Consumer Affairs VictoriaInformation Provisionand Education StrategiesResearch Paper No. 3 March 2006

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The information contained in this research paper is of a general nature onlyand should not be regarded as a substitute for reference to the legislation orlegal advice.

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Preface > i

Preface

All consumer agencies use information and educationstrategies to influence consumer behaviour andincrease the effectiveness of other consumer policies.Some have been highly successful. Others have notgenerated the results expected.

Making consumer information and education moreeffective requires understanding of the strengths andweaknesses of information strategies and howconsumers use available information. This paperdiscusses these issues, looking at the role ofinformation in achieving behavioural change.

The research paper is one in a series designed tostimulate debate on consumer policy issues. It doesnot represent government policy and is intended as abasis for discussion only.

This paper is preceded by a discussion paper on Whatdo we mean by ‘vulnerable’ and ‘disadvantaged’consumers? and is accompanied by another researchpaper on information issues: Social marketing andconsumer policy.

Consumer Affairs Victoria would like to thankDeborah Cope from PIRAC Economics for herassistance in preparing this paper.

Consumer Affairs Victoria would welcome yourcomments on the paper. These may be directed to:

Mrs Sally MacauleyConsumer Affairs VictoriaLevel 17, 121 Exhibition StreetMelbourneVIC 3000Tel: (03) 8684 6091Email sally.macauley@justice.vic.gov.au

Dr David CousinsDirectorConsumer Affairs Victoria

Information provision and education strategies > iii

Information provision and education strategies areintegral parts of consumer policy, and a focus forConsumer Affairs Victoria. Strengthening educationand information services is one of Consumer AffairsVictoria’s seven strategic priorities:

Emphasis is placed on empowering consumers to managetheir own risks. This means working to understand therole of consumer behaviour in systemic consumerproblems, and applying this understanding to engage withthe problems at source. As a result, 2004-05 saw theimplementation of several education strategies aimed atconsumers, sometimes running concurrently withstrategies aimed at business. (CAV 2005a, p. 62)

Consumer Affairs Victoria, along with other consumeragencies in Australia and overseas (for example,the United Kingdom), is focusing on empoweringconsumers to make more informed choices (OFT 2004and CAV 2005a, p. 62). This recognises thatinformation problems occur in many consumermarkets. But, increasingly, research in areas such asbehavioural economics is demonstrating that simplyproviding information, even if people clearlyunderstand that information, is not necessarilyenough to overcome these problems.

To better understand the links between goodinformation and education campaigns and theresolution of information problems in consumermarkets this paper looks at information problems, theproblems information strategies can address, theinformation provision and education strategies used inVictoria, and how they can improve outcomes forconsumers.

Information provisionand educationstrategies

Preface i

Information provision and education strategies iii

What is information provision and education? 1

Victoria’s use of information provisionand education 3

The role of information provisionand education in consumer policy 53.1 Empowering consumers 53.2 Encouraging compliance 8

Information provision and education strategies 94.1 Mandating that traders disclose information

to consumers 104.2 Information campaigns by consumer agencies 134.3 Education to build consumers’ skills 154.4 Mandating that traders provide information

to the regulator 16

Information and consumer policy 175.1 Defining the problem 175.2 Identifying policy alternatives 185.3 Choosing the best strategy 19

Conclusion 21

Appendix 1: Aproaches to informationprovision and education 23

A1.1 Websites 23A1.2 Publications 23A1.3 Education programs 24A1.4 Advertising 24A1.5 Seminars and conferences 24

Appendix 2: The problem of incomplete information – A theoretical perspective

A2.1 The contribution of common lawA2.2 Markets and consumer choice

under uncertainty

(Available separately on the Consumer AffairsVictoria website www.consumer.vic.gov.au)

Bibliography 25

Consumer Affairs VictoriaResearch and Discussion Papers 27

CCoonntteennttss

What is information provision and education? > 01

Consumer strategies often use information and skilldevelopment to improve outcomes for consumers ormake markets work more effectively to benefitconsumers. The paper defines consumers as peopleacquiring goods and services for personal, householdor domestic use. The initiatives covered by this paperinclude those that involve communication betweenindustry and government agencies, governmentagencies and consumers, and industry and consumers,including:

• the requirement that traders provide each consumerwith information when the consumer is consideringpurchasing a product or at the time of sale, orinclude certain information about the product inpublicity and advertising material

• the requirement that traders report to a regulatoryagency or provide certain information togovernment agencies to obtain a licence or permit

• initiatives by consumer agencies to inform tradersabout their responsibilities to consumers

• campaigns by consumer agencies to informconsumers about specific products or services ortheir rights in relation to those products or services

• consumer initiatives, such as education packages forschools, which improve consumers’ ability toexercise their rights.

