Abandoned in the market: The sad state of Canadian consumer protection
Michael Janigan
Executive Director and General Counsel
Public Interest Advocacy Centre (PIAC)
Jurisprudence Centre
Carleton University
Ottawa, ON
March 2, 2011
Perhaps the first comment that might be made about the title and theme of this lecture is so what? Aren’t there bigger items on Canada’s policy problems table to be solved? – the future and funding of health care, the national response to climate change, our continued engagement in Afghanistan, Arctic sovereignty – even the demise of the long form census loom larger in the national psyche than the brusque and often one sided treatment that the Canadian consumer receives at the hands of players in the market. If consumer protection has become an orphan, only the most flagrant abuses in the orphanage capture public attention. The government response is usually transient and a band-aid for often systemic problems. It seems clear that this pervasive ambivalence is a phenomenon that is more than simply a reflection of the mainstream’s media’s inability to report politics beyond the dynamics of personalities or scandals.
However, widespread apathy is not always a catalyst for funding indifference and lack of policy prioritization by the government. Different programs slumber through periodic government financial crises scarcely meriting much more than a raised eyebrow outside of high level review.
The apathy is certainly not a by-product of economic insignificance of consumer transactions. According to Statistics Canada, consumer purchasing accounted for more than 50% of all economic activity over the two decades that concluded in 2003. Yet the superintendence of the consumer interest in those transactions on the federal level is largely limited to the activities of one branch of Industry Canada that in 2008 had a budget of 5.1 million and staff resources of 23 person years. And for those jurisdictional purists that would point out that consumer protection is largely a matter of provincial concern, Canada’s largest province, Ontario has a the only separate consumer ministry among the provinces, and has a budget of approximately $60 million, the majority of the same largely consumed by the funding of the administration of agencies and authorities such as the Liquor and Gaming Commission.
Now, someone of a more libertarian bent, or perhaps a writer of a Molson Canadian ad, might cheer the incredible Canadian efficiency associated with such minimal government spending that produces a quiescent consumer populace. While acknowledging that Canadians are not in the streets about the lack of government commitment to a fairer marketplace environment, there are signs that the several decades of incurious and sometimes willful neglect may not reflect the future.
But before we catalogue the current deficiencies, it might be more instructive to figure out how we got to a place where consumer interests seem to be low priorities both for governments and traditional advocates for programs necessary for civil society. As I will describe, consumer protection was not only as a casualty of corporate strategy and government expedience, but also inattention by advocates of engaged government.
One important hurdle to the championing of public protection in the marketplace seems to be the word “consumer”. There is a strange dichotomy that has developed between the consumption of goods and services by Canadians, sometimes in much greater quantity than several decades ago, and their self identification as consumers.
The inclusiveness of the term is certainly a problem. As Industry Canada’s Consumer Trends Report has noted:
“Consumers are a diverse group and it is difficult to make generalizations about them. Their wants, needs and capabilities are often dramatically different, depending on their age, gender, social circumstances, place of residence and income. As a result, a marketplace opportunity for one group of consumers may be seen as a problem by another.”
But further, the term “consumer” itself has acquired a negative connotation associated with unbridled and unsustainable consumption. Consumption and efforts to curtail consumption, particularly of non- renewable resources or those products whose manufacture distribution, or use results in harmful effects in terms of total societal costs of the economic activity. The environmental movement and advocates for reform of climate change look to ways to reduce consumption often with
The views of those distressed by the very term “consumer” has been channeled by advertising copywriter Mark Stiltner writing on the blog site Design Taxi, where he states
“It is my long‐held opinion that the word “consumer” devalues people. It strips us down to the lowest common denominator and defines us by our most basic behavior. Even pond scum can consume.
At a time when many of our nation’s most deadly diseases are self‐inflicted symptoms of overconsumption, the term also reinforces a negative relationship between people and the companies that serve them. That’s right; the companies are there to serve us, not the other way around.
Which brings me to my next point; the term “consumer” places people squarely at the bottom of the commercial food chain. Thinking of potential customers as consumers hinders the way marketers and businesses interact with people. Because guess what? I’m not a consumer, and neither are you.”
I’m sure you may be thinking that it doesn’t bode well for the entire subject area when the term “consumer” itself is subject to derision from some of the same people who may otherwise be inclined to support the elimination of inequities on the marketplace. And Stiltner is correct that the notion of citizens as clients and customers has driven much of the happy talk from governments and industry over the past couple of decades when they are eager to disconnect the objectives of universality and affordability from their provision of an important product or service, delivered publically or privately.
So we haven’t got to the depressing part of the lecture yet, and already consumer protection is MIA from the interventionist barricades. In fact, in some of the most contentious public issues of the recent past in Canada, involving the negotiation and terms of multilateral trade agreements, the consumer voice was appropriated, without consent, by the faction representing exporters and the debate largely centred on issues not touching upon the position of Canadians as consumers.
The role of language and its use in this field is a wonderful topic for a seminar on the use of spin. Consumer protection is needless regulation when it is being eliminated, but important provisions for public safety when it is being implemented.
However, if this lecture’s theme is abandonment of the consumer, when precisely did the abandonment take place? Was there ever a moment when governments were fully engaged in leveling the playing field for Canadians, or, at least, being as committed to advancing consumer interests as that of producers.
