Showing papers in "Journal of Consumer Policy in 2008"

Can Consumers Buy Responsibly? Analysis and Solutions for Market Failures

Abstract: This paper analyses one of the business case arguments for social responsibility: that corporate social responsibility plans are rewarded by consumers. This paper explores the ability of consumers to buy responsibly, identifies the main obstacles for responsible consumption, and suggests conditions for it to work. The review of previous studies leads us to conclude that consuming responsibly is seen as a time consuming activity, economically disadvantageous, and stressful. The main thesis of this paper is that unless market failures are corrected, consumers will not be able to buy responsibly, and therefore, market incentives for CSR are seriously threatened.

Saving for Retirement—A Case for Financial Education in Germany and UK? An Economic Perspective

Abstract: Demographic changes, tight public budgets, and reduced generosity of occupational pension plans shift the responsibility for an adequate retirement provision towards the individual. Applying the theoretical perspectives of Behavioural Finance and New Institutionalism to the domain of retirement provision offers insights into the difficulties individuals are facing in planning for retirement, carrying out, and revising plans. Lacking financial literacy seems to lie at the heart of the problem and points to a possible solution: providing financial education to consumers through non-governmental organizations and state-related agencies. This article is examining which role consumer education and consumer advice can play to enhance financial literacy with regard to pensions and old-age provision. As two case studies Germany and the UK are compared because the institutional set-up of the pension systems and the approaches towards consumer policy are very different. The case studies show that financial education with regard to old-age provision can be successful if it reaches consumers in their environment at life-stages where important decisions need to be made. To achieve that considerable efforts have to be taken in terms of funding and organizational set-up. However, evaluation is necessary to prove the effectiveness of the education especially for vulnerable consumer groups. If evaluation reveals that these groups cannot be targeted effectively or that consumers are not taking action subsequently to attending financial education, there might be a case for changing behaviour through the institutional set-up of pension schemes (i.e., through automatic enrolment) and using financial education as a supportive policy instrument.

Knowledge and Perceptions of Superannuation in Australia

Abstract: Least squares and binary logit models are used to predict knowledge and perceptions of superannuation (private pensions) in Australia on the basis of demographic, socioeconomic and financial characteristics The data is drawn from the ANZ Survey of Adult Financial Literacy in Australia and relates to 2,516 superannuation fund members Knowledge of superannuation is defined, amongst other things, in terms of understanding superannuation fees, charges and statements, recognising the voluntary and compulsory nature of additional employee and employer contributions, and being aware of the lower taxation of superannuation compared to other investments Factors examined include gender, age, ethnicity, occupation, educational level, and family structure, along with household income, savings, and debt In terms of specific superannuation knowledge, substantially more than half of respondents knew that employers are obliged to make contributions on behalf of employees and that employees can make additional voluntary payments above these payments Slightly more than half knew that superannuation is taxed at a lower rate than other investments However, only one-third of fund members knew how to read and understand their statements or the approximate rate of contribution employers were required to make on their behalf, or had worked out how much they needed to save for retirement Overall, about 60% of respondents could correctly answer only 50% or less of the questions posed The evidence also suggests that knowledge of superannuation is unevenly spread across respondents Such knowledge is generally lowest for females, those from a non-English speaking background, those with low levels of education and persons aged less than thirty Knowledge is generally better for professionals, those aged over 40 or nearing retirement and the university educated The models best predict the compulsory nature of employer contributions, the voluntary nature of employee contributions, and knowledge that the government will not make up any gap arising from a failure to undertake retirement planning

Consumer Policy in a Market Economy Considerations from the Perspective of the Economics of Information, the New Institutional Economics as well as Behavioural Economics

