Some Challenges Facing a Behaviorally-Informed Approach to the Directive on Unfair Commercial Practices
The directive on Unfair Commercial Practices seeks to protect consumers by prohibiting, inter alia, misleading practices, which are defined as practices that are likely to mislead the average consumer and thereby likely to cause him to take a transactional decision he would not have taken otherwise (directive 2005/29/EC of the European Parliament and of the Council). While determinations of what constitutes average consumer behavior, what misleads consumers, or how consumers make transactional decisions all can be made as a matter of law, based on anecdotal observations, intuitions or theoretical assumptions, an empirical behavioral foundation can put consumer law on firmer ground and increase its efficacy. The Commission in its 2009 guidance explicitly noted, in fact, that the directive sought to take into account knowledge of how consumers actually make decisions in the market, including behavioral economic insights (guidance on the implementation/Application of directive 2005/29/EC on Unfair Commercial Practices). Nevertheless, a closer evaluation of the behavioral literature shows that the task of incorporating behavioral findings in the application of the directive is more complex than it may initially appear. Consumer law should not ignore relevant research findings – empirical and theoretical – on consumer behavior, particularly those regarding systematic and predictable deviations from normative models of strict rationality that scholars have identified. At least at first blush, such findings suggest concerns for consumer law in some situations where the behavior of perfectly rational actors would not have been distorted, say, because relevant product information is readily available. Nonetheless, to apply these findings correctly, consumer law and policy must overcome a number of significant challenges. After offering some background on relevant behavioral findings, these remarks thus focus on two key challenges to a behaviorally-informed approach to the directive: (1) the material distortion challenge of determining which deviations from strict rationality indeed are errors that legitimately concern consumer law; and (2) the average consumer challenge of accounting for the complex effects of consumer laws on a behaviorally-heterogeneous population with a differential susceptibility to different commercial practices.