What is informationprovision andeducation?

1

Victoria’s use of information provision and education > 03

Victorian consumer agencies are involved in all of theactivities noted above. Their activities are reactive andproactive. The most significant reactive activity isresponding to inquiries and complaints, many ofwhich are directed to Consumer Affairs Victoria(Box 1). An example is the Residential Tenancies BondAuthority, which had more than 105,000 calls to itscall centre in 2003–04 (CAV 2004a, p. 88). Someinquiries are also made to other agencies in theConsumer Affairs portfolio.

Source: CAV 2004a, p. 85.

While some inquiries result in conciliation orenforcement action or the complaint being referredto another body, almost all involve initially providingthe inquirer with information. Dealing withtelephone, face-to-face and written inquiries is anincreasing part of consumer affairs agencies’ work.For example, from 2002–03 to 2003–04, the numberof calls taken by Consumer Affairs Victoria increasedby nearly 6 per cent.

As well as responding reactively to requests forinformation, consumer affairs agencies also haveproactive strategies to make information more usefuland accessible to consumers. These strategies aredelivered through various media, which are discussedin Appendix 1 and include:

• websites

• publications

• education programs

• advertising

• seminars, trade shows and conferences, and

• compulsory information provision by traders.

Agencies often use a combination of media to deliverkey messages to traders and consumers. ConsumerAffairs Victoria, for example, frequently uses targetedcampaigns to increase the penetration andeffectiveness of its messages. One example is thestrategy used to inform estate agents and real estatebuyers and sellers about their rights and obligations.The project involved:

…pre-campaign activity focused on estate agents andaimed to inform agents about the amending legislationand to enlist their help in distributing the Guide [RealEstate: A guide for buyers and sellers]. (CAV 2004a,p. 37)

Victoria’s use ofinformation provisionand education

2

Box 1: Inquiries directed to Consumer Affairs Victoria

In 2003-04, Consumer Affairs Victoria handled morethan 570,000 telephone information requests.These included nearly 240,000 requests forinformation and advice about the purchase ofconsumer products and services and residentialtenancy issues, around 105,000 calls about residentialtenancy bonds, and just under 120,000 businessregistration issues. A 24-hour self-help telephonesystem provided pre-recorded information aboutcommon renting and consumer issues. When amatter cannot be resolved between two parties,Consumer Affairs Victoria inquiries officers provideadvice on alternative avenues for assistance.

Consumer Affairs Victoria provided nearly 75,000consumers with face-to-face assistance through theenquiries counter at its Melbourne office in 2003–04.Of those inquiries, there were:

• 56,541 about general registration• 7,324 about consumer and tenancy matters• 5,341 about licensed occupations• 5,487 about liquor licensing.

Consumer Affairs Victoria received 12,871 emailedinformation requests, including 6,756 requests forinformation and advice about the purchase of consumergoods and services, 4,160 business registrationinquiries and 1,560 requests for information andadvice about residential tenancy bond issues.

04 > Victoria’s use of information provision and education

The subsequent campaign involved:

• publication and distribution of Frequently askedquestions for estate agents (FAQ)

• publication and distribution of Real Estate: A guidefor buyers and sellers

• media releases and advertising via newspapers,magazines, radio and internet

• exhibitions (metropolitan) and public seminars(regional). (CAV 2004a, p. 37)

Consumer Affairs Victoria continually evaluates itscampaigns, using these evaluations to monitorcampaigns’ success and improve the delivery of futurecampaigns.

The role of information provision and education in consumer policy > 05

Information provision and education strategies areuseful policy tools, but they cannot address all of theproblems that cause consumer detriment. They aremost suited to addressing two consumer policy issues:

1. helping consumers to make better choices andprotect their own interests

2. encouraging traders to comply with consumerprotection laws.

