The Protection of Vulnerable Groups from a Behavioural Perspective
© Springer International Publishing Switzerland 2015
Bram B. DuivenvoordeThe Consumer Benchmarks in the Unfair Commercial Practices DirectiveStudies in European Economic Law and Regulation510.1007/978-3-319-13924-1_1010. The Protection of Vulnerable Groups from a Behavioural Perspective
(1)
Hoogenraad & Haak advertising + IP advocaten / University of Amsterdam, Amsterdam, The Netherlands
Abstract
The target group and vulnerable group benchmarks were meant to provide additional protection to consumers, addressing the concern that vulnerable consumers were not sufficiently protected by the average consumer benchmark. Yet, to what extent do these benchmarks really address consumer vulnerability? It is important in this context to note that the Directive views vulnerability in terms of groups. From a behavioural perspective, this view of consumer vulnerability is problematic. Studies on consumer vulnerability emphasise that vulnerability is highly context-specific and that this phenomenon is difficult to capture in terms of well-delineated groups. These studies show that some groups (such as younger children) may indeed be generally more vulnerable than other groups, but for most groups this is highly dependent on the type of situation. Since vulnerability is highly context specific and difficult to capture in terms of groups, both the target group and vulnerable group benchmark are applicable only in a limited number of cases, which makes it questionable whether these benchmarks can really address vulnerability.
Keywords
Vulnerable groupsBehavioural perspectiveConsumer vulnerabilityGroup-based vulnerabilityChildren and adolescentsElderly consumersMental and physical infirmityCredulitySocial classEducationLow income10.1 Introduction
The previous chapter has shown that the average consumer benchmark raises significant questions in relation to consumer behaviour as understood from the perspective of the behavioural sciences. In particular, the expectations of the average consumer’s behaviour, as well as the fact that working with an average as a benchmark, seems to disregard the interests of many consumers. This raises questions as to the level of protection of consumers and, more in general, the way the Directive regulates unfair commercial practices. The target group and vulnerable group benchmarks could provide a solution in this respect. Although the target group benchmark can also raise the threshold of protection (e.g., in case of an expert audience), these benchmarks were introduced mainly to offer additional protection to vulnerable consumers, and, in case of the vulnerable group benchmark, to reduce the criticism that the average consumer benchmark generally afforded consumers insufficient protection. Taking into account the problems identified in relation to the average consumer benchmark in the previous chapter, the focus of this chapter is thus on the target group and vulnerable group benchmarks in relation to their ability to take into account vulnerability.
Although much remains uncertain regarding how the protection of vulnerable consumers under the Directive will operate in practice,1 two points can be highlighted as to how the Directive views vulnerability. First of all, a central issue in the Directive is that consumer vulnerability is understood in terms of groups of consumers. Only the presence of specific target groups or of particularly affected vulnerable groups can justify an exception to the average consumer benchmark through application of the alternative benchmarks. Secondly, the Directive has a number of specific assumptions in relation to which groups are vulnerable. The Directive assumes that, due to their age, children, adolescents and elderly are vulnerable. Similarly, it assumes that people with mental or physical infirmity are vulnerable, and the same applies to—as the Directive refers to them—‘credulous consumers’.
This chapter is devoted to a discussion of how these two points of view of the Directive on vulnerability relate to actual consumer vulnerability as understood in the behavioural sciences.2 It discusses to what extent groups of consumers can be regarded as vulnerable, whether the groups mentioned in the Directive are indeed more vulnerable than other consumers and whether protection of these groups cover the issue of consumer vulnerability.
Firstly, paragraph 10.2 introduces the different perspectives one can take on consumer vulnerability, and identifies which perspective is relied upon in the context of the Unfair Commercial Practices Directive. Secondly, paragraph 10.3 deals with the Directive’s approach to address vulnerability in terms of groups. In paragraph 10.4 the different groups as identified by the Directive are discussed, i.e., children, elderly, mental and physical infirmed and, finally, credulous consumers and other groups that may be identified as vulnerable. Paragraph 10.5 draws conclusions as to how the Directive’s approach to the protection of vulnerable consumers relates to what is known about vulnerability in the behavioural sciences, and provides some preliminary conclusions as to the question whether the target group and vulnerable group benchmark take away the objections raised in relation to the average consumer benchmark.
10.2 Consumer Vulnerability: Different Perspectives
Before delving further into the concept of consumer vulnerability , it is important to avoid confusion by pointing out that consumer vulnerability is a broad phenomenon, and that the Unfair Commercial Practices Directive only addresses one particular perspective of vulnerability. Vulnerability can be viewed from the point of view of the limited abilities of consumers to deal with commercial practices, but vulnerability may also lie in the degree of exposure to certain commercial practices, or to the consequences of those practices for different consumers.
If one focuses on vulnerability due to limited abilities, one concentrates on the competences of consumers to deal with, in this case, unfair commercial practices. So, for example, children may be more vulnerable due to their limited cognitive development, making them less able to understand information and making them more open to the influence of traders.
