tag:theconversation.com,2011:/ca/topics/consumer-rights-41085/articlesConsumer rights – The Conversation2024-03-04T01:44:34Ztag:theconversation.com,2011:article/2196152024-03-04T01:44:34Z2024-03-04T01:44:34ZGreenwashing claims on trial: should NZ ban fossil fuel advertising?<p>According to independent watchdog Consumer NZ, New Zealand is “<a href="https://www.consumer.org.nz/articles/greenwashing-is-rife-in-aotearoa-we-need-new-laws-to-stop-them">rife with greenwashing</a>”, with many companies positioning themselves as “sustainable”. No doubt you’ll have seen such claims on the products in your weekly shopping basket.</p>
<p>The practice is coming under increasing scrutiny, in New Zealand and around the world, due to concerns that it <a href="https://www.rnz.co.nz/news/business/508529/consumers-struggling-to-verify-sustainability-claims-survey">denies meaningful consumer choice</a>. Studies show brands advertising their sustainability <a href="https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/consumers-care-about-sustainability-and-back-it-up-with-their-wallets">perform better</a>, but consumers can’t be expected to research every claim.</p>
<p>Overseas, legislative moves are being made to tackle greenwashing. The European Parliament, for example, has just <a href="https://www.europarl.europa.eu/news/en/press-room/20240112IPR16772/meps-adopt-new-law-banning-greenwashing-and-misleading-product-information">approved a directive</a> that will ban baseless marketing claims such as “environmentally friendly”. </p>
<p>The directive will also cover “claims that a product has a neutral, reduced or positive impact on the environment because of emissions offsetting schemes”. This will be particularly challenging for fossil fuel energy companies and other large polluters as they attempt to claim carbon neutrality through offset schemes. </p>
<p>Consumer NZ and others (including the Environmental Law Initiative where I also work), are <a href="https://www.consumer.org.nz/articles/consumer-nz-and-others-seek-high-court-declaration-that-z-energy-has-misled-new-zealanders">currently seeking</a> a High Court declaration that Z Energy has breached the Fair Trading Act with its advertising, including the claim it is “in the business of getting out of the petrol business”.</p>
<p>Z Energy has responded by saying its own transparency over emissions reporting makes it a target. The company’s CEO has been <a href="https://newsroom.co.nz/2024/01/26/greenhushing-not-greenwashing-z-energy-denies-court-claims/">reported as saying</a> the threat of legal action might mean big emitters “say less, do less and are less ambitious” about their attempts to meet emissions targets.</p>
<p>It’s the first major case in New Zealand concerning alleged climate greenwashing, and its outcome will be closely watched.</p>
<h2>Drawing a legal line</h2>
<p>An <a href="https://www.beuc.eu/sites/default/files/publications/BEUC-X-2023-149_The_Great_Green_Maze_How_environmental_advertising_confuses_consumers.pdf">international consumer survey</a> published late last year looked at perceptions of green claims. It found three out of four European respondents believed “very polluting” companies should not be allowed to use any green claims at all. </p>
<p>Close to 40% of respondents in Europe thought fossil fuel companies should not be allowed to do any advertising. Results were “broadly similar” for New Zealand respondents (and those from other countries) to the same survey.</p>
<p>Behind these sentiments is a simple logic. If advertising drives consumption, and consumption of fossil fuels is driving climate change, then ending the promotion of fossil fuels is part of the solution. There are obvious parallels with the restriction of tobacco advertising. </p>
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Read more:
<a href="https://theconversation.com/greenwashing-energy-companies-make-false-claims-about-sustainability-they-should-be-held-to-account-202995">Greenwashing: energy companies make false claims about sustainability – they should be held to account</a>
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<p>In practice, however, there are significant challenges to defining the scope of any such laws. We all use fossil fuels every day, not only to run vehicles, but by our reliance on products in which the burning of oil, coal and gas is embedded, including their supply chains. </p>
<p>Where would we draw the line? An ambitious <a href="https://www.parl.ca/DocumentViewer/en/44-1/bill/C-372/first-reading">private members bill</a> recently tabled in the Canadian parliament tries to answer that question. It reads:</p>
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<p>It is prohibited for a person to promote a fossil fuel, a fossil fuel-related brand element, or the production of a fossil fuel, except as authorized by the provisions of this Act or of the regulations. </p>
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<p>“Promotion” in this bill is defined as: </p>
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<p>a representation about a product or service by any means […] that is likely to influence and shape attitudes, beliefs and behaviours about the product or service.</p>
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<p>This is potentially much larger in scope than some existing European bans on the advertising of specific industries, such as <a href="https://www.euronews.com/green/2022/08/24/france-becomes-first-european-country-to-ban-fossil-fuel-ads-but-does-the-new-law-go-far-e">France’s ban</a> on the advertising of fossil fuel energy products. This has been criticised by Greenpeace for still allowing certain types of advertising, including sporting event sponsorship.</p>
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Read more:
<a href="https://theconversation.com/greenwashing-how-ads-get-you-to-think-brands-are-greener-than-they-are-and-how-to-avoid-falling-for-it-183169">Greenwashing: how ads get you to think brands are greener than they are – and how to avoid falling for it</a>
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<h2>Increasing climate litigation risk</h2>
<p>Because each country’s emissions profile is different, it might be most feasible to focus legislation on the most polluting companies or sectors, including carbon-intensive sectors that are still growing. </p>
<p>In New Zealand, that would mean limitations on the advertising of fossil fuel-intensive agricultural products and private transport (including non-electric cars and aviation). Or it might simply mean prohibitions on advertising by the <a href="https://www.rnz.co.nz/news/national/500074/new-zealand-s-biggest-emitters-for-2023-revealed#:%7E:text=New%20Zealand's%20top%2010%20emitters,tonnes%20from%20the%20previous%20year.">largest emitters</a>. </p>
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Read more:
<a href="https://theconversation.com/the-nz-ad-industry-wants-to-clean-up-its-climate-act-but-will-agencies-drop-their-fossil-fuel-clients-213236">The NZ ad industry wants to clean up its climate act – but will agencies drop their fossil fuel clients?</a>
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<p>In theory, such measures could be part of New Zealand’s second <a href="https://environment.govt.nz/what-government-is-doing/areas-of-work/climate-change/emissions-reductions/erp/">Emissions Reduction Plan</a>, which is due this year. This will contain strategies, policies and actions for achieving the country’s second emissions budget, and contributing to global efforts to limit temperature rises to 1.5°C.</p>
<p>However, the current government has made it <a href="https://www.rnz.co.nz/news/national/508653/auckland-regional-fuel-tax-to-end-in-june-pm-announces">cheaper to buy petrol</a> in Auckland, and has curtailed various public transport schemes. It seems unlikely we will see fossil fuel advertising bans in this parliamentary term, and any private member’s bill also seems destined to fail. </p>
<p>For all these reasons, attention is turning to the use of existing law in novel ways. As the Z Energy case suggests, New Zealand’s Fair Trading Act is likely to be increasingly used to challenge fossil fuel advertising. </p>
<p>The Act contains prohibitions against “misleading and deceptive conduct”, as well as “unconscionable conduct”. Neither has been properly tested in the New Zealand courts in the context of climate change. </p>
<h2>Climate and the law</h2>
<p>If consumer sentiment continues to harden, we can imagine a time when any positive advertising by a large climate polluter could be deemed to be misleading or unconscionable. </p>
<p>The risk for corporations is therefore increasing. As a <a href="https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/risk/deloitte-ch-en-climate-litigation.pdf">recent report</a> on climate litigation from global consultancy Deloitte argued:</p>
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<p>If policymakers do not enact adequate laws and standards, and companies do not apply these quickly and forcefully, individual constituents of society will increasingly turn to the courts to protect their own interests, those of their children and descendants, as well as the planet itself. </p>
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<p>However, at a time when rapid change is needed to address the climate crisis, driving it through the courts will be slow and incremental. </p>
<p>Specific legislation setting limits on fossil fuel advertising would be a far more efficient way of regulating claims by high-polluting industries. Such legislation would also provide more certainty for those industries.</p><img src="https://counter.theconversation.com/content/219615/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Hall is Director, Research and Legal for the Environmental Law Initiative (ELI). Along with Consumer NZ and Lawyers for Climate Action NZ, ELI is one of the plaintiffs in the Fair Trading Act case being brought against Z Energy in the High Court of New Zealand. </span></em></p>Consumer NZ’s case against Z Energy under the Fair Trading Act may be a sign of things to come. But new legislation would be a cleaner way to regulate fossil fuel advertising.Matthew Hall, Visiting Scholar, Faculty of Law, Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2187052023-12-05T00:32:37Z2023-12-05T00:32:37ZIf you want to avoid ‘giving away your first born’ make sure you read the terms and conditions before signing contracts<p>In 2019, a travel insurance company held a secret <a href="https://www.squaremouth.com/campaign/pays-to-read">contest</a> in which they included a line in the fine print of their policy promising $10,000 to the first person who spotted it.</p>
<p>Seventy-three policies were bought before the award was finally claimed. But those 73 who had obviously not read the policy, would not have been alone. </p>
<p>It seems most of us don’t read the terms and conditions of some relatively important, legally binding contracts before signing up.</p>
<p>In one <a href="https://via.library.depaul.edu/bclj/vol8/iss3/2/">study</a> only 8% of people read a bank account contract, 19% a car rental contract and 25% a dry-cleaning contract before committing to a deal. Similarly, more than 80% of participants in a different <a href="https://law.stanford.edu/wp-content/uploads/2023/06/SSRN-id1916831.pdf">study</a> reported “not reading at all” or “not really” reading click through agreements. </p>
<h2>A good reason to read a contract</h2>
<p>Even more confrontingly, 98% of participants in another <a href="https://www.tandfonline.com/doi/abs/10.1080/1369118X.2018.1486870">study</a> effectively agreed to give up their first born child after supposedly having read the fictional terms and conditions of an agreement online.</p>
<p>The number of people who do actually read the terms and conditions may be even lower with another <a href="https://www.jstor.org/stable/10.1086/674424">study</a> finding only 0.1% of shoppers accessed the licence agreement and most only read a small portion.</p>
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<a href="https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A hand holding a magnifying glass over a page of a contract, highlighting some specific detail" src="https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/563185/original/file-20231204-19-1koptv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Studies show very few people read contracts, let alone read them in full.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/contract-checked-magnifying-glass-on-subject-1287395218">Ralf Geithe/Shutterstock</a></span>
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<p>Despite our best intentions, most of us simply sign <a href="https://psycnet.apa.org/record/2011-25681-001">terms and conditions</a>, rarely read the fine print, and <a href="https://www.researchgate.net/publication/308719190_Confident_but_Confounded_Consumer_Comprehension_of_Telecommunications_Agreements">fail</a> to appreciate the consequences. </p>
<p>However, once we are presented with a particular problem arising from or related to the contract, our attitude alters. <a href="https://via.library.depaul.edu/bclj/vol8/iss3/2/">Studies</a> have shown the number of people who return to their contracts <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=984765">after a problem</a> more than doubles for car rentals, triples for dry-cleaning issues and rises nearly seven times for a bank account.</p>
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Read more:
<a href="https://theconversation.com/forgiveness-or-punishment-the-governments-proposed-safe-harbour-laws-send-mixed-messages-on-cyber-security-218025">Forgiveness or punishment? The government's proposed 'safe harbour' laws send mixed messages on cyber security</a>
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<p><a href="https://www.tandfonline.com/doi/abs/10.1080/10463280802613866">Unsurprisingly</a> though, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=984765">most people</a> don’t believe it’s their fault. Rather, they assume it’s to do with something they weren’t made aware of at the time of purchase or they <a href="https://accan.org.au/our-work/research/1307-confident-but-confounded">believe</a> it is easily fixed.</p>
<h2>So, why don’t we read the fine print?</h2>
<p>Like all things in human behaviour, it’s complicated. </p>
<p>Some reasons given by consumers include terms and conditions are <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1744-1714.2008.00068.x">too long</a> and time-consuming, they are <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/acp.2350080107">full of legal jargon</a>, they seem all <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315573717-13/contract-regulation-ucita-high-tech-consumers-meet-consumer-protection-critics-richard-epstein">the same</a>, they are <a href="https://law.stanford.edu/wp-content/uploads/2023/06/SSRN-id1916831.pdf">irrelevant</a> and they have <a href="https://heinonline.org/HOL/LandingPage?handle=hein.journals/nylr77&div=22&id=&page=">no choice</a> but to accept them if they want the particular product.</p>
<p>They also believed if there was something wrong with the agreement somebody else would have pointed it out (and fixed it before them) and vendors are usually <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315573717-14/rolling-contracts-agency-problem-clayton-gillette">reputable</a> so they wouldn’t be put at risk.</p>
<p>The last two reasons point to a rational tendency to equate <a href="https://proactsafety.com/articles/low-probability-risks-cant-be-ignored#:%7E:text=The%20term%20%22low%2Dprobability%22,will%20result%20from%20such%20risks.">low probability risks</a> with zero probability risks, as well as to use mental shortcuts that simplify decision-making and align with a person’s beliefs. There are also social norms and signals for us not to read the contract, such as the <a href="https://psycnet.apa.org/record/2010-01480-004">expectation</a> to “sign the form and keep moving”.</p>
<p><a href="https://jolt.law.harvard.edu/articles/pdf/v23/23HarvJLTech49.pdf?report=reader">Problems</a> arise in markets where it appears easy to switch from one contract to another, but where there are complex agreements, including telecommunications, banking, health insurance and gyms. These sectors might use strong marketing tactics, such as bundling offers, along with apparently easily accessible customer service, which can cause consumers to be <a href="https://www.sciencedirect.com/topics/psychology/overconfidence">overconfident</a> in their dealings with businesses.</p>
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Read more:
<a href="https://theconversation.com/why-youre-probably-paying-more-interest-on-your-mortgage-than-you-think-213862">Why you're probably paying more interest on your mortgage than you think</a>
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<p>Sometimes it is simply the length and complexity of contracts that puts people off reading them. <a href="https://www.statista.com/statistics/1129251/word-count-terms-of-service-leading-online-services/">For example</a>, assuming a reading rate of 240 words a minute, Spotify’s terms of service is estimated to take about 36 minutes, while TikTok’s would take 31. Microsoft would take over an hour. For comparison, reading all of Chinese war strategist Sun Tzu’s The Art of War would take only 50 minutes. </p>
<p>These extremely long policies, coupled with the fact individuals feel most information is <a href="https://psycnet.apa.org/record/2011-25681-001">unimportant</a>, influence willingness to read the fine print. Realistically, failure to read the terms and conditions, particularly because contracts are rarely negotiable, seems like a perfectly rational response. This is made even more likely if we thinks the costs of reviewing a dense document outweighs its benefits.</p>
<h2>Agreements are binding (kind of)</h2>
<p>Legally, though, terms and conditions are enforceable and allow businesses to reduce costs that might otherwise be associated with <a href="https://scholarship.law.cornell.edu/facpub/1062/">bargaining</a>.</p>
<p>Getting us to agree to the terms and conditions upfront also provides an opportunity for businesses to pass on certain <a href="https://www.sciencedirect.com/science/article/abs/pii/S0263786396000786">risks</a> to the consumer. Clearly this should be a concern for lawmakers. The idea of a well-informed consumer who understands their obligations and the rights under an agreement is a foundation of <a href="https://www.accc.gov.au/business/selling-products-and-services/unfair-business-practices">consumer law</a>. </p>
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<a href="https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&rect=60%2C26%2C4432%2C2633&q=45&auto=format&w=1000&fit=clip"><img alt="Hands typing on a keyboard displaying a note about terms and conditions" src="https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&rect=60%2C26%2C4432%2C2633&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/563184/original/file-20231204-27-axssf0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">An unfair contract can be voided under consumer law.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/online-business-concept-man-using-laptop-646365247">McLittle Stock/Shutterstock</a></span>
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<p>The <a href="https://consumer.gov.au/consumers-and-acl">Australian Consumer Law</a> does help reduce some risk by deeming terms of a standard consumer contract <a href="https://consumer.gov.au/sites/consumer/files/2016/05/0553FT_ACL-guides_ContractTerms_web.pdf">unfair</a> if they have been presented unclearly or disadvantage one party, regardless of whether they have been accepted by the consumer.</p>
<p>However, it is unlikely most consumers read consumer law or use it given the <a href="https://www.mondaq.com/australia/contracts-and-commercial-law/1392132/critical-reforms-to-unfair-contract-terms-laws-in-australia-now-in-force">complexity</a> of challenging a vendor who is unwilling to abide by them.</p>
<h2>Dealing with reality</h2>
<p>If we are serious about the concept of the informed consumer, then we have to accept some realities. </p>
<p>We have to acknowledge consumer attention is <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6688548/#:%7E:text=The%20limitation%20is%20on%20how,exert%20their%20pull%20in%20parallel.">limited</a> and information overload and <a href="https://www.sciencedirect.com/topics/economics-econometrics-and-finance/asymmetric-information">assymetry</a> prevents people from comprehending what is and isn’t important. </p>
<p>We also have to accept the type of information and the way it’s presented <a href="https://accan.org.au/media-centre/hot-issuesblog/447-seeking-straight-answers-a-short-video">does have an impact</a> on whether people understand the consequences of signing an agreement. </p>
<p>Critically, most terms and conditions currently seem to be designed to protect the seller more than they are to help the consumer to make an informed choice.</p>
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Read more:
<a href="https://theconversation.com/forgiveness-or-punishment-the-governments-proposed-safe-harbour-laws-send-mixed-messages-on-cyber-security-218025">Forgiveness or punishment? The government's proposed 'safe harbour' laws send mixed messages on cyber security</a>
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<p>Research does suggest consumers are more inclined to <a href="https://via.library.depaul.edu/bclj/vol8/iss3/2/">read terms and conditions</a> before committing when the product or service cost is significant, the contract is perceived as short, and there is a belief they will be able to change or influence contract terms. </p>
<p>Indeed, if businesses seriously do want their customers to be informed, shorter, less abstract and more focused terms and conditions that highlight the critical information related to potential harm is <a href="http://accan.org.au/files/Reports/Seeking%20Straight%20Answers_accessible.doc">one solution</a>. Another might be to quiz participants with a <a href="https://pubmed.ncbi.nlm.nih.gov/21421578/">short knowledge test</a> as they sign the document to see if they have actually understood the agreement. </p>
<p>Or perhaps they could hide surprise $10,000 “<a href="https://tjg.joeysit.com/of-dragons-and-easter-eggs-a-chat-with-warren-robinett/">Easter eggs</a>” in their terms and conditions and create a culture of reward for effort, instead of the current deficit approach.</p><img src="https://counter.theconversation.com/content/218705/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite our best intentions, most of us rarely read the fine print and simply agree to terms and conditions while ignoring the consequences.Paul Harrison, Director, Master of Business Administration Program (MBA); Co-Director, Better Consumption Lab, Deakin University, Deakin UniversityJeff Rotman, Senior Lecturer in Marketing and Consumer Psychology & Co-Director of the Better Consumption Lab, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2130522023-11-13T13:34:02Z2023-11-13T13:34:02ZThe battle over right to repair is a fight over your car’s data<figure><img src="https://images.theconversation.com/files/558692/original/file-20231109-29-4o84b.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C2000%2C1221&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Independent repair shops are fighting for access to vehicles' increasingly sophisticated data.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/95231808@N02/50019887107/"> Matthew P/Flickr</a></span></figcaption></figure><p>Cars are no longer just a means of transportation. They have become rolling hubs of data communication. Modern vehicles regularly <a href="https://dx.doi.org/10.2139/ssrn.3550158">transmit information wirelessly to their manufacturers</a>. </p>
<p>However, as cars grow “smarter,” the right to repair them <a href="https://scholars.law.unlv.edu/cgi/viewcontent.cgi?article=2392&context=facpub">is under siege</a>.</p>
<p>As <a href="https://scholar.google.com/citations?hl=en&user=Fx-XnboAAAAJ&view_op=list_works&sortby=pubdate">legal</a> <a href="https://scholar.google.com/citations?hl=en&user=mQnmR6MAAAAJ&view_op=list_works&sortby=pubdate">scholars</a>, we find that the question of whether you and your local mechanic can tap into your car’s data to diagnose and repair spans issues of property rights, trade secrets, cybersecurity, data privacy and consumer rights. Policymakers are forced to navigate this complex legal landscape and ideally are aiming for a balanced approach that upholds the right to repair, while also ensuring the safety and privacy of consumers. </p>
<h2>Understanding telematics and right to repair</h2>
<p>Until recently, repairing a car involved connecting to its standard <a href="https://www.autocare.org/government-relations/current-issues/access-to-and-control-of-vehicle-data#">on-board diagnostics port</a> to retrieve diagnostic data. The ability for independent repair shops – not just those authorized by the manufacturer – to access this information was protected by a <a href="https://malegislature.gov/Laws/SessionLaws/Acts/2012/Chapter368">state law in Massachusetts</a>, approved by voters on Nov. 6, 2012, and by a <a href="http://www.njgca.org/wp-content/uploads/Right-to-Repair-national-MOU-01-23-14.pdf">nationwide memorandum of understanding</a> between major car manufacturers and the repair industry signed on Jan. 15, 2014.</p>
<p>However, with the rise of <a href="https://www.merriam-webster.com/dictionary/telematics">telematics</a> systems, which combine computing with telecommunications, these dynamics are shifting. Unlike the standardized onboard diagnostics ports, telematics systems vary across car manufacturers. These systems are <a href="https://casetext.com/case/ford-motor-co-v-autel-us-inc">often protected</a> by <a href="https://berkeley.pressbooks.pub/buildinglltdm/chapter/technological-protection-measures/">digital locks</a>, and circumventing these locks could be considered a violation of copyright law. The telematics systems also encrypt the diagnostic data before transmitting it to the manufacturer. </p>
<p>This reduces the accessibility of telematics information, potentially locking out independent repair shops and jeopardizing consumer choice – a lack of choice that can lead to <a href="https://www.autocare.org/government-relations/current-issues/access-to-and-control-of-vehicle-data#">increased costs for consumers</a>.</p>
<p>Also, these telematics systems <a href="https://www.autocare.org/government-relations/current-issues/right-to-repair#">fall outside the scope</a> of the original Massachusetts legislation and the nationwide memorandum of understanding. Recognizing the pivotal role diagnostic data plays in vehicle maintenance and repair, 75% of Massachusetts voters approved a <a href="https://ballotpedia.org/Massachusetts_Question_1,_%22Right_to_Repair_Law%22_Vehicle_Data_Access_Requirement_Initiative_(2020)">ballot initiative</a> on Nov. 3, 2020, to <a href="https://malegislature.gov/Laws/SessionLaws/Acts/2020/Chapter386">amend the state’s repair legislation</a>. The amendment aims to ensure that the switch to telematics does not curtail an effective right to repair vehicles.</p>
<p>Specifically, the new law requires manufacturers selling telematics-equipped vehicles from the 2022 model year onward to provide car owners and their chosen repair shops access to the vehicle’s mechanical data through an interoperable, standardized and <a href="https://malegislature.gov/Laws/SessionLaws/Acts/2020/Chapter386#:%7E:text=Commencing%20in%20model,makes%20and%20models.">open-access telematics platform</a>. Access should also encompass the ability to relay commands to components of the vehicle, if necessary, for maintenance, diagnostics and repair. Voters in Maine <a href="https://www.404media.co/voters-overwhelmingly-pass-car-right-to-repair-law-in-maine/">overwhelmingly approved a similar measure</a> on Nov. 7, 2023.</p>
<p>However, the Massachusetts law was the subject of a lawsuit in federal court shortly after voters approved it in 2020, <a href="https://www.boston.com/news/local-news/2023/06/01/right-to-repair-law-massachusetts-enforced/">and it was suspended</a> until June 1, 2023.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/558489/original/file-20231108-29-hbccax.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="torso of a person holding a laptop computer in front of a car with its hood raised showing the engine compartment" src="https://images.theconversation.com/files/558489/original/file-20231108-29-hbccax.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/558489/original/file-20231108-29-hbccax.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/558489/original/file-20231108-29-hbccax.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/558489/original/file-20231108-29-hbccax.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/558489/original/file-20231108-29-hbccax.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/558489/original/file-20231108-29-hbccax.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/558489/original/file-20231108-29-hbccax.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Repairing cars today is as much about data as it is nuts and bolts, but increasingly, carmakers are locking that data away from car owners and independent repair shops.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/nenadstojkovic/51279558298/">Nenad Stojkovic/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Safety and privacy concerns</h2>
