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MEMO/11/229

Brussels, 11 April 2011

Questions & Answers : Consumer Empowerment Survey – Analysis of the results

SECTION 1: THE CONSUMER EMPOWERMENT REPORT, EUROBAROMETER SURVEY AND COUNTRY INDEX

SECTION 2: MAIN FINDINGS

SECTION 3: TEST YOURSELF

SECTION 4: BACKGROUND

SECTION 1: THE CONSUMER EMPOWERMENT REPORT, SURVEY AND INDEX

What is in the consumer empowerment package published today?

The package contains a Consumer Empowerment Report which analyses the results of a Eurobarometer survey on consumer skills, consumer awareness of their rights and consumer assertiveness. The report and survey are accompanied by a consumer empowerment index per country.

What did the survey examine?

This special Eurobarometer1 survey examined the capacities, knowledge and assertiveness of European consumers and collected internationally comparable data on the following main aspects:

  • Consumer detriment: an overview of European consumers’ actual detriment and insights into their redress behaviour. Where consumers had a bad purchase experience over the last twelve months, the incidence of turning to public authorities or consumer organisations, or taking the business to Court or an out-of-Court dispute settlement body and the reasons if they did not do so, as well as the subjective financial thresholds to take a complaint to Court or an out-of-Court dispute settlement body.

  • Consumers’ skills: consumers’ basic numerical and financial skills as well as their knowledge of common logos and symbols found on everyday products;

  • Consumers’ level of information and knowledge: consumers’ knowledge of their rights (awareness of unfair contractual terms, unfair commercial practices, guarantee rights, distance-purchasing rights …), of prices, of the institutions (governmental and non-governmental) protecting them and of different sources of information about consumer issues;

  • Consumers’ assertiveness: the extent to which consumers complain and/or report problems, as well as consumers’ experience with misleading or fraudulent offers.

Why was the survey needed?

The information gathered will contribute to a deeper understanding of European consumers who are the ultimate beneficiaries of many EU policies. Knowing better what consumers are capable of and willing to do can help design smarter regulation (especially on labels, logos and other consumer information), better information and education policies, as well as more easily accessible means of redress.

It will help design and develop policy which takes into account the real behaviour of consumers, as opposed to theoretical models.

It will also inform the development of the post 2013 EU Consumer Strategy.

What is an empowered consumer?

Empowered consumers are able to make optimal decisions by understanding their own preferences and the choices available to them. They know their rights, recognise when these have been breached and if so, complain and seek redress.

What is consumer empowerment?

Consumer empowerment is both a function of the skills, knowledge and assertiveness of consumers themselves and the protection, rules and institutions designed to support them play their part. Consumer empowerment therefore depends not only on good cognitive skills but also knowledge of consumer rights and information, well-known and effective non-governmental organisations and public authorities, an active media connecting with citizens and simple and accessible means of redress.

Note that the survey looked at Europe's consumers themselves to better understand their ability to maximise their welfare and drive competition. The survey did not look at the quality of consumer measures and institutions in the Member States which is monitored through the Consumer Conditions Scoreboard2.

Which Europeans are most empowered / least empowered?

The survey found the most empowered Europeans in Norway (highest ranking), followed by Finland, Netherlands, Germany, Denmark, Sweden, Czech Republic, Austria, and Iceland.

The middle ranking is dominated by countries, such as France, Belgium, United Kingdom, Luxembourg, Ireland, together with Cyprus, Slovakia, Slovenia and Malta.

Ranking lower on the index are Greece, Portugal, Spain, Italy, Estonia, Latvia, Lithuania, Hungary, Romania, Poland, Bulgaria.

The survey indicates that the least empowered consumers are those: who are less educated; over 54 years old; non users of the internet; retired or unable to work through illness.

Why is consumer empowerment important?

