The FTC's Public Interest Requirement: An Anomoly in Consumer Protection*

Proposals for consumer class actions and individual law suits have been considered by Congress during its last two sessions. Both bills sponsored by the administration condition recovery by the consumer upon successful completion of action by the FTC. FTC action, under these proposals, would be an absolute prerequisite to private recovery. Since private recovery is made to depend upon FTC action, the jurisdiction of the Federal Trade Commission becomes critical in determining whether or not a consumer will be entitled to relief. The “Public Interest Requirement” has long been viewed by the courts as a limitation upon Commission Jurisdiction. Thus, if the administration proposals are adopted, that requirement will have to be satisfied before individual consumer recovery will be available. This article seeks to identify the elements of the public interest requirement. Both judicial opinions and the Commission's criteria are considered and evaluated.     

Alternative Regulatory Cases Challenging Consumer Policy

By means of the concept of postmodern politics, we provide insights into how alternative regulation is challenging consumer policy. New actors, new forms of interaction, and new goals are emerging alongside established forms of consumer policy. In particular, we examine two alternative regulatory cases: trust marks and consumer-generated information systems. They both exemplify alternative regulation of electronic commerce, which has facilitated regulatory innovation for over a decade. On the basis of our analysis, we suggest that governmental consumer policy cannot imitate the alternative regulatory solutions. We also encourage governmental actors to consider building bridges to consumer networks. This would broaden the scope of consumer policy and be in line with the modes of operation of governmental actors. Consumers are themselves contributing to this rethinking of governmental consumer policy. By networking, consumers provide each other with empowering information on consumption. Doing so on the massive scale enabled by information and communication technologies, they are challenging conventional consumer policy, which can no longer address consumer needs as it could in the pre-Internet days. New issues are emerging for consumer policy to address, and networked consumers are already contributing to policy.     

New Audiovisual and Information Services and the Protection of Children: The European Dimension

This information paper outlines how the interests of minors are dealt with in the European Union's (EU) embryonic policies for new audiovisual and information services, in the context of what has happened – and is currently happening – in broadcasting and telecommunications. It is written from the public interest and consumer perspective rather than that of the industries involved, with a particular concern that the major contribution that new, technology-based services can make to the mental and moral development of children should not be prejudiced by harmful and damaging content. The author also addresses the virtually complete neglect of the need to protect children from economic exploitation through the new technologies.In general, the momentum of EU policy to ensure free movement of services, combined with the practical problems of developing an effective international regulatory structure for the new trans-border technologies, suggests that there will be considerable technological and commercial pressures to relax existing provisions which aim to protect minors, while there will be major obstacles in the way of developing new legislative or regulatory measures. This is a pessimistic scenario for those concerned with the interests of children. Nevertheless, there are some opportunities, which are outlined in the final section of the paper.     

The regulation of science-based claims in advertising

This paper analyzes the effects of scientific information dissemination on consumer and producer behavior. The first section draws heavily from evidence on the ready-to-eat cereal market during a period in which information developed about the health benefits of fiber cereal consumption. Although producers were initially prohibited from advertising these benefits, the regulatory ban against advertising was lifted during the period we study. Our results indicate that advertising was an important source of information leading to increased fiber cereal consumption and product innovation. The second part of our paper discusses the potential for deception if science-based claims are allowed. In the final section we consider a number of regulatory proposals that have been raised in the context of health claims for food products. We evaluate these proposals against the three goals of encouraging the dissemination of truthful information and discouraging the dissemination of deceptive or misleading information and their ability to keep pace with the changing science.     

Enhancing market discipline in banking: The role of subordinated debt in financial regulatory reform

The increasing complexity of large financial firms has led to consideration of alternative regulatory structures. This has intensified recently because of the worldwide turmoil in financial markets. One important consideration has been to increase reliance on market discipline—most notably, increased reliance on subordinated debt (sub-debt) in the bank capital structure to discipline banks’ risk taking. This proposal, however, has been subject to criticism related to the quality of the signal generated in current sub-debt markets. We argue that previous studies evaluating the potential usefulness of sub-debt proposals have evaluated sub-debt spreads in a very different environment from that characterized by a fully implemented sub-debt program, where the market will become deeper, issuance will be more frequent, debt will be viewed as a more viable means to raise capital, bond dealers will be less reluctant to publicly disclose more details on debt transactions, and generally, the market will be more closely followed. As a test to see how the quality of the signal may change, we evaluate the risk-spread relationship—accounting for the enhanced liquidity and market transparency surrounding new debt issues. Our empirical results indicate a superior risk-spread relationship surrounding the period of new debt issuance due, we posit, to greater liquidity and transparency. Our results overall suggest that the degree of market discipline would be significantly enhanced by a mandatory sub-debt program, thus suggesting a potential role for sub-debt in the banking regulatory reform.     