<p>While the amendment makes significant strides toward creating a level playing field in vehicle maintenance and repair, the National Highway Traffic Safety Administration and car manufacturers have raised concerns about the legislation.</p>
<p>The National Highway Traffic Safety Administration’s <a href="https://www.nhtsa.gov/sites/nhtsa.gov/files/documents/nhtsa_testimony_in_response_to_ma_committee_letter_july_20_2020.pdf">main concern</a> revolves around cybersecurity vulnerabilities with potential ramifications for vehicle safety, particularly the amendment’s provision for two-way access. A hacker could potentially take control of a car’s critical systems like accelerator, brakes and steering. Consequently, the agency recommended that car manufacturers <a href="https://www.reuters.com/business/autos-transportation/us-tells-automakers-not-comply-with-massachusetts-vehicle-data-law-2023-06-13/">not adhere to the law</a>.</p>
<p>A related argument is that Massachusetts law is preempted by federal law. This forms the basis of a lawsuit <a href="https://www.repairerdrivennews.com/wp-content/uploads/2020/12/auto-innovators-v-healey-20201120-complaint.pdf">filed in November 2020</a> by the Alliance for Automotive Innovation against Massachusetts’ attorney general. </p>
<p>The manufacturers assert that abiding by the state law would inevitably put them in breach of federal statutes and regulations, such as the <a href="https://www.britannica.com/topic/National-Traffic-and-Motor-Vehicle-Safety-Act">National Traffic and Motor Vehicle Safety Act</a>. This lawsuit was pending as of press time, although the Massachusetts attorney general <a href="https://www.boston.com/news/local-news/2023/06/01/right-to-repair-law-massachusetts-enforced/">declared the law effective</a> as of June 1, 2023.</p>
<p>Critics also emphasize the privacy concerns associated with open access to telematics systems. Granting third-party access <a href="https://www.repairerdrivennews.com/wp-content/uploads/2020/12/auto-innovators-v-healey-20201120-complaint.pdf">could expose personal details</a>, especially real-time location data. Advocacy groups warn that this information might be used as a tracking tool by potential abusers and others aiming to exploit people.</p>
<h2>Recent developments</h2>
<p>The National Highway Traffic Safety Administration and Massachusetts’ attorney general <a href="https://www.wbur.org/news/2023/08/23/right-to-repair-car-data-massachusetts">appear to have reached a consensus</a> on alterations to the law, and the administration has dropped its recommendation that manufacturers disregard the law. </p>
<p>The primary adjustment would mean a telematics platform would be in compliance with the right to repair law if it were accessible within close proximity to the vehicle – for example, via Bluetooth. The National Highway Traffic Safety Administration confirmed that this would <a href="https://www.autocare.org/docs/default-source/government-affairs/2023-08-22-nhtsa-letter-regarding-ma-data-access-law.pdf">be safer and align with federal law</a>. </p>
<p>However, repair advocates have criticized this change as <a href="https://www.wbur.org/news/2023/08/23/right-to-repair-car-data-massachusetts">unduly restrictive</a>. They argue that it gives authorized car dealers an unfair advantage over independent repair shops because the manufacturers allow the dealers to access the data remotely.</p>
<p>A new federal bill, the <a href="https://www.congress.gov/bill/118th-congress/house-bill/906/all-info">REPAIR Act</a>, was recently introduced in the House, seeking to require vehicle manufacturers to provide access to in-vehicle diagnostic data, including telematics. This bill’s <a href="https://energycommerce.house.gov/events/innovation-data-and-commerce-subcommittee-legislative-hearing-proposals-to-enhance-product-safety-and-transparency-for-americans">first hearing</a> occurred on Sept. 27, 2023, and the bill <a href="https://www.congress.gov/bill/118th-congress/house-bill/906/all-info">passed out of subcommittee</a> on Nov. 2.</p>
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<figcaption><span class="caption">Consumer Reports is among the organizations that support right-to-repair legislation.</span></figcaption>
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<h2>Who owns your car’s data?</h2>
<p>One issue left unresolved by the legislation is the <a href="https://static.tti.tamu.edu/tti.tamu.edu/documents/165604-1.pdf">ownership of vehicle data</a>. A vehicle generates all sorts of data as it operates, including location, diagnostic, driving behavior, and even usage patterns of in-car systems – for example, which apps you use and for how long. </p>
<p>In recent years, the question of data ownership has gained prominence. In 2015, Congress <a href="https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title49-section30101&num=0&edition=prelim">legislated</a> that the data stored in event data recorders belongs to the vehicle owner. This was a significant step in acknowledging the vehicle owner’s right over specific datasets. However, the broader issue of data ownership in today’s connected cars remains unresolved.</p>
<p>Whether data should be <a href="https://repository.uclawsf.edu/hastings_law_journal/vol70/iss1/1/">subject to property rights</a> is a matter of debate. If deemed property, it seems logical to award these rights to the vehicle owner because the vehicle creates the data while used by the owner. However, through contractual terms and digital locks, manufacturers effectively secure control over the data. </p>
<p>The question of ownership aside, the crux of the matter for right to repair is guaranteed access for vehicle owners to their vehicles’ data.</p>
<h2>A way forward</h2>
<p>While concerns surrounding the Massachusetts legislation have merit, we believe they should not overshadow the need to preserve a competitive space in the auto repair sector and preserve the right to repair. This matters not only for safeguarding consumers’ autonomy and ensuring competitive pricing, but also for minimizing <a href="https://www.nytimes.com/2020/10/23/climate/right-to-repair.html">environmental waste</a> from prematurely discarded vehicles and parts.</p>
<p>The hope is that policymakers and the industry can strike a balance: upholding the right to repair without compromising safety and privacy. One possibility is developing tools that segregate sensitive personal information from mechanical data.</p>
<p>Ultimately, a successful implementation of the new law in Massachusetts may pave the way for a renewed nationwide memorandum of understanding, capturing the essence of the original memorandum of understanding and preserving the right to repair cars in the face of rapidly advancing technologies.</p><img src="https://counter.theconversation.com/content/213052/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Today’s cars include hundreds of computer chips, and carmakers say the data produced by those chips is proprietary – and a security risk. This means you don’t own the data your car generates.Leah Chan Grinvald, Professor of Law, University of Nevada, Las VegasOfer Tur-Sinai, Professor of Law, Ono Academic CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2163342023-10-25T18:38:12Z2023-10-25T18:38:12ZToo many products are easier to throw away than fix – NZ consumers deserve a ‘right to repair’<p>There was a time when the family washing machine would last decades, with each breakdown fixed by the friendly local repair person. But those days are long gone. </p>
<p>Today, it is often <a href="https://www.consumer.org.nz/articles/device-repairability-is-expensive-or-non-existent-consumer-nz-has-the-solution">faster, easier and cheaper</a> to replace household items, even when they are meant to be repairable. </p>
<p>This is not just a consumer issue. Only about <a href="https://ourauckland.aucklandcouncil.govt.nz/news/2022/12/dispose-of-your-tech-the-right-way/">2% of New Zealand’s e-waste is recycled</a>, meaning most of our electrical goods are ending up in landfills.</p>
<p>And the problem is likely to worsen as more appliances use software. This allows manufacturers to limit the lifespan of their products. Copyright rules on that software are making repairs even more difficult – and potentially illegal. </p>
<p>So what can be done to protect consumers and the environment from appliances with deliberately short lives? <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4604098">Our research</a> found changes are needed to a range of laws, including copyright law, to enshrine the consumer’s “right to repair”. The government can look overseas to see how this can be done.</p>
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<h2>The right to repair</h2>
<p>The concept of a “right to repair” is <a href="https://www.europarl.europa.eu/RegData/etudes/BRIE/2022/698869/EPRS_BRI(2022)698869_EN.pdf">relatively vague</a>. But essentially, products need to be <a href="https://commission.europa.eu/document/afb20917-5a6c-4d87-9d89-666b2b775aa1_en">designed to last longer and be repairable</a>. </p>
<p>Manufacturers also need to ensure <a href="https://therestartproject.org/right-to-repair">repairs can be done with commonly available tools</a>, and that <a href="https://www.europe-consommateurs.eu/en/shopping-internet/spare-parts-and-repairs.html">spare parts and repair information</a> are available.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/if-you-buy-it-why-cant-you-fix-it-heres-why-we-still-dont-have-the-right-to-repair-203236">If you buy it, why can't you fix it? Here's why we still don't have the 'right to repair'</a>
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<p>While there is no single definition or set of requirements, a number of countries (including the <a href="https://www.thefirstmile.co.uk/the-big-picture/the-new-right-to-repair-law">United Kingdom</a>, <a href="https://grist.org/climate/why-frances-new-repairability-index-is-a-big-deal/">France</a>, <a href="https://www.cleanup.org.au/right-to-repair-automotive-industry">Australia</a> and parts of the <a href="https://www.ncsl.org/technology-and-communication/right-to-repair-2023-legislation">United States</a>) are introducing laws establishing the right to repair, albeit to varying degrees.</p>
<p>But New Zealand has yet to make, or indeed propose, any such legislation. </p>
<h2>Beyond repair – software locks</h2>
<p>Crucially, the right to repair is not limited to simply repairing broken electronics and appliances. </p>
<p>Increasingly, manufacturers are using software to <a href="https://policyreview.info/articles/analysis/regulation-through-bricking-private-ordering-internet-things">control how products are used</a> through “<a href="https://www.theregister.com/2021/04/23/ifixit_software_locks/">software locks</a>”, also known as <a href="https://www.theregister.com/2020/12/15/right_to_repair_dmca/">digital locks</a>. </p>
<p>For example, these have been used to stop printers working at the <a href="https://www.newshub.co.nz/home/technology/2022/08/outrage-over-epson-stopping-working-printers-from-functioning-with-hardcoded-end-of-life-date.html">end of their pre-programmed life</a> or if the owner stops <a href="https://www.theguardian.com/money/2022/nov/29/hp-instant-ink-service-printer-cartridges">paying a monthly subscription</a>.</p>
<p>Consumers are then forced to choose between using expensive authorised repairers to “service” the printer, to continue paying a subscription, or to throw away their “<a href="https://policyreview.info/articles/analysis/regulation-through-bricking-private-ordering-internet-things">bricked</a>” appliance (one that has become as <a href="https://www.howtogeek.com/126665/htg-explains-what-does-bricking-a-device-mean/">functional as a brick</a>). </p>
<p>Software locks are also used to prevent repairs by the owner or independent repairers, even if <a href="https://www.ifixit.com/News/69320/how-parts-pairing-kills-independent-repair">genuine spare parts are being used</a>. </p>
<h2>Copyright infringement</h2>
<p>Hacking a software lock is possible, but it can be a technical challenge and also a legal nightmare. Professional repairers are concerned about infringing copyright and other intellectual property rights if they repair items. </p>
<p>And they have every reason to be worried, with manufacturers using “<a href="https://repair.eu/news/apple-crushes-one-man-repair-shop/">intellectual property as a weapon</a>” against independent repairers.</p>
<p>In New Zealand, software locks called “technology protection measures” (<a href="https://smartcopying.edu.au/glossary/technological-protection-measure-tpm/">TPMs</a>), are <a href="https://www.legislation.govt.nz/act/public/1994/0143/latest/DLM346899.html?search=ad_act__copyright____25_ac@bn@rn@dn@apub@aloc@apri@apro@aimp@bgov@bloc@bpri@bmem@rpub@rimp_ac@ainf@anif@bcur@rinf@rnif_a_aw_se_&p=1">protected under the Copyright Act</a>. Independent repairers who circumvent a TPM to repair or maintain a product are committing an <a href="https://www.legislation.govt.nz/act/public/1994/0143/latest/DLM1705882.html?search=ad_act__copyright____25_ac@bn@rn@dn@apub@aloc@apri@apro@aimp@bgov@bloc@bpri@bmem@rpub@rimp_ac@ainf@anif@bcur@rinf@rnif_a_aw_se_&p=1">offence</a> and if prosecuted are liable for a <a href="https://www.legislation.govt.nz/act/public/1994/0143/latest/DLM1705882.html?search=ad_act__copyright____25_ac@bn@rn@dn@apub@aloc@apri@apro@aimp@bgov@bloc@bpri@bmem@rpub@rimp_ac@ainf@anif@bcur@rinf@rnif_a_aw_se_&p=1">fine</a> of up to NZ$150,000 or up to five years in prison, or both.</p>
<p>But some countries have recognised that manufacturers are illegitimately using copyright to prevent repair. In the US there are <a href="https://jolt.law.harvard.edu/digest/copyright-offices-ruling-on-exemptions-to-the-digital-millennium-copyright-act-allowing-consumers-repairers-and-hackers-to-fix-their-own-devices">narrow exceptions</a> for circumventing software locks to repair some goods. But these are temporary and need to be <a href="https://www.theregister.com/2020/12/15/right_to_repair_dmca/">reconsidered and renewed</a> every three years.</p>
<p>A <a href="https://www.parl.ca/legisinfo/en/bill/44-1/c-244">proposed amendment</a> to the Canadian Copyright Act would allow the circumvention of TPMs. The amendment is currently <a href="https://www.nortonrosefulbright.com/en-ca/knowledge/publications/11c47b23/right-to-repair-bill-passes-unanimously-at-house-of-commons">moving through the legislative process</a> and is expected to pass.</p>
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<h2>Parts pairing</h2>
<p>The growing practice of “<a href="https://www.ifixit.com/News/69320/how-parts-pairing-kills-independent-repair">parts pairing</a>” – allowing manufacturers to prevent a product operating correctly, if at all, after the installation of a spare part – means circumventing TPMs will not resolve all the software lock issues.</p>
<p>It’s a complex problem and any ban on parts pairing would require careful consideration. </p>
<p>Overseas, Apple has a “self-service repair” programme, meant to allow independent repairs of Apple products. In practice, the programme has been largely unworkable due to <a href="https://www.fastcompany.com/90967234/californias-new-right-to-repair-law-fails-to-stop-the-parts-pairing-loophole">Apple’s demands</a> – including handing over customers’ personal information, agreeing to years of audits, and signing non-disclosure agreements simply to get the parts.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/families-count-the-costs-as-big-tech-fails-to-offer-cheap-phone-laptop-and-fridge-repairs-177493">Families count the costs as big tech fails to offer cheap phone, laptop and fridge repairs</a>
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<p>Some of the harm of parts pairing could be mitigated by implementing a <a href="https://www.consumer.org.nz/articles/we-re-making-it-easier-to-choose-a-repairable-phone">repairability label scheme</a>, as introduced in France.</p>
<p>Such schemes require manufacturers to include labels outlining the repairibility of an item, and what it is likely to cost. This helps consumers make an informed decision about what they are buying, but it also requires an independent watchdog to ensure the information is accurate. </p>
<p>While the global right-to-repair movement is growing, none of the solutions being implemented overseas are straightforward, and all require significant legislative effort. </p>
<p>That said, New Zealand needs to address the issue of product reliability and longevity as an environmental issue and a consumer right.</p><img src="https://counter.theconversation.com/content/216334/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alexandra Sims is a member of the Right to Repair Coalition Aotearoa, which is advocating for right to repair legislation in New Zealand. She also served as a board member of ConsumerNZ between 2009-2015. </span></em></p><p class="fine-print"><em><span>Trish O'Sullivan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Manufacturers have too much legal freedom to sell products that don’t last or are hard to repair. It’s time local law caught up with global efforts to address this environmental and consumer issue.Alexandra Sims, Associate Professor in Commericial Law, University of Auckland, Waipapa Taumata RauTrish O'Sullivan, Senior lecturer, School of Accountancy, Massey UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2122982023-08-29T16:23:03Z2023-08-29T16:23:03ZHow to get help or your money back after travel disruptions – experts explain<figure><img src="https://images.theconversation.com/files/545240/original/file-20230829-17-emlk1i.jpg?ixlib=rb-1.1.0&rect=70%2C94%2C7771%2C5094&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/tired-delay-couple-airport-flight-waiting-2262798347">PeopleImages.com - Yuri A/Shutterstock</a></span></figcaption></figure><p>The summer of 2023 started well for airlines, after a tumultuous few years following COVID lockdowns in most countries. <a href="https://www.iata.org/en/pressroom/2023-releases/2023-08-08-01/">Passenger numbers were up</a> 30% in the northern hemisphere in June 2023, versus the previous year. But air travel in July and August has been disrupted once again, not only by air traffic control strikes, but also by devastating wildfires in typical tourist hot spots such as Greece, Maui, Tenerife and Canada. </p>
<p>The latest problem – <a href="https://www.bbc.co.uk/news/live/uk-66637817">a UK air traffic control fault</a> – has left thousands of passengers stranded after <a href="https://www.bbc.co.uk/news/live/uk-66644343#:%7E:text=More%20than%20a%20quarter%20of%20UK%20flights%20cancelled%20yesterday">more than one-quarter</a> of UK flights were cancelled on one of the busiest travel days of the year. It will take <a href="https://www.ft.com/content/03c0e257-ae88-41a0-b571-ae91f1eabe8c?xnpe_tifc=bILN4F_lxdYjbIHlxDz7x9pJVdUZMds_O.4LhF_JOFzdtIPuxknA4FYl4CJLhIz7tIY8bdoZOfbpxfoDh9XX4DHXxIBs4dQshuUu4.nJ&utm_source=exponea&utm_campaign=B2B%20%7C%20Email%20%7C%20InLife%20%7C%20Weekly%20Send&utm_medium=email">days to resolve</a>, according to the UK transport secretary, Mark Harper. </p>
<p>Air travellers caught up in these events are legally entitled to care and assistance from airlines <a href="https://www.legislation.gov.uk/uksi/2019/278/made">under UK law post-Brexit</a>. But our research shows that people are often unsure or completely unaware of their rights when travel is disrupted. </p>
<p>While consumers need more information about their rights in this situation, a group including consumer affairs organisation <a href="https://twitter.com/WhichUK">Which?</a> and online travel agents have also <a href="https://media.product.which.co.uk/prod/files/file/gm-aebcaa6b-8cc6-4d45-8c8e-bd8258c46aed-joint-letter-to-the-prime-minister.pdf">called on the UK prime minister</a> to give the airline regulator, the Civil Aviation Authority, more power to punish airlines that don’t help consumers affected by disruption.</p>
<p>At present the regulator is unable to directly and independently fine an airline, it must bring a court action. The CAA also has weak enforcement powers compared with airline regulators in <a href="https://www.which.co.uk/news/article/no-uk-airline-has-been-fined-for-breaking-consumer-law-in-20-years-a6LHU4Z4oKLo">other countries</a>. Which? wants the CAA to be able to directly fine airlines for failing to either provide clear and timely information about passenger rights and what to do when air travel is disrupted, or assistance with rerouting if a flight is cancelled, or a prompt refund.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1694001478816657459"}"></div></p>
<h2>Uncertainty about legal rights of air passengers</h2>
<p>Compliance by airlines with consumer protection laws has been <a href="https://journals.sagepub.com/doi/full/10.1177/1023263X20904235">problematic for some time</a>. But the mass cancellation of flights during the <a href="https://www.eca.europa.eu/Lists/ECADocuments/SR21_15/SR_passenger-rights_covid_EN.pdf">COVID pandemic</a> and the failure of many airlines to refund some passengers really brought the problem to the wider public’s attention. </p>
<p>We have <a href="https://www.cardiff.ac.uk/news/view/2554613-flight-cancellations,-consumer-rights-and-the-covid-19-pandemic">researched passenger experiences</a> of flight cancellations during the pandemic, as well as the level of awareness among air passengers of both their legal rights and routes to redress. Media coverage by the likes of ITV’s personal finance expert <a href="https://www.moneysavingexpert.com/travel/">Martin Lewis</a> and online information from consumer bodies such as <a href="https://www.which.co.uk/consumer-rights/travel/flights">Which?</a> certainly boosted awareness during COVID. </p>
<p>But our research suggests that many travellers are still not sure what action to take if their rights are not respected by an airline. People are also unaware of all the options open to them when seeking redress.</p>
<p>These problems are even more acute for passengers who have booked through an online travel agent rather than directly with the airline. Several of the participants we spoke to during focus groups said they trusted the airlines to look after them or relied on travel insurance. But travel insurance does not always cover the specific situation faced and some airlines have failed to live up to the trust consumers place in them.</p>
<h2>How to get redress for travel disruption</h2>
<p>If your flight has been cancelled by an airline or you need to seek redress for other reasons, you should contact your airline directly in the first instance. If you don’t get a response, or are unsatisfied with the response, there are other options. </p>
<p>For example, “alternative dispute resolution” bodies can help mediate with airlines, but our study showed passengers were unaware of the two ADR bodies in the UK, the <a href="https://www.cedr.com/consumer/aviation/">Centre for Effective Dispute Resolution (CEDR)</a> and <a href="https://www.aviationadr.org.uk/">AviationADR</a>. </p>
<p>Further, not all airlines are members of the schemes and ADR decisions are not binding. And while the CEDR has reports <a href="https://www.cedr.com/consumer/aviation/">high levels of demand</a> on its homepage, Which? has called for a <a href="https://www.which.co.uk/news/article/more-airline-passenger-misery-as-court-cases-could-take-years-a0Cbv3r4ziOt">mandatory aviation ombudsman</a> to be established to help mend “the broken complaints system”. </p>
<p>Alternatively, you could bring a court action against an airline, although this can be tricky if the airline is based abroad. Our study also showed passengers are often short of time and do not always have the confidence to pursue an action before the <a href="https://www.gov.uk/make-court-claim-for-money">small claims court</a>. </p>
<figure class="align-center ">
<img alt="Airport flight information board with " src="https://images.theconversation.com/files/545241/original/file-20230829-27-yus9mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/545241/original/file-20230829-27-yus9mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=384&fit=crop&dpr=1 600w, https://images.theconversation.com/files/545241/original/file-20230829-27-yus9mt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=384&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/545241/original/file-20230829-27-yus9mt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=384&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/545241/original/file-20230829-27-yus9mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=483&fit=crop&dpr=1 754w, https://images.theconversation.com/files/545241/original/file-20230829-27-yus9mt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=483&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/545241/original/file-20230829-27-yus9mt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=483&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The latest major travel disruption in the UK was down to an air traffic control glitch.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/close-international-airport-board-panel-all-91041512">Nuno Andre/Shutterstock</a></span>
</figcaption>
</figure>
<p>Cost can be another determining factor for action. Passengers are more likely to make a claim where the cost of a family holiday runs into thousands of pounds, according to our research. In the past decade, specialist claims firms have started to offer to make claims on behalf of passengers. These firms often have useful websites that can instantly assess whether a claim is worth pursuing. Of course, there will also be a cost to use these firms.</p>
<p>Although court action can be seen as a last resort, in March this year Which? found <a href="https://www.standard.co.uk/news/uk/airlines-refund-compensation-check-claims-court-b1068066.html">£4.5 million is owed</a> to passengers from outstanding County Court Judgments (CCJs) and attempts by passengers to obtain money owed by airlines <a href="https://www.bbc.co.uk/news/uk-england-beds-bucks-herts-64999557">using bailiffs</a>.</p>
<p>However, our study showed that one of the most successful ways to secure a refund was under <a href="https://www.which.co.uk/consumer-rights/regulation/section-75-of-the-consumer-credit-act-aZCUb9i8Kwfa">Section 75 of the Consumer Credit Act</a>. This allows you to make a claim to the bank or provider of the credit card you used to pay for your flights.</p>
<h2>What about the airline regulator?</h2>
<p>The routes available for consumers to seek redress for travel disruption will continue to be ineffective if they rely on resolving disputes with the airlines on an individual level. This pits the weaker consumer against the powerful interests and deeper pockets of the airlines. </p>
<p>This is why enhanced powers for the UK’s CAA are vital. The Department for Transport <a href="https://www.gov.uk/government/news/government-takes-action-to-strengthen-airline-passenger-rights">proposed reforms</a> in January 2022, but the UK government has yet to act.</p>
<p>After a summer of travel disruption that has caused delays and cancellations for thousands of people, a regulator with more teeth will help air passengers caught up in such crises.</p><img src="https://counter.theconversation.com/content/212298/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sara Drake has received funding from the European Parliament for research on EU air passenger rights and funding from the UK's Economic and Social Research Council's Festival of Social Science funding to disseminate research findings on air passenger rights in the UK.</span></em></p><p class="fine-print"><em><span>Carmela Bosangit receives funding from UK's Economic and Social Research Council's Festival of Social Science funding to disseminate research findings on air passenger rights in the UK. </span></em></p>Passengers are often aware that they have legal rights around travel disruption but are not confident about what exactly these rights are.Sara Drake, Reader in Law, Cardiff UniversityCarmela Bosangit, Senior Lecturer in Marketing, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2110262023-08-09T20:06:06Z2023-08-09T20:06:06ZWhat are your rights as an Airbnb renter in Australia? A law expert answers 6 common questions<figure><img src="https://images.theconversation.com/files/541136/original/file-20230804-13641-nj7xrd.jpg?ixlib=rb-1.1.0&rect=0%2C44%2C4992%2C2432&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Airbnb has revolutionised the short-stay industry. Launched in 2008, it now eclipses the world’s biggest hotel chains. In Australia alone there are about <a href="https://www.abc.net.au/news/2022-05-15/short-stay-rentals-airbnb-impact-on-australian-property-market/101019726">100,000 listed properties</a>.</p>