They do this by giving consumers and traders certaintyabout their rights and responsibilities by providingclear accessible information.

They are also not the only policy tools available. Toolsthat could be considered include:

• increasing compliance with existing legislation

• dispute resolution

• removing deficiencies in existing legislation

• monitoring or collecting information

• increasing enforcement activity

• placing standards on products, services or behaviours

• providing education and skill development

• providing information to consumers and traders

• providing information to support other policy tools

• requiring traders to inform consumers

• social marketing strategies

• self regulation, co-regulation or codes of practice

• compensation and insurance schemes

• accreditation or rating schemes

• registration or licensing

• bans or prohibitions.

Some of these tools focus primarily on informationprovision, education or skills development. Otherstrategies use information to reinforce the effectivenessof other policy tools. Changing product standards inan industry, for example, could be accompanied by acampaign to inform producers and consumers aboutthe new obligations.

Ultimately the effectiveness of these tools will not onlydepend on whether they communicate the issues well,but also whether they are developed with an awarenessof the complexities in the way consumers and tradersuse information to make decisions and how thisultimately affects the outcomes of consumer policy.

Many consumer problems are caused by consumersnot having access to, or not using, the informationnecessary to make informed choices. There are twoareas in which insufficient information candisadvantage consumers:

1. Consumers’ ability to choose the product that bestsuits their needs is inhibited by a lack of information,or a limited capacity or willingness to useinformation, about products, services or traders.Traders often have substantially more informationabout their products than is available to the consumer.

2. There is a lack of information or understandingamong consumers about their rights and options ifthey are dissatisfied with the performance of aproduct or trader.

In addition, while clear information is usually essentialto empowering consumers, it may not be sufficient onits own to get consumers to change their behaviourand make better choices. There may be other barriersto behavioural change that cannot be overcome byinformation. Such barriers could include a lack of skillsor opportunity to make the change, or social pressureto maintain the previous behaviour. These barriersmay mean that other strategies are needed inconjunction with information to empower consumers.While recognising these limits, this paper focuses onthe information component of such strategies.

3The role of informationprovision and educationin consumer policy

3.1 Empowering consumers

06 > The role of information provision and education in consumer policy

Uncertainty about products, servicesand tradersThere is considerable literature on how uncertaintyand poor information about products, services andtraders affects the relationships between buyers andsellers and the risks to consumers. An appendix on Theproblem of incomplete information – A theoreticalperspective, discussing the relevant theory, is availableon the Consumer Affairs Victoria Websitewww.consumer.vic.gov.au.

Some markets are more prone to informationproblems than others because the products andservices in those markets are:

• bought infrequently, so consumers cannot use pastexperience to assist them in making choices

• technical, so it is difficult to understand theirstrengths and weaknesses

• of a nature that makes it difficult for consumers tojudge their quality prior to purchasing and usingthem (experience goods)

• of a nature that makes it difficult for consumers tojudge their quality unless something goes wrong, soconsumers must rely on the honesty of the trader toensure the product or services meets theirexpectations (credence goods).

Consumers can suffer detriment when they do nothave access to the information they need, they do notuse information (even if it is available) or there aregroups of disadvantaged consumers that face‘persistent circumstances and/or ongoing attributeswhich adversely affect consumption thereby causinga continuing susceptibility to detriment inconsumption’ (CAV 2004b, p. 3). Disadvantagedconsumers are more vulnerable to uncertainty andpoor access to meaningful information.

In some situations, consumers who are not usuallyconsidered to be disadvantaged may be vulnerable todetriment because of the nature of the decisions they aretrying to make or their personal circumstances at the time.It is not possible to eliminate uncertainty and thevulnerability of consumers in those markets.

The factors that affect consumer choice are complex.Behavioural economics theories suggest that decisionmaking is more complicated than is represented intraditional economic models based on assumptionsof rational self interest, and that these models arenot always good predictors of market behaviour.To understand the implications of this outcomeit is necessary to determine whether:

• consumers are making poor decisions, that is,buying products and services that are inconsistentwith their underlying preferences

• if consumers are making poor decisions, thosedecisions are affecting competition and theefficiency of traders, as well as consumers’ abilityto choose the best product.