Abstract: The question concerning when a governmental intervention in the market system is justified has occupied economists from the very beginning and has been a controversial discussion topic for just as long. Against this background, with respect to modern consumer policy, which still represents a relatively young field in the theory of economic policy, it is vital to find sound economic reasons for governmental regulations in order to protect consumers. Therefore, the article attempts to assess what the various economic literatures have added to our understanding of good consumer policy. For this reason, those policy implications that might flow from different theoretical approaches in order to broaden the foundation of an economic justification for consumer policy will be analysed. For this purpose, the consumer policy implications of the Economics of Information will be described, including a denomination of some certain problems all of which are not covered satisfactorily by this approach. Subsequently and in order to amend the informational economics framework, further economical approaches from New Institutional Economics, Behavioural Economics as well as Behavioural Consumer Research, which provide a complementary analysis of consumer behaviour in consideration of the respective decision-making situations and determining constraints (formal and informal rules, cognitive and emotional boundaries), will be discussed comparatively with respect to their consumer policy implications.

Beyond Europe: The Internet, Regulation, and Multistakeholder Governance—Representing the Consumer Interest?

Abstract: The “Internet,” as a global self-regulated and interconnected network of institutions driven by educational and subsequently commercial priorities, has evolved into an element within a broader “global information society.” Industry, treated benevolently by market-led governments, has created co- or self-regulatory institutions or compacts, but as consumers have eagerly embraced the broadband Internet the scheme of governance must embrace respect for the social and economic rights and responsibilities of consumers at national, European and global levels. This paper shows how existing divisions between public-sector, private-sector, and civil-society institutions and responsibilities have rapidly become eroded and it portrays the emerging agenda for “multistakeholder governance.” The involvement of the consumer on a more legitimised and consensual level than is permitted under industry-led regulation is as yet a novel approach, but this paper draws on case studies which demonstrate the salience of these issues to consumers as citizens, and it concludes by preparing an agenda for Information and Communications Technology (ICT) companies to adopt more sophisticated patterns of participatory co- and self-regulation.

Food Advertising and Obesity Prevention: What Role for the European Union?

Abstract: When the Television Without Frontiers Directive (TVWF Directive) was first adopted in 1989, there was very little discussion on how food advertising should be regulated at Community level. However, things have changed as a result of rising levels of obesity in all EU Member States. Consequently, several stakeholders have suggested that the advertising of unhealthy food to children should be restricted. This article analyses whether and how, bearing the obesity epidemic in mind, the European Union could regulate the marketing of food high in fat, sugar and salt to children (HFSS food). It starts by presenting the evidence supporting such regulation. It then focuses on the contribution which the TVWF Directive and the Audiovisual Media Services Directive (AVMS Directive) could make to the debate. It finally looks at the broader regulatory framework by discussing their relationship with other instruments of Community law relating to food advertising, and in particular the Unfair Commercial Practices Directive (UCP Directive) and the recently adopted Regulation on nutrition and health claims made on foods.

The Consumer and Advertising Regulation in the Television without Frontiers and Audiovisual Media Services Directives

Abstract: This paper aims to assess the balance between the commercial interests of broadcaster and advertiser and the interests of the viewer, as well as programme makers. The new Audiovisual Media Services Directive (AVMSD) seeks to clarify and to simplify whilst maintaining the traditional European broadcasting landscape. The recurrent theme of the debate about legislative revision has been based in the vocabulary of consumer choice empowered by technology. The use of this vocabulary then leads to assumptions about the ability of the consumer to make choices. Insofar as those choices existed, they have been limited by developments in the AVMSD and in the broadcasting environment. Despite the claims of the AVMSD about viewer choice, it seems likely that the viewer will have no choice whether to receive commercial communications or not.

Self-regulation, Co-regulation and the Audio-Visual Media Services Directive

Abstract: This paper criticises the use of the concepts of self-regulation and command and control regulation as simplistic and often having a political function. They neglect the fact that there is a continuum of different types of regulation; they represent extremes rarely found in the real world. Moreover, regulatory regimes will be comprised of a cocktail of different regulatory approaches. The developing concept of co-regulation is likely to be more productive. It is unhelpful to attempt to draw up restrictive definitions of different types of regulation; it is much more important to assess them through the application of normative principles, including those relating to procedures, accountability, and enforcement of rights. The drafting of the Audio-Visual Media Services Directive initially made the mistake of using the narrow definitions of co- and self-regulation contained in the Interinstitutional Agreement on Better Law-Making, but amendments during the Parliamentary process have resulted in a more flexible approach better adopted to the recognition of existing co-regulatory regimes.

