Vulnerable Consumers and the Law

Consumer Protection and Access to Justice

Christine Riefa, Severine Saintier, Christine Riefa, Severine Saintier

• Publisher: Routledge
• Year: 2020
• Print ISBN: 9780367204686
• eBook ISBN: 9781000209747
• Edition: 1
• Topic: Law
• Subtopic: Comparative Law
• Index: Law

This book charts the difficulties encountered by vulnerable consumers in their access to justice, through the contributions of prominent authors (academic, practitioners and consultants) in the field of consumer law and access to justice.

It demonstrates that despite the development of ADR, access to justice is still severely lacking for the vulnerable consumer. The book highlights that a broad understanding of access to justice, which encompasses good regulation and its public enforcement, is an essential ingredient alongside access to the mechanisms of traditional private justice (courts and ADR) to protect the vulnerable consumer. Indeed, many of the difficulties are linked to normative obstacles and lack of access to justice is primarily a vulnerability in itself that can exacerbate existing ones. In addition, because it may contribute to 'pushing' already vulnerable consumers into social exclusion it is not simply about economic justice but also about social justice.

The book shows that lack of access to justice is not irreversible nor is it necessarily linked to consumer apathy. New technologies could provide solutions. The book concludes with a plea for developing 'inclusive' justice systems with more emphasis on public enforcement alongside effective courts systems to offer the vulnerable with adequate means to defend themselves.

This book will be suitable for both students and practitioners, and all those with an interest in the justice system.

1In search of (access to) justice for vulnerable consumers

Christine Riefa and Séverine Saintier

1.1 Vulnerable consumers and access to justice: The debate in context

In 1963, Caplovitz published the results of his pioneering sociological study The Poor Pay More, which charted the consumer practices of low-income families in a sample of settlements in New York City.¹ The entry of low-income consumers into consumer society was largely fuelled by the availability of credit and the coinciding poor commercial practices deployed by traders. Caplovitz showed that in low-income areas exploitation and fraud were the norm rather than the exception,² that most families were ill prepared to cope with consumer problems,³ and most did nothing when they found they had been cheated, either through inaction⁴ or lack of knowledge of available sources of assistance (some being available free of charge). Importantly, the study also highlighted that while social programmes were devised to help the poor to achieve a meaningful place in the productive sphere of society, the emphasis was on expanding earning power through education, job training and the creation of jobs.⁵

Caplovitz’ study served as a reminder that the poor are consumers as well, and that their inability to earn a decent living, although only one side of their economic plight,⁶ nevertheless has very real and tangible social consequences. Indeed, by paying more for the goods they buy, the poor are forced to live in a world of inflation that more comfortable citizens are able to escape.⁷

At the time of Caplovitz’s study, consumer protection was only starting to develop in the US, in the UK⁸ and later in the EU.⁹ In those early stages, no semantic distinction was drawn between the poor, the vulnerable or the average consumer.¹⁰ The focus of the consumer movement was on protecting the consumer who, by dint of being a consumer, was the ‘weaker’ party.¹¹

Fast forward a few decades, EU consumer law has now grown to offer much protection to consumers. A large body of laws has developed gaining autonomy from contract law. Yet, the bulk of EU consumer law has been created to primarily fit what was needed to complete the internal market.¹² Micklitz regrets this approach which leads to distributional effects on the most disadvantaged consumers and impacts negatively on social cohesion and social justice.¹³ This failure to ‘reconcile the values of the market, rights and social solidarity and how to deal with the tensions between them’¹⁴ is further compounded by the fact that tools for consumers to enforce their rights, a corollary to any well-developed substantive set of rights, have remained elusive.

Enforcement in consumer law is a mix of public and private methods. Private enforcement relies on consumers seeking redress for infringements of their rights through the courts and ADR bodies. The actions taken can be individual or to some extent, collective. The latter, especially when across a number of members states are only a recent feature.¹⁵ Public enforcement arises where regulatory bodies seek collective redress for consumers.¹⁶ Enforcers are normally granted some administrative, civil or criminal powers (or a mix).¹⁷

Although redress was identified early on as one of five consumer rights,¹⁸ efforts primarily focussed on developing rights for consumers without initially paying much attention as to how they would be upheld. It was somewhat expected that in acquiring rights, the consumer would naturally seek to exercise them. Quickly however came the realisation that access to justice (which at the time essentially meant access to court) was not, for the most part, effective. Like many of their contemporaries, Howells and Weatherhill noted that a key feature of consumer disputes is that it can be, for the bulk at least, of low value. When this is the case, it is often not worth taking a case to court. As a result, many scholars pushed for a re-examination of dispute resolution procedures.¹⁹ Meanwhile, the involvement of the State in enforcement was largely reduced²⁰ relying on private enforcement as the key to effective consumer protection. The shortcomings of small claims were acknowledged, and instead of attempting to adapt rules at national level, attention focussed on building ADR with the adoption of the ADR Directive and the creation of the ODR Platform in the EU.²¹ The focus of all alternatives to the traditional court procedures has been on enhancing access to justice, through a reduction of costs and a simplification of procedures.

