Avoid getting ripped off on repair work
07/01/2011 | FRIDAY, JULY 1: As a result of numerous criminal investigations carried out by the Department of Consumer Affairs over a ten year period, the Consumer Protection Act 1999 (the Act) was recently amended and came into effect on June 3 of this year. These amendments focused on three main areas of unfair business practices:
• A lack of clarity surrounding the terms Estimate, Quote and Price;
• Aggressive and abusive business practices that negatively affect consumers; and the
• Requirement for payment in full of goods and services in advance.
Consumers and businesses should take the time to familiarize themselves with these amendments and the Act in its entirety. Why? Consumers who fully understand their rights and responsibilities under the Consumer Protection Act 1999 are less likely to become victims of unscrupulous business practices.
The amendments to the Act will have significant impact on the way business is conducted in Bermuda and businesses that understand their responsibilities under the Act are less likely to engage in unfair business practices that could result in prosecution.
Over the next few weeks I will highlight each area of the amendments so that both buyers and sellers have a clear understanding of the implications.
Quotes and Estimates
Many businesses regard an estimate and a quote as the same thing and often use both terms when presenting the proposed cost for a product or service. But there is a difference.
“Estimate” means a representation, whether written or oral, indicating the likely price that will be charged in respect of consumer goods or services.
“Quote” means a written and signed representation setting out the actual price that will be charged in respect of consumer goods or services.
Inevitably problems arise when the terms ‘estimate’, ‘quotation’, and ‘price’ are used interchangeably throughout the process of negotiation. Yet sellers commonly use this practice to justify prices which they know grossly undervalues the end price that will ultimately be charged.
A common problem that occurs when an estimate or quote is issued for a job, is that it isn’t until after work has started and the job is halfway completed that the true price is established or fully understood.
This often places the consumer in the unfortunate position of either leaving the project unfinished, going back to the bank for more funding or taking their chances in court which can take months and can result in added expenses.
In most instances the cost increase has generally not been due to unforeseen issues beyond the vendor’s control or even change orders but rather it can be attributed to any one or all of the following scenarios:
The method of underbidding is financially profitable as many end up with a finished price over that of the highest bid; or
The assurance that no other company will come in and complete what another company has started; or
A lack of knowledge with respect to how to prepare a proper costing for a job and/or lack of attention to detail.
What ends up happening is that the consumer is ultimately disadvantaged as a result of the lack of clarity around the final price from the onset.
Remember, the amendments to the Consumer Protection Act are designed to correct behaviours that serve to adversely disadvantage consumers.
Simultaneously the amendments will assist traders to improve the quality of service and to become more effective in managing the related administrative processes.
These amendments benefit everyone. The consumer in that they now have more protection from unfair business practices and they also benefit the seller — better business practices equals a better business that results in customer satisfaction and loyalty and more profits.
Next week I will write about aggressive and abusive business practices (yes this actually is happening in Bermuda).