The Index of Consumer Sentiment toward Marketing: Validation, Updated Results, and Demographic Analysis

Abstract: US consumer sentiment toward the practice of marketing has been measured via annual survey for over two decades in this continuing study. The following report presents the measuring instrument, a test of the measurement model, and some updated findings. Examination of selected demographic variables indicates that they are only marginally related to the consumer sentiment construct. Yet the enduring import of the project is description of the secular trend of aggregate consumer attitude toward marketing in the context of the world’s largest national economy.

A New Look at Old Coefficients

Abstract: For more than 50 years, numerous studies have shown low price–quality correlation coefficients, mostly close to 02 That prices fail to function as valid indicators of product quality has been interpreted as informational market failure This article, however, argues, that, according to the economic theory of price formation, prices are not an indicator of quality, but an indicator of scarcity This allows the conclusion that workable consumer goods markets, at least as seen from the consumer’s point of view, should be characterized by low or even negative correlation coefficients rather than by strong positive coefficients

Fundamental Rights and the European Regulation of iConsumer Contracts

Abstract: This paper addresses the question of how fundamental rights affect European legislation and adjudication on contracts regarding digital information services (iConsumer contracts). Fundamental rights may be seen as representing political choices for the protection of certain values in society, but at the same time, they are enacted rules of the legal system, which may be invoked to enforce the protection of the interests they represent. It is submitted that because of this double-faced nature, they can bring to the fore policy issues in contract legislation and case law. Fundamental rights can thus play a role in evaluating the policy choices that are being made in the review of the acquis communautaire in the field of consumer law. For iConsumer contracts, that means that the rights of consumers, authors, and suppliers of copyright-protected content affect the choice of rule-solutions on the European legislative level. Furthermore, these rights have an impact on the case law of the European Court of Justice in the field of e-commerce. Fundamental rights help define the various rule-solutions the Court can choose from and thus demarcate the law-making capacity of the judiciary.

Integrating Consumer Rights into Copyright Law: From a European Perspective

Abstract: Until recently consumers and consumer-interests have been virtually absent not only from the rules of copyright but also from copyright’s discourse. This has been so even though the combination of an expansion of copyright and a devaluation of the internal balancing mechanisms raise concern from a consumer perspective. There would, therefore, seem to be a need to incorporate a consumer perspective into copyright analysis. To integrate consumer interests in copyright law, this study recommends action aimed at two levels. On the general level it is suggested to rebalance copyright in order to recognize the interests of users on the same level as right holders. On the concrete level it is suggested to change the limitations found in copyright to ease access to reuse elements of previous works. It is also proposed to reinforce the rule on private copying and to consider measures to secure access to basic information.

A “New Approach” to Standards and Consumer Protection

Abstract: As consumer use of information and communication technology (ICT) products grows, the importance of ICT standards in consumer markets also grows. While standards for manufactured products were once developed at the national level in formal standards bodies, standards for ICT products today are more likely to be developed by informal standards bodies that target global markets, creating new challenges for national consumer protection laws. As part of the process of creating a single market, the EU developed an innovative and successful form of “coregulation” known as the “New Approach” that coordinated the work of legislators and standards developers to reduce technical barriers to trade in the internal market. In order to protect consumer interests in markets for ICT products effectively, another “New Approach” is needed to coordinate the work of global ICT standard-developing organizations with the goals of national and regional consumer protection laws, but the institutional challenges facing such a strategy are daunting. The French DADVSI legislation represents progress in this direction; further progress may be possible by adopting “better regulation” strategies.