<p>But in dealing with both a digital platform and a private owner (or “host”, in Airbnb-speak), your legal rights as a renter (or “guest”) can be unclear – at least without reading lengthy terms and conditions.</p>
<p>This article answers six very common questions about using Airbnb in Australia. Please note that your legal rights may differ in other countries. Even if Airbnb’s terms and conditions are near identical – and they generally are – there may be differences in consumer laws. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ever-wondered-how-many-airbnbs-australia-has-and-where-they-all-are-we-have-the-answers-129003">Ever wondered how many Airbnbs Australia has and where they all are? We have the answers</a>
</strong>
</em>
</p>
<hr>
<h2>What if an Airbnb property doesn’t match its description?</h2>
<p>Airbnb’s <a href="https://www.airbnb.com.au/help/article/2908#6">terms and conditions</a> require the host to provide “complete and accurate information” about their property. Content, including photos, must be “up-to-date and accurate at all times”. Airbnb’s <a href="https://www.airbnb.com.au/help/article/2895/">Host Ground Rules</a> state that listings “should accurately describe the home and reflect the features and amenities that will be available”. </p>
<p>If a property does not match its description or photos, <a href="https://www.airbnb.com.au/d/anz-prohost-resource-centre-support">report this to Airbnb</a>. </p>
<p>False advertising will also likely breach the Australian Consumer Law, which prohibits (Section 18) commercial conduct that is misleading or deceptive or is likely to mislead or deceive. Report to the <a href="https://www.accc.gov.au/about-us/contact-us/report-a-consumer-issue">Australian Competition and Consumer Commission</a> here. </p>
<figure class="align-center ">
<img alt="Airbnb listings must provide 'complete and accurate information' about the property." src="https://images.theconversation.com/files/541638/original/file-20230808-27-4urabr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541638/original/file-20230808-27-4urabr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541638/original/file-20230808-27-4urabr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541638/original/file-20230808-27-4urabr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541638/original/file-20230808-27-4urabr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541638/original/file-20230808-27-4urabr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541638/original/file-20230808-27-4urabr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Airbnb listings must provide ‘complete and accurate information’ about the property.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>There are no specific provisions to claim a refund or a discount for misleading listings. Your only recourse would seem be to initiate the cancellation policy that applies to your booking.</p>
<h2>So when can I get a refund?</h2>
<p>If you cancel your booking or leave the property early, your refund rights are determined by your <a href="https://www.airbnb.com.au/help/article/149">cancellation policy</a> (see “show trip details”). </p>
<p>There are various <a href="https://www.airbnb.com.au/help/article/475">policies</a> (from which a host selects when listing). Most allow full refunds if you cancel one to five days prior to check-in, while others require up to 30 days’ notice or only provide partial refunds.</p>
<p>If the host cancels on you, they <a href="https://www.airbnb.com.au/help/article/990">may be penalised</a> by Airbnb.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-carbon-footprint-of-airbnb-is-likely-bigger-than-you-think-159544">The carbon footprint of Airbnb is likely bigger than you think</a>
</strong>
</em>
</p>
<hr>
<h2>Can an Airbnb host impose harsh and unreasonable ‘house rules’?</h2>
<p>If an owner wants to make rules against visitors without their permission or how many times you can use the washing machine, they generally can. </p>
<p>When you rent a property through Airbnb, you are entering into a private agreement with the owner. Under contract law, they can stipulate whatever terms they like, so long as those rules aren’t illegal.</p>
<figure class="align-center ">
<img alt="A Reddit user posted this list of 'additional rules' they say they say was stuck on the door of their Airbnb accommodation." src="https://images.theconversation.com/files/541627/original/file-20230808-21-xrobzo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541627/original/file-20230808-21-xrobzo.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=299&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541627/original/file-20230808-21-xrobzo.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=299&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541627/original/file-20230808-21-xrobzo.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=299&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541627/original/file-20230808-21-xrobzo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=375&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541627/original/file-20230808-21-xrobzo.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=375&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541627/original/file-20230808-21-xrobzo.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=375&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A Reddit user posted this photo of ‘additional rules’ they say they say was stuck on the door of their Airbnb accommodation.</span>
<span class="attribution"><span class="source">Reddit</span></span>
</figcaption>
</figure>
<p>What Australian Consumer Law does prohibit are <a href="https://www.accc.gov.au/business/selling-products-and-services/contracts#toc-unfair-terms-in-standard-form-contracts-">unfair terms</a> in standard form “consumer contracts” – which an Airbnb contract likely qualifies as. An unfair term is one that: </p>
<ul>
<li>causes a significant imbalance in your rights and obligations</li>
<li>is not reasonably necessary to protect the host’s interests</li>
<li>would cause you detriment (financial or otherwise) if it was enforced. </li>
</ul>
<p>The problem is that you will need to sue the host (that is, initiate civil litigation) to prove this.</p>
<p>Your best option is to carefully review the rules before you confirm your reservation. Once you confirm, you are legally agreeing to all of the host’s terms whether you’ve read and understood them or not. </p>
<p>If you disagree with a rule, ask the host to waive or amend it. If they won’t budge, your choice is to book or not. </p>
<h2>What are the boundaries for an Airbnb host/owner?</h2>
<p>Hosts are <a href="https://www.airbnb.com.au/help/article/3057">required</a> to ensure every property is secure and safe. Airbnb’s Community Policy states properties must be properly lockable and free of hazards, and hosts must be responsive and willing to answer guest queries within a reasonable time.</p>
<p><a href="https://www.airbnb.com.au/help/article/3060?_set_bev_on_new_domain=1691395791_NmY1ZDNmZjQxZjQy">According to Airbnb</a>, a host cannot physically intrude or interfere with your stay. They can only re-enter their property (or a guest’s room in a shared stay) if there is an emergency or with express permission. </p>
<p>In a shared stay, the host must not enter the bathrooms or guest bedrooms when the guests are inside. The host is also forbidden from sharing private details, photos, or videos of you without consent.</p>
<p>Where your safety is threatened, you should contact law enforcement and notify Airbnb. If you decide to leave, you may be entitled to a partial refund. Your rights depend on the cancellation policy applying to your booking (discussed further below).</p>
<figure class="align-center ">
<img alt="An Airbnb host is forbidden from sharing private details, photos or videos of you without consent." src="https://images.theconversation.com/files/541637/original/file-20230808-29-dmw679.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541637/original/file-20230808-29-dmw679.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541637/original/file-20230808-29-dmw679.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541637/original/file-20230808-29-dmw679.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541637/original/file-20230808-29-dmw679.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541637/original/file-20230808-29-dmw679.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541637/original/file-20230808-29-dmw679.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An Airbnb host is forbidden from sharing private details, photos or videos of you without consent.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>If I am injured in or get sick because of an Airbnb property, can I claim compensation?</h2>
<p><a href="https://www.airbnb.com.au/help/article/2908#4.2">Clause 4.2</a> of Airbnb’s terms and conditions states that, by staying at a listed property, you acknowledge and “freely and willfully” accept the risk of “illness, bodily injury, disability, or death”. </p>
<p>Further, clause 19 contains a broad disclaimer absolving Airbnb of any liability for “personal or bodily injury or emotional distress” incurred in using its services. Clause 20 also contains an indemnity preventing you from making any claim against Airbnb in relation to your stay. </p>
<p>This gives Airbnb legal protection. But you may make a claim against the host.</p>
<p>The first step would be to formally write to the host outlining your claim. Airbnb may also assist with any disputes. If this fails, you can sue the host but whether the cost and effort is worth it will depend on the extent of your injury or illness. </p>
<p>If you do make any claim against the host, they will likely rely on Airbnb’s insurance. Every Airbnb host is insured up to US$1 million (about A$1.5 million) through Airbnb’s <a href="https://www.airbnb.com.au/help/article/3145">Host Liability Insurance Programme</a>. This covers any bodily injuries incurred by guests (or others) and damage to or theft of any property belonging to a guest (or others).</p>
<figure class="align-center ">
<img alt="Staying at a listed Airbnb property means 'freely and willfully' accepting the risk of 'illness, bodily injury, disability, or death'." src="https://images.theconversation.com/files/541635/original/file-20230808-23-fh75un.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541635/original/file-20230808-23-fh75un.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541635/original/file-20230808-23-fh75un.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541635/original/file-20230808-23-fh75un.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541635/original/file-20230808-23-fh75un.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541635/original/file-20230808-23-fh75un.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541635/original/file-20230808-23-fh75un.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Staying at a listed Airbnb property means ‘freely and willfully’ accepting the risk of ‘illness, bodily injury, disability, or death’.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>There are some exceptions to what Airbnb’s insurance will cover, such as intentional violence, mould and communicable disease. If you want compensation for something the host is personally liable for, you are more likely to have to take legal action, using a lawyer. Consider the costs carefully.</p>
<h2>What’s the maximum cleaning/damages fee an Airbnb host can charge?</h2>
<p>Cleaning fees are <a href="https://www.airbnb.com.au/help/article/2812">set by the host</a>. Airbnb provides a <a href="https://www.airbnb.com.au/help/article/3171">pricing tool</a> to help them calculate a reasonable fee – generally <a href="https://www.igms.com/airbnb-cleaning-fee/">based on size and facilities</a> – but there is no maximum, presumably on the rationale that market forces (and reviews) will deter hosts from charging too much.</p>
<p>Nor is there a maximum damages fee. You can formally <a href="https://www.airbnb.com.au/d/anz-prohost-resource-centre-support">dispute the amount</a> with Airbnb, which will determine if it is reasonable, relying on information provided by both parties.</p>
<p>Charging exorbitant prices is not illegal though Australian Consumer Law does prohibit “<a href="https://www.accc.gov.au/business/selling-products-and-services/unfair-business-practices#toc-unconscionable-conduct">unconscionable conduct</a>”. But, again, you need to initiate legal proceedings and have a court agree you deserve compensation.</p>
<h2>Where to go for help and advice</h2>
<p>You can <a href="https://www.airbnb.com.au/d/anz-prohost-resource-centre-support">contact Airbnb</a> for any account, listing, or reservation-related questions. Online forums can also be useful for advice and support.</p>
<p>You can report consumer complaints to the <a href="https://www.accc.gov.au/about-us/contact-us/report-a-consumer-issue">Australian Competition and Consumer Commission</a> but the federal regulator does not resolve individual complaints or provide legal advice on your rights and obligations. For preliminary advice go to the following state and territory consumer advice agencies:</p>
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<p><em>Please note this article does not constitute legal advice. If you need legal advice, consult a lawyer.</em></p><img src="https://counter.theconversation.com/content/211026/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Giancaspro does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In dealing with both a digital platform and a private owner, your legal rights as an Airbnb renter can be unclear.Mark Giancaspro, Senior Lecturer in Law, University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2101692023-07-28T12:52:46Z2023-07-28T12:52:46ZHow new ‘consumer duty’ rules for financial products could reduce debt-related stress<figure><img src="https://images.theconversation.com/files/539741/original/file-20230727-29-u1qts5.jpg?ixlib=rb-1.1.0&rect=49%2C55%2C4072%2C2688&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/sad-woman-holding-her-head-over-2140114687">Grusho Anna/Shutterstock</a></span></figcaption></figure><p>New “<a href="https://www.fca.org.uk/publications/policy-statements/ps22-9-new-consumer-duty">consumer duty</a>” rules introduced by the Financial Conduct Authority (FCA) aim to set clear standards for the protection of financial consumers. Banks, building societies, investment and insurance firms, as well as many other types of business, are being told to “<a href="https://www.fca.org.uk/firms/consumer-duty">put their customers’ needs first</a>”. </p>
<p>The timing couldn’t be better. Amid a cost of living crisis, the UK regulator’s new rules should hopefully address the <a href="https://wearecitizensadvice.org.uk/living-on-empty-245f4b9acbe3">increasing recognition</a> by consumer groups that people cannot always solve the financial problems they face. Consumers are under pressure and need more support. Yet, trust in financial services is low: the FCA recently found that <a href="https://www.fca.org.uk/publications/financial-lives/financial-lives-survey-2022-key-findings">just 36% of UK adults</a> see most financial providers as honest and transparent in how they treat customers.</p>
<p>The new rules cover not only direct customers of products such as bank accounts, credit cards and loans, but also anyone that ultimately makes use of a product or service, including family members of a borrower who may benefit from the loan. Even if the provider does not have a direct relationship with the user, <a href="https://www.fca.org.uk/publication/policy/ps22-9.pdf">the rules still apply</a>.</p>
<p>In future, companies will have to demonstrate to the regulator that they are proactively putting consumer needs first and preventing any harm. They will be expected to continuously review their operations to identify and resolve areas where they could be going against these needs – from product design and delivery to customer services and communications.</p>
<p>The new regime should lead to a step-change in how consumers are treated. And this may improve financial wellbeing in the UK, especially for those in vulnerable financial situations. The FCA has suggested financial service organisations will need to make <a href="https://www.fca.org.uk/news/speeches/countdown-consumer-duty">fundamental cultural changes</a> to be more aware of and responsive to consumer needs across their operations.</p>
<p>A major part of this responsiveness will involve listening to and understanding the real-life experiences of financial consumers. Research shows the ways in which financial service companies could improve how they deal with their consumers.</p>
<h2>Preventing problems from escalating</h2>
<p>Our recent <a href="https://www.fincap.org.uk/en/reviews/money-and-mental-health-rapid-evidence-review">evidence review</a> on the connections between financial and mental health challenges highlights the negative effects of being behind on payments or in debt. Overly punitive approaches to dealing with these situations, such as the use of debt collection agencies, exacerbates financial stress. It also reinforces the stigma people can experience when dealing with both financial and mental health challenges. </p>
<p>An <a href="https://www.aston.ac.uk/research/bss/abs/centres-hubs/cpfw/our-projects">ongoing project</a> by Aston University and Birmingham City Council explores gambling and housing security. It shows problem gamblers often turn to debt, including payday loans, to fund their betting activity. This limits their ability to pay rent and can result in tenancy loss, which negatively affects long-term wellbeing. </p>
<p>The stigma associated with problem gambling has encouraged most of those surveyed to try to control their habit or stop gambling altogether. But they had not received any support from their financial providers or from other agencies they were engaged with, such as their housing association. </p>
<p>Preventing negative escalations should be a priority when consumers in tough financial situations are unable to pay their bills and debt starts to mount. They also need appropriate support to help overcome the stigma of experiencing financial problems. </p>
<p>The government’s “<a href="https://www.gov.uk/government/publications/debt-respite-scheme-breathing-space-guidance/debt-respite-scheme-breathing-space-guidance-for-creditors">breathing space</a>” scheme gives people experiencing debt problems time to receive advice and find a solution without penalties. This is a positive step. Similar interventions could help relieve the financial stress of other experiences – for example, <a href="https://www.tandfonline.com/doi/abs/10.1080/19424620.2013.819680">after a bereavement</a>, when the burden of dealing with complicated financial matters can have a detrimental impact on relatives’ wellbeing.</p>
<figure class="align-center ">
<img alt="Man and woman in front of a laptop with another woman speaking to them." src="https://images.theconversation.com/files/539744/original/file-20230727-15-uyr3qk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/539744/original/file-20230727-15-uyr3qk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/539744/original/file-20230727-15-uyr3qk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/539744/original/file-20230727-15-uyr3qk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/539744/original/file-20230727-15-uyr3qk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/539744/original/file-20230727-15-uyr3qk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/539744/original/file-20230727-15-uyr3qk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The FCA’s consumer duty rules should encourage financial firms to listen to and support their customers.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/close-female-realtor-manager-real-estate-1926167858">fizkes/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Listening to feedback</h2>
<p>Another strand of our research highlights the need to examine the impact of financial stress and debt across different groups of consumers. Disparities in income and wealth between men and women, for example, relate to different work and employment experiences and opportunities.</p>
<p>Financial products such as pensions and investment accounts often appear to be gender neutral, but do not actually align with different life experiences. A woman working part-time due to caring responsibilities may struggle to save in a traditional pension, for example. This can <a href="https://doi.org/10.1080/09692290.2022.2113114">ultimately discourage women</a> from using these products.</p>
<p>This is one of the reasons why it is important for consumers to give feedback directly to the firms they deal with, so they can create different products. The FCA’s consumer duty aims to encourage this interaction. Again, this is crucial because <a href="https://www.fca.org.uk/publications/financial-lives/financial-lives-survey-2022-key-findings">7.4 million UK adults</a> have struggled to contact their financial providers in the last year.</p>
<p>The consumer duty rules should help to facilitate this kind of feedback, resulting in financial products with a more diverse appeal and better outcomes. Support for those experiencing repayment problems and dealing with stress about their finances should also be more accessible.</p>
<p>In time, if followed correctly, these new standards should lead to a more equitable and trustworthy financial system. If so, this will improve financial wellbeing by reducing undue stress for many people.</p><img src="https://counter.theconversation.com/content/210169/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hayley James has received funding from the Economic and Social Research Council, the New Opportunities for Research Funding Agency Cooperation in Europe (NORFACE) consortium, and is currently working on a project funded by the Aviva Foundation (realaccounts.org.uk).</span></em></p><p class="fine-print"><em><span>Andy Lymer has recently received funding for his work from the UK’s Money and Pension Service, Vivid (a UK housing association) and via the Gambling Commission amongst others. He is currently engaged in a project funded by the Aviva Foundation. </span></em></p>Making financial firms more aware of their consumers’ needs could provide much-needed support during the cost of living crisis – and beyond.Hayley Louise James, Senior research fellow, Aston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2055962023-06-05T15:57:28Z2023-06-05T15:57:28ZHow AI might soon rescue consumers from signing up to unfair terms and conditions<figure><img src="https://images.theconversation.com/files/530069/original/file-20230605-29-8hqv2j.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">'Click to agree'. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/home-worker-paper-box-on-his-2142261901">Simona Pillola 2/Shutterstock</a></span></figcaption></figure><p>Most of us buy goods on the internet without reading the terms and conditions. We take it as a given that the clauses in these standardised agreements are non-negotiable, and hope that they are in our best interests. </p>
<p>Too often, however, this doesn’t seem to be the case. From <a href="https://www.theguardian.com/money/2023/jun/05/apple-repair-macbook-pro-free-screens">laptop makers</a> to <a href="https://www.which.co.uk/news/article/airline-compensation-refund-breaking-the-law-aiIty8R4mWLL">airlines</a> to <a href="https://www.theguardian.com/business/2022/feb/14/four-buy-now-pay-later-firms-change-potentially-unfair-terms-clearpay-klarna-laybuy-openpay">buy now, pay later companies</a>, there are endless rows about whether terms and conditions are fair. </p>
<p>Obtaining hard facts about the size of this problem is difficult. But certainly there are a lot of unhappy shoppers on consumer forums. </p>
<p>Many, for example, have experienced <a href="https://forums.moneysavingexpert.com/discussion/6450284/restricting-the-right-to-return-faulty-goods">difficulties in enforcing</a> their contractual rights or <a href="https://www.consumeractiongroup.co.uk/topic/458168-ipad-that-is-not-turning-on-after-3yrs-what-are-my-rights/#comment-5212572">were unaware</a> of what they agreed to when they bought something. In such circumstances it can be difficult to find free or affordable legal advice, so many probably just give up. </p>
<p>One argument is that people should just read the contract before clicking “I agree”, but most of us don’t have the time or ability to do so. There will soon probably be a solution to this, however. Instead of having to plough through all the small print ourselves, we might soon be able to do it using artificial intelligence. </p>
<h2>What exists already</h2>
<p>AI tools to analyse legal documents have existed in a very basic form for a while. <a href="https://beta.pickaxeproject.com/axe?id=JKQOUBIEUEJWQ6D6JN0B">They can</a> flag up potential issues such as rights violations that the consumer might want to investigate further. But you have to copy and paste terms sentence by sentence because the AI is so limited in how much text it can handle, and they are designed as a guide to reading the blurb yourself rather than removing the need altogether. </p>
<p>There are more sophisticated <a href="https://pribot.org/polisis/">AI tools</a> that solve the related problem of reading web policy documents. Rather than pasting in text, you upload the relevant URL. The important but narrow focus here is on how web providers use your data. This makes it easier to teach an AI model everything it needs to know – particularly in such a <a href="https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/">heavily regulated area</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/530071/original/file-20230605-19-gav2rz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two people looking through a privacy policy on a laptop" src="https://images.theconversation.com/files/530071/original/file-20230605-19-gav2rz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/530071/original/file-20230605-19-gav2rz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=429&fit=crop&dpr=1 600w, https://images.theconversation.com/files/530071/original/file-20230605-19-gav2rz.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=429&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/530071/original/file-20230605-19-gav2rz.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=429&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/530071/original/file-20230605-19-gav2rz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=539&fit=crop&dpr=1 754w, https://images.theconversation.com/files/530071/original/file-20230605-19-gav2rz.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=539&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/530071/original/file-20230605-19-gav2rz.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=539&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Privacy policy apps are not quite such a challenge.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/home-worker-paper-box-on-his-2142261901">Rawpixel.com</a></span>
</figcaption>
</figure>
<p>With terms and conditions, the challenge is their varied nature. Vendors are much more free to formulate everything in their own words, which makes detecting and understanding these much more difficult for an AI. </p>
<p>There are also lots of variations between different jurisdictions, such as “solicitor” in the UK and “attorney” in the US. This means that an AI trained with US data may mislead consumers from the UK. Yet it’s often not clear in the existing tools which jurisdiction they are designed for. </p>
<p>You might be wondering if the alternative might be just to copy and paste terms and conditions into one of the latest AI chatbots like <a href="https://openai.com/blog/chatgpt">ChatGPT</a>, but that’s not a solution either. These <a href="https://www.nature.com/articles/s42256-020-0223-0">general models</a> are not specifically trained on legal texts or legal analysis. This means that any advice they give is just as likely to be accurate, inaccurate or entirely made up.</p>
<h2>Fixing the problem</h2>
<p>As far as we are aware, no team of developers is trying to create a dedicated terms and conditions AI for consumers using models such as Open AI’s GPT-4, which underpins ChatGPT. </p>