However, apart from focusing on the abilities of certain groups of consumers to deal with dangers such as unfair commercial practices, one can also focus on the degree of exposure to those dangers. This is not necessarily linked to the abilities of the consumer. For example, unemployed people and people who stay at home (e.g., child-care providers and pensioners) may be more likely to be exposed to doorstep selling than people in full-time employment, simply because they are at home more often. This does not make them less able to deal with these practices, but the chance that they become a victim may be higher because they are exposed to the practices more often.
A third approach examines the consequences of unfair commercial practices. This perspective on vulnerability is often taken in the context of consumer credit and other financial services for consumers. For example, poor consumers may be more vulnerable to predatory lending than consumers with higher incomes, not only because they may more often be in need of credit (i.e., degree of exposure), but also because they will be less able to cope with the consequences of debt. In other words, regardless of their susceptibility to the commercial practices, they will be the victims who are hit hardest.
For the protection of vulnerable consumers under the Unfair Commercial Practices Directive, it is the limited abilities perspective that matters; the issue of the consumer benchmark (i.e., the average consumer, the target group consumer or the vulnerable consumer) addresses the question which consumer should be taken as the standard to determine whether a commercial practice influences the economic behaviour of consumers. Hence, it is about the consumer’s understanding of and reaction to commercial practices, which depends on his or her ability to deal with unfair commercial practices, rather than about the degree of exposure or the consequences of those practices. It is interesting to see that the EC Guidelines to the Directive in some cases confusingly refer to examples that reflect the vulnerability as a consequence of high exposure or gravity of the consequences, rather than the abilities of the consumer.3
10.3 Thinking About Vulnerability in Terms of Groups
As mentioned above, the Unfair Commercial Practices Directive focuses strongly on vulnerability in terms of groups. The average consumer is generally not regarded as vulnerable, and the application of the target group benchmark and vulnerable group benchmark is dependent on a specific group of consumers being targeted or particularly affected by a commercial practice.
One of the main lessons from studies on consumer vulnerability is, however, that vulnerability is context-specific and that the vulnerability of groups is sometimes overstated, leading to stereotypes.4 Possible indicators of consumer vulnerability, such as age, income or other characteristics may show a relationship with vulnerability, but the relationship tends to be limited. This means that thinking about vulnerability in terms of groups of consumers clearly has its restrictions.
This is supported by four recent survey studies dealing with consumers’ experiences with unfair commercial practices. It concerns studies in the United Kingdom, the Netherlands, the United States of America and Canada. The consumer enforcement authorities in each of the respective countries commissioned the studies (i.e., the U.K. Office of Fair Trading, the Dutch Consumer Authority5, the U.S. Federal Trade Commission, and the Competition Bureau Canada respectively).6
The studies are similar in their methods. Consumers were questioned regarding their experiences with common forms of unfair commercial practices, such as misleading lotteries, misleading health claims and pyramid schemes. So, for example, consumers in the American study were asked whether in the past year they had been told by anybody that they had won a prize or a lottery, followed by questions about whether they responded to this, whether they had been required to make payments and so on.
These studies are interesting as they investigate relationships between being a victim of unfair commercial practices and several characteristics of consumers, such as age, income, gender and social class . The studies indicate that some of these characteristics are indeed linked to consumer vulnerability . For example, the Dutch study shows that low-income consumers are more likely to be victims of unfair commercial practices than higher income groups (see also paragraph 10.4.4 below). However, the differences between the income groups are rather limited, as is also the case for the other characteristics. This indicates that one has to be careful when drawing conclusions concerning group-based vulnerability . Everyone can be a victim of unfair commercial practices and all consumers can expect to be vulnerable at some point in their lives.7
Why are these differences only limited? Part of the answer lies in the fact that characteristics that are commonly linked to vulnerability (such as age, income and social class) often do not directly address the cause of vulnerability. So, for example, the mere fact that a consumer is old does not necessarily mean that he or she is inept at reaching good decisions. To better address the vulnerability of elderly consumers, attention should instead be paid to the specific reasons for vulnerability that may be connected with old age, such as diminished cognitive abilities and social isolation, as is shown in more detail below.8
A second reason is that within vulnerable groups, differences exist between the individuals of those groups. Once again, this makes it more difficult to characterise vulnerability in terms of groups. People have different abilities, different knowledge, different past experiences and different personalities. It does not follow that people who have a certain characteristic in common (e.g., old age) will exhibit the same consumer behaviour. Within groups differences also exist because the individuals differ as to the identifying characteristic. For example, the group of ‘elderly consumers’ contains very old consumers (e.g., 90 +), but also ‘younger’ elderly consumers (e.g., 65 year-olds).9
Finally, it is important to point out that members of a vulnerable group are usually not vulnerable to all practices; vulnerability is highly context specific. Once more, one has to beware of stereotyping. In most cases groups are not vulnerable per se. Rather, one should ask whether certain consumers are vulnerable to a certain practice. For example, people with physical infirmity are unlikely to be more vulnerable than other consumers when it comes to, say, buying mortgages.
10.4 Vulnerable Groups
10.4.1 Vulnerability by Virtue of Age: Children and Adolescents
Children and adolescents are often regarded as vulnerable consumer groups. As we have seen above, this is also the case in the Unfair Commercial Practices Directive. Common sense suggests that children and teenagers may be more vulnerable as they lack experience as consumers and are less able to resist the influence of others.