Access to Major Events on Television under European Law

Abstract: Technological developments within the broadcasting sector, the emergence of more commercially minded sports governing bodies, and an insatiable popular appetite to consume sport on television have resulted in a growing number of major sporting events being broadcast on pay-TV rather than on a free-to-air basis. The paper explores attempts to secure public access on free-to-air television through the provisions of Article 3a of the European Union’s Television Without Frontiers Directive and the changes introduced by the Audiovisual Media Services Directive. In doing so it assesses the consequences of the legislation on consumers, broadcasters, sports governing bodies, and other interested stakeholders. The regime appears to have wide support yet has attracted critical comment from those unable to identify clarity and justification in the choices made by the Community legislature. The paper broadly agrees with these concerns but focuses the attention on the reasons for choosing the regime. It argues that regulation is sustained by two contradictory arguments. First, it is defended on the grounds that the EU’s sports policy subsystem has become infected with single market and commercial norms which have undermined the socio-cultural basis of sport and contributed to a juridification of sport. In these terms, the access rules represent a defence of these traditional values. Second, they are defended on the grounds that, due to its specificity and public character, sport has been afforded a wide margin of appreciation by the EU and that the type of regulation allowed for is a down payment on this immunity and a reflection of the state’s stake in sport. Clearly both arguments cannot be simultaneously sustained. The paper explores these arguments by locating the analysis within the context of Sabatier’s advocacy coalition framework. The paper’s focus is limited to the impact on sporting events rather than other “major events” and it only briefly considers the issue of short reporting.

Accommodating the Needs of iConsumers: Making Sure They Get Their Money’s Worth of Digital Entertainment

Abstract: The current methods of distributing music and film on the mass-market, either off-line or on-line, raise two types of consumer protection issues. First, consumers are not always in a position to know what they can and cannot do with their digital hardware and content. A lack of proper information and the ensuing failure of the products to meet the consumer’s expectations inevitably leads to discontent. In addition, as weaker party in the transaction, consumers have often no other choice but to accept or refuse the restrictive terms of use, even if these could be regarded as unfair. This paper examines whether European law is amenable to accommodate the iConsumer’s needs, and if so, in what form.

"To Be or Not to Be an Auctioneer?" Some Thoughts on the Legal Nature of Online "eBay" Auctions and the Protection of Consumers

Abstract: This paper discusses the legal classification of online “eBay” auctions. The discussion has key implications on the scope of consumer protection law as sale by auctions are, for example, excluded from the scope of the Consumer Protection (Distance Selling) Regulations 2000. The paper uncovers that online “eBay” auctions cannot always be considered as traditional auctions and that eBay, as an intermediary, is not to be considered as an auctioneer. This creates difficulties associated with a distributive application of consumer protection laws such as the Consumer Protection (Distance Selling) Regulations 2000. Another set of difficulties is associated with a lenient legal regime applicable to the liability of eBay under the Electronic Commerce (EC Directive) Regulations 2002. The paper concludes that there is an urgent need to clarify the legal classification of online auctions and to rethink the liability of online auction sites to better protect consumers.

An International Perspective of Online Disclosure Presentation: A Comparison of Banner Ad Disclosures from United States, United Kingdom, and Singapore Web Sites

Abstract: Effective online disclosure presentation is an important feature in banner advertising worldwide. The U.S. Federal Trade Commission (FTC) is viewed as the leader in providing guidance for making disclosures clear and conspicuous. This study examines the extent to which banner ads in the top 100 web sites in three countries with a shared language and intertwining legal and self-regulatory systems—the United States, United Kingdom, and Singapore—adhere to FTC guidance. The lack of systematic differences across countries suggests the need for disclosure research from a global perspective that takes cultural and linguistic differences into account.

Save the Children: The Protection of Minors in the Information Society and the Audiovisual Media Services Directive

Abstract: The protection of underage viewers against programmes harmful to their development has been a long-standing concern in national broadcasting systems and was recognized by the Television Without Frontiers (TWF) Directive as a fundamental issue in European audiovisual regulation. Policy discussions accompanying the most recent reform of the Directive confirmed the need to ensure adequate protection also in the context of on-demand services, while disagreeing over the method by which this should achieved. This article outlines the evolving regulatory regime for the protection of minors against unsuitable programming and presents the legislative proposals drafted by the institutions in the course of the ongoing reform process. The analysis demonstrates that while the concern for protecting minors perseveres in the face of the new Directive’s response to audiovisual convergence, the envisaged rules for on-demand services lead to a noticeable differentiation of the basic regulatory tier, and a concomitant concern for the effectiveness of protection.

