Europaudvalget 2016-17
EUU Alm.del Bilag 717
Offentligt
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USING BEHAVIOURAL INSIGHTS TO PROMOTE ACTIVE EURO-
PEAN CONSUMERS
The Fitness Check of the consumer area evaluates if EU consumer law is
fit for purpose on the basis of the criteria of effectiveness, efficiency, co-
herence, relevance and EU added value of the existing EU legislation.
The Fitness Check is an important exercise, because active consumers are
an important part of the Single Market, as active consumers make de-
mands on businesses which give them incentives to provide better service.
This can lead to an improvement in competition and create well-
functioning markets. The result of the Fitness Check will hopefully make
it easier for consumers and businesses to navigate within the area of the
directives that are subject to the Fitness Check.
Behavioral insights
refers to the range of behavioral science research into
how biases influence consumer decision making. The term has gained
prominence as a result of the wealth of research calling into question the
traditional assumption that consumers and citizens act like rational agents
in the marketplace. Behavioral insights are an obvious mean to ensuring
that regulation aligns with actual consumer behavior to the benefit of both
consumers and businesses.
The gap between the intended consumer protection of information disclo-
sure requirements and the observed consumer behaviour especially calls
for the consideration of insights from behavioural sciences.
This non-paper aims at emphasizing the importance of continuing the
implementation of behavioural insights in the refit and development of
EU consumer and marketing law.
From Full Disclosure to Targeted Disclosure
This non-paper argues that we should strive to shift from full information
disclosure to better targeted information disclosure based on evidence,
impact assessments and behavioural insights.
When regulation forces businesses to expose consumers to large quanti-
ties of information at once, there is a risk of consumers being uncritical
and inactive. Furthermore, an overload of information limits the compa-
rability of products across providers. This implies that the actual effect of
the regulation may be counterproductive
for the consumer as well as for
competition in markets.
EUU, Alm.del - 2016-17 - Bilag 717: Non-paper vedr. "fitness-checket" af forbrugerlovgivningen
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The purpose of disclosure requirements is to create greater transparency
in the market, so that consumers can consider conditions and costs relat-
ing to e.g. credit agreements. The rationale behind full disclosure of in-
formation is to provide for consumers to understand their choices and be
able to make an informed decision.
However, one important challenge is that such requirements determine
that the information must often all be disclosed at the same time, hinder-
ing the ability to create innovative solutions that could make it easier for
consumers to understand the conditions of the product or service being
sold to them
e.g. by presenting it in a more user-friendly way. It can be
challenging for consumers to comprehend the amount and complexity of
information in current disclosure formats. Moreover, this challenge is
particularly clear in an electronic format across digital platforms, due to
limited clarity on electronic handheld devices such as smartphones. In
other words, the current rules - which are in principle technologically
neutral - actually make it harder to develop solutions that would help in-
form and activate consumers, and improve competition in the market,
thus making the rules more effective.
Insights from behavioural sciences has led to the recognition of the fact
that consumers are not acting
rational
in every purchase situation, even
when adequate information is fully disclosed to the consumer. A recent
study by the Danish Competition & Consumer Authority identified signif-
icant limitations in consumers’ ability to understand and use disclosed
information when presented with mortgage loan offers from three differ-
ent providers.
We suggest that the Commission start a practice of field testing new dis-
closure requirements and/or reviewing existing requirements retrospec-
tively and revising them. In the process of applying or revising infor-
mation disclosure regulation to better target the consumers, considerations
ought to be given to five tests in policy design:
I.
II.
III.
IV.
V.
What are the desired behavioural outcomes aimed for?
Will the information provide sufficient incentive for consumers to
optimise their choice-behaviour?
To what extent does the information simplify choices for consum-
ers on a nice- /need to know basis?
Are burdens for businesses disproportional to expected benefits
for consumers?
Are existing regulated information requirements taken into ac-
count?
EUU, Alm.del - 2016-17 - Bilag 717: Non-paper vedr. "fitness-checket" af forbrugerlovgivningen
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Furthermore, policy-makers at the EU-level should consider:
a. To pilot the use of outcome-based approaches to information re-
quirements, enforced on the basis of consumers’ understanding of the
information rather than the sheer availability of the information.
b. Assigning research to develop concrete proposals on how infor-
mation requirements might be presented in a more compact electronic
format.
c. Establishing partnerships across member states and stakeholders to
develop innovative approaches to communicating with consumers.
d. To test significant future information requirements before implemen-
tation and evaluate according
to the Joint Research Centre’s taxono-
my of behavioural policy interventions.
e. To include information disclosure requirements in the scope of re-
views of relevant legislation so that requirements may be re-designed
or removed unless proven effective in improving outcomes.
Further suggestions for review
In terms of ensuring the effect of information disclosure requirements and
legislation fit for the digital age, we also suggest reviewing the following:
Directive on electronic commerce (2000/31/ED)
Directive on consumer credit (2008/48/EC)
Directive on credit agreements for consumers relating to residential
immovable property (2014/17/EU)
References
Better Regulation Executive and National Consumer Council (2007)
“Warning:
too
much
information
can
harm…”
http://www.eurofinas.org/uploads/documents/policies/NCB-BRE-
Report.pdf
Sousa Lourenço, J., Ciriolo, E., Almeida, S., & Troussard, X. (2016). Be-
havioural insights applied to policy.
JRC science for policy report: Euro-
pean Union.
OECD (2017),
Behavioural Insights and Public Policy: Lessons from
Around
the
World,
OECD
Publishing,
Paris.
DOI:
http://dx.doi.org/10.1787/9789264270480-en