This year it became public knowledge that German automaker Volkswagen and other corporations had deceived customers with fraudulent acts. This has brought into question the need for the improvement of commercial law by the government. But, above all, consumers should take the wise measures against these fraudulent practices. Do they make the best of the situation?

<Volkswagen’s Deceits>

Shocking Volkswagen Emissions Scandal

  In September 2015, countless consumers all over the world were shocked at the news that Volkswagen (VW), a typical example of the “clean diesel”, had deceived consumers with the manipulation of pollution tests. It turns out that most of Volkswagen’s diesel engines had been controlled by secret software to hide the fact they had been producing 40 times the legally allowable pollution limit. The software only operated when the cars were being tested and could reduce the gas emission for the moment, deceiving the official inspectors in to believing that the cars had complied with the law. It was also revealed that the amount of cars equipped with such software numbered 120,000 in Korea. Finally, VW completely admitted the charge of the deceit after long being in denial.

Mild Responses from Consumers

  After the Volkswagen diesel scandal, VW customers requested a product recall, claiming their right to reparation from the company. Additionally, VW received much criticism from people all around the world. However, it has only had a marginal impact on VW sales. Actually, in November 2015, right after the scandal, domestic sales of VW reached a record high in Korea. Considering sales in America decreased by one-hundredth, we have nothing to say but that Koreans are too 'generous'.

Impenitent Attitudes

  Through continuous investigations, in June 2016, prosecutors discovered additional deceits by VW. The automaker tampered not only with emission tests but also with noise level tests and fuel efficiency tests. Moreover, according to Korean market estimates, 50,000 cars with unauthenticated components have flooded the market. That is, the true depth of VW’s fraud was brought to light. More shockingly, the automaker has shown no sign of genuine repentance. Though the Korean Government ordered VW to recall its cars, VW refused on three occasions to comply. This is unacceptable behavior by the automaker considering that VW provided immediate compensation to US and European countries. Consumers as well as the government should turn their back on VW.

  This kind of evil deed must not be repeated again, indeed. By the way, even before the Volkswagen Emissions Scandal cool down, there have been a parallel case, so-called Oxy Scandal. Did the consumers make the best of the situation?

<Oxy Scandal Belatedly Came to Light>

Irresponsibility of Oxy

  The oxy scandal, where Oxy has selling toxic humidifier disinfectants, which triggers lung-related diseases and other health symptoms, has been sweeping the country. Though this risk has been predicted by some experts since 2003, Oxy overlooked the seriousness of it and deceived the consumers. The signs of incipient harmfulness were found by the 'Korea Center for Disease Control and Prevention' and 'Korea Ministry of Health and Welfare', as the country was saddened by a string of deaths from lung injuries in 2011. They announced that the Oxy humidifier disinfectant was considered to be the cause of the pulmonary damage. Thereafter, in November of that year,  the findings of an epidemiologic survey and experiment on mice showed that 13 out of 15 pregnant mice died as result of exposure to the Oxy product. However, the company concealed these findings and continued to sell the toxic product. Additionally, the eminent university professor who published  a study that verified no cause-and-effect relationship between the use of humidifier sterilizer and lung damage is now under investigation on suspicion of accepting a bribe.

  What’s more problematic is that Oxy made a belated apology in 2016. An apology five years too late and only until the police had launched an investigation into the scandal. The prosecution combed the manufacturers and distributors of Oxy with a seizure and search warrant, and discovered that PHMG, the toxic ingredient causing fatal respiratory conditions, had been used to produce the problematic humidifier disinfectant. Consumers rose up in anger at Oxy's belated regret. At the moment, the government puts the death toll at 103, and the company is under additional investigation.

Counteract of Consumers

  Since 2012, the victims and the bereaved have filed several manslaughter suits against Oxy, and they are constantly demanding compensation for their material and mental damage. Though they are recognized as the “official victims” by the government, they have not received any compensation or apology from the company. In May 2016, they held signs demanding an apology in front of the British headquarters of Oxy, but the company simply ignored them. Afterwards, in May 18, 2016, Ataur Rashid Safdar, Oxy Korea’s representative director, finally released a compensation plan for the victims. They, however, opposed the plan, saying the plan offered scant damages and claimed better compensation.

  Meanwhile, people are showing a pan-national boycott movement against Oxy products, blaming Oxy for its irresponsible attitude toward society. The movement is also spreading through the Internet. People share lists of the products under the Oxy brand and recommend joining the boycott. Moreover, many citizen groups are conducting large-scale activities to try to avoid another scandal.

  The Inha Times met Lee Eun Hee, a consumer studies professor at Inha University. She gave us a better understanding of situations of consumer fraud.

Lee Eun Hee, a consumer studies professor at Inha University

The Inha Times (IT) : Why does consumer fraud occur?

Lee Eun Hee : In fact, the reputation of a firm is very important in the purchasing decisions of consumers. Nevertheless, the reason for this consumer deceiving phenomenon is due to ‘asymmetry of information’, which means the information gap between the haves (firms) and not-haves (consumers). That is, the consumer deceiving originates from the selfish behavior of firms, who think consumers and the governments cannot uncover the truth.

The Inha Times(IT) : What do you think about the 'generous nature of consumers' towards Volkswagen?

Lee Eun Hee : There is a serious problem with the perception of Korean consumers. After the Volkswagen incident, VW conducted sales studies on its diesel line. The problem was that consumers rather increased their purchases, focusing only on their immediate and private interests. They don't consider the problem in its entirety so that their generous attitude would lead VW to forgot its indiscretions. So, a change in the consumer perception is really needed.

The Inha Times(IT) : So how would consumers respond against Oxy? Are they taking the proper actions?

Lee Eun Hee : The boycott against the Oxy products became a big issue after the incident. It is quite important to understand the role of a boycott. Businesses carry out their responsibilities better when consumers exert a strong influence on the companies. This is the role of boycott. In fact, it's not an easy task that civic groups protest against firms without financial support. So I think this is a good situation whereby the consumers spontaneously came together in mutual protest against Oxy.

The Inha Times(IT) : Is there anything  else that consumers can do towards the firms that betray their trust?

Lee Eun Hee : These days, young people tend to avoid participating in consumer movements. So, unfortunately, civic groups are faced with an ageing population. But there's undoubtedly a good thing. That's an online anti-fan community. Young consumers could stand against firms through active online sites. Even though some of these sites have short lifespans,, the online anti-fan community is obviously a good example of wise consumers.

The Inha Times(IT) : Please give a message to consumers, including young people.

Lee Eun Hee : I really hope communities, like Facebook groups, become activated. When they have enough people, they could get over the asymmetry of information I mentioned before. And what I really want to say is that consumers should be smart. Then companies develop themselves, the national economy grows steadily and, finally, the customers benefit. What I mean is consumers should  understand this cycle.

  It’s tragic to see so many suffer. Of course the firms regret their wrong doings and provide compensation to the victims. Moreover, people should take the proper actions as smart consumers.

이준  junei95@naver.com

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