Good for consumers – good for growth:

  • The need to be an 'empowered' consumer is growing. Consumers have to deal with increasingly complex choices and decisions in the marketplace. This is important in the light of: an ageing population; increasing information overload and new demands on consumers in making the best choices in liberalised markets. Consumer empowerment is even more important in the current economic climate.

  • As well as being able to maximise their own welfare, empowered consumers are a significant driver of growth as their behaviour intensifies competition and drives innovation.

How do empowered consumers drive growth?

Empowered consumers can easily identify the best prices and quality, and reward the most efficient operators who best innovate to respond to consumer demand. Empowered consumers who complain and assert their rights are the most effective consultants in helping businesses innovate and improve.

Final household consumption represents 56% of EU GDP, so better decision-making by consumers can have an impact on the economy, and long term growth.

Mature economies where consumers are not empowered and where consumer detriment is high are more likely to remain on a low growth path.

SECTION 2: MAIN FINDINGS

What were the main findings?

This innovative survey paints a picture of European consumers that shows many of them far from being able to play the role of active, informed and assertive market participants that the economy needs to drive competition and innovation. Indeed less than a majority of European consumers feel confident, knowledgeable and protected. However, as the results for some Member States show, there is a considerable potential to empower consumers and thereby to reap both significant gains in welfare and reductions in consumer detriment and to improve competition within the European economy, one of the sources of long-term growth. The internet and the media have a key role to play in consumer empowerment with more than 38% of consumers using the internet to compare products and given the media's capacity to reach citizens directly.

Confidence Overall

  • 73% of citizens interviewed felt confident as a consumer. The Netherlands, Sweden and the UK felt most confident.

  • 63% felt knowledgeable as a consumer. The Netherlands, Sweden and the UK felt most knowledgeable.

  • 55% felt protected by law when buying goods or ordering services. Sweden, Netherlands and Denmark rank highest here.

Less than half of consumers surveyed (44%) felt confident, knowledgeable and protected as consumers and only in seven Member States did a majority of consumers feel all three (NL SE DK FI IE UK BE).

Consumers' detriment and redress

Consumers suffer from considerable detriment, both through sub-optimal choices resulting from a lack of transparency and comparability in consumer markets3 and from problems arising from their transactions. More than one in five Europeans interviewed had encountered a problem for which they had cause for complaint. Consumer detriment is estimated at 0.4% of EU GDP. EU average detriment per problem was €375. 77% of those who had a problem complained. Of those who turned to public authorities for help, only 50% were satisfied with the help they received. The less educated and elderly are more reluctant to seek redress, although they are no less likely to have problems. Given the greater vulnerability of the more disadvantaged in society, improving consumer empowerment would also be of significant social benefit. The survey confirms the importance of access to good redress. Many of these problems could be solved if we had more alternative dispute resolution (ADR) mechanisms

Consumers' skills

In terms of numerical skills, consumers struggle with simple calculations: only 45% could answer three questions correctly. Only 58% could correctly read a label and 18% could not read the best-before date. Only 2% of consumers recognised five common public information logos. 33% of consumers thought that the CE mark meant 'made in Europe, and only 25% correctly know it meant that the product 'complies with EU legislation'. Norway, The Netherlands, Denmark, Sweden, Finland and Iceland ranked as most skilled.

Consumers' knowledge of their rights

When asked about consumer legislation, many consumers were not aware of their rights with regard in particular to the following: guarantees (e.g. the right to have a faulty product repaired, replaced or reimbursed 18 months after purchase); cooling off periods after purchase (the right, for a certain period, to return a good that they have purchased through post, phone or internet, without having to give a reason or if they find a better offer); unfair commercial practices (e.g. in relation to goods advertised as 'free' - it is illegal to offer a ‘free’ good (such as sunglasses) in return for dialling a costly premium rate telephone number); or advertising the price of air tickets which must state the total amount to be paid, including taxes, fees and charges; or in relation to cross border transactions (which laws apply).

