The Consumer ID Project – In Search of Shoes that Fit Image by Freepik

The Consumer ID Project – In Search of Shoes that Fit

The Consumer ID project will break new ground by deconstructing the framework on which consumer laws have been built, namely the concept of the consumer as a weaker party in relation to businesses.

Consumer laws emerged in the United States and Europe in the 1960s and 1970s in response to an upscaling of production and the perceived weakness of consumers in negotiating and assessing the quality of goods and services offered. One famous example of the information asymmetry between businesses and consumers was highlighted in Akerlof’s article on “the market for lemons”, in which he posited that a lack of information can lead to a race-to-the-bottom in terms of quality. He used the example of the market for second-hand cars to illustrate this. Due to the inability of consumers to assess the quality, the price of good cars will be the same as the price for bad cars (known as 'lemons' in the US). This gives an incentive to dishonest sellers to decrease the quality of the cars they sell even more. 

Regulation took the form of specific rules on contractual rights and tort liability, applicable to “business-to-consumer relationships” (B2C relationships) in which the consumer was broadly defined as a natural person not acting in the course of a business or profession. In substance, regulation focused on information rights for consumers, which should help them assess the quality of goods and services offered.

While that framework served consumer protection goals well, the complexities of modern consumer markets may demand greater differentiation between types of consumers (compare Micklitz 2013). The one-size-fits-all model of consumer law no longer seems appropriate. In modern consumer markets, consumers have simultaneously become more vulnerable and more active, in particular under the influence of the rapid emergence of digital consumer markets and platformisation. For example, the consumer of digital goods and services (e.g. Amazon, Facebook) is dealing with suppliers who know many things about her preferences and may exploit that knowledge. Businesses use data-driven technologies to learn how consumers behave and to influence their purchasing decisions, often without the consumer’s knowledge or understanding. This creates a “digital asymmetry”, a term denoting the structural imbalance between tech-providers and consumers, due to consumers’ structural and universal inability to fully understand the digital architecture (Helberger et al. 2021).

On the other hand, new opportunities have arisen for consumers who are active on online platforms. One can think of young people who have discovered that buying and re-selling limited edition shoes or vintage clothes can be quite a lucrative side-activity for individuals who are otherwise not active as traders (see e.g. Kickzswap and Vinted). Should they be subject to contract and tort rules applicable to consumer-to-consumer (C2C) relations, or do they constitute a new category of “prosumers”?

Digitalisation is but one influence on consumer markets. The same consumer who is buying or selling things on online platforms is called upon to make choices that contribute to sustainable consumption. In this respect, consumer identities are expanded to include not only their economic role as market actors but also their position as consumer-citizens with a responsibility to adjust their choices and behaviour in the light of societal objectives and values (Mak & Terryn 2019).

By retaining one consumer image in regulation, which considers the consumer as a weaker party in relation to businesses and aids her by providing information, European consumer law has become unable to keep up with the demands that digitalisation, platformisation and sustainability place on consumer markets. The Consumer ID project aims to determine in what respects a transformation of the consumer image can lead to better-fitting regulation and policies. That is not to say that the old consumer image and the information paradigm in European consumer law should be abolished. Instead, the question is what alternatives can be identified, and whether they can be implemented into EU law and national private laws in such a way that consumer law becomes able to address the needs of modern markets. That question has come to the fore in other research too, for example in behavioural studies that have shown that consumers often do not read information or are hindered from properly understanding it due to cognitive limitations (see e.g. Alemanno & Sibony, Nudge and the Law, Hart Publishing 2015). Also, advances in the capabilities of data-driven technologies have given rise to studies on the personalisation of consumer law (see e.g. Ben-Shahar 2022Busch et al. 2022). Still, no viable alternative has emerged that can replace the information-based approach in consumer law. Existing solutions often take the form of amendments to the information paradigm, whilst acknowledging that a larger overhaul of consumer law may be needed (compare Narciso 2022). Such a reform will require a more thorough examination and will need to be designed and evaluated carefully.

Therefore, starting from the finding that consumer laws’ metaphorical shoes no longer fit, our Vici team goes in search of new and better-fitting shoes!