Trade Negotiations in the Americas and What They Mean for You

The United States is engaged in two huge trade negotiations—the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership—that will have a profound impact on our economy and on the world trade system. These agreements can be an important template for new rules governing world trade, and they address some important new areas, such as regulatory issues. However, if they are to be a good template, U.S. negotiators have to alter some of their proposals, and these new agreements have to prohibit predatory trade practices, such as currency manipulation.     

Setting Boundaries Rather than Imposing Bans: Is it Possible to Regulate Consumer Arbitration Clauses to Achieve Fairness for Consumers?

The benefits of arbitration as a form of alternative dispute resolution in business to business disputes, particularly international business to business disputes, are well recognized and will be discussed in this article. Concerns arise, however, where arbitration is sought to be imposed as a method of dispute resolution upon consumers, through the inclusion of arbitration clauses in consumer contracts. Whilst there is a body of literature which argues strongly against the enforceability of arbitration clauses in consumer contracts, there is little consideration in the literature as to the possible benefits of consumer arbitration which might warrant enforceability within particular regulatory boundaries. To date, the pro-arbitration stance taken by some commentators and courts is premised on freedom of contract arguments rather than consumer benefit. This article will explore whether it is possible to overcome a number of the current concerns regarding the use and enforcement of consumer arbitration clauses through constructing a regulatory framework which will give rise to a fair alternative dispute resolution mechanism for consumers. The article will begin by exploring the current context which includes limitations upon the arbitrability of consumer disputes in a number of jurisdictions. It will then go on to consider what might be the benefits of facilitating consumer arbitration as a mechanism for alternative dispute resolution, particularly in the context of international consumer disputes. The article will then outline a range of concerns regarding the perceived unfairness of consumer arbitration and will draw upon current and potential regulatory models to consider ways of addressing those concerns. The article will conclude with recommendations for a regulatory model designed to facilitate fair consumer arbitration.     

The Local Consumer Information System: An Institution-To-Be?

This paper makes the case for the creation, testing and perfection of a new economic institution–a local consumer information system. The heart of the system would be a data bank to which the consumer could address questions and receive answers repeatedly regarding the local market. The purpose of the system would be to deliver relevant consumer information more efficiently. For the individual consumer this new institution would help identify his best buy variety of a product, quickly and at low cost. It would also tell him, again quickly and at low cost, from what local retailers and at what local prices this best buy variety might be purchased. This new institution would serve all consumers in a given community by lowering many prices, quality constant. By reproducing itself in different locales, as the product testing organizations have, it might be expected to multiply and serve consumers in many communities. The paper discusses the types of information to be provided, methods of information collection and dissemination, means of insuring accuracy and fairness and how it might be financed.     

A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation

The decrease in consumer trust in the financial sector and the attempts to restore it are receiving a great deal of interest, especially since the financial crisis at the end of 2008. EU legislation is one of the ways that attempts have been made to regain the trust of investors. In the second section, the concept of “trust” will be subjected to an in-depth yet not exhaustive examination, with the aim of reducing its elusiveness. The third section will discuss three recent EU proposals. Examination of these legislative proposals reveals that (1) the term “trust” is not precisely defined, and (2) without stating further reasons, the restoration of trust in the financial sector is considered a worthy goal. In light of the aforementioned, the fourth section will address the desirability of clarity regarding the term “trust.” The fifth section will then assess whether legislation is a suitable means to restore consumer trust, and the sixth section explores whether the restoration of consumer trust in the financial sector is a worthy goal. Indeed, the European legislator and other policymakers seem to consider a low level of consumer trust a bad thing, a high level of consumer trust a good thing, and a higher level of consumer trust an even better thing. This article will argue that it is doubtful whether EU legislation is a suitable means for restoring consumer trust in the financial sector and, moreover, that considering the perverse incentives in the current financial sector, among other things, a realistic degree of trust, implying a certain distrust, appears preferable.     

Healthcare reform and its implications for the U.S. economy

U.S. healthcare is currently a poor value proposition in relation to its cost. This must change. Driven by the fundamental forces of financing, consumer preferences, and technology, the U.S. is heading for a profound revolution in healthcare, one that will affect not only the system itself but also the larger U.S. business community. This new healthcare system will create vast opportunities and commensurately large risks for healthcare innovators. The outcomes of the present healthcare reform debate will either liberate or further shackle these innovators. Reforms that depend on governmental controls are more likely to dampen innovation than those achieved through control by consumers, and given the profound ramifications of healthcare reform outcomes, policy makers would be well-advised to harness the forces of consumerism in fashioning reform.     

