-fold the basic wage in the state regulations, which is VND1.49 million ($65) per month, according to Decree No.38/2019/ND-CP dated 2019.

For the dispute of SABECO, the amount of $1 million the customer is demanding far surpasses the compensation that the legal framework stipulates. I assume the the court will not approve this requirement.

In addition to asking for damage, a customer that deliberately provides information that aims to defame the reputation of a business is also a problem to consider in line with legal provisions. The court can consider to approve or not approve the customer’s requirement for compensation, because this is a civil right. However, if a customer deliberately defames a business, he has also violated some legal provisions.

If the court or other authorities conclude that SABECO has not violated, it can ask for compensation on damage done to it financially, or to its reputation and brand name. This is stipulated in the Civil Code, but compensation for a business is surely much larger, because reputation and brand name of a corporation is quite expensive, and expenditure for recovering the damage can be costly.

We should ensure all trust is placed into legal frameworks and consider carefully before making such moves, because every piece of information can damage any business, and legal provisions will ultimately be the fairest balance to judge everything.

The extent of a warranty

The extent of a warranty has been clearly delineated in the Civil Code. If, for example, a purchaser discovers a defect in a purchased item during the warranty period, he has the right to demand that the seller repair the item free of charge, reduce its price, or replace it with another item. He also has the right to return the item and receive a refund.

Article 21 of the Law on the Protection of Consumers’ Rights (LoPCR) supplements the Civil Code by providing details on the warranty obligations of traders, not just sellers as defined in the Civil Code.

Warranty shall be provided on goods, parts and accessories as agreed by parties or required by law. A trader of goods, parts and accessories subject to warranty shall:

1. Fully perform its obligations to provide warranty on its goods, parts and accessories;

2. Provide consumers with a warranty card which must specify the time of maintenance. Such time is excluded from the warranty period. When the goods trader replaces parts or accessories or change the goods, the warranty period for such parts, accessories or goods shall be counted from the time of replacing those parts or accessories or changing the goods;

3. During the time of maintenance, provide consumers with similar goods, parts, or accessories for temporary use or offer another solution accepted by consumers;

4. Change or recall similar goods, parts, or accessories and refund consumers when it, past the time of maintenance, fails to repair or correct the faults;

5. Change ore recall similar goods, parts, or accessories and refund consumers when it fails to correct the faults after three or more times of maintaining such goods;

6. Pay expenses for the repair and transportation of goods, parts, and accessories to maintenance places and from such places to consumers’ places of residence; and

7. Be held responsible for warranty on goods, parts, and accessories for consumers even when it authorises another organisation or person to provide such warranty.

Defective products

The concept of a “product” as the term used in the LoPCR has historically been very broad. Traders may have difficulties in determining whether the item they are offering is a “product,” and may also have difficulty assessing defects of the product or determining who is liable for a defect.

The Law on Quality of Products and Goods (LoQPG) mentions “defect” of products. However, the word “defect” seems to mean only “poor quality”. The LoPCR goes beyond this. Under the LoPCR, a defective product is a product which is not safe for consumers and which can cause death, personal injury, or property damage, even if those products have been manufactured in accordance with current technical standards or specifications, and even if the manufacturer is not aware of the defects at the time the products are sold.

There may be defects in the technical design of mass manufactured products. Defects may arise from the manufacture, processing, transport, or storage of singly manufactured products. Defects may also result from a failure to provide adequate instructions or warnings on potentially dangerous products.

In other words, quality is not the only factor involved in determining whether a product is defective under the LoPCR. One must also consider design, whether consumers are properly instructed on use, or whether the consumer has been warned of dangers.

Article 23 of the LoPCR outlines the responsibilities for compensation of damage caused by defective goods. Goods traders shall pay damages when their defective goods harm the life, health, or property of consumers even when they are not aware about or not at fault for such defects, except in one case defined in Article 24 of the same law.

Goods traders provided in Clause 1 of the article include goods producers; goods importers; organisations and persons with their commercial names on goods or using trademarks or commercial indicators showing that they are goods producers or importers; and direct suppliers of goods to consumers in case those responsible for paying damages specified in the first three points of this clause are unidentifiable.

Source: Law on the Protection of Consumers’ Rights

By Nguyen Thu

Nguồn: Vietnam Investment Review

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