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What to do to ensure that even in the digital era, customer is right

COMMENTARY
By Martin Mulwa | March 15th 2019

As we mark the World Consumer Rights Day (WCRD) today, it is important to take stock of progress made in consumer markets so far. Over the past decade, consumer markets for goods and services have undergone profound transformation.

Global markets and the use of new technologies are driving the changes in consumer services. These changes without a doubt have brought significant benefits to consumers and in many instances lead to improved efficiency.

More trust

The theme for this year’s WCRD focuses on better and trusted digital products. An increasing number of consumers have access to the Internet than before, which provides easier and faster access to products and services. Globally, it is estimated that smart products’ ownership is estimated at 23.1 billion, which is approximately one person for three devices.

According to the Communication Authority of Kenya (CA) first quarter sector statistics report for 2018/2019, indicates that the total number of active Internet/data subscriptions is estimated at 42.2 million, which essentially implies over 90 per cent internet subscription. However, high subscription might be as a result of most users owing more than one device.

The advent of smart technology brings many opportunities for consumers such as: access to new services, more responsive products, greater convenience and choice. However, relatively less attention is being paid to the challenges these developments might pose for consumers. For instance, there are potential risks in terms of lack of security, privacy, and often lack of clarity.

As product and devices carry out different functions and link to more systems, they will become more complicated and it may become difficult for consumers to have full clarity on how they work.

Again, it is difficult to ascertain whether the product, device or service delivered through digital channels are actually functioning as promised. The consumer may not have adequate opportunity to examine the goods, query about the condition, or try out the goods to decide whether the goods are acceptable.

This is a classic case of information asymmetry which is often the case when dealing with complex, technical products, where the producers possess more information about the product than the consumer.

The tools applied to overcome information asymmetry in other markets such as financial markets or motor markets is through the use of quality marks, trusted intermediaries, and regulation. However, these tools might be limited in the digital markets given the interoperability with other markets.

Real versus ideal

Ideally, an effective consumer protection framework should address these inherent information asymmetry and power imbalances in markets.

A consumer protection framework includes the introduction of greater transparency and awareness about the goods and services, promotion of competition in the marketplace, prevention of fraud, consumer education, and elimination of unfair practices.

Therefore, moving forward it is imperative for the institutions such Competition Authority of Kenya (CAK) and the Kenya Consumer Protection Advisory Committee (KECOPAC) with the mandate of consumer protection need to adopt a pro-active approach to ensure digital markets work for consumers.

Such a pro-active approach could contribute considerably to rebuild consumer trust. Also, these institutions need to create consumer awareness about the potential risks when dealing with this product and how consumers can protect themselves.

Education can potentially be an effective form of consumer protection though does not act as a substitute for regulation but complements an effective legal and regulatory framework.

Mr Mulwa is Programme Assistant, Consumer Unity and Trust Society (CUTS), Nairobi. [email protected]

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