The Hungarian Cocktail of Competition Law and Consumer Protection: Should It Be Dissolved?

Hungary, a candidate country expecting to join the EU in 2004, has to approximate its laws and economic policies to those of the EU. However, it is not certain whether the Brussels standards will always improve national rules.This article will discuss one possible case. It concerns the special Hungarian legislation on competition law and certain consumer protection rules in the Competition Act of 1990 and the amended Act of 1996. The inclusion of rules governing consumer interests in the Acts greatly contributed to the recognition and the enforcement of consumer interests in Hungary.Nevertheless, the European Commission and the OECD increasingly argue that the Hungarian Office of Economic Competition should pass its competence in consumer related cases to another institution and instead pay more attention to more prominent fields of competition law such as horizontal agreements and mergers.This article will contest this argument. Although it is an understandable approach, there are several reasons why it should be carefully reconsidered. These include the position of consumers, which is still weak, the general system of consumer protection in Hungary, and the strong standing of the Office for Economic Competition. The comprehensive nature of the Hungarian Competition Act of 1996 is one of the cases in which the European guidelines should be considered with caution in order to determine whether their implementation would improve or damage a system that already functions well.     

Opinions about advertising in Australia: a study of complainants

Advertising expenditure has risen globally and in Australia there has been a 2.7-fold rise in the last 10 years. It is suggested that some advertisements may be ‘unacceptable’, that is unfair, misleading, deceptive, offensive, false or socially irresponsible. Industry and regulatory responses to consumer complaints about these problems must be addressed. This research is concerned with consumer behaviour and consumer complaint behaviour specifically in the area of advertising in Australia. The general findings from the reviewed literature indicated that complainants tend to be older, have attained higher levels of educational qualifications, earn a higher gross weekly income, possess greater degrees of wealth, have higher participant levels of local community involvement and, in general terms, have more resources to avail themselves of in order to allow them to take action when dissatisfied. The results from this research engender a better understanding of the complaining public. Empirical analyses were used for determining the characteristics of people who complain to the Advertising Standards Board and inferred that their opinions regarding advertising differ from members of the general population in four key areas. This research will afford regulatory bodies a better understanding of the complaining public as well as educating marketing communications strategists in effectively reaching their target markets.     

An Information-Based Approach to Labeling Biotechnology Consumer Products

Using an economic framework this paper explores the need for labeling of biotechnological consumer products. In particular, we assess the impact of labeling on information problems faced by consumers and regulators. Using information analysis, we propose an approach to labeling biotechnology products that attempts to respect both the real nature of consumer information-processing capacities and approaches and the environment of uncertainty in which any regulatory policy for biotechnology will operate. We conclude that the fact of uncertainty on the scientific front and the nature of consumer concerns in this area gives rise to a need for some type of labeling. Using labels to convey substantive information, however, is likely to be of limited value to consumers. A comprehensive approach to information policy for consumers in this field should aim instead to use labeling requirements to harness the incentives of producers and other private entities to effectively convey to consumers what they want and need to know. We therefore recommend that governments require a simple alert label on biotechnology consumer goods that will prompt consumers to assess their information needs and producers or others to supply those needs. Government regulation in this scheme would consist of basic health and safety regulation and direct or indirect monitoring and regulation of the content of the information ultimately conveyed to consumers by producers and others.     

Reforming the WTO to Defuse Potential Trade Conflicts in Genetically Modified Goods

Arguably genetic modification is one of the most important technological change seen to date. Its effects on both human health and the environment are both profound and controversial. In particular consumers, mainly in the EU, have concerns regarding the long term effects of consuming genetically modified foods on their health. They are also concerned regarding the effect that genetically modified organisms will have on bio‐diversity and choice in the long run. Differing regulatory regimes towards genetically modified goods in the US and EU could lead to damaging trade conflicts. Current agreements covering trade in foods such as the SPS and TBT allow a way of diffusing conflicts. The primary aim of these agreements is, however, to prevent governments from protecting domestic producers by applying capricious barriers to foreign competition. This paper sets out to show that rather than modifying these two agreements it would be better to deal with new issues surrounding consumer preferences explicitly by negotiating a new international agreement.     

