High numbers of complaints can indicate consumer confidence says Philip Hunt
Volubly upset customers can actually indicate that a market is healthy and thriving, believes the EC. Now it wants to use consumer complaint data to identify markets that are performing poorly.
In the year to February 2008, 16% of EU consumers (around 78m people) made a formal complaint to a seller about a problem with a product or service. Following that complaint, some 51% of consumers were satisfied with its handling, while 47% were not. For those still unhappy, 51% took no action while 49% took things further by going to a consumer organisation, lawyer or arbitration service (Eurobarometer ‘Consumer protection in the Internal Market, 2008’).
Yet while many consumers may have reason to complain, they often do not act on it. A study carried out for the National Consumer Agency in Ireland showed that of those consumers who said that they had cause to complain in the last 12 months, 14% did not.
The EC believes that this failure to act is a good indicator of markets that are performing badly. In such sectors, consumers have so little confidence in receiving any reparation or recompense for problems, that they see making a complaint as a waste of time.
From this viewpoint, high numbers of complaints are not necessarily a sign of market malfunction, but can indicate consumer confidence in a market that responds to problems. Well-handled complaints can even give rise to higher consumer satisfaction.
Consumer Markets Scoreboard
The Commission therefore wants to develop a harmonised methodology for classifying and reporting consumer complaints across Europe as a means of helping identify poorly performing markets. It has set up a new unit under DG Health and Consumer Protection to work towards this goal.
A key top-level indicator will be the new Consumer Markets Scoreboard, launched for the first time in August 2008. The Scoreboard will serve as an important pointer to markets that may be failing to meet consumer expectations. It is not seen at this stage as a live indicator, but as an annual exercise.
Centralised consumer complaint databases are not new. The US Federal Trade Commission operates Consumer Sentinel, which forwards complaints to different local authorities in the US and to other international authorities. And at international level, econsumer.gov is an intergovernmental portal providing general information about consumer protection in all countries that belong to the ICPEN (International Consumer Protection Enforcement Network).
Gaining a better picture
By aggregating individual consumer complaints, the Commission believes that policy makers will gain a better picture of collective consumer problems in different market sectors. More harmonised data should also help empower European citizens, since their voices will gain more power at a market-wide level. And of course, higher visibility for consumer complaints should encourage more consumers to voice their concerns.