Meeting participants discussed the effectiveness of the national consumer rights protection system and the state consumer rights protection strategy to 2030.
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President of Russia Vladimir Putin: Good afternoon, colleagues.
Today we will discuss the national consumer rights protection system and its effectiveness.
It is an extremely important issue that concerns absolutely all citizens of Russia. People buy food and other products and various services every day with the expectation of quality, and that producers and sellers will be honest and upright and the state has effective methods for protecting them against frauds and counterfeits.
Abuses cost us time, money and patience, so the main goal of consumer rights protection is to maintain the material and moral well-being and health of the people. Moreover, it is also a good impetus for improving business and enhancing the competitiveness and quality of goods and services.
The current consumer rights protection system developed at the start of the fundamental economic reforms, with a law on consumer rights protection adopted in 1992.
In the 25 years since then, the system and its legal framework have improved. The consumption of goods and services has grown many times over, by more than 500 times in nominal terms.
Trade has grown from barely 5 billion rubles in 1992 to 2.3 trillion rubles in 2013. People became more active in protecting their consumer rights: over the past 20 years, the number of complaints to various agencies has grown a hundred-fold. The government agencies, including judicial bodies, as well as public organisations have accumulated considerable experience.
However, there is no single, permanent solution to consumer rights protection. This has a lot to do with economic development and the appearance of new goods and services.
This is why we must learn to predict future risks and promptly respond to them. The time is right for creating a state strategy in this sphere. I suggest that we outline its main aspects today.
I will focus on each of what I think are the main issues on our agenda. First of all I would say that the most acute matters are now concentrated in the services sector, including financial services.
For example, users of small personal loans have many complicated questions.
According to the Bank of Russia statistics Ms Nabiullina [Central Bank Governor] has provided, the average term of such loans (payday loans, as people call them) is 7 days; the average loan amount is 7,000 roubles. The actual overpayment on such a loan is 805 rubles, or 11.5 percent for the entire term.
For a number of these small short-term loans, the maximum total cost of the loan is quite high. For example, 800 percent on a 30,000 rouble loan for up to 30 days, or more than 600 rubles per day in loan servicing – in case the borrower does not meet their obligations within a year.
The well-known pawnbroker lady in Dostoevsky’s novel seems very reasonable compared to some of today's moneylenders.
People do not always take a loan out of dire need. Often they are responding to tempting offers without having the resources to make good on the loan. They deceive themselves, unfortunately, mainly because of financial illiteracy.
On the other hand, there are creditors who knowingly mislead people without explaining to them the terms of the loan or the whole chain of possible consequences. As a result, most borrowers almost inevitably fall into the debt spiral.
We know that the Bank of Russia is working to mitigate this situation. Now it has statutory authority to regulate the small loan market.
Together with the Government, we have developed a number of measures to curb the excessive appetites of certain creditors. I would like to ask Ms Nabiullina to elaborate on these issues today.
I will add that it is the law enforcement agencies’ job to clear the financial services market of all sorts of illegal and fraudulent players. I think we need to consider toughening legislation in this sphere.
Most importantly, we should prevent situations where people take out such loans like there is no tomorrow. Here, we should focus on consumer awareness, legal literacy and creating a culture surrounding the use of financial services.
It is also important to explain in detail how individual bankruptcy works, which offers civilised, legal ways out of debt.
The protection of online consumer rights is another important topic. E-commerce is growing rapidly, offering a wide variety of products, better prices, and a convenient shopping experience.
However, consumers are coming under an avalanche of commercial advertising, which is, let us face it, not always true. Often, information about online shops or companies that aggregate and deliver orders is missing. In such cases, the likelihood of purchasing low-quality goods or questionable services is fairly high.
Extensive educational work is also required in this area. I repeat: today, this is the key task, and its implementation requires specific and effective mechanisms and tools.
Consumer protection issues need to be addressed in a consolidated manner at all levels of government, and with the involvement of civil society and business associations.
Relevant regional programmes should be adopted at a faster rate. Each Russian region has its own peculiarities and issues in this sphere.
However, I would like to emphasise that this cannot be about regional protectionism under the guise of supporting ”local producers and consumers.“ The truth is that citizens are better protected where the economy is open and competitive, and where manufacturers and stores offer good value for money.
The involvement of municipalities in protecting consumers' rights is important. As of now, this is more the exception than the rule, although the real difficulties faced by consumers in particular regions are better seen right there, in the regions.
We need to help people, possibly by organising special consultations at the integrated municipal service centres. There are quite a few forms of support available. Most importantly, we should be concerned about people and take our responsibility to them seriously.
Let us get to work.