<p>Instead, many AI developers seem to be concentrating on the more lucrative area of <a href="https://www.dignited.com/109068/ai-in-law-top-software-for-legal-firms-in-2023/">creating tools</a> that will automate legal work for law firms and other companies. This could even lead to terms less favourable to consumers, since the focus will likely be on cutting costs rather than improving service quality. </p>
<p>To change this situation, lead author Jens Krebs and his colleague Ella Haig at the University of Portsmouth <a href="https://www.portsmouth.co.uk/business/business-talks-its-education-but-not-as-we-know-it-3937819">have been developing</a> a terms and conditions app for England and Wales. When fully developed, it will enable people to copy and paste an entire document into the prompt. </p>
<p>It will then list any terms that might unexpectedly affect the consumer, for example, by failing to meet legislative standards such as the <a href="https://www.legislation.gov.uk/ukpga/2015/15/contents/enacted">Consumer Rights Act 2015</a>. It will also compare all terms to those used by comparable vendors to ensure that nothing unusual has been slipped in. When it spots something unusual, it will then advise the consumer to read that part before deciding whether to go ahead. </p>
<p>The project is currently at the stage of testing the app on different AI models to see which is most effective. So far Google’s Bert is coming out best with 81% accuracy, testing it against data where the researchers know what the perfect result should be. </p>
<p>Nothing will be launched until accuracy hits 90% to 95%. The hope is that the app will be made available to consumer groups like Which? in 2024 and then go on general release in 2025. The intention is that it will be free to use. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/530074/original/file-20230605-23-1ydgnw.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Cupped hands with a digital brain between them" src="https://images.theconversation.com/files/530074/original/file-20230605-23-1ydgnw.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/530074/original/file-20230605-23-1ydgnw.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/530074/original/file-20230605-23-1ydgnw.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/530074/original/file-20230605-23-1ydgnw.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/530074/original/file-20230605-23-1ydgnw.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/530074/original/file-20230605-23-1ydgnw.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/530074/original/file-20230605-23-1ydgnw.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Where it’s hopefully heading.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/digital-image-brain-on-palm-artificial-2027569223">Meboon Studio</a></span>
</figcaption>
</figure>
<p>The key obstacle for such a project is the lack of examples of detrimental terms on which to train the AI – exactly the same problem consumers face if they are brave enough to try to judge terms and conditions. The long-term plan for continuing to increase accuracy in the Portsmouth app is to supplement and replace its training data with real data from consumer organisations, the government and consumers. </p>
<p>The hope is that the app will be at the forefront of a new generation of AI tools designed to make terms and conditions less opaque. As well as potentially reducing the number of unhappy consumers, these might also help people who are already signed up to unreasonable terms to prepare and present their case – thereby reducing the need for lawyers. </p>
<p>If such services take off, the hope would be that they also discourage vendors from pushing the boundaries of what is acceptable. If terms and conditions become a bit more favourable to consumers, that would be a huge win for this emerging technology.</p><img src="https://counter.theconversation.com/content/205596/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article.</span></em></p><p class="fine-print"><em><span>Enguerrand Boitel and Paris Bradley do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>If anyone ever read this stuff, they wouldn’t have time to do anything else.Jens H Krebs, Senior Lecturer in Law, University of PortsmouthEnguerrand Boitel, PhD Candidate in Computing/Research Assistant, University of PortsmouthParis Bradley, PhD Candidate in Law/Research Assistant, University of PortsmouthLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1844502022-06-07T23:15:52Z2022-06-07T23:15:52ZHidden costs, manipulation, forced continuity: report reveals how Australian consumers are being duped online<figure><img src="https://images.theconversation.com/files/467406/original/file-20220607-15990-frj1pn.jpeg?ixlib=rb-1.1.0&rect=59%2C35%2C3934%2C2958&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Australian consumers’ choices on websites and apps are being manipulated through online designs taking advantage of their weaknesses. That’s according to research on consumers’ online experiences and the presentation of websites and apps, <a href="https://cprc.org.au/wp-content/uploads/2022/06/CPRC-Duped-by-Design-Final-Report-June-2022.pdf">released today</a> by the Consumer Policy Research Centre (CPRC).</p>
<p>The research gives examples of consumers being manipulated or deceived into unintentionally buying items, paying more, or giving up more personal data than they meant to.</p>
<p>Examples include situations where an online store automatically added items to consumers’ carts, and “Hotel California” techniques which make it easy to subscribe to a service, but much harder to unsubscribe. </p>
<p>According to the CPRC’s findings, 83% of Australians surveyed had experienced one or more negative consequences – including financial harm or feeling manipulated – as a result of these “<a href="https://www.wired.com/story/how-to-spot-avoid-dark-patterns/#">dark patterns</a>”.</p>
<p>Some misleading designs breach the Australian Consumer Law. However, not all designs that have unfair consequences will necessarily be captured under the law. The latest report adds to existing calls to <a href="https://www.theguardian.com/australia-news/2019/sep/08/not-fair-why-judges-have-been-accused-of-failing-australian-consumers">amend consumer law</a> by introducing a ban on unfair trading practices. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/accc-world-first-australias-federal-court-found-google-misled-users-about-personal-location-data-159138">ACCC 'world first': Australia's Federal Court found Google misled users about personal location data</a>
</strong>
</em>
</p>
<hr>
<h2>What are dark patterns?</h2>
<p><a href="https://www.forbrukerradet.no/dark-patterns/">Experts</a> and <a href="https://www.ftc.gov/news-events/events/2021/04/bringing-dark-patterns-light-ftc-workshop">regulators</a> around the world have highlighted concerning online design techniques in recent years, labelling them “dark patterns” or “deceptive design”.</p>
<p>These designs often take advantage of a consumer’s recognised behavioural biases. For instance, “<a href="https://www.intereconomics.eu/contents/year/2018/number/1/article/using-behavioural-economics-for-rather-than-against-consumers-a-practitioners-perspective.html">default bias</a>” is consumers’ bias in favour of leaving default choices in place to avoid making complex decisions. Businesses take advantage of this by pre-ticking boxes in favour of the business’s preferences, despite consumer interests.</p>
<p>The <a href="https://www.accc.gov.au/system/files/DPB%20-%20DPSI%20-%20September%202021%20-%20Full%20Report%20-%2030%20September%202021%20%283%29_1.pdf">Australian Competition & Consumer Commission</a> has examined dark patterns, <a href="https://www.accc.gov.au/system/files/Digital%20platform%20services%20inquiry.pdf">defining</a> them as:</p>
<blockquote>
<p>The design of user interfaces intended to confuse users, make it
difficult for users to express their actual preferences, or manipulate
users into taking certain actions.</p>
</blockquote>
<p>The CPRC study conducted a randomised sweep of websites and apps to identify deceptive design features.</p>
<h2>Hidden costs: I bought what?</h2>
<p>The CPRC found several examples of online stores automatically adding items to consumers’ shopping carts, such as insurance or service plans.</p>
<p>For example, in one case a consumer buying a washing machine from a major online retailer for A$1,059, may or may not have noticed a single-line item, “3 Year Care Plan For Home - $160”, in the final steps of their purchase.</p>
<p>In other cases, customers were presented with offers of a product care plan at several points in the checkout process. The CPRC says:</p>
<blockquote>
<p>this design approach risks implying that […] a product care plan is required when most faults or problems are adequately covered by the consumer guarantees.</p>
</blockquote>
<p>For products sold in Australia, consumer guarantees about the quality of products are provided free of charge under the Australian Consumer Law.</p>
<h2>“Hotel California” or forced continuity</h2>
<p>Another concerningly common pattern is the relative difficulty consumers experience when trying to unsubscribe from a service, compared with how easy it is to sign up. CPRC labels this “Hotel California”, after the famous line in the Eagles’ song: “You can check out any time you like, but you can never leave”.</p>
<p>Examples from the CPRC’s findings included attempting to cancel an Amazon Music Unlimited subscription, which required a consumer to navigate more than five screens. Similarly, cancelling an eBay Plus subscription required four additional steps after selecting “cancel membership”.</p>
<p>The CPRC argues it should be as easy to opt-out of a service as it is to opt-in. While extra steps may not seem disastrous in isolation, they can especially disadvantage those already experiencing vulnerabilities, such as sudden illness, loss of a loved one, or low digital literacy.</p>
<p>This is sometimes combined with another manipulative design technique called “confirmshaming”. With this, consumers are asked to confirm a statement that makes them feel shamed or foolish, such as if they want to “lose their benefits” or if they “refuse to support” a good cause.</p>
<h2>Data grabs, colours and countdowns</h2>
<p>The CPRC also found the majority of consumers surveyed (89%) had experienced being asked for more personal information than was needed to access the relevant product or service. This was achieved in various ways, including by:</p>
<ul>
<li>pre-ticking the option to receive marketing communications</li>
<li>forcing the consumer to create a profile to browse or purchase a product, and</li>
<li>treating the mere use of a website as acceptance of data terms or conditions.</li>
</ul>
<p>Other examples of manipulative design included highlighting the business’s preference in a colour known to <a href="https://fil.forbrukerradet.no/wp-content/uploads/2018/06/2018-06-27-deceived-by-design-final.pdf">entice consumers to agree or act</a> (often green or blue), using a rapid countdown to create a false sense of urgency, and warning that a number of other customers are looking at a product. </p>
<p>Importantly, the research found consumers aged between 18 and 28 were more likely to suffer negative impacts from manipulative design, leading to substantial effects on their financial well-being and privacy. A significant proportion of consumers in this younger age bracket reported they:</p>
<ul>
<li>accidentally bought something (12%)</li>
<li>spent more than they intended (33%)</li>
<li>disclosed more personal information than they wanted to (27%)</li>
<li>created an online account when they didn’t want to (37%), and</li>
<li>accidentally signed up to something (39%).</li>
</ul>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Young man in a store peruses his phone, with a laptop open on a table in front of him" src="https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/467413/original/file-20220607-18-5op3ky.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The research found young people in particular were vulnerable to manipulative techniques used by online businesses.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>We need to upgrade business practices and consumer law</h2>
<p>For businesses, using dark patterns to boost profit will likely lead to long-term losses in the form of consumer trust and loyalty. Almost one in three people surveyed said they stopped using a website or app (either temporarily or permanently) after experiencing dark patterns. </p>
<p>Misleading designs may also lead to penalties for businesses under the Australian Consumer Law. This happened last year when <a href="https://www.accc.gov.au/media-release/google-misled-consumers-about-the-collection-and-use-of-location-data">Google’s privacy settings</a> were found likely to mislead consumers.</p>
<p>However, other designs that have unfair consequences <a href="https://cprc.org.au/unfair-trading-practices-in-digital-market-evidence-and-regulatory-gaps-2/">might not fall foul of consumer laws</a>, if they don’t meet certain criteria set out by the law. </p>
<p>The CPRC’s research adds to evidence in support of the Australian Competition & Consumer Commission’s <a href="https://www.accc.gov.au/system/files/DPB%20-%20DPSI%20-%20September%202021%20-%20Full%20Report%20-%2030%20September%202021%20%283%29_1.pdf">existing recommendation</a> that our consumer law should include an unfair practices prohibition, similar to those in the European Union and the United Kingdom.</p><img src="https://counter.theconversation.com/content/184450/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Katharine Kemp receives funding from The Allens Hub for Technology, Law and Innovation. She is a Member of the Advisory Board of the Future of Finance Initiative in India, and the Australian Privacy Foundation.</span></em></p>Younger people aged 18 to 28 were more likely to be negatively impacted by manipulative designs on websites and apps.Katharine Kemp, Senior Lecturer, Faculty of Law & Justice, UNSW, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1695382021-10-14T23:50:39Z2021-10-14T23:50:39ZMany of New Zealand’s most popular websites use ‘dark patterns’ to manipulate users – is it time to regulate?<figure><img src="https://images.theconversation.com/files/426311/original/file-20211013-27-7pj2th.jpg?ixlib=rb-1.1.0&rect=9%2C0%2C6540%2C3270&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>More than half of the most popular New Zealand websites may be unfairly manipulating visitors, according to our <a href="https://talesfromthedarkside.org/resources/">latest research</a> into the use of “dark patterns” in sites with a “co.nz” domain name. </p>
<p>While legal, dark patterns have been <a href="https://arxiv.org/abs/1907.07032">described</a> as a type of online design employed to manipulate users into “making decisions that, if fully informed and capable of selecting alternatives, they might not make”.</p>
<p>They’re effective because they use insights about human psychology to <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3456155">undermine user autonomy</a> or encourage users towards the <a href="https://www.oag.ca.gov/sites/all/files/agweb/pdfs/privacy/shining-a-light-on-dark-patterns.pdf">least privacy-friendly options</a>. </p>
<p>Common examples include the so-called “<a href="https://www.darkpatterns.org/types-of-dark-pattern/roach-motel">roach motel</a>”, where it’s easy to get into an online situation but difficult to get out of it – such as signing up for and then trying to cancel a streaming subscription.</p>
<p>There are also <a href="https://www.darkpatterns.org/types-of-dark-pattern/disguised-ads">disguised ads</a>, which are presented as other kinds of content or navigation to encourage you to click. Some retail websites use dark patterns to nudge users to spend more.</p>
<p>Dark patterns have been widely criticised in the <a href="https://iapp.org/news/a/ongoing-dark-pattern-regulation/">US and Europe</a>. For instance, amendments to the <a href="https://www.natlawreview.com/article/dark-patterns-come-to-light-california-data-privacy-laws">California Consumer Privacy Act</a> seek to ban “the use of dark patterns to subvert or impair the process for consumers to opt out of the sale of personal information”.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/426309/original/file-20211013-25-1k6ygry.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/426309/original/file-20211013-25-1k6ygry.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/426309/original/file-20211013-25-1k6ygry.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=519&fit=crop&dpr=1 600w, https://images.theconversation.com/files/426309/original/file-20211013-25-1k6ygry.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=519&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/426309/original/file-20211013-25-1k6ygry.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=519&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/426309/original/file-20211013-25-1k6ygry.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=652&fit=crop&dpr=1 754w, https://images.theconversation.com/files/426309/original/file-20211013-25-1k6ygry.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=652&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/426309/original/file-20211013-25-1k6ygry.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=652&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Are you sure? A typical example of the subscription cancellation – or ‘suspension’ – process.</span>
<span class="attribution"><span class="source">Screenshot</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>However, little research has been undertaken in Aotearoa New Zealand. The Commerce Commission <a href="https://comcom.govt.nz/news-and-media/media-releases/2016/jetstar-gives-enforceable-undertakings-to-end-opt-out-pricing">ruled against</a> Jetstar’s online opt-out pricing tactics in 2016, but dark patterns don’t appear to be on the government’s legislative radar.</p>
<h2>How do I unsubscribe?</h2>
<p>We found dark patterns are well and truly a feature of New Zealanders’ online experiences. Our list of the top 100 local sites (based on user traffic) included media, e-commerce, government, telecommunication, property and banking websites. </p>
<p>We simulated everyday use of the sites: arriving on a homepage, scrolling through and engaging with media content, purchasing a product, subscribing to and cancelling a service. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-need-a-code-to-protect-our-online-privacy-and-wipe-out-dark-patterns-in-digital-design-145622">We need a code to protect our online privacy and wipe out 'dark patterns' in digital design</a>
</strong>
</em>
</p>
<hr>
<p>A more complete picture was limited by our inability to fully access certain government or banking websites, but overall the results showed 54% of sites had one or more dark patterns. E-commerce sites were the biggest offenders, followed by media sites. </p>
<p>The research also reveals dark patterns tend to cluster around financial transactions, followed by homepage navigation, and when attempting to cancel a service or subscription. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/426323/original/file-20211013-25-18oyecg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/426323/original/file-20211013-25-18oyecg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/426323/original/file-20211013-25-18oyecg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/426323/original/file-20211013-25-18oyecg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/426323/original/file-20211013-25-18oyecg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/426323/original/file-20211013-25-18oyecg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/426323/original/file-20211013-25-18oyecg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Welcome to the ‘roach motel’: pushing customers to sign up to newsletters is a common tactic.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Shopping and media</h2>
<p>Online shoppers are most likely to experience a dark pattern when purchasing a product or service. Examples include a countdown timer to encourage immediate purchase, or activity notifications (such as when a user is made aware other customers are browsing the same item) to invoke the fear of missing out. </p>
<p>Shoppers are also likely to encounter a dark pattern in the form of pop-up windows when first arriving on an e-commerce site. Many of these direct users to sign up for notifications or newsletters in exchange for a discounted price or early “VIP” notice of upcoming sales.</p>
<p>News consumers are especially likely to encounter dark patterns in the form of interface interference to boost engagement metrics and drive advertising revenue — for example, the auto-play function on embedded video content.</p>
<p>Subscribers to premium media services are most likely to encounter some form of obstruction when attempting to cancel a service, donation or subscription – the “roach motel” again.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-rise-of-dark-web-design-how-sites-manipulate-you-into-clicking-168347">The rise of dark web design: how sites manipulate you into clicking</a>
</strong>
</em>
</p>
<hr>
<h2>Customer surveillance</h2>
<p>Another common dark pattern we observed involved a form of customer surveillance – the requirement that online shoppers register their personal details to use a site, even when simply browsing items. </p>
<p>As well as enabling ongoing contact between the business and the potential customer, this provides the opportunity for the business to gather valuable behavioural data about consumer habits. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/daemons-are-the-programs-that-run-the-internet-heres-why-its-important-to-understand-them-119154">Daemons are the programs that run the internet. Here's why it's important to understand them.</a>
</strong>
</em>
</p>
<hr>
<p>These types of dark patterns normalise the exchange of personal details for very little in return. Although consent may be implied when a user hands over their details, most users remain uninformed about how their data will be used.</p>
<p>Dark patterns also appear to be used to reduce business costs through interface design that discourages certain types of communication, such as speaking to a customer service representative, in favour of more cost-effective options like “frequently asked questions” pages, online forms or an automated web chat. </p>
<p>Many New Zealand websites are deliberately designed to triage customer queries and drive down business costs associated with dealing with them.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/426324/original/file-20211013-13-ba5q3f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/426324/original/file-20211013-13-ba5q3f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=381&fit=crop&dpr=1 600w, https://images.theconversation.com/files/426324/original/file-20211013-13-ba5q3f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=381&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/426324/original/file-20211013-13-ba5q3f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=381&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/426324/original/file-20211013-13-ba5q3f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=479&fit=crop&dpr=1 754w, https://images.theconversation.com/files/426324/original/file-20211013-13-ba5q3f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=479&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/426324/original/file-20211013-13-ba5q3f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=479&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Let the chat bot help you: limiting human interaction allows businesses to reduce costs.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Regulation versus education</h2>
<p>Lockdown culture is <a href="https://www.stuff.co.nz/business/industries/126246704/lockdown-culture-marks-transformational-shift-in-new-zealanders-spending-habits-as-online-sales-boom">changing</a> online spending habits. Time spent online is <a href="https://www.hootsuite.com/resources/digital-trends">increasing rapidly</a>, with New Zealanders now averaging six hours and 39 minutes on the internet daily. </p>
<p>Alongside these shifts in user behaviour, artificial intelligence is increasingly being used to shape user experiences based on individual data profiles and behaviour histories. </p>
<p>As a result, people are increasingly likely to be subjected to personalised, targeted manipulation as they conduct online activities – particularly online shopping.</p>
<p>Greater awareness of the dark arts of interface design may help users avoid this in their everyday online lives. But changes to relevant regulation, such as the Fair Trading Act and the Privacy Act, would also enhance New Zealanders’ consumer and privacy rights.</p><img src="https://counter.theconversation.com/content/169538/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cherie Lacey receives funding from InternetNZ. </span></em></p><p class="fine-print"><em><span>Alex Beattie receives funding from InternetNZ.</span></em></p>Kiwi consumers are increasingly experiencing personalised, targeted manipulation online, but the law has very little to say about it.Cherie Lacey, Lecturer in Media Studies, Te Herenga Waka — Victoria University of WellingtonAlex Beattie, Postdoctoral Research Fellow, Centre for Science in Society, Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1520792020-12-15T18:25:16Z2020-12-15T18:25:16ZNZ businesses are still including potentially unfair terms in their general contracts — consumers deserve better<figure><img src="https://images.theconversation.com/files/374987/original/file-20201215-19-1m7mzfd.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C7668%2C5116&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>The last time you used a car parking building and paid for the service online, did you pause to read the terms and conditions? If not, you might be surprised to find the car park operator could have the right to remove your vehicle without having to give any reason — and would not be obliged to refund any charges you’ve paid.</p>
<p>This is just one example of commercial terms identified as potentially unfair in a <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3748793">new study</a> by Te Herenga Waka—Victoria University of Wellington in association with the Ministry of Business, Innovation and Employment.</p>
<p>The study compared contracts from 2015 and 2018 (the latest available data) to assess whether businesses are revising their contracts to remove “potentially unfair terms” in line with <a href="https://www.mbie.govt.nz/dmsdocument/7112-review-of-consumer-law-fair-trading-act-evaluation-report">changes</a> to the Fair Trading Act introduced in 2015. </p>
<p>Such terms are defined as those a court could find unfair, based on the law’s own criteria. Other examples of potentially unfair terms revealed in the study include:</p>
<blockquote>
<p>We may choose not to connect […] services to your premises for any reason, including where we reasonably consider it uneconomic or unsafe to do so. We may exercise this right at any time, even after we have accepted your application for […] services.</p>
<p>You agree to pay any such charges and fees in addition to your membership fee and acknowledge that all fees in the agreement are subject to change at our discretion and without notice.</p>
</blockquote>
<p>The study reveals potentially unfair terms are relatively common in standard form contracts — those terms and conditions for which most of us simply click “I agree”. </p>
<h2>An increasing problem</h2>
<p>Every one of the 134 contracts from 2018 contained at least one potentially unfair term. The most common penalises the customer but not the service provider for a breach or termination of the contract.</p>
<p>A <a href="https://www.stuff.co.nz/business/83949811/laws-to-protect-consumers-from-unfair-contract-terms-arent-working-claims-academic-alexandra-sims">previous study</a> by the University of Auckland in 2015 had looked at contracts issued by New Zealand businesses. The new study was able to directly assess 119 of these to see whether they had amended their contracts to remove potentially unfair terms.</p>
<p>In fact, there was an overall increase of 9.2% in unfair terms between 2015 and 2018. Significant increases were seen in the health and fitness and telecommunications industries. </p>
<p>Just 22 of the 119 contracts reviewed had fewer potentially unfair terms in 2018. Significant declines were seen in banking, digital music and transport.</p>
<p>These results will disappoint those who had hoped the Fair Trading Act changes in 2015 would lead to a reduction in unfair terms in standard form consumer contracts.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"999769960934133760"}"></div></p>
<h2>More enforcement required</h2>
<p>The study report makes several recommendations aimed at improving compliance with the law, including more active enforcement by the Commerce Commission. </p>
