GCC economies have been growing fast, incomes have been rising and new infrastructure projects are underway. The business sector is flourishing, and e-commerce industry and the wider sharing economy are gaining momentum. According to a recent study conducted by management consultancy Strategy& (formerly Booz & Company), these developments will directly impact efforts required to protect consumers against fraud, and consequently should be addressed.
The rapid development of the GCC has led to significant improvements in infrastructure, rising income for citizens, and higher levels of international tourism. All of these have increased the need for more sophisticated consumer protection. Rising incomes for example have led to a dramatic increase in consumption. Additionally, rapid growth in tourism (both inbound and outbound) has exposed the GCC to markets abroad with more sophisticated consumer safeguard regulations. All of these factors are ultimately putting pressure on GCC governments to offer more robust and effective consumer protection solutions.
Commenting on the need for increased consumer protection in the GCC, Chucrallah Haddad, partner with Strategy&, said: “Progress will depend on the governments’ attention to a few key areas. GCC governments need to look at the institutions currently responsible for consumer protection and think about how their roles need to evolve. They must have a clear understanding of when to use prevention measures versus enforcement measures by defining a clear enforcement philosophy, and make sure to involve better-informed consumers and the community in an effort to safeguard their own interests. GCC countries should also take a long-term view of consumer protection, recognizing that the challenges of tomorrow will be different from today.”
According to the study by Strategy&, there are six tenets of consumer protection in the GCC:
1) Creating regulations that are in equal parts comprehensive and flexible. Detailed laws are the building blocks of a well-established consumer protection landscape. GCC governments should ensure that the laws they are working on individually and collaboratively are as comprehensive as possible to maximize the scope of consumer protection.
2) Put in place the right institutions and operating model. An empowered consumer protection body is required to manage core consumer protection functions such as consumer handling, research and inspection. GCC countries tend to be less far along in their protection-related institutions and processes. Sophisticated complaint-handling mechanisms, well-trained staff, and a robust research framework are key, and risk-based inspections should ultimately replace the less effective routine ones.
3) Define an enforcement philosophy. To ensure compliance with consumer protection laws, GCC countries should emphasize prevention through awareness for businesses and keep harsh enforcement for when the harm to consumers is severe and irreparable. GCC enforcement activities have mostly been conducted in an ad hoc way, often without clear targets.
4) Engage with the consumer and the community. Countries should conduct awareness campaigns addressing consumer rights and introduce a wide range of tools such as consumer helplines, digital recall platforms, and interactive online platforms to help consumers exercise and demand these rights. GCC countries have been increasingly active in this area, with Saudi Arabia and Qatar having launched consumer awareness campaigns to help consumers know their rights. Advocacy bodies can also play an important role in pushing consumers’ rights; however, these only currently exist in Oman and Saudi Arabia from the GCC countries.
5) Go beyond state borders. GCC authorities should look to outline a clear road map and develop practical mechanisms to strengthen collaboration and share knowledge across borders. The GCC Consumer Protection Committee has held meetings to unify the region’s efforts, discuss ways to launch integrated consumer protection platforms and develop a unified consumer protection law.
6) Take the long term view and continually evolve. It is important to keep improving the wider consumer protection ecosystem through leveraging research. Research — which can draw on information in the GCC countries’ consumer complaint systems and in inspection data — is a vital part of understanding main threats for consumers and identifying possible remedies. This is essential if the GCC is to keep on improving its consumer protection ecosystem.
Further highlighting the need for consumer protection, Serge Eid, manager with Strategy&, said: “Consumer protection is an ongoing effort to keep abuses from happening, minimize their impact when they inevitably do happen, and keep a specific type of abuse that has already happened from recurring. The numerous ways in which consumers can be taken advantage of means that GCC countries must be prepared to deal with problems in different areas and keep altering their consumer protection framework. Better safeguards for consumers will allow GCC countries to accelerate the modernization of their commerce.”