The most aware consumers in Europe are in Norway! In the EU, consumers in Germany, Finland and the Netherlands were most aware.

What action might be taken to respond to the findings?

The survey identifies important avenues for improving consumer empowerment. Consumers lack adequate means to remedy the problems they face, which results in significant welfare losses, but also reduces competitive pressure on companies to improve quality and customer service. Improving access to out-of-court and court redress mechanisms, including for small losses, could have significant benefits for consumers and efficient and consumer responsive businesses.

Consumers have reasonably good self-knowledge of their skills and abilities, which could be relied on to design smarter policies and regulation, tailored more to self-declared abilities. Overall skill levels in arithmetic and reading labels indicate that a many consumers struggle with simple tasks. These insights should inform policies on public information or regulatory information disclosure, helping to design policies that provide consumers with the information they need and can actually use and abolishing information disclosure burdens on business that do not achieve their effect. Simplification and standardisation of information could help considerably.

The findings on logos reinforce the case for better design and testing, as well as awareness-raising.

Widespread ignorance of the most fundamental consumer protection measures appears to confirm the significant vulnerability to consumer detriment through fraud or inadequate compliance with consumer protection law. Better awareness of these rights and the confidence to use them daily would yield significant welfare gains to consumers and efficiency gains to the economy. Since consumers tend not to pro-actively seek information on their rights, consumer media, which are popular with consumers, offer a very good way forward.

In the face of an increasing information overload, shortcuts could significantly help consumers to make better decisions and avoid problems. Price comparison tools, such as unit price indication rules and accurate and transparent internet price comparison websites appear to offer the most effective solutions.

These results provide important background information for policymakers and stakeholders at both EU and national level to help them design smarter policies and regulations that improve consumer decision-making and reduce administrative burdens. It can also be used to help design and target information campaigns, consumer education initiatives, the communication of the work of public authorities and consumer NGOs and the work of the consumer media.

Role of the media

The internet and the media have a key role to play in consumer empowerment with more than 38% of consumers using the internet to compare products and given the media's capacity to reach citizens directly.

The survey showed the following interesting figures in relation to the use of media by consumers in relation to consumer issues.

Television and radio programmes depicting problems encountered frequently by consumers and providing consumer advice, can be a great source of information to consumers. The respondents to the survey were asked how frequently they watch these types of programmes. More than six in ten consumers have watched or listened to a consumer programme (64%), though only one in six (17%) follow these programmes on a weekly basis. Just over a fifth (21%) watch or listen to these programmes about once a month, and 26% do so less than once a month. Close to three in ten respondents say they never listen to or watch these programmes (29%) and 5% claim never to have heard of such programmes. 2% answer that they don’t know. Respondents in Denmark stand out because more than nine in ten have watched or listened to consumer programmes in the last year (92%). There is also a high consumption of consumer programmes in the Czech Republic (86%), the Netherlands and Sweden (83% in both countries). Nine in ten people in Norway have also watched or listened to consumer programmes. In addition, at least a third of people in Denmark and Cyprus watch or listen to consumer programmes at least once a week.

By contrast, close to half of those interviewed in Spain never watch or listen to consumer programmes (47%). Consumption is also low amongst those in Iceland (45% never watch) where, in addition, 11% say that they have never heard of this type of programme. Respondents in NMS12 are less likely to watch or listen to programmes about consumer issues (58%, compared to 66% of those in EU15). In addition, 12% of consumers in NMS12 say they have never heard of these types of programmes (vs.3% in EU15).

What next ?

These results will form part of the April 2011 Consumer Summit which will discuss many of these empowerment issues. They will also be made available in detail via a public access database to enable policymakers, stakeholders and researchers to deepen analysis of the findings, especially at national level (where the sample size permits further socio-economic analysis). The Commission will use the feedback from these results and the discussions at the Consumer Summit to prepare a consultation of stakeholders on policy options in the second half of 2011. The results of this consultation and the present report would then be used to prepare a communication on consumer empowerment in 2012.

