ARGENTINA-ECONOMY: Stable Prices Bring Complaints from Consumers

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Aug 27 1997 (IPS) - Back in the 1980’s when the inflation rate in Argentina exceeded 5,000 percent, consumers were on a frenzied buying spree, pressured by a daily increase in the price of any item. There was no time to waste in making a selection, even less to complain about fraud.

But after six years of stability, and an inflation rate that is lower than that of the United States, Argentineans have become more demanding. During the first semester of this year, there has been a 57 percent increase in complaints by dissatisfied shoppers, compared to the same period in 1996, says the Office of Consumer Protection.

The bulk of the complaints are aimed at former public services that have been privatised since the 1980’s.

The president of Consumer Action, Ana Maria Luro, says that since the beginning of the privatization process, which brought the government some 26 billion dollars, some 100,000 complaints have been directed public companies.

The problem does not revolve around inefficiency, but rather costs, which are seen as excessive, she said.

According to Luro and other consumer protection organizations, the problem with public service companies lies in the fact that the government, having turned over the captive markets, has been unable to continue its role as controller. Nor has it been able to integrate the organizations that protect consumers.

Economic Minister Roque Fernandez has admitted that the rapid privatization process, implemented by the government of president Carlos Menem, has committed some errors. “Companies were given a certain degree of monopoly, and consumers ended up paying for it with higher prices,” he acknowledged.

The government, however, vetoed key points in Argentina’s Consumer Protection law, which would have granted a greater degree of control over providers, and a better defense of consumers against abuses. The reason for the veto was a fear of scaring off investors.

In the face of the new openness to capital and consumer goods, plus the fact that there are near-monopolies in public services – 80 percent of which are controlled by seven companies – consumers have only two options: to accept the facts as they are or to complain.

More and more people are stating their grievances, such as against increased prices for telephone calls that the phone companies call ‘tariff readjustment,’ or reduced services for the same price, like the privatized Argentine Airlines, which does not even offer a cup of coffee.

Companies that provide water, gas and electricity and have invested heavily in expanding networks, have received complaints from consumers on exorbitant amounts being asked to pay for the pipes to reach their properties – the basic purpose of expansion.

Companies have sought protection in laws that state that if an investment is not profitable, they are not required to make it. Users, on the other hand, maintain that the company has 20 years to recover the capital outlay through tariffs.

The problem is that the bills pile up and consumers do not know what to do. At first, the companies said: ‘pay and then file the complaint’. But sometimes the consumer has no money.

Regulatory entities for the service companies are required by law to defend consumers, but non-governmental organizations claim that they are bureaucratic and that complaints pile up without anyone resolving them. These regulatory bodies are financed by the new service companies.

In addition, the stability of prices has also placed obstacles on producers, importers and wholesalers of other types of goods and services. Savings plans for purchasing cars and credit cards are two of the categories under attack by consumers.

One case that sparked the most complaints was that of an automobile company that offered a layby plan for the purchase of a particular model at an established price. During the course of the contract, it required clients to switch to another model at another price. Other changes were also made, to the point that clients no longer knew how much they were paying, nor for how long.

The last straw came when the company offered to pay for a better car with a loan at an interest rate that was higher than the market rate. To make matters worse, the company not only changed the rules of a signed contract, but it also deceived the clients. Each notification of change came with a headline that read: ‘Good News’.

Many clients in such plans are currently suing in order to recover money for installments they paid without having received any service in return.