Consumers are (Not) Dumb and Weak: An Advertisement for Collaborative Consumer Protection

by: in Law

The prevailing notion in the field of consumer protection law is that the consumers are weak vis-à-vis the businesses. Consumers generally lack bargaining power and often do not have sufficient knowledge to determine if they are getting ripped off or what legal remedies they are entitled to when they do (aside from simply returning the item and not forgetting to bring the receipt). This gap in the bargaining powers and the level of knowledge between the two parties can render situations where consumers end up agreeing to terms more favorable to businesses without the ability to actually influence the content of their contracts. [See also, Eurobarometer #342 on Consumer Empowerment and the identification of disadvantageous and vulnerable consumers.]

Thus, the legislatures at the Member State level and also at the EU level are continuously attempting to protect the consumers “better” through various consumer protection measures like the new Consumer Rights Directive 2011/83/EU, which will start applying to contracts entered after 13 June 2014. The national courts and the CJEU are keenly aware of this fact as well as evidenced by cases such as PereničovaMostaza ClaroAsturcom Telecomunicaciones and many others, where they explicitly made references to the fact that the consumers need added protection to safeguard them from the “big bad businesses”.

This common assumption, however, begs the question of whether consumers are really weak and whether they actually need the legislatures and the courts to look after them. Though some consumers may be better off than others, the answer to the later question seems to be a rather obvious yes, especially given the incredible amount of influence that multinational corporations are already exerting over our daily lives from what we eat, what we wear, what we see on the news and basically, what we want. [For more on this particular issue, check out “Network of Global Corporate Control”, which is a fascinating study conducted by the Swiss Federal Institute of Technology that claims 147 companies (including the likes of Barclays, JP Morgan & Chase, UBS, etc.) control almost 40% of the global economic value of transnational corporations.]

This reality renders valid concerns over whether businesses still cater to consumer demands or whether consumer demands are actually being shaped and manipulated by businesses and their marketing departments for their benefit. For example, if I want a chocolate cake, is it because I really want one intrinsically or is it because I just saw an advertisement for a divine, melted-chocolate cake with extra warm fudge drizzling over some whipped cream on the TV and that created a demand where there was no demand before? The truth probably lies somewhere in the middle, but this goes to show that businesses are capable of not only exploiting consumers through contracts that limit their freedom to contract, but that they are also capable of manipulating consumer demands, or at least that is the assumption being made here.

So while  overarching consumer protection measures seem very necessary to protect the consumers from lopsided contracts or possibly even unwanted intrusions into our psyche, perhaps the existing protection is not enough. This leads us to the following question: What more can the consumers do to reclaim some autonomy, control and responsibility to improve their chances against the encroaching business interests? In other words, how can the consumers better protect themselves?

“Collaborative Consumer Protection”

This question was one of the main topics of discussion in the article “Adjusting EU Consumer Protection Mechanisms to the Needs of Private Actors: Collaborative Consumer Protection and the Ex Ante Avoidance of Conflict”.[1] Collaborative consumer protection is a term forged by borrowing ideas from Rachel Botsman and Roo Rogers’ “What’s Mine is Yours”, which is about the emergence of collaborative consumption. Collaborative consumer protection on the other hand is a mechanism, where consumers – empowered by technological advances and the ever-expanding network of online social platforms – can actively avoid, ex ante, purchasing from “bad” sellers by relying on digitized word-of-mouth recommendations by other, more experienced consumers. Essentially, collaborative consumer protection is the crowdsourcing of consumer protection, where consumers can share their knowledge with one another at a C2C level in order to enhance their consumer experiences at the B2C level.

This mechanism is obviously not without its flaws, ranging from free-rider concerns to the online anonymity problem that allows conniving businesses to post comments masquerading as a consumer, but even with its flaws, this grassroots mechanism compliments the existing framework of top-down consumer protection to offer extra protection for consumers willing to partake in it. This mechanism has the possibility to return some of the autonomy, control and responsibility back into the hands of the consumers and is worthy of consideration by those seeking to shift the paradigm from prioritizing what the businesses want back to focusing on what the consumers really want.

Shameless Plug

The aforementioned ERPL article continues to discuss further benefits and the feasibility of the collaborative consumer protection mechanism by paying homage to Botsman & Rogers and by addressing various components of the mechanism including, but not limited to: 1) role of social norms; 2) mutualism, signaling & strength of weak ties; 3) power of a decentralized system and collective wisdom; and 4) reputational capital and how these factors can create positive incentives for businesses to buy into this framework. The article also includes a discussion of how the EU and the European Consumer Centre Network can benefit from and also enhance this mechanism by using the CJEU ruling from Invitel as a case study to illustrate this point.

To reemphasize, this mechanism is not without its flaws and there are good reasons to be suspect of its benefits and feasibility. Therefore, in moving forward with this conception and its pragmatic applications, I solicit any and all comments, concerns and most welcomingly, skepticism. The ultimate goal of this blog entry, however, was to create demand (for you to read the full article), where there was no demand before. With that in mind, as always, thanks for reading!

[1] M.T. Kawakami, “Adjusting EU Consumer Protection Mechanisms to the Needs of Private Actors: Collaborative Consumer Protection and the Ex Ante Avoidance of Conflict”, European Review of Private Law 5/6 (2013). Available at:

* The draft version of this article was presented at the Hertie School of Governance in Berlin during the Jean Monnet Conference on “One for all and all for one? The role of collective actors in enforcing European Law” in May 2013.