The Puzzle of Effective Consumer Protection Legislation: Challenges, Key Lessons and Design Principles
The Law and Economics of Regulation, Mathis & Torr eds (Springer, 2021), Forthcoming
29 Pages Posted: 27 Apr 2020 Last revised: 29 Apr 2020
Date Written: March 14, 2020
Legislation, even when well-intended, sometimes fails to provide the desired results. By design, the legislative process suffers from “noise” and is typically driven by diverse motives. Inevitably, then, the legislative process generates some mistakes.
In spite of these mistakes, the legal discussion of the mechanics of the legislative process is partial and underdeveloped. Focusing on consumer protection legislation, this chapter aims to fill some of this gap. It makes two complementary arguments. Descriptively, the chapter succinctly points to some predominant weaknesses in the legislative process. It illustrates how consumer protection laws may not only fail to achieve their desired results but can also backfire and harm consumers. Normatively and prescriptively, the chapter calls for a nuanced and holistic attitude to consumer protection legislation. It argues for more cautious and tailored consumer protection legislation, which benefits from healthy skepticism.
The chapter identifies four principles for improving the process of consumer law-making. First is a more careful approach to legislation, where legislatures progress in a gradual and moderate way. The second proposed principle is to approach the legislative process from a multi-disciplinary, evidence-based, empirical perspective. The third principle suggests adopting a humble decision-making process, which employs temporary consumer protection laws. Finally, the fourth principle offers diffusing and delegating some, or perhaps more, legislative and policy responsibility to administrative agencies and consumer organisations.
The chapter draws on consumer protection examples from Europe, North America, Australia, New Zealand and Israel. However, it is largely general in nature. If proven successful, the proposed design principles may be scaled up and implemented in additional jurisdictions and other domains.
Keywords: Consumer protection, legislation process, unintended consequences, (ir)rational consumers, small claims courts, disclosures, consumer organizations, temporary laws, evidence-bases approach, public choice theory, credit regulation, unhealthy foods, cooling-off period, gradual legislation
Suggested Citation: Suggested Citation