Consumer Advocacy and Protection
CONSUMER ADVOCACY AND PROTECTION
Consumer advocacy refers to actions taken by individuals or groups to promote and protect the interests of the buying public. Historically, consumer advocates have assumed a somewhat adversarial role in exposing unfair business practices or unsafe products that threaten the welfare of the general public. Consumer advocates use tactics such as publicity, boycotts, letter-writing campaigns, Internet "gripe sites," and lawsuits to raise awareness of issues affecting consumers and to counteract the financial and political power of the organizations they target. Since even large, multinational businesses can be visibly wounded when their mistreatment of consumers or other constituencies arouses the ire of consumer advocacy organizations, it should be obvious to business owners that they can ill afford to engage in business practices that could draw the attention of consumer advocates.
Periods of vocal consumer advocacy around the turn of the twentieth century and in the late 1960s have left a legacy of federal legislation and agencies intended to protect consumers in the United States. The rights of consumers have expanded to include product safety, the legitimacy of advertising claims, the satisfactory resolution of grievances, and a say in government decisions. In the early days of industry, companies could afford to ignore consumers' wishes because there was so much demand for their goods and services. As a result, they were often able to command high prices for products of poor quality. The earliest consumer advocates to point out such abuses were called muckrakers, and their revelations of underhanded business practices spurred the creation of several federal agencies and a flurry of legislation designed to curb some of the most serious abuses. At the same time, increased competition began to provide consumers with more choices among a variety of products of higher quality. Still, some notable cases of corporations neglecting the public welfare for their own gain continued, and corporate influence in American politics enabled many businesses to resist calls for reform in advertising, worker or consumer safety, and pollution control.
This situation led to the consumer movement of the 1960s. One of the country's most outspoken and controversial consumer advocates, lawyer Ralph Nader, came to the forefront during this time. Nader's effective and well-publicized denunciations of the American automobile industry included class-action lawsuits and calls for recalls of allegedly defective products, and many of his actions served as a tactical model for future advocacy organizations.
The efforts of Nader and other activists led to the formation of several federal agencies designed to protect consumer interests. The U.S. Office of Consumer Affairs, created in 1971, investigates and resolves consumer complaints, conducts consumer surveys, and disseminates product information to the public. The Consumer Product Safety Commission, formed in 1973, sets national standards for product safety and testing procedures, coordinates product recalls, and ensures that companies respond to valid consumer complaints. Other government agencies that benefit consumers include the Federal Trade Commission (FTC) and state consumer agencies.
Nongovernmental agencies that provide information for consumers include the Better Business Bureau, a private, nonprofit organization that works to resolve complaints consumers have with businesses. The Consumer Federation of America is the one of the largest consumer advocacy groups in the United States, consisting of about 300 member organizations representing 50 million people. The International Organization of Consumers Unions, based in the Netherlands, actively promotes consumer interests on a global scale. Other well-known consumer advocacy groups include: Public Citizen, founded by Ralph Nader; the Consumers Union of the United States, which publishes Consumer Reports ; and the National Consumers League.
CONSUMER ADVOCACY IN CYBERSPACE
In the early 1990s, the widespread use of home computers advanced consumer advocacy by making it easier for citizens to gather information and make their views known. By the early twenty-first century, the Internet had become one of the primary weapons of consumer advocates, with untold thousands of "so-called global 'gripe sites' established by campaigners or disgruntled customers with the aim of harassing and haranguing large companies," according to Simon Reeve in the European.
Before the advent of the World Wide Web, it was difficult for individuals or small groups, which lacked the resources of major corporations, to make their voices heard over their targets' advertising messages. "But the Internet has created a level playing field for advocacy," Reeve wrote. "With little more than a personal computer and a subscription to an Internet service provider, anyone can open a site on the World Wide Web and say more or less whatever they like." Current and potential customers of major corporations typically use common Internet search engines to access the companies' carefully prepared home pages. Yet these search engines also lead the customers to sites created by protesters—sites that are filled with complaints and allegations against the companies, ranging from the use of child labor to the exploitation of resources in less-developed countries. Thus, for consumer advocates, "the Internet means a new freedom to take on the mightiest corporations, in an environment where massive advertising budgets count for little," Reeve stated.
For businesses, on the other hand, Internet gripe sites pose a difficult problem. Although the material posted on such sites might be distorted, false, or even outright libelous, it can still prove damaging to a company's image. Moreover, few legal remedies exist as the law struggles to keep up with technology. It is often difficult for companies to trace the operators of gripe sites, for example, and suing the Internet service providers that provide a forum for protesters has not proved successful. In addition, turning to the law for help can turn into a public relations disaster for companies, making a small problem into a much bigger one. "The Internet is an uncontrollable beast," attorney Simon Halberstam told Reeve. "While legally the firm may have recourse to law, the reality is that they may just have to accept the problem and carry on with their business."
TECHNOLOGY OFFERS MIXED BAG FOR CONSUMERS
The Internet age has provided consumers with unprecedented access to information and an often-overwhelming abundance of choices, but it has also exposed them to new types of fraud. "The deregulation and technological revolution that gave us all these new responsibilities and choices were also supposed to release the genius of the free market, which would drive down prices and create innovative comparison-shopping tools," Kim Clark wrote in U.S. News and World Report. "But the anticipated information explosion hasn't kept up with consumers' needs."
According to the National Consumers League, consumer losses to telemarketing and Internet scams during the first six months of 2005 were more than double the average from 2004. Telemarketing fraud victims lost an average of $4,107 during the first half of 2005, compared to $1,974 in 2004. This increase came despite efforts by the FTC to reduce consumers' exposure to unwanted telemarketing calls through registry on the National Do Not Call List, which received widespread praise from consumer advocacy groups. Similarly, Internet fraud victims lost an average of $2,579 in 2005, compared to $895 in 2004. Federal efforts to reduce spam and other sources of Internet fraud have not been particularly successful.
Clark, Kim (2003, August 18). Customer disservice. U.S. news and world report, 29.
Mayer, Robert N. (1989). The consumer movement: Guardians of the marketplace. Boston: Twayne.
National Consumers League. (2005, June). Mid-year fraud stats reveal alarming trends in telemarketing, Internet scams. NCL news. Retrived August 11, 2005, from http://nclnet.org/news/2005/fraud_trends_june2005.htm
Reeve, Simon (1998, January 26). Web attack. European, 20.
Unsafe at any megahertz: Ralph Nader is taking on Bill Gates. Is consumerism still a force in America? (1997, October 11). Economist, 80.
Laurie Collier Hillstrom
"Consumer Advocacy and Protection." Encyclopedia of Business and Finance, 2nd ed.. . Encyclopedia.com. (December 10, 2018). https://www.encyclopedia.com/finance/finance-and-accounting-magazines/consumer-advocacy-and-protection
"Consumer Advocacy and Protection." Encyclopedia of Business and Finance, 2nd ed.. . Retrieved December 10, 2018 from Encyclopedia.com: https://www.encyclopedia.com/finance/finance-and-accounting-magazines/consumer-advocacy-and-protection
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