<p>So far, the commission has issued just two sets of court proceedings seeking declarations of unfair terms. One of these resulted in a declaration that certain terms in the contracts of mobile trader Home Direct relating to a voucher entitlement scheme were <a href="https://comcom.govt.nz/news-and-media/media-releases/2019/refunds-for-home-direct-customers-after-first-unfair-contracts-term-declaration">unfair</a>. The other case concerned the terms of ticket re-seller Viagogo and is ongoing.</p>
<p>A key issue identified in the report is that consumers themselves can’t take action in court (or any other tribunal) when they have bought goods or services on potentially unfair terms.</p>
<p>The report recommends consumers should be able to take an unfair terms case to the <a href="https://disputestribunal.govt.nz/">Disputes Tribunal</a> and that the tribunal be allowed to adjudicate.</p>
<h2>Consumers need more information</h2>
<p>Lower-level enforcement is also recommended, such as the commission issuing warning letters. Education would also improve the situation.</p>
<p>The establishment of a database of terms that New Zealand and Australian courts have found to be unfair would help both traders and consumers. Given the similarities in the jurisdictions, Australian cases are likely to be influential in New Zealand.</p>
<p>Commission reviews of <a href="https://comcom.govt.nz/__data/assets/pdf_file/0018/86121/Unfair-contract-terms-Telecommunications-contracts-review-February-2016.pdf">telecommunications</a>, <a href="https://comcom.govt.nz/__data/assets/pdf_file/0019/86122/Unfair-contract-terms-Energy-retail-contracts-review-August-2016.pdf">electricity, gas</a> and <a href="https://comcom.govt.nz/__data/assets/pdf_file/0020/86123/Unfair-contract-terms-Gym-contracts-review-August-2017.PDF">gym</a> contracts have resulted in those industries reviewing contracts for potentially unfair terms. The report recommends more industry reviews.</p>
<p>Without such measures, it seems likely businesses will continue to include potentially unfair terms in their standard form contracts. New Zealand consumers deserve better protection.</p><img src="https://counter.theconversation.com/content/152079/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Victoria Stace received funding from MBIE. MBIE gave some money for the research - but I did not benefit from this personally it just paid for the research assistant.</span></em></p><p class="fine-print"><em><span>Alexandra Sims and Emily Chan do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A new study suggests the Commerce Commission needs to get tougher with New Zealand businesses over their general terms and conditions.Victoria Stace, Senior Lecturer, Te Herenga Waka — Victoria University of WellingtonAlexandra Sims, Associate Professor in Commericial Law, University of Auckland, Waipapa Taumata RauEmily Chan, Legal Research Assistant, Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1443792020-09-14T15:05:43Z2020-09-14T15:05:43ZHow Nigeria’s new competition law will benefit the economy - and what to watch for<figure><img src="https://images.theconversation.com/files/357454/original/file-20200910-24-xtd4iu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An unregulated economy leaves the economically disadvantaged at the mercy of the rich and powerful </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/judges-gavel-block-against-flag-nigeria-1344673268">Novikov Aleksey/Shutterstock </a></span></figcaption></figure><p>Competition laws protect consumers and create <a href="https://www.academia.edu/8822080/The_Need_and_the_Challenges_to_the_Establishment_of_a_Competition_Law_Regime_in_Nigeria">confidence</a> in an economy. It’s a signal to investors and entrepreneurs that a market is fair and open. And the reward for countries that regulate competition is that on average they <a href="https://pdfs.semanticscholar.org/b5a0/f7df84ba435d90e5565225ae3db00e93c387.pdf">produce more</a> value per capita than others.</p>
<p>In Nigeria the competition law regime has been inadequate compared with its economy’s size and complexity. It hasn’t had a comprehensive law addressing anti-competitive trade practices like monopoly, price regulation and abuse of dominance.</p>
<p>The government previously had a monopoly over certain key sectors of the economy, such as telecommunications and electric power. After these were largely privatised, anti-competitive activities remained evident. These raised entry barriers, limited innovation and reduced quality in the market.</p>
<p>After <a href="https://pdfs.semanticscholar.org/2b89/5cf06379dfec95e8447e93e3b1b34eb02867.pdf">earlier unsuccessful attempts</a>, the Nigerian government has now enacted a national competition law, <a href="http://fccpc.gov.ng/guidelines/documents/">the Federal Competition and Consumer Protection Act 2018</a>. Our <a href="https://www.tandfonline.com/doi/full/10.1080/03050718.2020.1770617?scroll=top&needAccess=true">research</a> looks at how effective this is likely to be in creating a fair and efficient market that benefits Nigerian businesses and consumers alike. </p>
<h2>A few dominant players</h2>
<p>Lack of competition regulation created outright dominance of a few players in some industries.</p>
<p>In television, for example, DStv Nigeria was able to control pricing mechanisms. <a href="https://medium.com/@ayokunleojelade/competition-law-and-the-control-of-monopoly-in-nigeria-853f6d57886b">Between 2009 and 2017</a>, prices increased eight times. </p>
<p>A major cement producer, <a href="https://www.dangotecement.com/">Dangote Cement</a>, is said to have <a href="https://medium.com/@ayokunleojelade/competition-law-and-the-control-of-monopoly-in-nigeria-853f6d57886b">forced the market cement price</a> up in 2017. </p>
<p>Similarly in telecommunications, MTN has been accused of <a href="https://www.bloomberg.com/news/articles/2019-10-22/nigeria-mulls-action-to-boost-competition-in-telecoms-industry">undermining competition.</a>.</p>
<p>President Muhammadu Buhari <a href="http://fccpc.gov.ng/news-events/releases/2019/02/06/federal-competition-and-consumer-protection-bill/">assented</a> to the Federal Competition and Consumer Protection Act in February 2019. It established the <a href="http://fccpc.gov.ng/">Federal Competition and Consumer Protection Commission</a>, which oversees consumer protection and competition issues in all entities in Nigeria. These include commercial and government bodies or agencies. </p>
<h2>Powers and potential problems</h2>
<p>Competition exists when no single buyer or seller can control the price in the market. This occurs when there are enough agents active in the market. New agents can enter the market if they want to and price is thus <a href="http://cpparesearch.org/nu-en-pl/competition-policy-nigerian-commercial-governance/">determined by the market</a> as a whole. </p>
<p>The <a href="http://fccpc.gov.ng/guidelines/documents/">Act</a> provides rules to minimise market distortions across all sectors. It also ensures that fair play is respected. It prohibits unfair business practices that are likely to reduce competition and lead to higher prices, reduced quality or levels of service, or less innovation. </p>
<p>But there are some issues that could affect the new act’s efficiency. One is the domination of the Act over sector specific competition legislation. The advantage is that it brings a uniform perspective and jurisprudence to competition issues in Nigeria. On the other hand, some competition issues are sector based. This is why various government agencies have standards and laws for regulating competition in their specific sectors. </p>
<p><a href="https://www.tandfonline.com/doi/abs/10.1080/03050718.2020.1770617?af=R&journalCode=rclb20">For example</a> the <a href="https://nerc.gov.ng/">Nigerian Electricity Regulatory Commission</a> regulates the electricity sector while the <a href="https://www.ncc.gov.ng/">Nigerian Communications Commission</a> deals with the telecommunication sector. The <a href="https://sec.gov.ng/">Securities and Exchange Commission</a> regulates the capital market and the <a href="https://www.cbn.gov.ng/">Central Bank of Nigeria</a> oversees banking. The domination of the Act over sector specific legislation has the tendency to create an overlap and interfere with the roles and functions of these agencies.</p>
<p>To guard against this power tussle, the Act allows for negotiation of agreements with sector specific regulators. It’s also possible to harmonise regulations to resolve any inconsistencies in enforcement.</p>
<p>The <a href="http://fccpc.gov.ng/">Federal Competition and Consumer Protection Commission</a> was set up to administer and enforce the Act. It can also conduct quality tests on consumer goods as it deems necessary. It can compel makers and suppliers to certify that they have met all standards for goods and services, and warn of any health hazards. These powers are similar to those of the Standards Organisation of Nigeria and the National Agency for Food and Drug Administration and Control. There is an overlap of function and authority, so all these agencies will have to work together. </p>
<p>Another issue is funding of the new regulatory regime. Rather than depending exclusively on budgetary allocation, a better way of funding could have been through a combination of different sources such as general revenues, fees or fines. This would <a href="https://www.tandfonline.com/doi/abs/10.1080/03050718.2020.1770617?af=R&journalCode=rclb20">make it more difficult</a> for any single source of funding to dominate the budget and influence the Commission’s activities.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-a-lack-of-competition-in-south-africas-private-health-sector-hurts-consumers-125380">How a lack of competition in South Africa's private health sector hurts consumers</a>
</strong>
</em>
</p>
<hr>
<p>The new Act is applicable to certain conduct outside Nigeria. This could bring up questions about whose laws apply. To clear up any ambiguity, Nigeria should publish the procedure for applying its competition law internationally.</p>
<p>In addition, the powers of the president of Nigeria to regulate prices are at variance with the power of the Price Control Board to fix prices of commodities as provided in the Price Control Act. </p>
<p>The new competition law has given a lot of powers to the new, untested Commission. It will have to be staffed by professionals who are knowledgeable in antitrust laws, economics and intellectual property and representatives of the various sectors of production.</p>
<p>The importance of the legal framework for competition regulation in Nigeria cannot be over emphasised. An unregulated economy leaves the economically disadvantaged at the mercy of the rich and powerful. </p>
<p>That is not only dangerous to the economy but also dangerous to democracy. This is the case in Nigeria today as the nation is sliding into a two-class society: <a href="https://www.kitsapdailynews.com/letters/the-dangers-of-unregulated-laissez-faire-capitalism/">rich wealth hoarders and impoverished workers</a>.</p><img src="https://counter.theconversation.com/content/144379/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Oluchukwu Precious Obioma does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Lack of competition regulation created outright dominance of a few players in some industries.Oluchukwu Precious Obioma, PhD candidate, Department of Commercial and Corporate Law, Faculty of Law, University of NigeriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1319602020-03-09T19:01:02Z2020-03-09T19:01:02ZA plea to businesses: Don’t take away our paper bills!<figure><img src="https://images.theconversation.com/files/319343/original/file-20200309-118951-as2bu0.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5382%2C3577&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In an era of data breaches and privacy intrusions, the majority of Canadians want paper bills. So why aren't organizations listening to them?</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Once again a telecommunications company is telling its customers that they will no longer receive a paper bill. This time <a href="https://communityforums.rogers.com/t5/Account-Support/Paper-Billings-to-Disappear-as-of-March-26-2020-Available-only/td-p/455505">it’s Rogers</a>. </p>
<p>What seems to some to be a non-issue evokes a strong reaction in others. <a href="https://www.cbc.ca/news/canada/british-columbia/telus-paperless-bills-1.4874865">When Telus eliminated paper bills,</a> customers who prefer paper bills were shamed online. Others expressed solidarity with digitally disadvantaged groups or listed reasons why some consumers need paper bills. </p>
<p>But why do banks and billing organizations feel it necessary to stop sending paper bills and statements? </p>
<p>One reason is the cost to print and mail paper. Strangely, most of these organizations are highly profitable, generating <a href="https://www.bnnbloomberg.ca/royal-bank-raises-dividend-as-it-reports-3-5b-first-quarter-profit-1.1393548">healthy returns</a> to shareholders. </p>
<p>The cost to send paper bills is negligible as a percentage of the service cost and the advertising and promotional budgets of banks and most billing organizations. Telecoms are not only profitable, but since they provide Canadians with internet services, they earn revenue from consumers using the web to access, pay their bills and download their billing information. </p>
<h2>People like paper bills</h2>
<p>Paper bills and statements have value to most consumers, especially those who bank and pay online. Research <a href="https://www.emerald.com/insight/content/doi/10.1108/IJBM-08-2013-0088/full/html">that I have been conducting since 2010</a> indicates that almost 90 per cent of online Canadians aged 18 to 90 continue to receive paper bills. </p>
<p>When I ask why, they indicate wanting control over their own behaviour, and some semblance of control over the organization. </p>
<p>They also want the paper bill as a <a href="https://www.pitneybowes.com/us/shipping-and-mailing/case-studies/4-reasons-consumers-prefer-paper-bills-statements.html">reminder to pay</a>. They say that e-reminders get lost in their digital in-boxes because they are busy people. This is also due to the lack of any clear indication on e-bills that differentiates them from other email correspondence or spam. </p>
<p>They worry that if the bill is only in digital form, they won’t review it, or they won’t notice errors. This <a href="https://www.fdic.gov/news/conferences/consumersymposium/2018/documents/jorring-paper.pdf">could cost</a> them due to mistakes made by organizations, overcharging for services that the consumers did not understand, charges for products or services they didn’t authorize, inappropriately high interest charges for late payment and other billing charges. </p>
<h2>Memory is better with paper</h2>
<p>Consumers also worry about their ability to understand complex financial information in digital form. Research studies done by financial and consumer lobby groups show <a href="https://www.nclc.org/images/pdf/banking_and_payment_systems/paper-statements-banking-protections.pdf">that comprehension</a> and memory are better when reading information on paper than digitally. </p>
<p>The levels of bankruptcy, <a href="https://business.financialpost.com/personal-finance/debt/canada-q3-household-debt-to-income-ratio-rises">household debt</a> and outstanding credit card balances have never been higher in Canada. </p>
<p>The increase of online and mobile banking adoption by Canadians, and the pressure by billing organizations and banks to discontinue paper bills and statements, seems to me an important element of increasingly poor financial management by Canadians. In 2015, the Canadian government was so concerned that they introduced <a href="https://www.canada.ca/en/financial-consumer-agency/programs/financial-literacy/financial-literacy-strategy.html">a financial literacy strategy.</a> </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/318063/original/file-20200302-18262-1mqiaix.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C7200%2C4796&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/318063/original/file-20200302-18262-1mqiaix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/318063/original/file-20200302-18262-1mqiaix.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/318063/original/file-20200302-18262-1mqiaix.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/318063/original/file-20200302-18262-1mqiaix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/318063/original/file-20200302-18262-1mqiaix.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/318063/original/file-20200302-18262-1mqiaix.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Paper bills could assist financial literacy efforts.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Finally, and regardless of whether they are pro-paper bills or not, my research indicates that 57 per cent of Canadians who pay their bills online worry about their increasing dependence on large organizations if their information is only in digital form. </p>
<p>The <a href="https://www.nytimes.com/2018/04/04/us/politics/cambridge-analytica-scandal-fallout.html">Cambridge Analytica</a> scandal, along with the increasing number of hacks, digital fraud and ransomware events, has taught consumers that no one is entirely safe online. </p>
<h2>No proof?</h2>
<p>Could one of the reasons be that banks and billing organizations don’t want external proof of transactions so they can reduce the ability of their customers to demand action from them? </p>
<p>Some of their <a href="https://www.bmo.com/home/popups/global/firstbank-service-agreement">service agreements</a> make clear that customer information produced by the bank is the only authentic evidence of a transaction. Unlike the paper bill, which is produced by the bank, a digital bill on a consumer’s computer or phone, or printed from a PDF file, is not considered proof unless the bank or billing organization decides it is. </p>
<p>Paper bills and statements can also be shared openly and easily. Those who share a household and have responsibility for its financial well-being, and who receive paper bills and statements, can all share access to the information. </p>
<p>The information isn’t hidden away in the digital account of one person; it’s not restricted to the account holder. Sharing access by using paper also helps avoid the risk of being accused of participating <a href="https://www.cbc.ca/news/business/banks-deny-compensation-online-fraud-security-1.5322982">in a fraudulent</a> transaction that could ensue if someone shares the password to an online account.</p>
<p>Paper bill shamers say that it is easy to review financial information online, but they overlook the time and effort it takes to access online accounts, <a href="https://www.consumer-action.org/news/articles/paper-or-digital-winter-2018-2019">in part because consumers must remember various usernames and passwords</a>. Two-factor authentication <a href="https://www.rbcroyalbank.com/caribbean/digital-hub/security-two-factor.html">that some organizations</a> are beginning to push offers another level of security against fraud, but also, more complexity for those accessing online accounts. </p>
<h2>Trees at risk?</h2>
<p>The virtual digital world is firmly planted in the real world of servers that require a tremendous amount of energy consumed in terms of running and cooling these machines. Paper producers <a href="https://twosidesna.org/paper-production-supports-sustainable-forest-management/">plant more trees than they harvest</a>. If the end game is no more paper documents, then the <a href="https://www.twosides.info/myths-and-facts">land used to grow trees</a> could conceivably be sold off for use to create more and more server farms. In a time when solving the climate crisis is critical, this is not a satisfactory trade-off for me. </p>
<p>The war on paper bills and statements could be thought of as a war on personal financial identity. </p>
<p>Just as Facebook disrupted social interactions, consumers are realizing that their financial identity is at risk. Their identity is being subsumed in a world of software and algorithms. </p>
<p><a href="https://www.ctvnews.ca/business/cra-puts-focus-on-paper-returns-as-tax-filing-season-opens-1.4824545">If governments</a> wish to protect their citizens financially, they should enshrine in law a requirement for companies and banks to send paper bills and statements. I encourage the <a href="https://nationalpost.com/pmn/news-pmn/canada-news-pmn/regulator-to-clarify-whether-wireless-providers-must-offer-paper-bills">CRTC to stop listening to the big voices of telecoms</a> and starting listening to Canadians.</p><img src="https://counter.theconversation.com/content/131960/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joanne E. McNeish does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In an era of data breaches and data privacy concerns, governments should enshrine in law a requirement for companies and banks to send paper bills and statements in order to protect consumers.Joanne E. McNeish, Associate Professor, Marketing, Toronto Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1065712019-05-17T13:07:45Z2019-05-17T13:07:45ZSouth Africans don’t trust companies to protect their data privacy<figure><img src="https://images.theconversation.com/files/253201/original/file-20190110-32148-1na324e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Companies aren't living up to their privacy policies' promises.</span> <span class="attribution"><span class="source">mindscanner/Shutterstock</span></span></figcaption></figure><p>Consumers expect that organisations will respect their privacy. For instance, when you buy something online, you take it for granted that your bank details will be kept secure. Or if you provide your identity number at a store, you trust that this will be kept confidential.</p>
<p>But the reality in South Africa is very different. In 2017, a massive data breach saw tens of millions of South Africans’ personal information leaked. A real estate company using an open web server <a href="https://www.timeslive.co.za/news/south-africa/2017-10-18-top-real-estate-company-admits-to-being-unwitting-source-of-countrys-largest-personal-data-breach/">was responsible</a>. There have been <a href="https://www.fin24.com/Tech/News/ster-kinekor-website-flaw-puts-7-million-users-data-at-risk-20170316">other instances</a> also involving <a href="https://www.fin24.com/Companies/Financial-Services/data-breach-under-control-and-under-investigation-says-liberty-ceo-20180617">large companies</a>.</p>
<p>There are legislative measures in place to protect people’s data, among them the <a href="http://www.justice.gov.za/inforeg/docs/InfoRegSA-POPIA-act2013-004.pdf">Protection of Personal Information Act</a>. An <a href="http://www.justice.gov.za/inforeg/">Information Regulator</a> has been established with the objective of protecting citizens’ personal data. It is also responsible for monitoring and enforcing organisations’ compliance of all organisations with the requirements of the Act once it comes into effect.</p>
<p>Ultimately, though, organisations remain accountable for implementing measures in line with the Act to protect their customer data. Public and private organisations are legally obliged to implement minimum requirements to protect consumer data when they process it. </p>
<p>But <a href="https://www.emeraldinsight.com/doi/full/10.1108/ICS-03-2018-0036">research</a> conducted at the University of South Africa has found there’s a huge disconnect between the privacy that consumers expect and are legally entitled to, and what organisations are doing to meet their obligations.</p>
<p>And <a href="https://www.emeraldinsight.com/doi/full/10.1108/ICS-03-2018-0036">a survey</a> we conducted as part of the research found that consumers are becoming increasingly disenchanted with South African organisations when it comes to issues of privacy and data protection. </p>
<p>These issues can be addressed in several ways. Organisations must start complying with the Protection of Personal Information Act. This will bring South Africa in line with more than 120 countries that have already enacted <a href="https://www.consumersinternational.org/media/155133/gdpr-briefing.pdf">data privacy legislation</a>. </p>
<p>Organisations can also adopt and adapt guidelines issued by Information Regulators elsewhere in the world, and can study best practice from other jurisdictions. It could also help organisations if the Information Regulator in South Africa issued guidelines to implement the Act. It would also be useful to set up ways of holding organisations to account. Consumers need to know where to report companies that don’t protect their data.</p>
<h2>Deep mistrust</h2>
<p><a href="https://www.emeraldinsight.com/doi/full/10.1108/ICS-03-2018-0036">Our survey</a> found that consumers’ were very concerned about the protection of their data. As much as 64% of the participants know someone personally whose personal data has been misused. Unwanted marketing was common, suggesting that contact information which was meant to be kept private, had been shared with others.</p>
<p>Of the 1007 people who responded to our survey across South Africa’s nine provinces, 83% were concerned about the protection of their data. About 94% were especially worried about safeguarding their identity; 92% expressed concerns about the security of their financial data, and 80% about their health-related data. These concerns were higher (79%) for online transactions when compared to face-to-face transactions (57%).</p>
<p>Consumers also weren’t sure what to do if their privacy had been violated. Only 37% felt they knew where they have to submit a complaint in a violation.</p>
<p>Overall, the survey suggested that South African consumers weren’t confident that organisations always used their information lawfully and for the agreed purposes. The survey outlined all of the act’s major conditions – and most respondents felt companies weren’t meeting any of these. This, of course, affects consumer trust and confidence.</p>
<p>It has bigger implications, too. If a private or public company is domiciled in South Africa, it must comply with the Protection of Personal Information Act. If it processes the data of citizens in another jurisdiction, like the European Union (EU), it must also comply with the EU’s regulations for the processing of personal information.</p>
<p>But, given that consumers feel that so many South African companies seem not to be complying with local data regulations, it’s unlikely they are operating in line with global data rules such as the EU’s <a href="https://eugdpr.org/">General Data Protection Regulation</a>. This may affect companies’ ability to engage in international trade.</p>
<h2>Interventions</h2>
<p>Organisations must take heed of their consumers’ privacy concerns, and ensure the methods they use to process and store data are in line with both the law and customers’ expectations. Compliance plans would be useful as compiled by organisations based on international best practice.</p>
<p>It is also obvious from the survey that consumers don’t know who to complain to when their privacy has been violated. Consumers may also not know what the Act entails and what their rights are as only 44% indicated that they have good knowledge about it. The Information Regulator and other consumer organisations should consider awareness and education campaigns to address these gaps. </p>
<p>Consumers indicated that their preference for receiving more information about their privacy rights are mainly the Internet followed by organisations to whom they give their data, as well as the government and banking institutions.</p><img src="https://counter.theconversation.com/content/106571/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This work is based on research supported wholly by the National Research Foundation of South
Africa (grant number: 105735)</span></em></p>South African consumers aren’t confident that organisations always use their information lawfully and for agreed purposes.Adele Da Veiga, Senior lecturer, University of South AfricaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1107932019-02-04T02:51:54Z2019-02-04T02:51:54ZResearch shows most online consumer contracts are incomprehensible, but still legally binding<figure><img src="https://images.theconversation.com/files/256950/original/file-20190203-21298-fty6bt.jpg?ixlib=rb-1.1.0&rect=806%2C221%2C7725%2C5332&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The law assumes consumers read the terms and conditions of their contracts, and in a dispute, they are held responsible for the written terms of any agreements.</span> <span class="attribution"><span class="source">from www.shutterstock.com</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>Most of us will have entered into consumer contracts with large companies and ticked a box to confirm we understand the terms and conditions – without bothering to read the fine print.</p>
