PepsiCo Penalized for Shortchanging ConsumerPosted: October 5, 2012
PepsiCo Ordered to pay Rs. 50,000 to Consumer Welfare Fund of India
Ahmedabad, September 14, 2012
Contrary to the commonly-held belief that well-known, leading brands live up to their name and refrain from duping consumers, Consumer Education & Research Society (CERS), Ahmedabad, has brought to light one case wherein the Indian subsidiary of the international food & beverages giant PepsiCo was found selling underweight packets of its popular potato chips brand “Lay’s”.
CERS had received a complaint from Krishan Kumar Bajaj about a “Lay’s – Shipra Tangy Twist” potato chips packet bought by him being underweight. When the weight was checked, the sealed packet was found to weigh a mere 8 gm instead of 30 gm mentioned on the packet, a shocking 72% less!
CERS filed a case against PepsiCo at the Consumer Disputes Redressal Forum. In a landmark judgement, issued on 7 September 2012, the Forum ordered PepsiCo India Holdings Ltd. to deposit Rs. 50,000 in the Consumer Welfare Fund of India within 90 days from the receipt of the order. PepsiCo was also asked to pay the complainant Rs. 5,000/- for mental agony and Rs. 2,000 for the litigation cost.
While just one packet was randomly discovered to be underweight by an alert consumer, a simple calculation indicates that the company can earn an extra profit worth around Rs. 2.75 lakh, if the entire production of 36,700 packets under the batch mentioned on the packet is sold underweight. This holds significance since, on CERS’ query, the company could not totally rule out this possibility. CERS resorted to legal action in its attempt to compel PepsiCo to pay compensation and punitive damages, and uphold consumer rights.
Bajaj, a resident of Vastrapur, Ahmedabad, had purchased the disputed packet from a shop in Thaltej area on 28 June 2010 and had immediately sensed its being underweight. His doubt was confirmed when he actually weighed the pack. The manufacturing date on the pack was 19 April 2010 and the production batch no. was N-207 C. He wrote twice to the manufacturer. While the first letter got no response, in reply to the record, the company accepted that the packet was underweight but didn’t take the complaint seriously. It offered Bajaj a gift hamper from PepsiCo which he refused.
Bajaj approached CERS and the pack was weighed in the in-house laboratory of the organisation. On ascertaining that it weighed only 8 gm, i.e. 22gm less than that claimed, CERS immediately wrote to PepsiCo. “There is practically no possibility of such a pack coming out of our plant,” replied PepsiCo. CERS in turn demanded an explanation as to how the pack reached the market and finally to the consumer. The company gave several unsatisfactory clarifications. It explained that sometimes, due to technical glitch, packets might be underweight at the beginning and the end of the packaging process. Such packets are “segregated in a separate hold area and destroyed”, it claimed.
Further probe by CERS led to startling revelations : Simi Mehta, a PepsiCo spokesperson, admitted on phone that the company had been getting complaints about underweight packets from its Pune plant. This was, therefore, not an isolated incident. CERS had good reasons to believe that the sale of underweight packets to consumers was not a freak incident. This could happen with their various products in several batches from different PepsiCo plants. Even if such an instance / technical glitch occurs at PepsiCo on a given day, it has huge implications for the company and its consumers.
Eventually, CERS took the issue to the Consumer Disputes Redressal Forum, Ahmedabad (Rural), alleging unfair trade practice. The forum also gave a favourable ruling dismissing all the arguments made by PepsiCo. On PepsiCo’s request, the Forum got the pack weighed at a government laboratory and the report from the lab revealed that the weight of the pack was 8.42 gm. The company argued that the complaint should not be entertained, as Bajaj could not produce the bill for the purchase. For a product of Rs.10/- very often consumers may not have a bill. To address this issue, Bajaj submitted on affidavit that he had bought the “Lay’s” packet from Brahmani Provision Stores, Thaltej, Ahmedabad.
The Court was of the view that, as PepsiCo could not deny that the packet bought by Bajaj was their product, the argument of his not having a bill and, therefore, his not being a consumer under the C P Act was overruled.
CERS in its prayer had requested the court to direct PepsiCo to immediately stop such unfair trade practice, deposit Rs.2,00,000 in the Consumer Welfare Fund and award Rs.2,75,250 as punitive damages. CERS had also appealed to the court to order PepsiCo to give Rs.75,000 as costs of litigation and also inform the media.
If PepsiCo stands to gain Rs. 2,75,250 from underweight delivery in one single product, in one single batch of one particular manufacturing plant, the implications of this happening more often are simply huge and that too at the cost of consumers.
The court gave the order with the comment that if PepsiCo claims to be an international company, then this kind of negligence is not acceptable.
For further information please contact Ms. Pritee Shah (O) 079 -27489945/46