How Can Consumer Rights Accelerate Digital Transformation in 2022?

Technology Policy Internet Policy

How Can Consumer Rights Accelerate Digital Transformation in 2022?

Commentary
Posted on: 16th June 2022
Rhea Subramanya
Policy Lead - Economist, Internet Policy Unit

The internet is now used by almost two-thirds of the global population to supplement or completely replace social, economic and consumer activity. Consumer protection and regulatory innovation, however, is lagging behind and will act as a drag on wider digital transformation. As part of our technology and public policy programme at the Tony Blair Institute we published a report on consumer protection setting out seven recommendations for policymakers. We then convened an expert roundtable on consumer protection to explore the topic and generate recommendations for political leaders around the world. This is what they found:

  1. Consumer rights have always extended beyond customer rights.

The technology that dominates our digital economy is transformational but not necessarily exceptional. Consumer rights are adaptable to changing milieu. For example, the United Nations added new consumer rights to a healthy environment and essential services in 1999.

Consumer rights can fulfil four broader purposes:

  1. Equalise unequal relationships in the market between supply and demand.
  2. Guarantee access to essentials (e.g. water, internet, etc.).
  3. Ensure safe and high-quality products.
  4. Provide for future consumption needs rather than encourage overconsumption.
  1. Consumer trust in the digital economy is low – but it can be fixed.

Tech firms apply a selective interpretation of consumer rights that prioritise customer experience and service over other rights. Consumers trust digital firms to deliver, to be consistent, and to be reliable (e.g. shipping estimates) but not necessarily to act in their best interests.

To build trust online, we need to address privacy and data protection because personal data powers the digital economy (e.g. technologies like AI). We need consumer protections that come from hard regulation and not just from guidance or ethical codes.

  1. In the interim, we are bridging regulatory and enforcement gaps by engaging in private enforcement of public law harms.

Consumer rights has a companion legal partner in antitrust law with a common focus on markets that work for everyone. For example, UK union Unite complained about Amazon to the national competition authority for price-gouging during the COVID-19 pandemic peak. Private and public enforcement are rising to the challenge of addressing harms in digital markets.

Legislation is a slow-moving process. With more effective redress mechanisms such as opt-out collective actions, private enforcement can hold companies to account - and fill regulatory and public enforcement gaps. Opt-out collective proceedings do not require individual claiminants to be identified to bring a damages claim. For example, UK’s Consumer Rights Act 2015 and the new EU Collective Proceedings Directive enable cross-border collective cases to be brought. Ultimately, the goal should be better regulation and enforcement of consumer protections on digital platforms.

  1. We live in a global village where problems extend beyond borders – solutions must too.

International coordination is necessary to prevent whack-a-mole. If we resolve issues in a single jurisdiction, there is a threat that it can pop up in another. Organisations like the International Consumer Protection and Enforcement Network (ICPEN) offer avenues to collaborate to prevent this but consumer protection government agencies across the world must also cooperate to protect consumers engaging in online cross border transactions.

We can borrow and share analyses and rules from other regulatory regimes. The global business models that tech firms follow provides a unique opportunity for enforcement. For example, UK’s Age-Appropriate Design Code went into effect in 2021 as a set of 15 standards to protect kids online. Since then,  tech firms have adopted some of these standards in other regions, despite not being required to.

  1. We can strengthen consumer protections online without killing the golden goose.

Digital markets develop quickly and are prone to tipping where the market equilibrium shifts to favour concentration once a product or service reaches a critical mass of users. Harms, where they exist, develop fast while legislation is a slow-moving and time-consuming process. Online redress mechanisms can help us bridge this gap, by providing an avenue for consumers to lodge complaints that could be automatically (e.g. general queries) or manually mediated (e.g. complex matters).

There is concern that regulation may curtail the growth of the tech sector. However, history has shown us that it is possible to be both safe and prosperous. In the 1980s, despite protests from the automobile industry in Detroit, safety mechanisms like seatbelts were mandated. Today, the US remains one of the most prolific manufacturers of automobiles in the world.

  1. We’re all in this together.
  • Legislators/Regulators

Legislators need to work with technical specialists (e.g. engineers, economists, etc) to ensure optimal outcomes because the digital economy is characterised by innovation.

  • Tech industry

Technology can help solve problems created by technology. Public Interest Technology (PIT) puts “people at the center of the policymaking process” to promote the public good and be better corporate citizens.

  • Civil society

In 2021, civil society organisations protested privacy changes on WhatsApp, in a campaign called ‘Stop Facebook and Save WhatsApp.’ Facebook responded by not making acceptance mandatory. Today, we have more such opportunities to mobilise around digital consumer protection issues.

We need to take the lessons that we have learnt from the past, from other industries and from across the world and share it with the next generation.

 

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On 30 March 2021, the Tony Blair Institute for Global Change convened a roundtable on Consumer Protection. This built on TBI’s recent paper, which sets out seven recommendations for policymakers to incorporate consumer rights into the digital economy. It was complemented by an extensive evidence base detailing the consumer rights movement and global applications, written as an external commission by Liz Coll.

The discussion brought together four experts from three countries to share their experiences and identify areas where the public, private and civil sectors can collaborate to advance consumer rights. Liz Coll, the author of the consumer rights report, joined us along with Burcu Kilic (Head of Policy and Strategic Partnerships, Frontier Technology, Minderoo Foundation), Boniface Kamiti (Consumer Protection Manager, Competition Authority of Kenya) and Luke Streatfeild (Partner, Hausfeld Law).

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