Consumer legislation is commonly linked with the average consumer and with how these would behave, what they will understand and how well informed they are. Nevertheless, compared with the average consumer, consumers in vulnerable situations may be less able to secure their own interests and may be more likely to experience negative outcomes in the market.
A large research project was recently carried out by the European Commission to examine the scope and the drivers of consumer vulnerability in the European Union. This study covered all 28 member states, as well as Norway and Iceland.
Although there are various existing definitions and understandings of consumer vulnerability, this study provided an evidence-based new definition of the concept:
“A consumer who, as a result of socio-demographic characteristics, behavioural characteristics, personal situation or market environment, is at a higher risk of experiencing negative outcomes in the market; has limited ability to maximise their well-being; has difficulty in obtaining or assimilating information; is less able to buy, choose or access suitable products; or is more susceptible to certain marketing practices.”
This definition takes into account that consumer vulnerability is situational. This means that a consumer can be vulnerable in one situation but not in others, and that some consumers may be more vulnerable than others.
Consumer vulnerability is most frequent when consumers face complex offers in marketing practices and therefore are unable to select the best deals; and also when they experience difficulties when it comes to buying, comparing, choosing and accessing suitable products.
As consumer vulnerability is multi-dimensional, so is the impact of personal characteristics on the likelihood of being vulnerable as a consumer.
The most important driver of consumer vulnerability is when consumers have difficulties choosing and accessing products and services, for example consumers who are not able to read terms and conditions due to small print, who do not know their contract conditions, who rarely compare deals from providers or who rarely read or thoroughly understand communication from their providers are more likely to be vulnerable.
Other drivers of consumer vulnerability may be both young and old age; consumers who are non-native speakers, female, poorly educated or who live in low-density regions; consumers in difficult financial situations or who suffer a long-term sickness or disability; consumers who do not use the internet or simply to search for information; consumers who are considered as credulous, impulsive or risk averse; and those who have poor computational skills or are less trusting of people in general.
The study is particularly relevant to consumer policy, such as the Unfair Commercial Practices Directive, as it brings new evidence to refine the understanding of the key concepts of ‘average consumer’ and ‘vulnerable consumer’.
It is also relevant to sector-specific policies, such as in the energy sector, where it advances a broader definition of consumer vulnerability that goes beyond energy poverty.
This information is taken from an EU study on consumer vulnerability, which was published recently.