Consumer Defense in the Digital Economy

Consumer defense is a broad term that encompasses several legal and regulatory mechanisms used by governments to protect the rights of consumers. These protections can include disclosures to consumers about a company’s products, antitrust laws that limit business practices, and regulations that prevent unlawful acts or practices by market participants.

The first form of consumer protection is the basic right to safety, which protects consumers from marketing products or services that are dangerous for health or life. The second is the right to information, which provides consumers with the facts they need to make sound decisions about products and services. The third is the right to choose, which allows consumers to have access to a variety of products and services at competitive prices.

In the United States, consumer defense is a decentralized and complex area of law that includes both federal and state law. In addition to these legal and regulatory mechanisms, private attorneys and consumer advocacy organizations are also involved in protecting the rights of consumers.

Although the concept of consumer defense is not new, it has become increasingly important as consumer protection laws are adapted to address global challenges such as the digital economy. This article describes some of the main features and challenges of global consumer protection law and highlights some of the policy options for addressing these issues.

Introduction

In a world where monopolies can stifle competition and consumers are at risk of being exploited, government intervention in the market is critical to ensure that the goods and services that consumers want can be produced and sold fairly. Economists have shown that the most effective government interventions in consumer protection are those that encourage a general presumption in favor of consumers’ rights, such as by requiring consumer disclosures and policing market participants for unlawful conduct.

Alternatively, market-reinforcing interventions are those that promote a presumption in favor of competition by preventing monopolistic practices that reduce the choice of goods and services. These include ensuring that companies disclose information about their products, enforcing antitrust laws against unfair business-to-consumer commercial practices, and regulating business practice such as requiring the production of safe and clean products and limiting advertising for dangerous or harmful products.

These approaches have proven highly successful in the past and are likely to continue to be a key component of the consumer protection policy regime in the U.S. However, they will only work if governments are committed to protecting consumers.

Third, consumer protection can be enhanced by a system of self-correcting markets that provide feedback about the quality of the products and services that are being offered to consumers. These markets can incentivize companies to improve their products and services if consumers complain about them, or if they think that their goods and services are inferior to those of their competitors.

To promote the development of consumer protection in the United States, the National Consumer Law Center (NCLC) has worked with nonprofit and legal services organizations, private attorneys, and policymakers to develop and advocate for consumer laws and policies that are fair and effective in preventing abuses by businesses and helping financially stressed families build and retain wealth. NCLC also works to educate the public about consumer rights and issues, and to help consumers understand their rights and how to exercise them.