Despite the development of ADR, access to justice is still severely lacking for the vulnerable. The economic crisis in 2008 and its aftermath translated into a drastic rise of consumer-indebtedness and fuel poverty.²² In the face of growing levels of income inequality,²³ due in part to long periods of austerity,²⁴ inequality of access to justice is felt more acutely than ever before. The issue has grown particularly pressing following the dismantlement of access to justice through a wave of reforms and a focus on ADR rather than on the modernisation of the judicial apparatus. Notably in England, the last decade witnessed drastic changes made to the civil justice system not just concerning the treatment of consumer cases.²⁵ The overall direction of travel has been the withdrawal of the state from civil disputes.²⁶ Today no legal aid is available for consumer disputes and consumers need to seek alternative funding where necessary, not always with a great degree of success.²⁷ ADR has come to largely replace the courts for consumer disputes, but both structures are found lacking and are still under-utilised by those consumers who need it the most. Access to courts and ADR are indeed the preserve of a few, primarily white, male, well-educated, middle-class and middle-aged consumers.²⁸ Meanwhile, public enforcement has not yet come to fill the gap and collective redress is still severely limited.²⁹

The EU is attempting to address the issue,³⁰ an effort echoed in some Member States.³¹ The fallacy of the circumspect and well informed consumer has been revealed and the ‘images’ of the consumer have multiplied.³² We are no longer simply concerned with the poor or the ‘weaker party’ but are increasingly realising that other groups also find themselves vulnerable.³³ Following the opening of former state monopolies and the decrease of the welfare state,³⁴ a clearer social-oriented EU policy took shape, cemented with the formal recognition of ‘services of economic general interest’ in the Treaty of Amsterdam and their access protected in the Charter of Fundamental Rights. Yet, in spite of the ‘rights rhetoric’,³⁵ the bulk of the legislation in this domain is still focused on the need to increase choice and support ‘the active information seeker’³⁶ to the detriment of the more vulnerable.

The negative effects of an instrumentalised consumer law aimed at realising the internal market, and the ensuing need for a less transactional focus, discussed for some time in academic commentary,³⁷ have finally reached policy and regulatory circles.³⁸ However, no detailed policy strategy on how this can be addressed has yet been outlined. There is also a gap in literature on the interface between consumer vulnerability and access to justice, which this book aims to fill.

1.2 Unpicking the needs of vulnerable consumers to design better access to justice

This book seeks to take stock, to offer a snapshot of the difficulties encountered by vulnerable consumers in their access to justice, in a small number of EU countries and further afield where there is a clear lack of adequate response to the need of the vulnerable and little is offered by way of solutions to ensure their access to justice.³⁹ With no claim of being exhaustive, this book aims to reflect on why vulnerable consumers seem to not be adequately protected in the current system, to document and understand what the main issues are and start to reflect on some potential solutions for their needs to be met in the future.

The book does so in three parts. First, it considers vulnerability from a normative viewpoint to understand what is meant by ‘vulnerable consumers’ and how they have been conceptualised to better protect them. The next part untangles the issue from a regulatory viewpoint. Contributing to the debate on vulnerability, it also highlights that a broad view of access to justice is necessary to protect consumers, especially vulnerable ones. It considers how good regulation and its public enforcement can offer some form of justice to consumers alongside, or perhaps instead, of a need for access to the mechanisms of traditional private justice. Finally, authors reflect on what currently is missing in the courts and ADR systems and offer some possible solutions.

1.2.1 Normative responses to consumer vulnerability

The concept of ‘vulnerability’ originates from political sciences and Professor Fineman’s work has been particularly instrumental in this field.⁴⁰ Based on the fact that, as humans, we are all ‘vulnerable subjects’, her ‘vulnerability theory’ is ‘an influential and powerful new critique of formal equality and an alternative framework for understanding substantive equality’.⁴¹ Very versatile, the concept of ‘vulnerability’ has spread to many other disciplines including sociology, marketing,⁴² law⁴³ and, more particularly for the subject of this book, consumer protection. In any discipline, vulnerability is a complex and multi-faceted concept, which is widely used but is not always entirely understood. It is intrinsically very difficult to define.⁴⁴ The literature shows that all consumers will experience vulnerabilities. Vulnerability is therefore constant, a universal, ever-present experience, which may be exposed at any given moment by our individual circumstances or embeddedness.⁴⁵

The focus of debate on the best way to protect vulnerable consumers has traditionally been on the personal attributes, and the cognitive capacities of consumers⁴⁶ whereas

their financial capacity has not been considered to be of any relevance in private law relationships. The inability to pay did not have any influence on the contract and on the fate of the payment obligation. Payment problems and poverty were public law issues and dealt with under welfare law.⁴⁷

The literature on consumer vulnerability is now moving beyond strict personal characteristics (age, gender, locality, education and language)...

Table of contents

• Cover
• Half Title
• Series Information
• Title Page
• Copyright Page
• Contents
• Acknowledgements
• List of Contributors
• Foreword
• 1 In search of (access to) justice for vulnerable consumers
• 2 Economic theory and consumer vulnerability: Exploring an uneasy relationship
• 3 A universal perspective on vulnerability: International definitions and targets
• 4 The legal definition of ‘vulnerable’ consumers in the UCPD: Benefits and limitations of a focus on personal attributes
• 5 Vulnerable consumers in financial services and access to justice: The regulatory response
• 6 Regulating the consumer credit market: Protecting vulnerable consumers
• 7 Vulnerability in the UK energy market
• 8 Using ‘stokvel’ community values to combat financial exclusion
• 9 The role of voluntary standards in improving outcomes for consumers in vulnerable situations
• 10 Improving courts and ADR to help vulnerable consumers access justice
• 11 ODR and access to justice for vulnerable consumers: The case of the EU ODR Platform
• 12 Consumer ADR in the European Union and in Portugal as a means of ensuring consumer protection
• 13 Online dispute resolution of consumer disputes, vulnerable consumers and new technologies
• 14 Using claims management as a method to help consumers on low income
• 15 The way forward: For an ‘inclusive’ access to justice to protect vulnerable consumers
• Index