<p>We accept <a href="https://en.wikipedia.org/wiki/Standard_form_contract">standard form contracts</a> when using social media, booking flights, opening a bank account, subscribing to a gym or renting a car. In all these cases, companies offer pre-drafted standardised agreements that are not negotiable. </p>
<p>At the same time, consumers are legally assumed to read the terms and conditions of their contracts. Because of this “<a href="https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=2144&context=flr">duty to read</a>”, consumers are held responsible for the written terms of their agreements, regardless of whether they read them or not.</p>
<p>While consumers have the legal burden to read their contracts, companies do not have a general duty to offer readable ones. As our <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3313837">research</a> shows, most of them are incomprehensible. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/if-small-print-terms-and-conditions-require-a-phd-to-read-should-they-be-legally-binding-75101">If small print ‘terms and conditions’ require a PhD to read, should they be legally binding?</a>
</strong>
</em>
</p>
<hr>
<h2>Checking readability</h2>
<p>We have studied popular online consumer contracts and examined the readability of the 500 most popular <a href="https://www.lawexperts.com.au/commercial-law/sign-wrap-contract-new-type-online-contract/">sign-in-wrap contracts</a> in the United States. </p>
<p>These contracts, now used routinely by popular companies such as Facebook, Amazon, Uber and Airbnb, assume that the user agrees to the website’s terms and conditions by signing up. During the sign-up process, the website provides a hyperlink to its terms and conditions. But the consumer is not required to actually access the terms. </p>
<p>Many scholars argue that <a href="https://lsr.nellco.org/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1199&context=nyu_lewp;Does">consumers do not read their contracts</a>. Nonetheless, courts enforce these contracts based on the assumption that consumers had an opportunity to read them. In other words, according to this reasoning, consumers freely choose to ignore these contracts. </p>
<p>To examine this legal argument, we applied two well-established linguistic tools to check if consumers can actually read sign-in-wrap contracts. We used the <a href="http://www.readabilityformulas.com/flesch-reading-ease-readability-formula.php">Flesch Reading Ease</a> and the <a href="https://en.wikipedia.org/wiki/Flesch%E2%80%93Kincaid_readability_tests">Flesch-Kincaid</a> tests. Both tests are based on two factors: the average sentence length and the average number of syllables per word. </p>
<h2>Consumer contracts as dense as academic papers</h2>
<p>We found that according to these criteria, the contracts examined in our sample are very hard to read. In fact, they are written at the same level as academic articles. Reading these agreements requires, on average, more than 14 years of education. This result is troubling, given the <a href="https://contently.com/2015/01/28/this-surprising-reading-level-analysis-will-change-the-way-you-write/">recommended reading level for consumer materials is eighth grade</a>.</p>
<p>Our study shows consumers cannot be expected to read their contracts. A contract is based on mutual assent, but consumers cannot truly assent to something they cannot read. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/comic-contracts-and-other-ways-to-make-the-law-understandable-90313">Comic contracts and other ways to make the law understandable</a>
</strong>
</em>
</p>
<hr>
<p>We hope such findings will encourage policymakers to revisit their approach to consumer contracts. For starters, legislatures should require companies to better communicate their terms. Beyond that, we should also detail systematic and objective criteria as to what is readable.</p>
<p>At the same time, courts should not assume consumers can read their contracts. Judges should hence be more willing to excuse consumers from unreadable agreements. </p>
<h2>Where to from here</h2>
<p>Linguistic tests may serve as a good starting point. But such tools should be used only as a perquisite legal standard for examining readability. Companies might deliberately generate good readability scores but that does not necessarily mean the text is actually easy to understand. </p>
<p>The purpose of plain language requirements is not to increase readability <em>per se</em>. Rather, it is to improve the chances that users will be able to understand these agreements, shop among them, and make informed decisions. </p>
<p>Making contracts readable does not rest other concerns, such as the incorporation of unfair terms. Policymakers need to take further steps to level the consumer-business playing field. Currently, the law neglects to impose on companies a clear and operational duty to draft readable contracts. Without a clear incentive, companies will continue to use unreadable texts as their contracts. </p>
<p><em>This research is a joint project, co-authored with Dr Uri Benoliel at the College of Law and Business in Ramat Gan, Israel.</em></p><img src="https://counter.theconversation.com/content/110793/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samuel Becher does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Legally, consumers are expected to read any online contracts they enter into, but companies have no obligation to offer readable agreements. As research shows, most are incomprehensible.Samuel Becher, Associate Professor of Business Law, Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1014622018-08-21T13:44:25Z2018-08-21T13:44:25ZInquiry sets out how parts of the private health care sector in South Africa can be fixed<figure><img src="https://images.theconversation.com/files/232462/original/file-20180817-165943-p5tvvc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>A <a href="http://www.compcom.co.za/healthcare-inquiry">Health Market Inquiry</a> into South Africa’s private health care sector has established that the market is dominated by a few players. In such an environment, non-competitive behaviour such as collusion and excessive pricing tends to <a href="https://theconversation.com/why-the-dominance-of-big-players-is-bad-for-south-africas-economy-92058">thrive</a>. These dominant firms withhold key information which leaves consumers disempowered and at the mercy of monopolistic enterprises.</p>
<p>South Africa’s medical schemes market reflects acute domination by a few players. A few examples illustrate this. Among a total of 22 medical schemes open to the public, one scheme, Discovery Health Medical Scheme, is home to 55% of all medical scheme beneficiaries. Among the administrators contracted by medical schemes to manage and administer medical insurance, two companies – Discovery Health and Medscheme – account for 76% of total gross contribution income. And as much as 83% of private hospital beds are owned by the three large hospital groups: Netcare, Mediclinic and Life.</p>
<p>On top of this a handful of big corporations have controlling stakes in the few players that dominate the private health care industry, with some individuals serving as directors on the boards of multiple companies. </p>
<p>The report argues that the lack of competitive pressure feeds high prices for medical goods and services. The situation is made worse by information asymmetry – customers know much less than the companies offering the services – which makes for uninformed consumers. </p>
<h2>Closing the gap</h2>
<p>The report makes recommendations to close this information gap under five broad themes:</p>
<p>Standard benefit packages: Medical schemes should be required to offer a similar standard benefit package. This will allow those purchasing medical insurance to make better informed choices based on value-for-money.
This should cover prescribed minimum benefits as well as cost-effective out-of-hospital care and primary and preventive health care.</p>
<p>In this way, consumers can easily compare the prices of the basic option offered by different schemes and make decisions based on value-for-money. The coverage offered under this package will be exempt from co-payments to medical schemes or additional billing by providers. </p>
<p>Reimbursement and pay for performance: Doctors and specialists are currently paid for every individual service provided to the patient on a reimbursement basis, called fee-for-service payment. This often results in overuse and over-prescription, known as supply-induced demand. The problem of supply-induced demand is worsened by the fact that the prices of medical services are unregulated.</p>
<p>This needs to change and alternative ways to reimburse doctors and specialists needs to be found that links the service they offer to how they perform. </p>
<p>Medical brokers: The position and role of brokers in the South African medical aid industry has been <a href="https://theconversation.com/why-south-africa-needs-to-discipline-the-private-healthcare-industry-100410">precarious</a>. For one, its not clear whose side they’re on as they are often paid by and working for only one specific scheme which dilutes their objectivity.</p>
<p>And the fact that the majority of consumers are allocated a broker by default, through a practice called opt out, is highly problematic.</p>
<p>The report recommends that the opt out practice should be changed to one that allows people to opt in. Scheme members will be able to exercise their choice of making use of the services of a medical broker – or not – on an annual basis. </p>
<p>Clients without brokers will pay proportionally lower scheme membership fees. They will also be able to directly engage with medical schemes rather than through brokers, including applying for membership.</p>
<p>Disclosure of information: The report recommends that customers must be given far more information than is currently the case. This should include, for example, details on the costs of particular care. And, as a matter of course, service providers should declare their interests in facilities being used. For example, a service provider should provide the patient with information on their shareholding in the facility where the service is being provided. They must also declare their financial interest in any product they use, dispense or prescribe.</p>
<p>Another recommendation is that all fee-for-service tariffs should be published and displayed at each place where patients make contact with the health care system. This includes the consulting rooms of doctors and specialists as well as hospital reception areas. Other information of interest and value to the clients of private medical schemes should also be put in the public domain. This could include information on the results and value of adopting alternative methods to pay health care providers.</p>
<p>Information on administrative costs and income from broker fees should also be published by the Council for Medical Schemes on an annual basis.</p>
<p>Voice and participation: The report calls for consumer activism. This includes attendance by scheme members of their insurer’s Annual General Meeting. </p>
<p>The report also calls for activism by civil society organisations. These can make representations to the proposed forum responsible for setting fee-for-service tariffs.</p>
<h2>The long road ahead</h2>
<p>A number of factors will determine how fast, and how far, change takes place.</p>
<p>Certainly, the legislative changes needed to make it possible for the inquiry’s recommendations to be implemented will take time. And the success of many of the initiatives will ultimately depend on buy-in from medical schemes, scheme administrators, and medical practitioners. </p>
<p>Equally critical will be the capacity to effectively manage and to hold accountable new institutions – such as a Supply-Side Regulator – as proposed in the report.</p><img src="https://counter.theconversation.com/content/101462/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frederik Booysen does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Findings from South Africa’s Health Market Inquiry makes recommendations to close the information gap between service providers and consumers.Frederik Booysen, Professor of Economics: School of Economic and Business Sciences Frederik Booysen, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1004102018-07-25T14:45:55Z2018-07-25T14:45:55ZWhy South Africa needs to discipline the private healthcare industry<figure><img src="https://images.theconversation.com/files/229060/original/file-20180724-194143-1lj4nb6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>If a service is provided by a company rather than government, this does not automatically mean a market is at work. The point is fairly obvious but has passed many in South Africa by.</p>
<p>Private provision of services is moving into the spotlight in South Africa as the government looks to make the health system more accessible to the poor. One aspect is the <a href="https://www.huffingtonpost.co.za/2018/07/06/5-things-you-need-to-know-about-the-healthcare-market-inquiry_a_23475961/">Health Market Inquiry</a>, established by the Competition Commission and chaired by former Chief Justice Sandile Ngcobo. It recently released a provisional report recommending more regulation of private health care. It has invited comment on its ideas.</p>
<p>It is absolutely inevitable that whatever proposals it comes up with will be <a href="https://bhekisisa.org/article/2016-01-20-motsoaledi-accused-of-seeking-justification-to-control-prices">attacked</a> as an assault on the free market in health care. This will ignore the reality – that there is no market in health care in South Africa, at least not one which works in the way in which markets are meant to work.</p>
<p>To get an obvious point out of the way first, markets work only for people who have enough money to take part. So it is true that a healthcare market in South Africa would exclude many people who cannot afford private care. But that is not the only problem with the private healthcare system – another is that even those who are able to join medical schemes do not get the benefits markets are meant to offer.</p>
<p>For markets to <a href="http://www.compcom.co.za/wp-content/uploads/2018/07/Health-Market-Inquiry-1.pdf">work</a> as they are meant to, consumers must be able to make informed choices: they must have both a real right to choose and enough information to make that choice. But information and choice operate weakly in private healthcare and not at all in the private health insurance offered by medical aids.</p>
<p>This places the South African debate about healthcare in perspective. The Competition Commission and the health ministry are not trying to abolish the market, they are trying to make it work. The accurate debate is about whether they are doing it in the best possible way.</p>
<h2>No real choice</h2>
<p>It might be true that people who can afford private medical care can choose their general practitioner. But that is where it ends. If patients need specialised care or hospital treatment, they don’t choose the specialist or the place where they will be treated. </p>
<p>And so they have no way of ensuring that they get the best possible care. While popular wisdom in the suburbs often assumes that all private doctors and hospitals are good, inevitably some are a great deal better than others and some are no good at all. But consumers do not make an informed choice on where to go and who to go to, although this is a far more important decision than buying a kettle.</p>
<p>Informed <a href="http://www.compcom.co.za/wp-content/uploads/2018/07/Health-Market-Inquiry-1.pdf">choice</a> of a medical aid scheme is just about non-existent. Most people belong to the scheme their employer chooses. If they are “lucky” enough to have a choice in theory, they do not have one in practice. Medical aids do not <a href="https://www.health24.com/News/sas-private-healthcare-not-competitive-20180705">publicise</a> what they do and the language they often use most people can’t understand and so there is no way to “shop around” in ways which would make an informed choice possible.</p>
<p>The situation is quite the same when people have joined schemes. Information on what is allowed and what is not may be understandable to doctors and pharmacists, but not to scheme members.</p>
<p>The supposed solution is the <a href="https://www.fin24.com/Companies/Health/calls-to-include-health-market-inquiry-findings-in-new-medical-aid-regulations-20180723">medical aid broker</a>, who is meant to help consumers to choose and to deal with the scheme after they join. But the brokers are paid by the schemes and so it is no surprise that they are there to look after the scheme, not the consumer.</p>
<p>Brokers direct people to the schemes they are working for, not those which will best meet the needs of the consumer. Anyone who has a problem with a medical aid’s decision will soon find that the broker is a public relations officer, not a consumer representative. Their job is to justify the scheme’s decision, not to question it.</p>
<h2>Pro -market moves</h2>
<p>Given all this, the Health Market Inquiry’s proposal that healthcare providers and funders should be regulated is a pro-market move – it seeks to make informed choice more of a factor than it is now. There is room for debate on whether it is going about it in the best way. But to claim that it is an <a href="https://bhekisisa.org/article/2016-01-20-motsoaledi-accused-of-seeking-justification-to-control-prices">attack on markets</a> ignores the way in which private healthcare operates.</p>
<p>Similarly, an amendment to <a href="https://businesstech.co.za/news/government/253207/these-are-the-10-massive-medical-aid-changes-you-need-to-know-about/">the Medical Aid Schemes Bill</a> which would abolish brokers is currently up for discussion. It, too, is not an attack on the market. Its likely effect would be to force brokers into the customer relations departments of the medical schemes, improving market information by ensuring that consumers know that they are dealing with people who work for the schemes, not for them. </p>
<p>Again, to oppose this measure is not to defend the market – it is the opposite. To argue against it is to say that a market in which people know who they are dealing with and can make informed choices is not a good idea.</p>
<p>The tendency to assume that private provision means that there is a market even when there is not is not restricted to health care. For years, it was assumed in the mainstream that the market was delivering satellite television when there was only <a href="https://mybroadband.co.za/news/broadcasting/226269-how-icasa-proposes-the-multichoice-dstv-monopoly-should-be-broken.html">one supplier</a>. Moving from services to goods, many beer drinkers no doubt toast the market as they choose between a range of labels produced by one company. </p>
<p>More generally, concentration in the formal economy means that most goods are produced by subsidiaries of a handful of companies – and sold in stores owned by only two or three firms. While competition between a couple of firms is technically a market, it is hardly one which offers strong benefits to consumers.</p>
<h2>Making markets work</h2>
<p>This has two implications for South Africa’s economic debate. The first is that not all proposals for regulating private economic activity are an attack on the market. A key feature of the country’s economy is that it is dominated by very few players and so markets often do not work as they should. A stronger government role could mean stronger, not weaker, markets.</p>
<p>The second is that, in these circumstances, the claim that markets must be left alone very often means that there is a need to leave existing private providers alone. This hides the reality that, in current circumstances, the challenge is not to protect private providers but to ensure that they really are subjected to the rules by which markets are meant to force them to play.</p><img src="https://counter.theconversation.com/content/100410/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven Friedman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Debates around South Africa’s health market inquiry must remember that not all proposals for regulating private economic activity are an attack on the market.Steven Friedman, Professor of Political Studies, University of JohannesburgLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/941472018-04-02T18:59:07Z2018-04-02T18:59:07ZWill Amazon be your next bank and health insurance?<figure><img src="https://images.theconversation.com/files/212831/original/file-20180402-189801-800vup.jpg?ixlib=rb-1.1.0&rect=0%2C162%2C3500%2C1886&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Amazon founder Jeff Besos.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/samchurchill/6927955020/in/photolist-byczEm-4x4zhh-49zDrd-foChCZ-fpwE5Y-GXvbZ-GQEoL-exQZ9-FaR6g-AoqF-dEMn5a-8MpFbB-JUbAJa-56PcCG-fyGpPJ-GQC7R-GQEw3-UZz3nW-fvf9tL-CXEft-fNifdn-c7cgmE-c7cgaJ-px3ycA-4GH29q-4GH2iN-GY5Rj-4GLVHG-DkoV-eCS3sQ-c7ckwo-9cUXQ-s3etE-c7cc67-gpKR8-c5otZ9-ardYMw-c5osD7-dxUL1m-c7ci9J-GSQt1-c7cff1-zYEy-c5otNs-FvTFit-c5osry-ESAoM-c5oso9-c5osjw-c7ckNm">Sam Churchill/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><blockquote>
<p>“One of Mr. Rockefeller’s most impressive characteristics is patience.”</p>
</blockquote>
<p>This 1902 assertion by pioneering journalist Ida Tarbell described <a href="https://www.poynter.org/news/today-media-history-ida-tarbells-1902-1904-investigative-series-corruption-standard-oil">John D. Rockefeller</a>, one of the wealthiest men in the world in the early 20th century.</p>
<p>Today, it could as easily be used to describe Jeffrey Preston Bezos, the founder and CEO of Amazon, and <a href="http://money.cnn.com/2018/01/09/technology/jeff-bezos-richest/index.html">currently the richest man on Earth</a>. Bezos had to wait 14 years to see the first positive quarterly result of his company. In another testament to his long-term vision, he recently invested $42 million in the construction of a <a href="http://www.businessinsider.fr/us/everything-you-need-to-know-about-jeff-bezos-amazing-10000-year-clock-2013-8">10,000-year clock</a>. This 150-meter tall apparatus is being built within a mountain in Texas. It tells time in terms of decades and centuries rather than seconds and minutes, and its “cuckoo” mechanism will be activated only once a year. Bezos believes this gigantic endeavour – based on a prototype designed by the <a href="http://longnow.org/clock/">Long Now Foundation</a> – should be a timeless reminder to our species (as well as future civilizations) that humanity should nurture long-term ambitions.</p>
<p>“Relentless” is another way to describe Bezos. This was one of the names he considered for his online book-selling service back in 1997 (in fact, the URL relentless.com is still owned by Amazon and redirects to its main website to this day). His business objectives relentlessly grew from being the world’s largest bookseller, to becoming the “everything store” and then branching out to create the world’s greatest cloud service provider, with <a href="https://en.wikipedia.org/wiki/Amazon_Web_Services">Amazon Web Services</a> (providing data storage to clients ranging from NASA to Netflix). Not to mention the founding of Blue Origin, a spaceflight services company whose Latin motto “Gradatim Ferociter” means “Step by step, ferociously”. In 2013 Bezos shocked the media world by snapping up the <a href="https://www.theguardian.com/media/2013/aug/05/washington-post-sold-jeff-bezos-amazon"><em>Washington Post</em></a> for $250 million, roughly 1% of his wealth at the time, $22 billion. (He’s now up to $106 billion.)</p>
<p>Last year, Amazon raised many eyebrows by crossing into physical distribution territory with the <a href="https://theconversation.com/with-its-purchase-of-whole-foods-is-amazons-goal-to-revolutionise-food-distribution-93161">acquisition of Whole Foods Market</a> and its 473 stores in North America and the United Kingdom. This move made the shares of Walmart and other supermarket chains plummet, while raising Amazon’s own stock valuation by $15.6 billion. After the announcement of the deal, the rise in Amazon share prices alone was enough to cover the $13.7 billion cost of acquiring Whole Foods.</p>
<p>More recently, Amazon announced that it would partner with other giants like Berkshire Hathaway and JPMorgan to implement a <a href="http://money.cnn.com/2018/02/27/news/companies/amazon-health-care/index.html">health care solution for their combined 840,000 employees</a>. Is that the first stage of a road-map to offer health insurance worldwide? Finally, a few weeks ago, we learned that Amazon is in talks with large banks such as JPMorgan Chase to create a checking-account-like service.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/212614/original/file-20180329-189795-2t80s7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212614/original/file-20180329-189795-2t80s7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=316&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212614/original/file-20180329-189795-2t80s7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=316&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212614/original/file-20180329-189795-2t80s7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=316&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212614/original/file-20180329-189795-2t80s7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=397&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212614/original/file-20180329-189795-2t80s7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=397&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212614/original/file-20180329-189795-2t80s7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=397&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The 10,000 year clock being built by Jeff Bezos inside a mountain in Texas.</span>
</figcaption>
</figure>
<h2>How big is too big?</h2>
<p>As Amazon competes with Apple for the record of becoming the <a href="https://www.investors.com/news/technology/amazon-may-beat-apple-on-path-to-reaching-1-trillion-in-value/">first company in history to be valued at $1 trillion</a>, several experts start to question when antitrust regulation should step in to stop its relentless growth. In a brilliant research note published in the <em>Yale Law Journal</em>, Lina M. Khan argues that current US antitrust laws based on the principle of “consumer welfare” are ill-prepared to deal with what she calls the Amazon paradox: contrary to what antitrust theory predicts, Amazon does not raise its prices in spite of its growing dominance. She cites two reasons for the rationality of everlasting predatory pricing by online e-commerce platforms:</p>
<ul>
<li><p>Pursuing growth over profits has been historically rewarded by investors, who clearly believe in Bezos’ long-term vision.</p></li>
<li><p>Thanks to their dominant size and investor’s faith, Amazon can integrate across distinct business lines (retailer, marketplace, cloud service provider) to create the very infrastructure upon which its rivals came to depend. If, for instance, Amazon notices through its powerful data analytics that one new product category is growing, it can launch its own brand of the same product and rank it higher in its search results, effectively driving traffic and sales away from the newcomers.</p></li>
</ul>
<p>Yet whenever claims of monopolistic practices are levered against it, Amazon quickly points out that <a href="https://www.entrepreneur.com/article/306678">e-commerce represents less than 10% of brick-and-mortar sales</a>. Furthermore, it claims that Walmart sales alone – over $500 billion in 2017 – are almost three times bigger than Amazon’s. Add to this the fact that prices are kept low at Amazon and you can dismiss any charge of Amazon abusing its dominant position.</p>
<p>These arguments miss the main point raised by Khan in her “Amazon Paradox” note: Amazon should not be persecuted for antitrust based on consumer welfare criteria or overall retail market share dominance. Rather, more modern antitrust laws should focus on the methods online platforms the size of Amazon can use to inhibit competition. These methods include predatory pricing based on real-time analysis of marketplace competitors and vertical integration of logistics. Thanks to Amazon’s highly complementary business models, it has created a physical and online infrastructure empire that is quickly becoming the only competitive way to satisfy the growing need of <a href="https://theconversation.com/delivery-drones-swooping-down-to-prey-on-our-self-control-77994">instant gratification by online shoppers</a>. Lured by the lock-in mechanisms built into the “Prime” subscription services (which offers free next-day delivery and video streaming to subscribers), consumers cannot help but be ecstatic with this online shopping paradise. One quickly understands why Amazon Prime now captures 46% of online shoppers in the US and why the barriers to entry are becoming increasingly insurmountable to upstarts in this field.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/212615/original/file-20180329-189798-1vo6vvl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212615/original/file-20180329-189798-1vo6vvl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212615/original/file-20180329-189798-1vo6vvl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212615/original/file-20180329-189798-1vo6vvl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212615/original/file-20180329-189798-1vo6vvl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212615/original/file-20180329-189798-1vo6vvl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212615/original/file-20180329-189798-1vo6vvl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An undercover investigation reveals difficult working conditions at Amazon.</span>
