Assessing Existing Enforcement Mechanisms in Consumer Law

Download or read book Assessing Existing Enforcement Mechanisms in Consumer Law written by Franziska Weber and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: From an economic point of view, there has to be a rationale for government intervention in markets in the form of consumer protection laws. This rationale results from economic inefficiencies in markets: particularly the occurrence of market failures. If markets do not work properly, inefficient contracts are concluded and consumer interests are assumed to be hurt. The focus of this paper is on enforcement, which is crucial in forming the incentives and deterrents that serve to change people's behaviourin a way to induce compliance with the law. Enforcement is crucial to empower consumers. While substantive consumer law has been widely harmonized within the European Union, this is much less the case as to procedural laws. It lies in the nature of consumer laws that they cannot be classified as one set of rules. Consumer problems lie on the borderline of private/public and social/commercial problems, which is why various branches of law can be triggered in terms of both substantive law and enforcement. Private, administrative, and criminal law are the given options. Alternative dispute resolution and self-regulation are to be considered as well. While there are different goals of enforcement (e.g. compensation, fairness etc.), from a law and economics perspective enforcement efforts are usually discussed from a deterrence perspective. Although the deterrence theory was developed in the context of criminal law, it has been extended in the meantime to law enforcement in general. It is along the lines of this theory that this paper sets out the main strengths and weaknesses of existing enforcement mechanisms by referring to a set of established factors that influence people's incentives (free-riding behaviour and principal-agent issues, to mention just two). Deterrence of the systems as they exist in reality shall be assessed, and it will be demonstrated that their economic weaknesses in particular can lead the way to necessary changes in legal systems in order to optimise deterrence.