While consumers may make some choices that do notsit well with economic models based on rational selfinterest, such choices are not necessarily inconsistentwith consumers’ underlying preferences. Consumersare not only concerned about the benefits they receivefrom particular goods and services, for example, butalso the social and environmental effects of thosegoods and services and their overall fairness. They alsoappear to be more adverse to losses than attracted togains of a similar size (see Appendix available on theconsumer Affairs Victoria website). In these situations,government intervention is not necessary. Consumersstill demand the goods and services they want andtraders still respond to that demand. Action to changewhat consumers are buying implies that consumers’preferences are wrong and should be changed toreflect a more appropriate consumption pattern.

The implications of poor decisionmakingIn other cases consumers may be making poor choices.People often use proxies or shortcuts to deal withinadequate access to, or a lack of ability to use,information. They rely on a simplified set of principlesin making judgements that involve complexprobabilities, and shortcuts chosen could result inconsumers choosing products or services that do notmeet their expectations. Also, shortcuts in decisionmaking may be so ingrained that consumers do notrealise they are choosing in a way that does notidentify the right product for them. Decision makingthat results in poor choices may warrant governmentintervention if the market does not develop strategiesto improve consumers’ access to, and use of,information. Government intervention may also bewarranted if it would improve consumers’ choices, andif the benefits of intervention would outweigh the costs.

A good understanding of the consequences of the poorchoices made by consumers is needed beforeconsumer agencies can respond effectively. Poordecision making can affect the supply of products andservices and consumers’ welfare.

The role of information provision and education in consumer policy > 07

Poor choices can reduce the efficiency of production ifconsumers demand products and services that do notmeet their expectations, leading to the wrong mix ofgoods and services being produced. Traders may beable to exploit consumers by charging monopolyprices or reducing quality in areas where consumersare not considering relevant facts. Also, the normalmarket forces – whereby competition would pushinefficient operators that are not meeting consumers’needs out of the market – do not work effectivelybecause consumers have difficulty distinguishingbetween good and bad traders.

The pressure on producers to improve their efficiencymay increase if some consumers gather informationand use it to select the best product or service forthem. Those that search drive traders to provide theproducts and services they want at the lowest possibleprice. This can have flow-on benefits to the quality ofthe products and services available to other consumers.Other consumers will benefit most if the product orservice is uniform. If the range of products is diverse,however, having a significant proportion of consumersmaking poor decisions still affects producers’ efficiencyand consumers’ welfare. This applies even if informedconsumers ensure that traders produce at the lowestpossible cost, are innovative, supply a good range ofproducts and services and do not overprice.

Poorly informed consumers can have difficultyidentifying the option that best suits their needs fromthe available range of products and services. The socialand personal consequences of the resulting poorchoices are obvious and well documented in fields likeconsumer credit and investment advice. From aneconomic perspective, poorly informed consumersspend too much on products and services that are notmeeting their expectations and have less to spend onproducts and services that would improve theirwelfare. The economy then produces a mix ofproducts and services that does not reflect consumers’underlying preferences. This is inefficient.

Overall, well informed decisions are vital to encouragecompetition and drive traders to operate efficiently.Without these drivers to generate efficient production,it is impossible to maximise the benefits to consumers;however, even if markets appear competitive, there isstill a risk that welfare would not be maximisedbecause poorly informed individuals are unable tochoose the products or services that best suit them.These outcomes are illustrated in Box 2 using theexample of consumer credit.

The steps for developing policy responses to complexinformation problems are discussed in section 5.

Box 2: Consumer credit

Borrowing money is an obvious area in whichconsumers make complex decisions and rarely have afull understanding of the costs and benefits of allcredit products. Some consumers are better informedthan others. They undertake sufficient research, or useother sources of aggregated information (such asconsumer magazines) to obtain the best deal.Consumers who search for the best deal put pressureon credit providers to improve the quality and reducethe price of credit products. Without other consumerprotection policies, however, it is unlikely therewould be sufficient well informed consumers to drivemarket efficiency.