Download of Copyright-Protected Internet Content and the Role of (Consumer) Contract Law

Abstract: The software, music, and movie industries keep suggesting to consumers that if they copy digital contents they may find themselves in jail Moreover, horrifying damage claims are in the air The problem with these scenarios is, amongst others, that it is difficult to understand for consumers where their rights end and where illegal use of content begins This article focuses on the contractual relationship between online content providers and consumers It explores relevant consumer law issues and lays open the legal uncertainties of the current regimes at the European Community (EC) and national level The article then looks at current ideas put forward by the Commission on how to regulate internet consumer law It concludes that a sector-specific i-consumer contract law should be introduced and offers proposals related to its possible content

Country of Origin Principle in the EU Market for Audiovisual Media Services: Consumer’s Friend or Foe?

Abstract: The country of origin principle, the cornerstone of the EU Television Without Frontiers Directive – to become the Audiovisual Media Services Directive – is often criticised as being insensitive to the legitimate national public interest to protect viewers – and consumers – of audiovisual media content. This paper seeks to demystify this pessimistic perception of the country of origin rule from the perspective of the consumer interest. It demonstrates that the possible negative repercussions of the country of origin logic for consumer welfare are mitigated in three ways: by specific derogations possibilities foreseen in the Directive in case of violations of the fundamental rules on protection of minors and of human dignity; through the margin of broadcasting control left to the Member States in the areas beyond those coordinated by the Directive, and by means of a new two-step anti-circumvention procedure introduced by the new Directive.

Credit Union Legislative Frameworks in the United States of America and the United Kingdom – A Flexible Friend or a Step Towards the Dark Side?

Abstract: This article questions the findings of several studies which have concluded that the Credit Unions Act 1979 was a factor limiting the growth of credit unions in the United Kingdom (UK). The author’s conclusions are based upon an analysis of the amendments to the Credit Unions Act 1979 introduced by the Financial Services Authority (FSA). As a result, the 1979 Act now reciprocates the controversial, yet flexible United States (US) legislative framework. In particular, the article examines the interpretation of the common bond, the provision of financial services and the regulation of credit unions. The article concludes that these three statutory provisions have assisted the growth of credit unions in both countries and not limited their development. However, the growth of credit unions has come, at the expense of their unique status and philosophy. It has made US credit unions, in particular, indistinguishable from banks. This is a problem which may affect credit unions in the UK. The article concludes that the Credit Unions Act 1979 did not limit their development, but acted as a galvanising factor for credit union expansion.

Looking Ahead—Future Issues when Reflecting on the Place of the iConsumer in Consumer Law and Copyright Law

Abstract: The following is a brief report of the discussion and main comments that were made during a workshop ‘The place of the iConsumer in EU and US law—protecting consumers of copyright protected content’, held in Amsterdam on 14 and 15 of December 2007. The workshop was part of a series of joint events organised by the Berkeley Centre for Law and Technology, University of California (BCLT) and the Institute for Information Law (IViR), University of Amsterdam on copyright and a follow-up to the conference on ‘Copyright, digital rights management technology and consumer protection’ that was held at the UC Berkeley in March 2007. The main goal of the workshop was to confront a consumer law approach with the more commonly discussed approach of internalising user-related questions directly into copyright law. To this end, a selected group of European and US experts in both fields, copyright law and consumer law, were invited. The participants were then asked to share their thoughts and views from the different fields of law with regard to a number of main statements given by the organisers. The transatlantic perspective further added to the discussion. The main purpose of this report is to point to a number of issues that, according to the workshop participants, should be taken into account in future discussions concerning the legal position of the iConsumer. This report summarises the discussion along the three statements that the organisers asked participants to consider. The report gives some background information for each of the statements, to then describe the main arguments made during the workshop, to the extent that this discussion has not already been internalised in the papers that are part of this special JCP issue.

