European Consumer Protection Through the Behavioral Lense

Abstract

In this article, we identify whether and how EU consumer protection rules could incorporate more behavioral wisdom. The relevance of behavioral insights to consumer rights is obvious as consumer protection rules tend to ignore how boundedly rational consumers can be when they make their decisions. The rules are all too often written with a fictional consumer in mind: one who reads labels, checks the terms and conditions, etc. Though the relevance of behavioral insights to consumer protection is universal, the European context exhibits specific features. In Europe, paternalism is rarely seen as a question of principle. The debate is therefore not whether a behavioral approach can offer minimalist regulatory approaches preserving freedom of choice, or whether it provides evidence that is robust and general enough to justify paternalistic interventions: rather, it is whether and how a more behavioral approach can make EU law more effective and European consumers better off. The focus in this Article is precisely on how behavioral insights are being incorporated and could be incorporated.

The question is important since EU consumer law has evolved into an apparent anti-model of behavioral regulation, featuring a much-criticized load of mandatory information requirements. The internal market constraints that still exist should however not be analyzed as preventing a behavioral turn.

The question is also timely since new rules are in preparation in the field of consumer protection: can the EU legislator take useful inspiration from the insights developed in behavioral sciences? Various dimensions are studied. First, disclosure mandates are a central feature of EU consumer law that has been severely criticized in the light of behavioral findings. Though disclosure mandates are over-used, this technique can still serve a useful purpose provided their use is adequately streamlined and enhance with “smart” design. Secondly, advice mandates also suffer from limits inherent to disclosure of information that needs to be processed, but they too can be made more effective. Thirdly, simplification is a behaviorally sound intuition, which has been badly implemented, notably because the EU legislator has erred on what to simplify.

Finally, the question whether further developments in behavioral research should primarily be implemented at the level of the Member States or of the EU raises challenges. In any event, the heavy machinery of choice protection should only be deployed for choices that matter to consumers.

Keywords: EU Law, Consumer protection, Information paradigm, Behavioural analysis of law, Smart disclosure

JEL Classification: K10, K29, K39