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 Business News | March 2007 
Consumers Begin to Fight Back in Mexico
 Jeremy Schwartz - Cox News
Mexico City - It was a heart-stopping moment for Enrique Lacombe Vega when he recently returned to his apartment to find a $7,000 electric bill from Mexico City's municipal power company Luz y Fuerza.
He tried to convince the company there was no way he could have racked up such a bill. The 32-year-old project manager filed a formal complaint and sought the help of a fledgling consumer advocacy group.
Then, his power was cut.
"They are the all-powerful and I don't have any other options but to keep fighting," he said. "They don't see you as a client, they see you as someone they can abuse and that's the sad truth."
Lacombe's seething frustration is shared by thousands of others in Mexico. Mention the phrase "the customer is always right" here and you're likely to be met with a blank stare.
Mexican consumers are charged some of the world's highest rates for energy and telecommunications. They stand in interminable lines to pay for services, are hit with hidden charges and face Kafkaesque bureaucracies.
Experts say Mexico's authoritarian past - it was ruled for 71 years, until 2000, by the Institutional Revolutionary Party - has stunted a consumer rights movement that is only now finding its voice.
"Demanding your rights as a consumer is part of daily life in a democracy," said Alejandro Calvillo, founder of the group The Power of Consumers. "And that is just beginning to happen in Mexico."
In the past year a handful of citizen-led consumer protection groups have emerged, mostly shoestring operations with dreams of confronting Mexico's array of public and private monopolies and oligopolies.
Advocates say fighting the mindset of acceptance is their first challenge.
"We're stoics," lamented Daniel Gershenson, who helped create the Al Consumidor advocacy group last year to pursue claims for consumers like Lacombe. "It's a disgrace - consumers should have organized way, way, way before. We're voices in the desert right now."
The Internet has also become a rallying point for frustrated consumers. On the popular Mexican Web site apestan.com (translation: they stink.com), angry consumers wage a kind of guerrilla war against offending businesses, posting messages about everything from poor service at a local restaurant to deceptive advertising on credit card offers.
Sometimes the public floggings bring results. A furniture seller recently posted apologies and promises to improve service after a series of blistering complaints.
Some say the lack of a strong Mexican consumer rights movement stems from the creation of the federal Consumer Protection Agency, Profeco, 30 years ago as a watchdog group for goods like milk and tortillas that used to have fixed prices.
"In people's minds there wasn't a need for citizen groups because the government played that role with Profeco," Gershenson said. "The problem is that Profeco is not part of the solution."
While the agency has had some successes - last year its investigators discovered that about 90 percent of Mexico's gas stations were overcharging motorists - even Profeco officials admit the agency doesn't have the tools or resources to prevent all corporate abuse. And critics say it is too close to government monopolies like Luz y Fuerza to effectively advocate for consumers, a charge refuted by Profeco officials.
"We're fighting to strengthen consciousness among the people," said Profeco spokesman Luis Mariano Aceves. "We are consumers and if we're organized we can have enormous power."
The consumer groups say fighting for new laws and regulations is a Herculean task that pits them against well-financed corporations. Calvillo, whose group focuses on regulating junk food in Mexican schools, said opposing lobbyists have included a former president's son.
Most consumer ire in Mexico is directed against monolithic corporations like Telmex, Mexico's telephone giant with 94 percent of the nation's fixed lines and 77 percent of its cellular business through its subsidiary Telcel.
More than 8,000 formal complaints were lodged against Telmex in 2006, more than any other company, according to the Mexican government.
Luz y Fuerza, Mexico City's public power company is fifth on the list. Because of its pricing strategy, consumer advocates complain, it doesn't take much additional use of electricity by a household to push it from the low range of charges (about $7 a month) into the high range of $100 or more.
"They are punishing the middle and lower-middle classes," said Adriana Labardini, an attorney with Al Consumidor. "They are saying, 'Don't you dare enter modernity."'
Experts say the next consumer battleground in Mexico will be the Internet, where Prodigy, a subsidiary of Telmex, controls the vast majority of the market.
Mexico has the highest monthly broadband prices for any of its 30 member nations, according to the Organization for Economic Cooperation and Development. The United States is the fourth cheapest.
Calls have been growing for President Felipe Calderon to confront both public and private monopolies, which economists say hinder Mexico's ability to lure foreign businesses and investment.
Calderon offered his strongest language to date last week in an appearance with Telmex owner Carlos Slim, the world's third richest man, according to Forbes magazine.
"We need to transform out economy to make sure the costs of production - what we pay for electricity or gas, in taxes or telephone services and Internet - are competitive on a global level," Calderon said. "So we are talking with businesses within the telecommunications sector, and of course with Telmex, to find a way to make the country's economy more competitive and much more efficient."
Jeremy Schwartz's email address is jschwartz@coxnews.com |
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