SECTION 3: TEST YOURSELF – ARE YOU AN EMPOWERED CONSUMER?

Do you consider yourself an empowered consumer? Do you feel that you are confident, knowledgeable and protected, aware of your rights and assertive in claiming them? See how you score on the following three questions (answers at the end of the Memo). To do the full survey for a more detailed picture, see

http://ec.europa.eu/consumers/consumer_empowerment/index_en.htm

Q1

Imagine that a new fridge you bought 18 months ago breaks down. You didn't buy any extended commercial guarantee. Do you have the right to have it repaired or replaced for free?

a

Yes

b

No

c

It depends

Q2

Imagine you purchase car insurance over the telephone, the internet or by post. Two days later you discover a better deal with another provider and you decide to cancel the original contract. Do you have the right to do that?

a

Yes, but you won’t get your money back

b

Yes, but you have to pay an administration fee

c

Yes, and without paying anything

d

No

Q3

Imagine a salesman calls uninvited at your door demonstrating a vacuum cleaner. You buy the vacuum cleaner from him, but two days later you discover a better deal. Do you have the right to return the vacuum cleaner and get your money back without giving any reason?

a

Yes,

b

No

(Answers: Q1 - a, Q2 - c, Q3 - a)

SECTION 4: BACKGROUND

The Consumer Empowerment Report, Survey and Index

The Report is based on a face-to-face survey (Eurobarometer 342) carried out in March 2010 by 56 471 consumers in the EU, Iceland and Norway. It analyses the main findings4 of the survey. It was requested by Eurostat and the Directorate General for Health and Consumers and was conducted by TNS Opinion &Social.

The Survey refers to the Eurobarometer surveys of the Directorate General for Communication – in this case special Eurobarometer 342.

The Consumer Empowerment Index is an index per country which provides a portrait of Europe's consumers. The Direction General Health & Consumers together with the Direction General Joint Research Centre synthesised part of the data from the Eurobarometer survey into a unique measure of consumer empowerment at EU level and for each country. It was constructed from the data on consumer skills, knowledge of consumer rights and consumer engagement. It has been done with the participation of the members of the relevant Member State Expert Group to define the relative weights of the data inputs through their vote.

To test yourself and for further information and documents

http://ec.europa.eu/consumers/consumer_empowerment/index_en.htm

See the Eurobarometer 342

http://ec.europa.eu/public_opinion/index_en.htm

For more information on consumer's attitudes, please consult IP/11/280 on the 5th Consumer Markets Scoreboard:

http://ec.europa.eu/consumers/strategy/facts_en.htm

http://www.european-consumer-summit.eu

Annex

Figure 7 – Consumer Empowerment Index

The map shows that the most empowered group of countries includes NO (that records the highest score), FI, NL, DE, DK, SE, CZ, AT and IS. The middle of the ranking is dominated by Western European countries, such as FR, BE, UK, LU, IE together with CY, SK, SI and MT. At the bottom of the index are EL, PT, ES, IT, EE, LV, LT, HU, RO, PL, BG. The CEI is positively correlated to GDP: a €10,000-difference in per capita GDP explains more than a 6% difference in the CEI index.

The index shows that consumer empowerment is highly varied among socio-economic groups. In particular empowerment appears to be strongly linked to age, profession; education level and internet use. Non-native speakers do not however appear to be less empowered than native speakers.

1 :

EB 342 ESTAT http://ec.europa.eu/public_opinion/index_en.htm

2 :

Consumer Conditions Scoreboard March 2011 SEC (2011) 299

3 :

The 4th Consumer Market Scoreboard ranks the 50 most important consumer markets according to, inter alia, ease of comparison.

4 :

The full report on the survey (Eurobarometer 342) can be found at http://ec.europa.eu/consumers/strategy/facts_en.htm


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