The preferences of those that are well informed arelikely to be different from the most vulnerable anddisadvantaged consumers; for example, low incomehouseholds that look to fringe lenders (such as payday lenders) would receive few flow-on benefits fromthe search activities of well informed, often higherincome, consumers. In the case of consumer credit,therefore, insufficient information is likely to be aproblem. Consumers who search may help improvethe efficiency of the products on offer, but significantissues would remain.

On the demand side, there is a complex array ofcredit products. Even if each option provides goodvalue for money, consumers have trouble choosingthe best option for them. Many make the wrongchoice. A low usage credit card holder, for example,may choose a card with high up-front fees and alower interest rate. The purchase of the wrongproducts is at the expense of consumers’ ability toafford other products and services that contributemore to their welfare.

Uncertainty about consumer rightsand responsibilitiesConsumers may be poorly informed not only aboutthe products and services they are considering buying,but also their rights and responsibilities when makingthose purchases and if something goes wrong. Mostconsumer agencies give priority to educatingconsumers about their rights. The European Union’sconsumer policy statement noted:

EU [European Union] consumer policy should alsoempower consumers to understand policies that affectthem and to make an input into these policies. Consumersshould have the capacity to promote their interests in orderto be on the same footing as other civil societystakeholders represented at the EU level. (EU 2002, p. 3)

Informing consumers about their rights has benefitssuch as:

• helping consumers to avoid problems because theycan identify behaviour that might indicateunethical business practices

• reducing the costs (and wasted resources) whenproblems arise by assisting consumers to redressthose problems quickly

• highlighting rogue traders more quickly andreducing the damage they can inflict on subsequentconsumers

• increasing the amount of information available toconsumer agencies through inquiries andcomplaints and increasing agencies’ ability toidentify and target problems.

Information that empowers consumers can alsoimprove traders’ compliance with consumerregulation:

• When traders disclose information on products orservices, they make regulations easier to enforce bymaking discrepancies between traders’ claims andtheir performance more apparent (Cranston 1984,p. 306).

• Informing consumers of their rights increases theprobability that they will demand that those rightsbe met and seek redress if they are not. Informationabout rights increases the profile of consumerregulation, which also encourages compliance.

Two other areas in which information provision canencourage compliance are informing traders abouttheir rights and responsibilities, and requiring tradersto provide information to their industry’s regulator.

Uncertainty about traders’ rights andresponsibilitiesTraders can be poorly informed about their rights andresponsibilities under consumer regulation. Honesttraders may be unaware they are not meeting theirobligations. Some argue that ignorance is a problemamong bodies corporate, for example: ‘Manysubmissions were of the view that many bodycorporate disputes were often the result of ignoranceof the Regulation’ (CAV 2004c, p. 9).

In Consumer Affairs Victoria’s consultations on theMotor Car Traders Act 1986, the importance ofinforming ‘traders generally wishing to comply withthe law’ was noted (CAV 2004d, p. 58). Regulatorsoften prefer to use persuasion rather than lawenforcement. By informing traders about theirobligations, consumer agencies are perceived as morecooperative, giving traders adequate opportunity tocomply. This cooperative approach, combined withgreater trader awareness, reduces the need to resort tocostly litigation to get honest traders to comply.

Raising the profile of consumer regulation increasesawareness of the regulation and the perception thatthose that breach it are likely to get caught. This isparticularly the case when advertising is used to showinstances in which traders have been successfullyprosecuted. This can encourage other traders to comply.

It is difficult to balance the pursuit of a strategy ofcooperation while maintaining the perception thatenforcement action will be taken if necessary.Consumer agencies need to balance these messageswhen informing traders about their rights andresponsibilities.

Informing the regulatorThe regulator may have difficulty obtaining informationto monitor businesses and identify when and wherebreaches occur. Such a lack of information might beaddressed by requiring traders to inform the regulatordirectly, either through regular reporting or an obligationto respond to the regulator’s requests for information.

Reporting has several benefits: it reduces the regulator’scost and increases the effectiveness of monitoring, andgives the regulator access to more evidence on which itcan prosecute breaches. It also raises the industry’sperception that regulatory breaches will be identifiedand prosecuted, and this is likely to increase theincentives for compliance. Requirements to provideinformation do, however, impose costs on traders.

