By Adv Ehud Peleg - CEO of the Israel Consumer Council
It was recently reported in the media that Tara (an Israeli dairy product manufacturer) has removed a number of ingredients with nutritional and health value from its soft white and cottage cheeses, without informing the public.
Does such conduct reflect a fair policy toward consumers?
In a survey carried out for the Israel Consumer Council, 80% of those who expressed an opinion responded that the removal of nutritional ingredients from a product, without informing the public and without changing the price accordingly, demonstrates a lack of fairness; 61% would respond to this unfairness by no longer purchasing the product, information about which was concealed.
Hiding information from the public, or obscuring it so as to make it difficult for the consumer to obtain or understand is, unfortunately, a form of conduct that is not uncommon in the business sector. For example, consumers are unable to compare the costs for checking accounts between the various banks, because of the way in which these costs are presented, in a mixture of shekel sums and percentages.
The same is true of Bezeq’s 144 Telephone Directory Service, where the use of the “star” key to automatically dial the number requested is subject to a fee; however, the sum charged is unknown to consumers, since the company does not indicate the price in the recorded message that offers the service, but only on its website. (Another survey for the Israel Consumer Council showed that over 90% of those using the “star” service were unaware of the price; half of them indicated that they would no longer use it, once told of the cost involved.)
And many will remember the time that Tnuva (another major food manufacturer) added silicon to the milk, and then hid the information from consumers. In a class action filed by the Israel Consumer Council, together with the late Tawfik Rabi, the compensation awarded by the court, 38.5 million shekels, reflected the court’s opinion of such conduct and its significance.
Hiding information from consumers, to prevent them from making intelligent purchasing decisions, is a breach of trust toward consumers, and misses the point of a business transaction: agreement between a willing seller and a willing purchaser, with both of them having full understanding of the conditions and willing to enter into the transaction.
A basic condition for this is that all details of the transaction are known to the two parties. This is certainly true in regard to details which may influence the consumer’s willingness to enter into the transaction, under the conditions presented to him, and in particular at the price being asked.
The value of a product or service, from the consumer’s point of view, and the value for money in his eyes – the cost-benefit ratio – are considerations that the consumer cannot be prevented from taking into account, by hiding the information from him. Those who do so are behaving dishonestly, deviously, and in a way that distorts the meaning of free will in commerce.
The million-dollar question is: why do businesses allow themselves to behave unfairly toward consumers. Unfortunately, the answer lies in the very description of the question: a million dollars.
It would seem that, when a value, such as fairness, clashes with the interest of profit maximization, many businessmen don’t see any dilemma at all, and will do all that they can to increase their profits at the consumers’ expense.
Apart from this unacceptable ethical norm, businesses that conduct themselves in this way are also being shortsighted as to the profitability of such conduct. In an age in which consumers share their experiences with one another, such businesses will be publicly denounced, with consumers punishing them by boycotting their products.
In the near future, consumers will also have another assessment tool: the Israel Consumer Council and the Research Administration in the Ministry of Economy, have reached the final stages of developing a “Fairness Index,” which will assess complete industries, and also individual businesses and companies. For years, the Consumer Council has been fighting for the right of consumers to be treated fairly. This struggle is now due to be taken up a notch, with consumers being able to penalize unfair businesses for their conduct.
According to a Geocartography survey carried out for the Israel Consumer Council, 70% of consumers responded that they would make use of a fairness index as one of their purchasing considerations.
“No Secrets” should not only be the name of a television program. It is a basic condition for fairness in commerce, and has to be a guiding principle for manufacturers and marketers when offering their products and services to the consumer public.