As we have seen the term consumer can be subject to sufficiently elasticity to include almost everyone depending on the context, and possesses certain unhelpful connotations for a segment of the population that fails to self identify. What then would a commitment to consumer interests consist of?
For American President John F. Kennedy, the appropriate commitment could be condensed to a statement of consumer rights. In his address to Congress of March 15, 1962, Kennedy noted:
“Consumers, by definition, include us all. They are the largest economic group in the economy, affecting and affected by almost every public and private economic decision. Two-thirds of all spending in the economy is by consumers, But they are the only important group in the economy who are not effectively organized, whose views are often not heard.
The Federal Government --by nature the highest spokesman for all the people -- has a special obligation to be alert to the consumer's needs and to advance the consumer's interests
For Kennedy, the Federal Government’s obligation included a package of consumer rights comprised of the following
“(1) The right to safety -- to be protected against the marketing of goods which are hazardous to health or life.
(2) The right to be informed -- to be protected against fraudulent, deceitful, or grossly misleading information, advertising, labeling, or other practices, and to be given the facts he needs to make an informed choice.
(3) The right to choose --to be assured, wherever possible, access to a variety of products and services at competitive prices; and in those industries in which competition is not workable and Government regulation is substituted, an assurance of satisfactory quality and service at fair prices.
(4) The right to be heard-- to be assured that consumer interests will receive full and sympathetic consideration in the formulation of Government policy, and fair and expeditious treatment in its administrative tribunals”
These rights were selling point for an ambitious package of reforms that included the passage of a new Food and Drug Act in 1963.
How does Canada stack up in relation to the advancement of these rights in its first century of existence? While there does exist a perception in some circles that Canada was once at the forefront of consumer protection and a model for other nations because of a regulatory commitment to objective public interest principles, the historical record is decidedly less clear on this point.
Early Canadian initiatives to level the playing field in the marketplace for consumers largely followed developments in the United Kingdom associated with the Sale of Goods Act close to the turn of the nineteenth century and the changes the Uniform Commercial Code in the United States in relation to the rights of buyers and sellers. There is no discernible body of jurisprudence that stakes out a special Canadian sensitivity to consumer rights. In fact, it is arguable that there is ample case law to support a thesis of fairly close adherence to the confines of the sales contract, written or implied and a trust of existing business.
In relation to issues of public safety, for example, Canadian efforts to regulate drugs were first confined to insuring no alterations of the drug took place, and not until 1920 was there legislation to enable the year old federal Department of Health to license drugs subject to certain requirements. By 1951, the regulations called for new submissions from the drug companies before the commencement of initial marketing. As we shall see, these proved to be wholly inadequate to prevent the introduction of thalidomide into the Canadian market.
America was a far more industrialized and urbanized society in the latter part of the nineteenth century, and many of the initial battles to curb the activities of the important financial and industrial interests of the day occurred initially in the United States. These included struggles for labour union recognition, antitrust legislation and enforcement, and efforts to institute public health concerns into the preparation and manufacture of food and drugs. In this latter area, the strong public response to Upton Sinclair’s novel The Jungle that depicted the harsh and filthy environment inside the Chicago stockyards led to the passage of the pure food and drug legislation containing meat inspection provisions in 1906. In 1938 Congress added to the 1906 legislation by enacting the Food, Drug and Cosmetic Act, which required manufacturers to prove the safety of new drugs before being allowed to put them on the market.
One of the largest public health tragedies of the last century, the Thalidomide crisis, left some 15,000 children adversely affected in 46 countries; 12,000 among them born with birth defects and another 8,000 dead in their first year of life. While not the first crisis generated by a pharmaceutical product causing death or putting consumers’ health and safety at risk since the industrial revolution, the Thalidomide crisis was a historical landmark in consumer protection. The large number of victims of the drug caused worldwide prompted strong public reaction, and forced governments to establish or strengthen legislative and regulatory protections to discharge their obligation to better protect the safety of their citizens.
Thalidomide was a sedative developed by Ciba, but put on the market in 1957, by another German pharmaceutical company, Chemie Grünenthal. It was supposed to allow patients who had trouble falling asleep to have a quick, natural sleep. Grünenthal became the new patented maker of the drug and hailed its non-addictive, non-hangover effects and the fact that it was “completely non-poisonous”, “completely safe” and harmless “on pregnant women and nursing mothers. The drug became widely popular under the name Contergan in the German market and sales volume in Germany averaged 90,000 packets of the drug every month, all of them over-the-counter. Three years later in 1960, it was sold to millions in 46 countries around the world, including Europe, North America, Latin America, Africa and Asia under 37 different names. And although the United States Food and Drug Administration (FDA) withheld the green light for the drug to enter the United States market, in Canada the drug was approved for sale to the public in 1959.
The U.S.-based distributor of Thalidomide, Richardson-Merrell, managed to get approvals by Canadian authorities to distribute the drug in the country. It was available in the form of sample tablets in 1959 and, by 1961; it was approved for medical prescription though medical journals around the world had started to raise alarm bells about the drug’s possible side effects. When the effects of the drug around the world became news, it was soon learned that Canada had not escaped harmless from the tragedy with 125 children with Thalidomide-induced deformities were reported in this country.