There is a considerable body of research, developed mainly in the 1970s and 1980s, on what is often referred to as consumer socialisation, i.e., the development of consumer knowledge, skills and values of children and adolescents .10 Not surprisingly, studies indeed show that skills, knowledge and attitudes of children develop during their childhood, making them gradually ready to function as consumers on the marketplace. This is clear from experiments on various subjects, such as understanding of advertising and persuasion knowledge, product and product pricing knowledge and decision-making skills.11
For example, research on children’s understanding of TV advertising indicates that especially younger children do not comprehend the persuasive intent of advertising. From age seven or eight, children begin to understand the persuasive intent of advertising and recognise that ads may lie or contain bias or deception.12 From age 11, children develop a deeper understanding of the persuasive intent and specific tactics and appeals of advertising, and tend to be sceptical towards advertising.13
More in general, research suggests that young children use fewer sources and less information when comparing and selecting products than older children.14 Children, especially if they are young, also lack product knowledge (i.e., they tend to be novices rather than experts 15) and knowledge of product pricing.16
As a consequence of these limitations, children have more difficulty making good (‘rational’) decisions, especially if these decisions involve large quantities of information. Moreover, the mode of presentation of information is highly relevant in this context.17
At the same time, it is important to point out that much depends on the age of the child. While younger children may struggle making even basic decisions, adolescents may easily be able to fulfil the same tasks.18 In fact, adolescents in many ways have similar abilities as adults.19 Unlike younger children, who often struggle even with relatively simple decision-making processes, adolescents can often cope well with persuasion attempts.20
However, it should be taken into account that adolescents still have little experience as consumers. In particular, they are likely to have less product knowledge, have less experience in making complex decisions and have less knowledge about unfair commercial practices.21 The ability to deal with persuasion attempts, therefore, continues to develop well beyond the period in which information-processing skills have stabilised.22 In this context it is important to note that children may be particularly vulnerable with regard to online advertising, where persuasive intent is often unclear and advertising techniques change quickly.23
Besides of their limited experience, adolescents—even though their cognitive skills often do not differ much from adults—tend to engage more often in risky behaviour. Steinberg points out that this is not caused by adolescents’ bad risk assessment, but rather by their limited impulse control. Adolescents were found to know, just as well as adults, that certain types of behaviour are risky, but in practice they do not seem to act accordingly. Steinberg attributes this to the timing of the development of self-regulation capabilities; while several drives or impulses strengthen in early adolescence, self-regulation capacities such as impulse control, emotional regulation, delay of gratification, planning and resistance to peer influence continue to develop until late adolescence and young adulthood. Hence, adolescents are faced with a ‘gap’ between the strengthening of drives, on the one hand, and capacities to deal with those drives, on the other.24 While little is known of the impact of this on adolescents’ behaviour as consumers, it may suggest increased vulnerability for certain trade practices, as well as vulnerability to exploitation by traders. For example, Steinberg’s theory may suggest that adolescent consumers tend to focus more on immediate gains and ignore future costs.25
In conclusion, it is understandable that children are seen as a vulnerable group in the Unfair Commercial Practices Directive. Especially young children are easily persuaded and have limited decision-making abilities. However, as children grow older, they may in many senses have the same abilities as adults, yet lack the experience and self-control capabilities making them vulnerable to exploitation. It is, therefore, important to examine the age of the group involved, and to determine whether this group is vulnerable to the practice at hand. A standardised approach is thus difficult to maintain from a behavioural perspective.
10.4.2 Vulnerability by Virtue of Age: Elderly Consumers
In a similar fashion to children and adolescents , elderly consumers are mentioned in the Directive as a vulnerable group. Common sense indeed suggests that at least some elderly consumers will be more vulnerable to unfair commercial practices due to their age. As is discussed in more detail below, several theories and experiments in the field of consumer behaviour indeed suggest that elderly consumers may be more vulnerable than other consumers. Surprisingly though, the surveys on consumers’ experiences with unfair commercial practices (already discussed in paragraph 10.3 above) suggest that elderly consumers in fact fall victim to unfair commercial practices less often than other age groups.
An analysis of the consumer behaviour literature reveals that the most likely reason for vulnerability of elderly consumers concerns diminishing decision-making skills due to cognitive impairment.
Some cognitive abilities, such as memory retrieval, diminish as a result of aging, causing cognitive impairment. Elderly consumers may, therefore, be less likely than younger consumers to accurately process information and make rational decisions, if they are faced with new information.26
Experiments also show that elderly consumers take longer to process information and have trouble processing information if it is presented at a relatively high pace.27 Whether they have control over the pace in which information is presented, therefore, seems relevant for their ability to make good decisions.28 Elderly consumers also seem less able to remain attentive and alert over longer periods of time, in particular when they face many new stimuli.29
Moreover, experiments suggest that elderly consumers have more trouble than younger consumers in making judgments if they are faced with irrelevant information. Accordingly, elderly consumers seem to be less able to discriminate between relevant and irrelevant information.30