<span class="attribution"><span class="source">Sunday Mirror</span></span>
</figcaption>
</figure>
<h2>The price of instant gratification</h2>
<p>Amazon definitely takes its “customer-centric” culture seriously. Few consumers are left unmoved by the killer value proposition it offers: a convenient, fast and reliable way of buying almost anything online. While customers have somewhat fallen out love with other tech giants like Apple and Google – both of whom recently plunged from 2nd and 3rd places to 29th and 28th places in the <a href="https://theharrispoll.com/reputation-quotient/">annual “Reputation Quotient” list by the Harris Poll</a> – Amazon has remained the first brand in the preference of US consumers for the past five years (with exception of 2015).</p>
<p>Behind stage, this constant battle to keep customers happy does come at a cost to Amazon employees, though. Cases of burnout or exhaustion have been documented in Amazon’s fulfilling centres, with workers reportedly falling asleep standing up during 55-hour-a-week marathons ahead of big events like Christmas or Black Friday. Or consider the story of a young British man whose night shifts in an Amazon warehouse working alongside robots <a href="https://www.theguardian.com/money/2018/jan/20/amazon-worker-warehouse">almost destroyed his social life and his psychic health</a> – all for a princely salary of £18,000 ($25,262) a year.</p>
<p>With no visible sense of irony, Amazon has recently produced a “Prime Original” TV series called <a href="https://www.amazon.com/Philip-K-Dicks-Electric-Dreams/dp/B075NTXMN9"><em>Electric Dreams</em></a> that portrays dystopic techno-futures envisioned by Philip K. Dick. In the second episode, called <a href="https://www.thestranger.com/slog/2018/01/16/25716031/autofac-an-episode-from-new-amazon-series-electric-dreams-is-about-how-to-destroy-amazon">“Autofac”</a>, they describe a post-apocalyptic world in which the last survivors of the human race are besieged by robot-driven factories that ignore the end of the world and keep pumping out drone-delivered boxes of products no one needs.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/212832/original/file-20180402-189827-15fgofv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212832/original/file-20180402-189827-15fgofv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=332&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212832/original/file-20180402-189827-15fgofv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=332&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212832/original/file-20180402-189827-15fgofv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=332&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212832/original/file-20180402-189827-15fgofv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=418&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212832/original/file-20180402-189827-15fgofv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=418&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212832/original/file-20180402-189827-15fgofv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=418&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Amazon’s own vision of the future in their new TV series <em>Electric Dreams</em>: a post-apocalyptic world ruled by drones and robots.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Antitrust laws need to evolve to catch up with 21st-century business practices in order to create a healthier competitive environment in the e-commerce sphere. This is no longer about saving the mom-and-pop stores in main street or keeping brick-and-mortar bookstores from disappearing: it is about making sure that future innovative players can thrive online without having to use the monopolistic infrastructure of Amazon or be confronted with their anti-competitive practices. Hopefully such measures will also limit the drive for lowering prices at all costs, with all the social and environmental consequences this race to the bottom entails.</p>
<p>In 1911, Rockefeller’s Standard Oil was broken up in 34 companies by the Sherman Antitrust act, separating them into distinctive activities of oil producing, transporting, refining and marketing. If “data is the new oil”, monopolistic data-driven platforms of today should maybe suffer the same fate in the name of competition, innovation and employee well-being.</p><img src="https://counter.theconversation.com/content/94147/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marcos Lima ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>How Jeff Bezos is plotting to take over the world – and why Amazon’s dominance in e-commerce could be a threat to innovation.Marcos Lima, Head of the Marketing Innovation and Distribution Program at EMLV, Pôle Léonard de VinciLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/879752017-11-27T20:21:31Z2017-11-27T20:21:31ZFront-of-pack nutrition labels: why are certain agro-industrial firms resisting?<figure><img src="https://images.theconversation.com/files/195894/original/file-20171122-6013-1nv3q9j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In a supermarket candy and cookie aisle. October 31, France adopted the NutriScore, a labelling system designed to inform consumers about the nutritional value of food choices.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/fr/image-photo/wallonia-belgium-october-17-consumers-shopping-265259207">Defotoberg/Shutterstock</a></span></figcaption></figure><p>After nearly four years of effort, France recently adopted a food-labelling system that will allow consumers to see and compare at a glance the nutritional value of packaged food products. The government approved the “NutriScore” label, and it was signed into law in October. But some of the biggest global agro-industrial conglomerates are refusing to adopt it.</p>
<p>According to the <a href="https://www.quechoisir.org/">UFC Que Choisir</a> consumer-advocate organisation, the <a href="http://www.alliance7.com/">Alliance 7</a> trade group, which includes major manufacturers of breakfast cereals, candies and cookies, is encouraging its members to instead select another type of nutritional label. The trade group’s position is aligned with that of six food conglomerates – Mars, Mondelez, Nestlé, Coca-Cola, Unilever et PepsiCo (known as the “Big 6”) – who announced in March that they intended to develop an alternative system for the European Union. Some are also members of the Alliance 7, and the trade group’s “manifesto” states that it wants to “help consumers making informed food choices”. But some elements indicate that this strategy may have other goals.</p>
<p>Specifically, we wanted to know the classification of products from the “Big 6”, based on the official NutriScore. The results show that the majority are classified as being of low nutritional value – and suggest that the big corporations’ efforts to install an alternative label may be aimed more at confusing consumers than helping them.</p>
<h2>A label adopted after a long political process</h2>
<p>It’s worthwhile looking back on the political process that led up to the adoption of NutriScore system, developed in our research team in Paris 13 University. Based on a report delivered in 2014, the previous French minister of health, Marisol Touraine, chose the principle of a voluntary front-of-pack nutrition label. The proposal, based on EU regulations, was approved in December 2015 and the decree published in July 2016 with, at that point, no specific choice for the label’s graphical format.</p>
<p>The announcement of the selection of the NutriScore in March 2017 was based on a series of scientific studies, in particular the results of a large-scale trial conducted in 60 supermarkets at the request of manufacturers and retailers. It compared several label formats, and the one selected, the NutriScore, was confirmed by France’s current health minister, Agnès Buzyn, and co-signed by the ministers of Agriculture and the Economy.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/195895/original/file-20171122-6039-4xzhmy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/195895/original/file-20171122-6039-4xzhmy.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=156&fit=crop&dpr=1 600w, https://images.theconversation.com/files/195895/original/file-20171122-6039-4xzhmy.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=156&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/195895/original/file-20171122-6039-4xzhmy.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=156&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/195895/original/file-20171122-6039-4xzhmy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=196&fit=crop&dpr=1 754w, https://images.theconversation.com/files/195895/original/file-20171122-6039-4xzhmy.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=196&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/195895/original/file-20171122-6039-4xzhmy.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=196&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">NutriScore, the official French front-of-pack label.</span>
</figcaption>
</figure>
<p>The NutriScore has five colours with the goal of informing consumers on foods’ nutritional qualities and thus allowing them to compare between food. The selection of this label was based on numerous studies published in international peer-reviewed journals. This approach that led the <a href="http://www.euro.who.int/en/countries/france/news/news/2017/03/france-becomes-one-of-the-first-countries-in-region-to-recommend-colour-coded-front-of-pack-nutrition-labelling-system">EU office of the World Health Organisation to commend</a> “France’s robust use of evidence to inform this decision”.</p>
<h2>An evidence-based label</h2>
<p>Studies conducted during the consultation process as well as independent research from teams at Inserm, INRA and other universities in France all have shown the superiority of NutriScore compared to other formats. Research looked at consumer perception, objective understanding and the labels’ impact on the nutritional quality of purchases in a range of experimental and real-life designs. The results of these studies are consistent, and show a greater efficiency of the NutriScore, both for the general population and for disadvantaged subgroups of the population or subjects suffering from chronic conditions like diabetes.</p>
<p>Despite the evidence, and in disregard of the positions of consumer associations who are asking for the NutriScore to be implemented, several agro-industrial lobbying groups have opposed the label. They resort to a simple strategy, shown to be successful in other sectors, such as tobacco: Unable to stop a political decision, they conjure up an alternative system – one potentially less damaging to their economic interests – by justifying its supposed advantages for the consumer.</p>
<p>The Big 6 have thus advocated a modified version of the “multiple traffic light system” <a href="http://www.foodlabel.org.uk/label/front-of-pack-labelling.aspx">currently used in the United Kingdom</a>, to be called “Nutri-Couleurs” in France.</p>
<h2>Ten pieces of data to help choose between a yogurt and a fruit purée</h2>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/195896/original/file-20171122-6039-1akzzu4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/195896/original/file-20171122-6039-1akzzu4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=156&fit=crop&dpr=1 600w, https://images.theconversation.com/files/195896/original/file-20171122-6039-1akzzu4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=156&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/195896/original/file-20171122-6039-1akzzu4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=156&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/195896/original/file-20171122-6039-1akzzu4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=196&fit=crop&dpr=1 754w, https://images.theconversation.com/files/195896/original/file-20171122-6039-1akzzu4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=196&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/195896/original/file-20171122-6039-1akzzu4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=196&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Modified British</span>
</figcaption>
</figure>
<p>Various studies compared this label with the NutriScore and it was shown to be less efficient. Indeed, the NutriScore provides only one indicator of colour for the overall nutritional quality of the food: the foods having the highest nutritional quality are labelled in green. The alternative label provides information for each nutrient – a food could be labelled in green for sugars, but other colours for salt or fats. This type of label can be more difficult to understand for consumers. To choose between two products – for example, a yogurt and a fruit purée – the consumer needs to quickly compare ten different pieces of information, instead of just two with the NutriScore.</p>
<p>Moreover, the alternative label requires consumers to prioritize the information it contains. Between a product high in salt and low in lipids, and another that’s high in lipids and low in salt, which to select? This system therefore tends to confuse consumers compared to a more synthetic system.</p>
<p>To understand better the manufacturers’ objectives in proposing an alternative label, let’s immerse ourselves in the world they would have us experience. In its “manifesto Nutri-Couleurs”, published in October, the Alliance 7 trade group proposes, as do the Big 6, a modified version of the British “traffic light” system. Instead of deriving the colours from the content in nutrients for 100g, as in the original version, the thresholds would be based on a portion – in other words, the quantity usually consumed by an individual, which is extremely variable from one person to the next. Because manufacturers set the portion sizes of their products, they could manipulate them to give a better classification for their products than they would have had otherwise. The thresholds for the various colours have not yet been disclosed, and appear to be still under discussion.</p>
<h2>How the Twix bar could go from red to amber</h2>
<p>The case of the Twix chocolate bar, revealed by the UFC Que Choisir is particularly relevant:</p>
<blockquote>
<p>“The labels for Bounty and Twix chocolate bars (produced by Mars Incorporated) indicate portions corresponding to a single bar of the confectionery, which is sold with two bars in an individual packet. [This change is enough] to drastically lower the level of sugar and fats in the portion”.</p>
</blockquote>
<p>Using the NutriScore, the Twix bar is classified as red (E), the lowest nutritional quality:</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/195898/original/file-20171122-6035-ksy73v.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/195898/original/file-20171122-6035-ksy73v.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=156&fit=crop&dpr=1 600w, https://images.theconversation.com/files/195898/original/file-20171122-6035-ksy73v.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=156&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/195898/original/file-20171122-6035-ksy73v.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=156&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/195898/original/file-20171122-6035-ksy73v.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=196&fit=crop&dpr=1 754w, https://images.theconversation.com/files/195898/original/file-20171122-6035-ksy73v.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=196&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/195898/original/file-20171122-6035-ksy73v.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=196&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Nutriscore for a Twix candy bar.</span>
</figcaption>
</figure>
<p>In the standard British system, all indicators are set to red, except for salt, which is set at amber:</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/195899/original/file-20171122-6027-ey82z5.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/195899/original/file-20171122-6027-ey82z5.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=156&fit=crop&dpr=1 600w, https://images.theconversation.com/files/195899/original/file-20171122-6027-ey82z5.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=156&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/195899/original/file-20171122-6027-ey82z5.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=156&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/195899/original/file-20171122-6027-ey82z5.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=196&fit=crop&dpr=1 754w, https://images.theconversation.com/files/195899/original/file-20171122-6027-ey82z5.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=196&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/195899/original/file-20171122-6027-ey82z5.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=196&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">British ‘traffic light’ label for a Twix bar.</span>
</figcaption>
</figure>
<p>With the modified label proposed by the “Big 6” and Alliance 7 group (of which Mars is a member), ratings are set based on the recommended portion – chosen by the manufacturer. Thresholds between colours not having been made public yet, the hypothesis is that that for red would be set at 20% of the reference intakes. Under this assuming, all indicators would change to… amber. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/195901/original/file-20171122-6061-11r3j5n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/195901/original/file-20171122-6061-11r3j5n.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=156&fit=crop&dpr=1 600w, https://images.theconversation.com/files/195901/original/file-20171122-6061-11r3j5n.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=156&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/195901/original/file-20171122-6061-11r3j5n.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=156&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/195901/original/file-20171122-6061-11r3j5n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=196&fit=crop&dpr=1 754w, https://images.theconversation.com/files/195901/original/file-20171122-6061-11r3j5n.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=196&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/195901/original/file-20171122-6061-11r3j5n.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=196&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Modified</span>
</figcaption>
</figure>
<p>Even with lower thresholds for red (15%, for example), most indicators would still be amber. And yet the product itself has not changed in the least.</p>
<h2>Fleury-Michon, Danone and McCain support the NutriScore system</h2>
<p>The EU commission confirmed the France’s selection of the NutriScore, justifying its support by the importance of public health. Given the consistency between the French and the EU positions, it’s worth asking why the members of the Alliance 7 trade group still refuse to use the NutriScore. Moreover, some retailers, including Intermarché, Auchan and Leclerc, have pledged to use the NutriScore on their products. Other agroindustry corporations, including Fleury-Michon, Danone and McCain, have also adopted the label.</p>
<p>To attempt to answer this question, we looked at the NutriScore classifications of the products from the Big 6 corporations. Thanks to the <a href="https://fr.openfoodfacts.org/">Open Food Facts</a> participative database, it’s possible to know the nutritional composition of most food products, and therefore the NutriScore classification even for those that do not provide this information.</p>
<p>The results indicate that corporations supporting the alternative label are those whose product portfolio contains foods high in fat, sugar or salt, all of which would be classified as lower nutritional quality in the NutriScore. Products featured include sweetened beverages, chocolate, confectionery, biscuits, breakfast cereals, ice creams or salty snacks. For example, in the Mars corporation, 100% of foods in the Open Food Facts database are classified as orange or red; for Mondelez, 86% of the products; and 55% for Nestlé, 54% for Coca-Cola, 52% for Unilever and 46% for PepsiCo.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/196110/original/file-20171123-18006-1pq0eo8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/196110/original/file-20171123-18006-1pq0eo8.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=244&fit=crop&dpr=1 600w, https://images.theconversation.com/files/196110/original/file-20171123-18006-1pq0eo8.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=244&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/196110/original/file-20171123-18006-1pq0eo8.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=244&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/196110/original/file-20171123-18006-1pq0eo8.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=307&fit=crop&dpr=1 754w, https://images.theconversation.com/files/196110/original/file-20171123-18006-1pq0eo8.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=307&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/196110/original/file-20171123-18006-1pq0eo8.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=307&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Distribution of NutriScore grades for Mars products.</span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/196107/original/file-20171123-17985-4jldjg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/196107/original/file-20171123-17985-4jldjg.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=244&fit=crop&dpr=1 600w, https://images.theconversation.com/files/196107/original/file-20171123-17985-4jldjg.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=244&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/196107/original/file-20171123-17985-4jldjg.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=244&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/196107/original/file-20171123-17985-4jldjg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=307&fit=crop&dpr=1 754w, https://images.theconversation.com/files/196107/original/file-20171123-17985-4jldjg.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=307&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/196107/original/file-20171123-17985-4jldjg.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=307&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Distribution of NutriScore grades for Mondelez products.</span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/196104/original/file-20171123-18021-8shsus.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/196104/original/file-20171123-18021-8shsus.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=244&fit=crop&dpr=1 600w, https://images.theconversation.com/files/196104/original/file-20171123-18021-8shsus.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=244&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/196104/original/file-20171123-18021-8shsus.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=244&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/196104/original/file-20171123-18021-8shsus.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=307&fit=crop&dpr=1 754w, https://images.theconversation.com/files/196104/original/file-20171123-18021-8shsus.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=307&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/196104/original/file-20171123-18021-8shsus.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=307&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Distribution of NutriScore grades for products from Nestlé.</span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/196109/original/file-20171123-17982-8c13qd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/196109/original/file-20171123-17982-8c13qd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=244&fit=crop&dpr=1 600w, https://images.theconversation.com/files/196109/original/file-20171123-17982-8c13qd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=244&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/196109/original/file-20171123-17982-8c13qd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=244&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/196109/original/file-20171123-17982-8c13qd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=307&fit=crop&dpr=1 754w, https://images.theconversation.com/files/196109/original/file-20171123-17982-8c13qd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=307&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/196109/original/file-20171123-17982-8c13qd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=307&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Distribution of the NutriScore grades for Coca-Cola products.</span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/196108/original/file-20171123-17988-4xz91i.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/196108/original/file-20171123-17988-4xz91i.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=244&fit=crop&dpr=1 600w, https://images.theconversation.com/files/196108/original/file-20171123-17988-4xz91i.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=244&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/196108/original/file-20171123-17988-4xz91i.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=244&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/196108/original/file-20171123-17988-4xz91i.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=307&fit=crop&dpr=1 754w, https://images.theconversation.com/files/196108/original/file-20171123-17988-4xz91i.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=307&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/196108/original/file-20171123-17988-4xz91i.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=307&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Distribution of NutriScore grades for Unilever products.</span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/196106/original/file-20171123-17992-j4w0q4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/196106/original/file-20171123-17992-j4w0q4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=244&fit=crop&dpr=1 600w, https://images.theconversation.com/files/196106/original/file-20171123-17992-j4w0q4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=244&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/196106/original/file-20171123-17992-j4w0q4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=244&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/196106/original/file-20171123-17992-j4w0q4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=307&fit=crop&dpr=1 754w, https://images.theconversation.com/files/196106/original/file-20171123-17992-j4w0q4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=307&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/196106/original/file-20171123-17992-j4w0q4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=307&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Distribution of NutriScore grades for PepsiCo products.</span>
</figcaption>
</figure>
