COVID-19

This blog is part of a series of PSDI posts considering the impacts of COVID-19 on competition and consumer protection. See also “Retail Pricing in the Pacific During the Covid-19 Pandemic” and "Competition in the Wake of Covid-19: Supporting Pacific MSMEs."

The coronavirus disease (COVID-19) pandemic is affecting countries throughout the Pacific region, bringing a range of direct and indirect consequences for public health, public finance, economic welfare, business viability and many other aspects of life. In this blog, PSDI considers the effects of COVID-19 on Pacific consumers and suggests appropriate steps to mitigate those effects.

Pressure on consumers and traders

Consumers in Pacific island countries are at risk of being adversely affected as a consequence of the COVID-19 outbreak. During the current crisis, consumers may be anxious about their own and their families’ health and wellbeing, contending with financial stress, and uncertain how or whether they can complete transactions that previously were routine. Many traders and businesses will also be facing intense commercial pressure and difficult trading conditions. In these circumstances, the risks that consumers will be disadvantaged—deliberately or inadvertently—are substantially higher.

Some risks to consumers are malicious in origin, such as taking advantage of the pandemic to defraud people. Some risks might arise from a lack of care, such as retailers unwittingly misleading their customers. Still other risks flow from the effects on businesses, such as supply constraints resulting in consumers not receiving what they paid for. Below we consider the most likely kinds of risks, and possible steps to mitigate them.

COVID-19 frauds

Consumers’ natural anxiety regarding the pandemic provides fertile ground for fraud. Many such frauds are taking advantage of people being online more or available by telephone during quarantine or lock-down. COVID-19 related frauds circulating elsewhere include:

• Online offers for “coronavirus vaccine”
• Advertisements for coronavirus “cures”
• Dishonest offers to sell masks, which are never delivered
• Financial scams purporting to be linked to government COVID-support funding
• Email scams soliciting donations to bogus COVID-19 “charities”.

Providing redress for the victims of fraud is always difficult. The best remedy is prevention—enforcement agencies and advisory bodies should work to raise consumers’ awareness of fraud risks and to educate consumers to avoid offers that raise ‘red flags’.

Misleading conduct

Under the unusual circumstances of the COVID-19 pandemic, traders might deliberately or unwittingly mislead consumers regarding the products or services they offer, their delivery terms, their refunds policy, or other key terms of their transactions.

• Consumers might be deliberately misled by, for example, a false claim that a particular mask is
  “100 percent COVID-proof!”
• A statement that was accurate before the outbreak might subsequently have become misleading: for example, “all orders delivered in 24 hours.”

Some Pacific islands countries already have laws against misleading or deceptive conduct and have agencies to enforce those. Enforcement agencies should be vigilant in prosecuting deliberate infringements and consumer rights bodies active in explaining consumers’ rights with examples relevant to the pandemic. Sector regulators and advisors to retail-level businesses should also encourage traders to review their advertising and marketing materials to ensure that representations to consumers remain accurate and able to be provided.

Unfair trading terms

As a general principle, consumers should be entitled to be refunded the deposit or price paid for a good or service, if the trader who sold it is unable to supply it, or to deliver it when agreed or within a reasonable time. 

Some Pacific islands countries give effect to this right through their consumer laws. In those countries, consumers and traders alike should be reminded of this right, and the relevant enforcement agency should enforce the law and publicize the cases in which it takes action.

Countries that do not have such a law should consider updating, or introducing, appropriate consumer protection legislation.

Conclusion

Among the many impacts of the COVID-19 pandemic on the health and welfare of the people of the Pacific are increased risks to their wellbeing as consumers.

An effective consumer protection law, vigilant enforcement by the responsible agency, and active awareness-raising efforts by the relevant ministry or consumer rights body will all assist to protect consumers who are vulnerable at this time.

This blog post was prepared by Dr. Andrew Simpson, Dr. Alma Pekmezovic, and Mr. Terry Reid, members of PSDI's Competition and Consumer Protection team. PSDI has undertaken competition and consumer protection reform in Cook Islands, Fiji, Kiribati, PNG, Samoa, Solomon Islands, Tonga, and Vanuatu.