Making Place for the iConsumer in Consumer Law

Abstract: This special JCP issue deals with the iConsumer and their search for rules that would accommodate their specific concerns and interests. For a long time, consumers of audiovisual services, music, e-Books, and computer games have led a shadow existence as ‘eyeballs’, ‘couch potatoes’ ,o r‘nerds’. The times, however, seem to be over. The digital consumer (or iConsumer) is high on the political agenda. In the wake of the Lisbon agenda, iConsumers of today are subject to an entire battery of measures that are meant to enhance consumers’ confidence in ‘the largest information economy of the world’ and their active participation in making Europe’s ambitious visions work. A critical obstacle for Europe’s information economy are the concerns of iConsumers when purchasing digital information products and services. Over the past few years, it has become apparent that there are many discrepancies between the rights and interests of consumers and the way digital content is marketed. Some of the conflicts arising have even made their way to the courts. In a number of recent cases in France, Belgium, and Germany, 1 consumers complained about overly restrictive contracts and technological measures that would prevent them from private copying and playing legitimately purchased CDs on their computers or car radios. The Norwegian consumer ombudsman has filed a

When Should “Consumers-as-Producers” Have to Comply With Consumer Protection Laws?

Abstract: Since the 1960s, consumer protection law has been built on the contrast between large “producers” and small “consumers.” Today, instead, an ordinary consumer owns what can accurately be called a “personal mainframe”—a home computer whose processing power matches an IBM mainframe from about 10 Years ago. Equipped with a personal mainframe—an Information-Age factory—ordinary “consumers” at home are increasingly also becoming “producers.” As unregulated consumers become regulated producers, a major legal question is whether and when the individual should have to comply with consumer protection laws. The discussion here selects four examples of US legal rules that might apply to consumers-as-producers, with recommendations spanning the range of possibilities: (1) consumer privacy legislation: creating a threshold, with no compliance required for databases of fewer than 5,000 names, is recommended; (2) advertising substantiation: concerning the requirement that advertisers have a “reasonable basis” for their claims, applying current law to small advertisers is recommended; (3) spam: current law does not create a threshold for those who send a few commercial emails, but such a threshold is worth considering; (4) political blogging: the author agrees with the US Federal Election Commission decision to create a major exemption from campaign finance laws for online political advocacy, even for large blogs or websites. The common theme among these recommendations is to describe the sort of harm that existing law seeks to reduce. The approach here next looks at how the use of personal mainframes affects creation of those harms. Where the sorts of harm are likely to be created by consumers-as-producers, the analysis tilts towards requiring compliance. Where the sorts of harms are unlikely to be caused by consumers-as-producers, then the case for an exception is stronger.

Europeanisation of Product Liability in the Asia-Pacific Region: A Preliminary Empirical Benchmark

Abstract: This report draws primarily on a survey offering a tentative but empirical benchmark of the impact of strict-liability product liability law reforms in the Asia-Pacific Region. There has been a two-fold Europeanisation of product liability in this region. First, the reforms implemented in many jurisdictions during the last 15 years have usually been based on the 1985 EC Product Liability Directive. Secondly, moving beyond the “law in books,” the survey confirms other indications of considerable convergence in the “law in action.” This largely mirrors trends from Lovells’ baseline survey of European jurisdictions completed in 2002 for the European Commission. Similar effects associated with similar reforms include small but significant increases in claims, settlements, and reactions from companies. However, these tendencies are also affected by broader (arguably inter-related) factors such as shifts in consumer consciousness and media attention. Rather than the reforms directly, increased awareness of consumer rights and the media have been identified as being more influential to the increase in claims. These factors are also very important in generating more settlements. Conventional causes of action also continue to be invoked, and there is not much call for further reform. Thus, high levels of product liability litigation remain unique to the United States. However, growing case law in certain Asia-Pacific and European jurisdictions might be synthesised into “Strict Liability Product Liability Principles.” It also seems likely that the Asia-Pacific region will continue to follow more the EU in related areas such as consumer access to justice and product safety regulation, and such harmonization may accompany the proliferating Free Trade Agreements in the region.