08 > The role of information provision and education in consumer policy

3.2 Encouraging compliance

Information provision and education strategies > 09

Consumer agencies use a range of policies to deal withincomplete information and uncertainty. Settingstandards, licensing service providers and banningdangerous products are all used to provide consumerswith an acceptable standard of product or service inmarkets in which they are unable to judge theappropriate standard for themselves. This paper focuseson one set of policy approaches: the provision ofinformation and education for consumers and traders.

Different information and education strategies aresuited to providing different types of information.Usually:

• mandating that traders disclose information toconsumers informs consumers about thecharacteristics of a specific product or service

• information provided by consumer affairs agenciesmore commonly guides consumers on how tochoose between products and services, or informsconsumers and traders about their rights andresponsibilities under consumer regulation

• education strategies help people to develop theirskills, rather than simply providing information.

Overall, education and information strategies assistconsumers to avoid poor choices without undulyreducing the range of choice. Maintaining anappropriate range of choices means more consumershave access to the best product for them, andcompetition between traders is strengthened:

Well informed and confident consumers are good for business.The more knowledgeable consumers are, the more powerfulthey are and they usually have more choice as a result.Consumer choice is an important incentive for the sellersof any products to keep prices low and quality high.(Consumer Affairs Directorate (United Kingdom) 2002, p. 3)

According to conventional wisdom, however, reduction ofinformation acquisition costs, other things being equal, ispreferable to legislative or judicial determination of contractterms, because reducing information costs enables individualsto make informed choices to maximize their own utility.Because consumers seldom have identical preferencerankings, external determination of terms rarely is optimal.(Schwartz and Wilde 1979, p. 635)

While various information and education strategieshelp empower consumers and promote businesscompliance, this section discusses four: mandatingthat traders disclose information to consumers;information campaigns by consumer agencies;education to build consumers’ skills; and mandatingthat traders provide information to the regulator.

The success of information strategies is difficult tomeasure because their objective is usually not only toraise awareness but also to change people’s behaviour.Changing behaviour is notoriously difficult. In thecontext of consumer issues among young people,researchers observed:

Achieving behavioural change was generally acknowledgedas an extremely difficult goal. The evidence from theliterature indicates that advertising on its own rarely leadsto wide behaviour change particularly in the area ofhealth...

Changes in behaviour are more likely to eventuate over along period of time, and only if the mass mediacommunication is supported by other activities(e.g. community-based interventions, sponsorship, publicrelations (PR) etc.). (Shanahan, Elliot & Dahlgren 2000,p. 5) (See also Commonwealth Consumer AffairsAdvisory Council 2002, p. 15.)

As previously noted, the barriers to behaviouralchange are often much broader than poorinformation. The success of an information campaignmay be dependent on it being accompanied by otherstrategies to encourage behavioural change.

Information provisionand educationstrategies

4

10 > Information provision and education strategies

Mandatory information disclosure is used in a numberof industries to require traders to inform consumersabout the products or services they are consideringbuying. Three examples are in Box 3.

4.1 Mandating that traders discloseinformation to consumers

Credit providers

Before entering into a credit contract, a credit providermust give the debtor a precontractual statement andan information statement. The first page of theprecontractual statement must disclose the followingin table form:

• the amount of credit to be provided – if the amountis not ascertainable, then the maximum amount ofcredit to be provided

• the annual percentage interest rate or rates • details of any interest-free period • the total amount of interest if the contract is to be

paid out within seven years • the number, amount and frequency of repayments,

and • any credit fees and charges.

The rest of the precontractual statement shoulddisclose:

• the credit provider's name • to whom the credit is to be provided • details of any changes that can be made under

the contract • the frequency of account statements • any default rate of interest • whether enforcement expenses would be paid by

the debtor in the event of a breach • details of any mortgage or guarantee that

may apply • details of any commission to be paid, and • details of insurance financed under the contract.

The information statement explains the debtor’s rightsand obligations under the Consumer Credit Code(Creditcode 2005, pp. 2–3).

Car traders

The seller of the vehicle must provide a roadworthinesscertificate. The Motor Car Traders Act 1988 (s. 52)requires the dealer to display information about the:

• name and business address of the owner of the caror, if the owner is a car trader or special trader, thename and address of the last person registered asthe owner

• distance travelled by the vehicle when the traderacquired it

• price of the vehicle• year the vehicle was first registered, and• model of the vehicle.

