November 26, 2008

By Bill Jayes
The Kaselehlie Press

Peilapalap, Pohnpei - Consumers in Pohnpei are as little as one month away from having a protector in Pohnpei, a protector with sharp eyes and teeth.

Vallerio Hallens of Pohnpei State's Office of Economic Affairs has put in motion plans to fulfill the vow he made when he was sworn in four months ago. Paper work has been processed to advertise the position of Consumer Protection Officer for the State.

The Pohnpei State Legislature has appropriated the funds necessary to send the new officer to Guam for two weeks of training on weights and measures verifications and to buy the proper tools for the job. Hallens has already made arrangements with the Guam Department of Taxation and Revenue for that office to train the new employee. The new officer could be fully trained and on the streets protecting Pohnpei consumers as early as one month from now.

Gone will be the days of fish markets having one improperly calibrated scale for purchasing fish and another for selling fish; or the sneaking suspicion that $5.10 worth of fuel at the pump is just shy of a gallon. Maybe in the future, the mark on the side of the one gallon gas can that says "One Gallon" will be at the same place on every gas can in Madolenihmw or in Kitti that sells fuel that way.

Additionally, business people who arbitrarily mark up prices on imported items without regard for the law will soon do so at a much greater risk of being caught, and prosecuted.

Pohnpei State Law (3L-72-73), the Price Control Act, passed in 1973 was established mainly because the market pricing system that relies on competition rather than regulation to control prices was not working in Pohnpei. This was due to the fact that the market was too small for effective control other than by regulation.

The regulation said that an importer may include in his price to the buyer ONLY the following items and no others: cost of the goods; actual charges for inland and overseas freight; insurance; import taxes or duties; and a sum not greater than 50 percent of the cost of the goods. The allowable markup is for the first sale of a good after its arrival in Pohnpei. An importer who sells to a retailer in Pohnpei may mark up his price by a maximum of 50%. The second seller, the retailer may only mark up his price by 20% above the price he pays to the first seller or wholesaler.

There are civil and criminal penalties for business owners who violate the regulations. A violator may be required to void a sale that was illegally marked up above the limits and refund the price paid by the buyer, or refund the illegal portion of the price paid by the buyer. He may be required to additionally pay triple the amount of the illegal part of the price to the buyer.

The business person could also go to jail. If he or she willfully falsifies records, refuses to produce records or violates any of the terms of the regulation including the markup limits he can be fined not more than $500, or imprisoned for not more than one year, or both. Each sale at an illegal price or other violations is considered to be a separate offense.

Hallens said that the officer's responsibilities would also include the regulation of repair shops. He said that complaints constantly come into his office about unscrupulous repair shops that either overcharge or perform unnecessary or unauthorized work. He told me a personal story about paying $750 for a new head gasket when he was not having an interchange of oil and water in his engine. The problem ultimately turned out to be bad spark plugs which cost about $3 each to replace and one spark plug wire for about $4.50.

He said that the Consumer Protection Officer might also work closely with the health department to establish regulations on food products that should be pulled from store shelves such as expired food products.

Hallens said that his office will set up a consumer hotline that people will be able to call in order to register consumer complaints.

The Consumer Protection Officer will have a great deal of power, power that could potentially be sold to business people bold enough to offer a bribe. A single Consumer Protection Officer could also possibly carry a personal agenda against certain businesses or business people and could unfairly wield his power through harassment. "Every business will be treated the same," Hallens said. He said that they will be looking for a candidate amongst applicants with a reputation for impeccable ethics. The ideal candidate would have experience in both business and law enforcement, he said.

In 2008, the market is not much larger than it was in 1973 and the Price Control regulation still stands but there has been no one to enforce the regulation for well over a decade. No one seems to know with any certainty why that has been the case though conspiracy theories abound.

The Price Control law established a Price Control Commission in Pohnpei that would consist of five members appointed by the Governor with Legislative advice and consent. The members were to have been Pohnpeian citizens living in Pohnpei. No more than one of the five could have a controlling ownership or a managerial interest in one or more businesses in Pohnpei.

Some Governor at some time stopped appointing members and the commission simply ceased to exist. Now there will be someone to protect consumers in Pohnpei again.