<p>The position of the corporations refusing to adopt official EU and French label thus appears to be primarily guided by their commercial interests and their marketing and strategic vision of the situation. The use of an alternative label would lead to more consumer confusion rather than less. From our point of view, consumers deserve transparence on a topic as essential to their health as nutrition. They should decide whether the position of these corporations is respectful of this imperative – and to react accordingly.</p><img src="https://counter.theconversation.com/content/87975/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Serge Hercberg has received funding for his team's research from the French Public Health Department, the Ministry of Social Affairs and Health, ANR, Inca, ANSES, the University of Paris 13, the Fondation pour la Recherche Médicale and the Foundation Coeur et Artères.</span></em></p><p class="fine-print"><em><span>Chantal Julia has received funding for her research from Santé publique France, the Ministry of Social Affairs and Health and INCA.</span></em></p>France recently adopted NutriScore, a series of simple colour codes that will allow consumers to easily identify the healthiest foods. But some of the biggest food conglomerates are fighting back.Serge Hercberg, Professeur de nutrition, Université Sorbonne Paris NordChantal Julia, Médecin nutritionniste et enseignant chercheur, Université Sorbonne Paris NordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/859042017-10-22T19:03:50Z2017-10-22T19:03:50ZLike it or not, you’re getting the NBN, so what are your rights when buying internet services?<p><a href="http://www.tio.com.au/publications/news/2017-annual-report-released">Complaints</a> about the national broadband network (NBN), involving connection delays, unusable internet or landlines and slow internet speed are on the rise.</p>
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Read more:
<a href="https://theconversation.com/when-it-comes-to-the-nbn-we-keep-having-the-same-conversations-over-and-over-85078">When it comes to the NBN, we keep having the same conversations over and over</a>
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<p>Most Australians will be <a href="https://www.accc.gov.au/consumers/national-broadband-network/moving-to-the-nbn-for-consumers">forced to move onto the NBN</a> within 18 months of it being switched on in their area, and that means navigating what can be confusing new contracts.</p>
<p>So, what are your rights regarding landline and internet connections?</p>
<h2>Landlines</h2>
<p>Many consumers can and do manage without a landline. But particularly for those without a reliable mobile service, a landline can be essential. It is included in many phone and internet “bundles” offered by internet service providers.</p>
<p>Standard telephone services (primarily landline services) are subject to a <a href="https://www.acma.gov.au/Citizen/Phones/Landlines/Phone-connection-and-repair/customer-service-guarantee-for-phone-users-faqs">Customer Service Guarantee</a> enshrined in law under the Telecommunications Act 1997. </p>
<p>This means that standards apply to common services such as connection of a phone line, repairs of that line and attending appointments on time. The provider will have to pay compensation to the customer if the Customer Service Guarantee standards are not met. </p>
<p>Despite this, some providers suggest a customer waive his or her customer service guarantee rights. There are <a href="https://www.acma.gov.au/Citizen/Phones/Landlines/Phone-connection-and-repair/waiver-of-rights-under-the-csg-standard-fact-sheet">safeguards</a> for this waiver to be effective, primarily in that the provider must explain the nature of the rights to the customer before asking for the waiver. </p>
<p>The idea behind allowing providers to request a waiver of the Customer Service Guarantee is that it will allow customers to obtain cheaper services than would otherwise be the case. However, we might question the integrity of the consent typically given to such waivers, given consumers generally don’t read contracts and may have little understanding of the value of the Customer Service Guarantee or the likelihood of having to claim under it.</p>
<p>In any event, providers cannot ask for a waiver for <a href="https://www.acma.gov.au/Industry/Telco/Carriers-and-service-providers/Obligations/universal-service-obligation-obligations-i-acma">Universal Service Obligations</a>, which ensure accessible services for all customers, including those with a disability and those who live in remote areas. </p>
<h2>Internet</h2>
<p>The Customer Service Guarantee does not apply to internet connections – although the <a href="https://accan.org.au/our-work/1167-reliability-broadband-performance-and-affordability-are-telco-consumer-priorities">Australian Communications Consumer Action Network</a> has argued that it should. </p>
<p>So there are no statutory obligations for internet providers, or NBN Co, to connect customers within a particular time frame or respond promptly to complaints.</p>
<p>The main safeguard for customers for internet services is in the Australian Consumer Law (ACL). </p>
<p>If an internet service provider promises a particular broadband speed and does not provide that speed, the provider may have engaged in <a href="http://www.abc.net.au/news/2017-07-20/accc-warns-big-four-telcos-over-failure-to-deliver-on-nbn-speeds/8726268">misleading conduct</a> contrary to the ACL. Damages and even penalty payments could be awarded against it. And <a href="https://blogs.unimelb.edu.au/opinionsonhigh/2014/01/06/paterson-wong-tpg/">fine print</a> qualifications to the headline statement about internet speeds will not necessary protect the provider. </p>
<p>In addition, the Consumer Guarantees under the ACL (not to be confused with the Customer Service Guarantee under the Telecommunications Act) ensure that any equipment provided with an internet service must be of acceptable quality, and services be provided with due care and skill. </p>
<p>If these standards are not met, the consumer has a right to certain remedies under the ACL and damages for losses that result from the failure. These rights should go some way to protecting telecommunications consumers, although of course they do not directly guarantee that the provider will arrive on time for a scheduled appointment. </p>
<p>So while you may wish to charge your internet service provider for not turning up to an installation appointment, you wouldn’t get far under current Australian law.</p><img src="https://counter.theconversation.com/content/85904/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeannie Marie Paterson receives funding from the Australian Research Council.</span></em></p>Complaints about the NBN are growing quickly, but there’s limited options for recourse under Australian consumer law.Jeannie Marie Paterson, Associate Professor, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/855922017-10-19T03:43:54Z2017-10-19T03:43:54ZGift cards often end up in the bin, but extending their life might not help<figure><img src="https://images.theconversation.com/files/190326/original/file-20171016-27774-19ayjd3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Some gift cards can't be used online</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The New South Wales Parliament is <a href="https://www.nsw.gov.au/news-and-events/news/three-year-expiry-date-for-gift-cards/">introducing legislation</a>, creating a three year minimum expiry date on gift cards. This reform will go some ways towards solving the problem of unredeemed gift cards. But there are other issues besides short expiry dates.</p>
<p>Research from the United States, which has a <a href="http://www.ncsl.org/research/financial-services-and-commerce/gift-cards-and-certificates-statutes-and-legis.aspx">five year minimum expiry date</a>, shows an extended expiry term <a href="http://www.marketwatch.com/story/1-billion-in-gift-cards-go-unredeemed-2013-11-27">only slightly</a> improves the problem of unredeemed cards. </p>
<p>Minimum expiry dates are just the start of necessary reforms to gift cards. Gift card terms and conditions vary widely, making it hard for consumers to understand what their rights and obligations are.</p>
<p>Data shows that <a href="http://www.consumerinterests.org/assets/docs/CIA/CIA2013/OralSess2013/patterns%20of%20gift%20card%20non-redemption%20-%20horne.pdf">between 10% and 27%</a> of gift cards in Australia go unredeemed. </p>
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Read more:
<a href="https://theconversation.com/xenophon-is-right-to-call-for-law-reform-on-gift-cards-53045">Xenophon is right to call for law reform on gift cards</a>
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<p>The use of gift cards in Australia is growing, with about A$2 billion spent and 32 million cards issued in <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Dick_Smith/Submissions">2014</a> alone. </p>
<p>But <a href="https://treasury.gov.au/publication/gift-cards-in-the-australian-market-report-2/gift-cards-in-the-australian-market-report/appendix-7-sample-of-typical-complaints/">complaints</a> about gift cards are also increasing. So much so that gift cards have featured in two government inquiries in the last five years. </p>
<p>The <a href="https://treasury.gov.au/publication/gift-cards-in-the-australian-market-report-2/gift-cards-in-the-australian-market-report/">first</a> was prompted by growing concerns regarding risks faced by gift card holders. The <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Dick_Smith">second</a> arose from the failure of Dick Smith Electronics.</p>
<h2>Expiry dates aren’t a panacea</h2>
<p>Expiry dates are usually clearly identified on the gift card but <a href="https://www.shavershop.com.au/giftcertpurchase">some online terms and conditions</a> do not specify the term. Enforcing a fixed term would be beneficial to consumers in this regard.</p>
<p>But <a href="https://treasury.gov.au/publication/gift-cards-in-the-australian-market-report-2/gift-cards-in-the-australian-market-report/">one government inquiry</a> found no strong evidence that consumers would be assisted by a mandatory minimum expiry date for gift cards. </p>
<p>In fact, it’s possible gift cards with shorter expiry dates have higher redemption rates. The shorter time frame forces customers to use the cards fast, meaning customers are less likely to lose or forget to use the cards.</p>
<p>Furthermore, extending the expiry date increases administration issues and costs for retailers. Some stores even face difficulty in carrying liabilities from the gift cards for an extended period of time. For this reason the United States <a href="https://www.law.cornell.edu/cfr/text/12/205.20">allows</a> “dormancy fees” to be levied if cards have not been used for an extended period of time, like 12 or 15 months.</p>
<h2>Other issues with gift cards</h2>
<p>In addition to expiry dates, common problems with gift cards arise from the terms and conditions and the inability to use gift cards when the retailer becomes insolvent. This last point was particularly evident in the wake of the collapse of <a href="http://www.abc.net.au/news/2016-01-06/knight-dick-smith-and-the-folly-of-gift-cards/7071164">Dick Smith Electronics</a>. </p>
<p>Longer expiry dates will not stop consumers losing out if a retailer becomes insolvent. Gift card holders are unsecured creditors and in the event of <a href="http://theconversation.com/xenophon-is-right-to-call-for-law-reform-on-gift-cards-53045">insolvency</a> there is very little to stop the holder from losing the value of their card.</p>
<p>Redeeming a gift card quickly is the only means of minimising this risk, something a longer expiry date will not necessarily encourage. </p>
<p>In the course of research I am currently undertaking, I have also found issues with a wide range of gift card terms and conditions.</p>
<p>For instance, some cards allow partial redemption, but not refunds or <a href="http://www.rebelsport.com.au/GiftCard/Terms">cash reimbursements</a>, even for small balances remaining on the card after redemption.</p>
<p>Some terms and conditions specify limits on the use of the gift card. For example, the card must be used in store, but <a href="https://www.oroton.com.au/help/faq/">not online</a>. Consumers unaware of these limitations may be unpleasantly surprised when their gift card is unable to be used.</p>
<p>Some <a href="https://www.jbhifi.com.au/General/Help-Centre/Gift-Card-help/Gift-Card-Terms--Conditions/">retailers</a> offer replacement of lost or stolen gift cards provided proof of purchase or card identification number is available. When the holder of a gift card is not the original purchaser this may be problematic. If you do purchase a gift card as a present, you probably should either keep the receipt or pass it on to the receiver along with the gift card.</p>
<p>Consumers should also be aware that many <a href="http://www.kathmandu.com.au/terms-and-conditions/e-gift-card-terms">retailers</a> include a clause reserving the right to vary terms and conditions at their discretion. So the terms and conditions that applied when you purchased or received the gift card may not be the same as when you go to redeem it.</p>
<p>Regulating expiry dates is one step towards attempting to have consistency between gift cards, but could also cause more confusion if expiry dates are different in various states of Australia. </p>
<p>Ultimately regulation will not replace ensuring gift card holders understand all terms and conditions of individual gift cards. Protect yourself by making sure you know what you can, and can’t, do with any gift card you have.</p><img src="https://counter.theconversation.com/content/85592/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nicole Ibbett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The NSW government is set to mandate a 3 year minimum expiry period for gift cards, but it isn’t clear that this will solve the problem of unredeemed cards.Nicole Ibbett, Lecturer - School of Business (Accounting), Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/816412017-08-14T16:26:28Z2017-08-14T16:26:28ZThere’s still a gap between consumer protection and sustainability in Africa<figure><img src="https://images.theconversation.com/files/181345/original/file-20170808-22982-13wuvw4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Across the globe consumers are increasingly realising their power. In many countries this consumer consciousness, which marries consumer rights to sustainability issues, has been greatly helped by dynamic consumer protection policies. </p>
<p>In Africa, the rise of the middle class is fuelling a consumer economy and countries have begun to beef up their consumer protection policies. But they tend to be disconnected from sustainability issues.</p>
<p>South Africa, which leads the continent in terms of consumer protection regulations, showcases this limitation. The country has a good <a href="http://www.gov.za/documents/consumer-protection-act-regulations">consumer protection policy regime</a>, benefiting consumers and providing them with rights and redress possibilities. But it’s not linked to sustainability concerns.</p>
<p>The South African situation is not helped by the location of consumer affairs and sustainability in two separate government departments. Consumer protection policy is the responsibility of the Department of Trade and Industry. For its part, sustainability is primarily located in the Department of Environmental Affairs. As a result there’s a disconnect between the two.</p>
<p>South Africa – and other African countries suffering from this disconnection – need to develop a new framework. Our <a href="http://unctad.org/en/Pages/DITC/CompetitionLaw/ResearchPartnership/Sustainable-Consumer-Protection.aspx">study</a> identifies key areas countries should focus on to get to an integrated approach.</p>
<h2>International experience</h2>
<p>In recent years many countries have amended their consumer protection laws to connect them more closely with sustainability concerns. We looked at a number of international experiences to identify key aspects that could make up a comprehensive consumer protection framework. </p>
<p>Brazil provided helpful insights. It established the <a href="http://thebrazilbusiness.com/article/consumer-rights-in-brazil">National Consumer Bureau</a> in 2012. It was designed to plan, prepare, coordinate and implement the country’s national policy on consumer affairs.</p>
<p>Brazil’s system runs on a model that actively pursues an integrated approach to consumer protection and sustainability. It connects a number of government departments to work together. Departments and agencies in sectors like tourism, health, transport, aviation, municipalities. Together with business representatives they cooperate to ensure consumers rights.</p>
<p>Chile has implemented a <a href="http://en.unesco.org/greencitizens/stories/education-sustainable-consumption">national initiative</a> titled education for sustainable consumption. It was designed to provide consumers with information about the environmental and social impact of their daily choices. The underlying policy premise is encouraging responsible consumption.</p>
<p>In Europe, <a href="http://www.lexology.com/library/detail.aspx?g=4612ce31-735e-4c76-a832-46b65a22cb6e">Germany</a> aligned its consumer protection law with European Union consumer rights <a href="http://ec.europa.eu/consumers/consumer_rights/rights-contracts/directive/index_en.htm">directive</a>.
The emphasis is on giving consumers balanced and independent information so that they can make comparative choices.</p>
<p>China unveiled <a href="http://www.chinalawtranslate.com/consumer-protection-law-including-2013-amendments/?lang=en">new</a> consumer protection laws in 2014. Critical changes included raising penalties for false advertising, including false statements about human health or safety. But the law is silent on measures retailers must take to ensure the accuracy of product information.</p>
<p>While many countries are <a href="http://unctad.org/meetings/en/Contribution/CCPB_ADHOC_JAN15_CONT_BEST_en.pdf">incorporating</a> some elements of sustainability into their consumer protection legislation, it isn’t happening fast enough on the African continent.</p>
<h2>Lagging behind</h2>
<p>Our study showed that consumer protection policies in many African countries tend to be narrow. This is partly dictated by economic conditions. In poorer countries the basic needs of consumers are given precedence over sustainability considerations. </p>
<p>In addition, poverty limits consumer choices. Products that are produced in a way that doesn’t damage the environment tend to be more expensive. </p>
<p>Ideally, there should be a mix of policy instruments to enable consumers to make more sustainable consumption choices. These must touch on product safety regulations, product information provision and consumer information standards.</p>
<p>South Africa’s Consumer Protection Act has gone some way to closing the gap. The act provides for industries to voluntarily implement minimum sustainability compliance requirements. In addition, the government has powers to prescribe minimum industry sector standards.</p>
<p>But little has been done to put in place mechanisms to enforce these provisions. This also limits the insertion of sustainability goals into consumer protection policy. </p>
<p>On top of this the act should be amended with a view to:</p>
<ul>
<li><p>improving the definition of key concepts of sustainability and sustainable consumption</p></li>
<li><p>making the link between consumer protection and sustainability explicit</p></li>
<li><p>and setting down minimum requirements for self-regulation.</p></li>
</ul>
<p>Because sustainability straddles multiple policy domains, there needs to be joined-up implementation across government. </p>
<p>Consumer education and stakeholder engagement are important because individual’s choices and behaviour also have an impact.</p>
<h2>The way forward</h2>
<p>Sectoral self regulation is an immediate starting point. To trigger this, the business community should review business processes. They must find ways to integrate sustainability and consumer protection.</p>
<p>Debates among policymakers in regional bodies such as the African Union can play an important role. The advances that have been made in the EU provide <a href="http://ec.europa.eu/consumers/consumer_rights/index_en.htm">a good example</a>. </p>
<p>But these debates must be underpinned by the knowledge that poverty limits consumer choices. Basic needs of poor consumers need to be protected. South Africa has made a head start and can lead the way.</p><img src="https://counter.theconversation.com/content/81641/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laura Best is the Deputy Chairperson of the National Consumer Tribunal</span></em></p><p class="fine-print"><em><span>Miemie Struwig and Sibongile Muthwa do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The rise of the middle class in Africa is fuelling consumer economies and protection policies. But they tend to be disconnected from sustainability issues.Miemie Struwig, Professor, Department of Business Management, Nelson Mandela UniversityLaura Best, Special Assistant to the Vice-Chancellor of the Nelson Mandela University, Nelson Mandela UniversitySibongile Muthwa, Deputy Vice-Chancellor: Institutional Support Nelson Mandela University, Nelson Mandela UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/662202017-07-24T11:51:57Z2017-07-24T11:51:57ZMasterCard survives £14 billion class action but more could follow<figure><img src="https://images.theconversation.com/files/179413/original/file-20170724-24759-pjgfp8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Should convenience come at a cost?</span> <span class="attribution"><span class="source">nevodka / Shutterstock.com</span></span></figcaption></figure><p>Convenience often comes at a cost. As consumers, many of us are resigned to seeing a surcharge or “processing fee” on goods and services when we pay by credit or debit card. At present, it is lawful for businesses to charge consumers these fees although <a href="http://www.legislation.gov.uk/uksi/2012/3110/regulation/4/made">the amount should be limited</a> to the actual cost to the retailer of the transaction. </p>
<p>Bank charges for processing card payments <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/466783/Interchange_fee_regulation_response.pdf">were capped in the UK in 2015</a>, but many businesses have <a href="https://www.fairerfinance.com/business/blog/why-are-we-still-being-charged-for-paying-by-credit-card">continued to charge</a> consumers inflated fees to generate further profit. Even <a href="https://ion.icaew.com/taxfaculty/b/weblog/posts/revisedchargesforpayinghmrcbycreditcard">the government’s tax department</a> routinely adds a surcharge of up to 2.4% to bills paid by card.</p>
<p>Now, <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/629988/Implementation_of_the_revised_EU_Payment_Services_Directive_II_response.pdf">the government has announced</a> that charges for paying by debit or credit card will be outlawed completely from January 2018. This raises several questions, not least whether retailers will simply increase their prices to cover any shortfall. Many companies <a href="https://www.thetimes.co.uk/article/no-more-cheeky-credit-card-fees-fsvwdtb86">argue</a> that fees are there to cover their transaction costs, which consist of an “interchange fee”, levied by the card issuer such as Visa or MasterCard (capped by law at 0.3%) and the “merchant fee”, charged by the bank for handling each payment. This is not capped but for large businesses it should not amount to more than about 0.3%.</p>
<p>It is also unclear how the ban will be policed. Local authority Trading Standards departments are tasked with dealing with complaints from buyers, but the widespread flouting of the current cap indicates that embattled officers are <a href="https://www.tradingstandards.uk/news-policy/news-room/2016/trading-standards-experts-respond-to-gov-cutting-red-tape-review">under-resourced</a> to deal with the issue.</p>
<h2>Class action rejected</h2>
<p>Future charges are to be outlawed, but what about the millions in surplus fees paid by consumer buyers in the past? A recent attempt to secure £14 billion in compensation for UK consumers was <a href="http://www.catribunal.org.uk/238-9925/Judgment-CPO-Application.html">recently rejected</a> by the Competition Appeal Tribunal (CAT).</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/179436/original/file-20170724-10327-13yjxvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/179436/original/file-20170724-10327-13yjxvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/179436/original/file-20170724-10327-13yjxvq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/179436/original/file-20170724-10327-13yjxvq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/179436/original/file-20170724-10327-13yjxvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/179436/original/file-20170724-10327-13yjxvq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/179436/original/file-20170724-10327-13yjxvq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The new law covers all card companies.</span>
<span class="attribution"><span class="source">dean bertoncelj / Shutterstock.com</span></span>
</figcaption>
</figure>
<p>The trailblazing claim against MasterCard, initiated by <a href="https://www.linkedin.com/in/walter-merricks-cbe-3487a139">Walter Merricks</a>, who was head of the Financial Ombudsman Service from 1999-2009, was the first collective claim of its kind under new rules introduced by the <a href="http://www.legislation.gov.uk/ukpga/2015/15/contents/enacted">Consumer Rights Act 2015</a>. </p>
<p>Previously, US-style class actions were not permitted under UK law and consumers affected by price fixing or anti-competitive behaviour had to either actively opt in as a named participant in a claim, or bring proceedings on their own behalf. In cases where the loss to the consumer was relatively small, the cost of bringing a claim meant that pursuing the trader was often not worthwhile. </p>
<p>Under collective proceedings rules, there is no need to register for a stake in the claim – anyone who fulfils the criteria is automatically joined in the action unless they expressly opt out. Under the new Consumer Rights Act, claims can be brought by a suitable representative of the group affected. In the Mastercard case it was Walter Merricks, on behalf of every consumer who purchased goods from a retailer in the UK between 1992 and 2008. </p>
<p>Had the claim succeeded, it would have given individual consumers the collective legal power to call a corporation to account. Ultimately, the claim faltered under the huge complexity of trying to quantify the total compensation payable, and then allocate it fairly among consumer claimants. Notwithstanding the CAT’s decision, the case has <a href="http://www.pymnts.com/news/regulation/2016/mastercard-uk-class-action-lawsuit/">prompted fears</a> from card companies that the UK will see a tsunami of similar claims, possibly resulting in vast payouts.</p>
<h2>Onslaught of action</h2>
<p>What happens next will be scrutinised closely by banks and other credit providers. The decision is the latest chapter in an <a href="https://www.ft.com/content/50342c2c-e703-11e6-893c-082c54a7f539">onslaught of legal action</a> against MasterCard dating back to 2007. The fees charged to retailers are determined in large part by interchange fees agreed between groups of banks and in 2007, MasterCard was subject to an investigation by the European Commission, which <a href="http://eur-lex.europa.eu/legal-content/en/TXT/PDF/?uri=uriserv%253AOJ.C_.2012.200.01.0011.01.ENG">ruled</a> that its interchange fees were anti-competitive and violated the EU Treaty.</p>
<p>MasterCard appealed the ruling but the European Court of Justice confirmed the decision in <a href="http://europa.eu/rapid/press-release_MEMO-14-528_en.htm">September 2014</a>. Fees were subsequently capped at 0.3% of the transaction value for credit card payments and 0.2% for debit card payments. </p>
<p>In July 2016 MasterCard was ordered to pay <a href="https://www.ft.com/content/35fcd220-49c2-11e6-8d68-72e9211e86ab">substantial damages to the supermarket Sainsbury’s</a>, after it successfully sued MasterCard over processing fees. While the court in this case acknowledged that electronic payment arrangements benefit both customers and retailers, it ultimately concluded that MasterCard’s charges were excessive and breached EU and UK competition law. This judgement potentially paves the way for a wave of further claims from retailers who were charged similar rates.</p>
<p>MasterCard is not the only lender affected. Visa was <a href="http://europa.eu/rapid/press-release_IP-10-462_en.htm?locale=en">also investigated in 2007</a>, but managed to avoid formal sanctions by agreeing voluntarily to reduce its fees and improve transparency around charging. </p>
<p>The British government’s move to scrap charges completely by January 2018 promises greater transparency over future prices paid by consumers. But, future class actions should not be ruled out. The recent rejection of Merricks’s case against MasterCard was down to the complexity of computing individual losses – if this issue is remedied then future claims could well succeed.</p><img src="https://counter.theconversation.com/content/66220/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joanne Atkinson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A recent ban on charges for paying by credit or debit card could open the door to legal action for surplus fees paid in the past.Joanne Atkinson, Principal Lecturer, Law, University of PortsmouthLicensed as Creative Commons – attribution, no derivatives.