This study is set out to improve the quality and consistency of assessing personal consumer detriment by developing a simple, consistent state-of-the-art methodology to identify, measure and quantify its incidence and magnitude. Protecting consumers, especially the vulnerable ones, against significant personal detriment is a matter of fairness. In addition, this can also improve overall market functioning, as consumers confident enough that they have some protection against unforeseeable negative outcomes may be more willing to engage actively in markets, by e.g. switching to new suppliers or products, or signalling problems in the marketplace through their complaints.
Consumer detriment consists of harm (loss of welfare) suffered by consumers, whether financial or non-financial, in the marketplace. Personal consumer detriment – as opposed to structural consumer detriment attributable to market failure or regulatory failure – refers to negative outcomes for individual consumers, relative to reasonable expectations(1).
The study developed a detailed step-by-step operational guidance to guide scientifically sound and resource efficient assessments of personal consumer detriment in markets across the EU, and tested it in the markets for mobile telephone services; clothing, footwear and bags; train services; large household appliances; electricity services; and loans, credit and credit cards, in France, Italy, Poland and the UK.
Key findings include:
- It is estimated that across the six markets consumers in the EU28 suffered detriment between EUR 20.3 billion and EUR 58.4 billion over the last 12 months. These estimates refer to the sum of total post-redress financial detriment and monetised time loss.
- The highest incidence of problems was registered in the mobile telephone services market. Average pre-redress financial detriment per problem was highest for large household appliances, with a value ranging from EUR 302.7 to EUR 323.4, followed by loans, credit and credit cards with a value between EUR 139.0 and EUR 224.9.
- On average, consumers who experienced problems received the highest level of redress in the clothing, footwear and bags market, recovering between 50% and 61% of their initial costs and losses. In contrast, in the mobile telephone services and the electricity services markets, respondents recovered respectively only about 14% and between 12% and 21% of their initial costs and losses.
Two main components of the personal consumer detriment were measured:
- The incidence of detriment, i.e. the proportion of consumers who experienced a problem in a given market in the last 12 months;
- The average magnitude of detriment per problem, i.e. the average extent to which consumers who experienced a problem suffered detriment.
The methodology applies to financial detriment, time loss and psychological detriment. Pre- and post-redress financial detriment are measured separately. Furthermore, a method to extrapolate financial detriment and detriment resulting from time loss to the country and the EU level was developed, including the monetisation of time loss.
Online and face-to-face consumer surveys were used as the main data collection tool for the testing of the methodology. To prove the robustness of the methodology, survey data were triangulated with complaints data and a check of seller/provider websites.
How are these findings used?
The results of the study have informed the European Commission's fitness check of consumer and marketing law. The operational guidance developed in the context of the study will guide future assessments of personal consumer detriment in individual markets or from a cross-market perspective.
(1)The revealed personal consumer detriment pools negative outcomes for individual consumers which they become aware of following the purchase or use of a good or service, measured relative to what would reasonably have been expected, given the type of transaction.
- Executive Summary (pdf)
- Final Report (pdf)
- Operational guidance document on measuring personal consumer detriment (pdf)
- Annexes (pdf)