Time to Do the Job Properly—The Case for a New Approach to EU Consumer Legislation

Following 25 years of legislative activity in the field of consumer law, the EU has proposed major reforms to the consumer law acquis. Existing legislation is largely based on directives harmonizing aspects of national consumer laws. This paper argues that a more appropriate approach for EU consumer law would be legislation in the form of a regulation which is applicable to cross-border transactions only. This argument will consider the constitutional constraints of the EU Treaties, before examining the case for a cross-border-only measure. It will be argued that the cross-border approach is preferable, because it would provide clearer benefits for consumers seeking to buy goods/services across borders, while not upsetting domestic law unnecessarily, in particular in the context of e-commerce.     

The Death Care Industry: A Review of Regulatory and Consumer Issues

Although virtually every person in the United States will purchase or consume a funeral‐related product or service, relatively little is understood about the processes a consumer undertakes in making these expensive decisions in stressful circumstances. Regulation of the industry has been contentious from the outset, and there have been numerous questions as to regulatory effectiveness. This article outlines and discusses issues related to the death care industry with particular attention to consumer interests.     

The Federal Trade Commission Redefinition of Deception and Public Policy Implications: Let the Buyer Beware

The current movement toward market deregulation in the United States is perhaps no better illustrated than by the proposals put forth by the Chairman of the Federal Trade Commission (FTC), James C. Miller, III. His far reaching suggestions would alter considerably the approach taken by the FTC toward the regulation of advertising. This paper reviews the current standards of deception in advertising regulation and compares them with Miller's proposals for new standards. Two recent cases settled under the current guidelines are presented. The probable outcome of these cases under the proposed guidelines is examined by employing a framework proposed by Miller and Hutt for analyzing the effects of regulatory policy. Based on that examination, the authors conclude that the current standards have allowed federal and state agencies to bring about elimination of false advertising claims that would not be possible to prove under the proposed guidelines. While the proposed changes may bring certain benefits to government, business, and consumers, their most significant effect could be to reintroduce the rule of caveat emptor.     

Savings and Investment Behaviour in Britain: More Questions than Answers

Since the late 1970s successive British governments have been instrumental in cultivating a savings-friendly environment. Changes have been orchestrated in two ways: first by developing a regulatory structure in which the emphasis has been on safeguarding consumer's savings; and second by developing new types of accounts which include significant tax incentives. Despite considerable government intervention, consumer savings and investment behaviour has not received a great deal of attention from academic researchers. Some of the reasons for this lack of interest will be assessed prior to analysing two large scale datasets to ascertain levels of savings and account holding behaviour in Britain. The data indicates that while the vast majority of the British population are savings account holders, levels of regular saving are very low and savers frequently give few, if any, motives for their savings strategies.     

低碳经济下的消费者社会责任——以新能源汽车为例

随着2008年"消费与责任"被中国消费者协会确定为年主题,越来越多的学者关注消费者社会责任,消费者的社会责任意识缺失也受到重视。笔者总结了学者们对消费者社会责任的研究和社会责任消费行为的维度,并以新能源汽车为例分析了责任意识缺失的现状,进而提出相应的低碳消费建议。     

NSPCC: Marketing the “solution” not the “problem”

In private sector companies, marketing philosophy and their accompanying portfolio of tools and techniques have long had a strong and shaping role in the creation of a market‐led corporate strategy. This is because in most cases there is an obvious and direct link in the economic transaction which takes place, between the consumers of the product and the suppliers of the product. In such a relationship, consumer preference and consumer sovereignty are meaningful and explanatory concepts. In contrast, in the Charitable Sector, the situation arises where a consumer receives a product or service which is supplied by a charity, but paid for by a third party, which may be a private sector organisation, a public sector organisation or a private individual. This arrangement has often meant that charities have only selectively applied those marketing techniques which are primarily concerned with attracting income from funders to the organisation. Thus a marketing philosophy and all that it implies for the development of an interactive and consumer responsive marketing system, has not been significantly developed.

This paper will argue through use of the illustrative example of the NSPCC (National Society for Prevention of Cruelty to Children), that charitable organisations can enjoy substantial benefits through the wider application of marketing principles to their activities.

It will show through its narrow emphasis upon its relationship with the funders, that the NSPCC has created a brand image based upon the problems encountered by the NSPCC, rather than upon the “solutions “ to those problems. This has had the further consequence that the resource allocation and resource attraction systems within the NSPCC has remained separate. A simple model is presented which facilitates examination of this relationship.

It will be suggested that this dichotomy within the NSPCC can be bridged through the Introduction of a marketing orientation which will enhance understanding of the relationship between the NSPCC and its funders, and which above all will provide the stimulus to the creation of a communication system between the funders and the children who are beneficiaries of the NSPCC activity.