Consumer vulnerability is often described in terms of consumer characteristics or demographics such as age, disability, gender, race/ethnicity, low or limited literacy, and level of education. In general, these measures are useful indicators of potential vulnerability, and most government departments, large institutions and commercial businesses use these to operationalise their vulnerability and disability programs and policies.
But recent research suggests that there is no empirical proof that biophysical characteristics of individuals should be the sole basis on which to define consumer vulnerability. In fact, consumers might be vulnerable due to transient stages or short-term and less concrete states such as grief-related vulnerability, stress, ego-depletion or fatigue.
Even external conditions can contribute to vulnerability. Impoverished consumers, for example, have been shown to be influenced by the materialism that they view in the media, while other external conditions such as a lack of access to healthcare, and lack of access to retail facilities can make life particularly difficult.
Even something as seemingly “normal” as product similarity – particularly when differences are tiny – can influence the way that a consumer processes information in a purchasing decision. What this means is that cognitive vulnerability, as much as other vulnerabilities, needs to be a focal point when deciding if consumers are vulnerable. Indeed, any consumer – not just those of a certain demographic profile or those with a specific, measurable disability – can experience loss of utility in a range of seemingly benign situations, including those where they are exposed to unethical means of marketing, or are required to make choices under pressure. As the former head of the department of psychology at the University of Chicago, Mihaly Csikszentmihalyi, has said, “when consumers are unable to control their attention, behaviour, or emotions, then their responses are beyond their control, aversive and part of their experience of vulnerability”.
It is surprising (and disappointing) then, that despite a greater awareness of the complexity of vulnerability amongst researchers, consumer advocates and policy specialists, our consumer protection regulations do not allow for a more comprehensive perspective of the vulnerable consumer that is both holistic and multi-dimensional. This is despite the fact that in 2005, seminal work in the field of consumer vulnerability, led by Dr Stacey Baker at the University of Wyoming, recommended that consumer protections should focus on actual vulnerability (rather than perceived vulnerability) and should be consumer driven. In other words, the disability or circumstances should not define the vulnerability; rather the outcome for the consumer should be the main consideration.
Public policy in many countries does not appropriately address the issue of consumer vulnerability. In Australia, the Australian Competition and Consumer Commission’s (ACCC) definition of “disadvantaged or vulnerable consumers” focuses on groups of consumers, such as those who have a low income or are from a non-English speaking background. Definitions that are limited in this way fail to consider vulnerability in a holistic manner that incorporate transient vulnerability or vulnerability due to social persuasion techniques, such as those used by marketers.
Clearly, these easily identifiable groups may be more susceptible to vulnerability, but there are also negative repercussions to defining a person as vulnerable, simply as a result of a measurable factor such as education, physical disability, or low income. If we are really serious about addressing all forms of vulnerability, a more sophisticated, and human centred approach needs to be considered.
An alternative approach might be to view vulnerability as a spectrum that is neither enduring nor binary. Spectrums have been applied in other complex contexts, where they represent a range of severity, e.g.. autism spectrum, or a range of types e.g., the bipolar spectrum. Applying a spectrum approach to the concept of consumer vulnerability (and potential protections) could be helpful in representing that any individual might experience vulnerability at a point in time. It might also be useful in recognising that vulnerability does not have to be enduring, and arises from an interaction of factors rather than a single individual characteristic.
In fact, policy makers must be careful about how they define vulnerability so as to not make it more difficult for the individual to move away from the vulnerable situation. Scholars in my own field have argued that the removal of barriers that prevent the movement from situational vulnerability to the preservation or reconstruction of one’s identity will go a long way toward achieving relevance to public policy. An examination of the vulnerability of consumers in specific situations using a vulnerability spectrum allows policy makers to readily identify public policy measures that might facilitate consumer protection.
A consumer vulnerability spectrum might also be useful in assisting with proactive policy development. One of the problems with a state-based view of consumer vulnerability is that it assumes consumer vulnerability is triggered by factors external to the consumer, which leads to a reactive approach from public policy. An alternative frame might be to consider how consumer vulnerability can be tackled at earlier stages, through a more anticipatory or pre-emptive approach, similar to that suggested by ASIC chairman, Greg Medcraft.
We know from research in the area of decision-making that once a consumer has made a “bad” decision it can be difficult to rectify, partly due to the psychological pressure that makes it difficult for us to admit that we make poor decisions (which psychologists refer to as the disconfirmation bias) and partly due to the practical barriers created by institutions when consumers attempt to resolve a problem. Policy that takes a more comprehensive perspective of the vulnerable consumer and is holistic and multi-dimensional should include internal factors such as psychological processes, and thus be more proactive in nature.
Ultimately, consumer policy should be directed toward facilitating individual empowerment. Policy informed by a consumer vulnerability spectrum will place the consumer at the centre, providing the best chance for facilitating fairness.