One goal of consumer protection legislation is to guarantee consumers' right to adequate and correct information, fair contracts and fair business practices. If a dispute arises, a consumer should be able to seek redress and obtain compensation for financial loss.
In addition to consumers' legal security, another task of consumer legislation is to ensure that markets work and to spur competition.
The existence of common rules is not enough to achieve these ends: businesses must also take rules seriously. Some operators do their part splendidly and some even take advantage of the edge that playing by the rules gives them. But there are other operators who try to get away with illegal practices and appear to view this as a sign of creativity. When this happens, effective enforcement is necessary to protect not only consumers but also competing businesses that operate fairly.
Enforcement methods are still stuck in the 1970s, however, when the operating environment was regulated much more than it is now. Modern open and fast-moving markets need the support of more flexible and efficient enforcement methods for situations in which businesses repeatedly and intentionally disregard the law.
In the area of consumer protection there are no provisions for local enforcement that would make it possible to intervene rapidly in clear market disturbances in which the courts have already ruled. Local enforcement is not in the cards when consumer advice becomes part of state administration, but the expansion of the state provincial offices' authority to other basic enforcement work besides the market surveillance of price labelling and consumer credit could be a good solution.
Serious consideration should also be given to new and rapid sanctions according to the same model used in some other countries. In international consumer policy discussion a common concern is achieving adequate sanctions for operators that break the rules in search of quick profits, at the expense of consumers and competitors.
How serious is it if products are marketed with misleading promises or if warranty terms state that a consumer must always pay for parts that are needed for repairs? We can get a better idea if we calculate the total amount that 5,000 customers stand to lose. This is how much an operator would benefit unfairly compared to competitors. And to get an overall picture we have to evaluate the effect on the national economy. The Office of Fair Trade estimated in 2000 that consumers' losses total about £8.3 billion a year in Britain.
This figure does not take into account the value of the time that consumers spend trying to obtain redress. This has a lot of significance for today's consumers, since customer service appears to have weakened - as evidenced by phone queues, unanswered e-mails etc. When consumers cannot get answers from businesses, they turn to public authorities, and sometimes it feels like businesses almost consider public authorities a form of outsourced customer service.
The OECD, the EU and individual countries have been studying better ways to deal with consumer disputes and market disturbances. Studies have also been conducted from the viewpoint of consumer detriment, i.e. calculating the amount of financial losses that consumers experience and cannot get back.
Editor-in-Chief, Director of the Consumer Law Division