Sucheta Dalal :But what about consumersR17; rights?
Sucheta Dalal

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But what about consumers’ rights?  

Nov 8, 2004

Safeguard their rights before empowering corporations to go after defaulting consumers

The Reserve Bank of India (RBI) soon plans to bring a legislation to empower banks and finance firms to share consumer credit histories even without their consent. Along with the Securitisation Act, this would be another legislation that further empowers lenders. Clearly, powerful lenders have successfully lobbied for such legislation, but despite a growing body of evidence of shoddy service and mischief by these very entities, there are no plans to improve consumer rights or increase penalties and damages.

Personal credit data is collated by the Credit Information Bureau of India Limited (Cibil), and it will mean that customers with a bad payment record can soon forget about getting new credit cards, personal loans or housing finance. This is just as it should be, but problems arise when payment disputes are not the customer’s fault.

There is a growing incidence of customer harassment by high profile foreign and private banks that is caused by new technology and systems that discourage grievance redressal. Since Cibil’s statistical enumeration makes no allowances for legitimate disputes arising out of bad service, the database may often work against consumers in such cases. For instance, a big problem faced by users of credit cards and ATM cards these days is over-billing. These entities slip in charges of Rs 100-200 per individual, which appear paltry but add up to a hefty sum.

Several consumers on a yahoo group (consumer-voice) report that Citibank recently billed them a “security fee” for the possibility of having “to protect them against the misuse of a lost card” during the period between discovering the loss and reporting it to Citibank. It reluctantly reversed the charges for those agitated customers who protested. What about the others? I had taken up a complaint relating to a wrongly charged late fee of Rs 75 with the RBI. Responding to the regulator, the bank admitted to the wrong charge but attributed the mistake to several consecutive holidays. Logically, the regulator ought to have ensured that the entire class of eligible customers received similar reversals; but it only behaved like a postman.

Another investor says this about a foreign bank that hard-sells loans against shares. Every time the stock prices drop significantly, the bank backdates and closes out the account and even eats into his security deposit. Fighting a large international bank is tough for an individual consumer, but the bank can easily destroy his credit record permanently.

• Growing incidence of customer harassment by foreign and private banks

• Apart from banking, problems of bad services are as acute in other areas

• Need to stop service providers from profiting from lapses or wrong billing

Bad service problems are as acute in private sector utility companies. For instance, an energy company in Mumbai outsourced the job of changing electricity meters to a dubious firm. The firm mixed up the wiring and when power was switched on the TV, microwave and light bulbs immediately burnt out. The company apologised and offered the customer a box of chocolates.

A big problem is complaint handling. Service companies have set up call centres that work well in handling routine queries, redressing simple complaints or providing simple clarifications. But the problem gets more serious, polite call centre executives believe they must stonewall and block access to senior executives.

A Tata customer who has 26 high-usage telephone lines spent three weeks complaining and sending faxes to the number prescribed by the call centre but the problem remained unresolved. Senior officials remained stubbornly inaccessible despite having dealt with the firm in the past. The problem was resolved almost instantly when it was escalated to the level of a sympathetic director. Without that access, the consumer would have been forced to switch services and leaving behind a genuine payment dispute.

A user of a Reliance phone has been receiving SMS messages demanding interim payments of upto Rs 5,692 for “high usage”. Yet, his bills have never exceeded Rs 1,400. The call centre and the company simply refuses to get it. He managed to escalate the issue to the chairman’s office. Here was the response: “We have been trying to contact you but we were not able to reach you (even though he uses its phone)...we request you to make an on-account payment of Rs 5483 towards your high usage by November 01, 2004 to continue enjoying uninterrupted Reliance services”. Without resolving or understanding the issue it apologises for “the inconvenience caused to you in this regard”. Unfortunately, unlike the company itself, the customer cannot afford to rush to a High Court for relief.

Here is another questionable charge that consumers are paying. Mobile phone companies such as Hutch apparently charge what is called a “daily decrement” of one rupee for pre-paid services. This amount is deducted from the account whether or not the phone is used. This means that not only are users not rewarded for paying in advance, but in fact penalised for it!

Clearly, there is need to legislate some basic consumer rights that stop service providers from profiting from lapses or wrong billing. We also need legislation that mandates service providers to keep tamper proof records of customer complaints and call centre conversations and produce them in court when there is a dispute. But our independent regulators have first to realise that bad service problems have not expanded to the level that it requires new legislation. Ignorance about consumer rights is so high that a newspaper recently reported that the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) had not received a single consumer complaint since its inception in May 2000. Many consumers probably go to a consumer court because TDSAT is only mandated to help groups of consumers.

Independent regulators in banking, electricity, telecom and insurance must realise that the disparity between the financial muscle of companies and consumers is so enormous that urgent steps are needed to safeguard consumer rights before empowering corporations to go after defaulting consumers and causing lasting damage.

-- Sucheta Dalal