Introduction agents

The Introduction Agents Act 1997 (s. 24) requiresintroduction agents to inform potential clientsabout the:

• name of the agent• type and levels of service provided by the agent• price of each level of service and the method

of payment• criteria to be used for introductions • current size of the agent’s membership database• number of males and females in the membership

database• methods used to introduce clients • agent's refund policies • agent's complaint procedures• amount payable for terminating the agreement

early (if any), and• other obligations (if any).

Box 3: Mandatory requirements to provide information to consumers

Information provision and education strategies > 11

Mandatory information disclosure can empowerconsumers and encourage traders’ compliance. Itempowers consumers by improving their knowledgeof the product and increasing their confidence.Confident consumers are more likely to pursue theirrights. This encourages traders to comply withconsumer regulation.

Well designed mandatory disclosure arrangementsprovide the right information to the right peoplewhen they can use it effectively.1 They target peopleactively seeking to purchase a product or service andthus are directed at those most likely to need theinformation. Requiring traders to provide informationbuilds on an existing relationship that consumersalready use to obtain information about the productthey are seeking to purchase. This increases thelikelihood that consumers will become aware of anduse that knowledge.

Consumers get their information about products from manysources. But the most important is often that supplied bythe producer of the product itself, either in the form of alabel or warning on the packaging of the product itself, orin instructions supplied with the product. (DTI 2002, p. 15)

There are three main challenges in makinginformation disclosure effective:

1. overcoming resistance among traders

2. ensuring consumers use the information

3. recognising the potential costs to consumersand traders.

Resistance among tradersTraders should implement information requirementsin such a way that useful information is delivered toconsumers. Traders are often resistant because theywant to reduce disclosure costs or are reluctant tomake information public.

Given that the information they are being forced todisclose is of strategic value and that any representationsmade in compliance with a disclosure regulation will inturn form the basis of liability if untrue or misleading,sellers will attempt to minimize disclosure and liability bycomplying through obfuscation and complex or difficult todecipher (or even receive) statements. (Hadfield, Howse &Trebilcock 1998, p. 143)

This may lead traders to structure or design theirproducts, services or activities to minimise their disclosureobligations or the risks accompanying disclosure.Producers may not conduct research that could castdoubt on the quality of their product, for example, ifthey are required to disclose the results of that research.

At some point the question has to be asked, then, whetherthe particular distortion created by the initial informationdisadvantage (in light of other market or regulatorymechanisms that could indirectly compensate for thedisadvantage) is worth the costs and distortions created bythe strategic response to disclosure laws. In some cases theanswer will be yes; in others it will be no. (Hadfield,Howse & Trebilcock 1998, p. 144)

Similarly, traders may be reluctant to provide usefulinformation because it triggers other disclosurerequirements. Credit providers, for example, may bereluctant to include interest rates in their advertisingbecause advertisements that refer to the cost of creditmust also contain annual percentage rates (whichinclude all changes) and a statement detailing any feesor charges that may apply (Creditcode 2005, p. 5).

Ensuring consumers use theinformationThe information traders are required to divulge mustbe used by consumers. This requires:

• people to be aware that they need the information

• the information to be provided at the right time inthe decision making process

• the information to be useful, accessible andunderstandable

• consumers to then use that information as a basisfor decision making.

A breakdown in any one of these factors could preventthe information from changing consumers’ behaviour.Consumers are often unaware they need information.In these cases, policy makers need to increase the valueconsumers place on information before they woulduse that information. Simple disclosure may beineffective. It is also important that information beprovided at the time consumers form their decisions.Information disclosed as consumers make a finalcommitment to a deal may be too late because theconsumer is already locked in to a decision. This hasbeen recognised as an issue in disclosure on creditcontracts in Australia.

There is no assurance that the debtor will receive thestatement in sufficient time to read and understand itbefore signing the contract, even in the case of complextransactions or real estate mortgages. (Lanyon1997,p. 223)

1 Information disclosure requirements can take many forms. This paper does not analyse the strengths and weaknesses of the options.

12 > Information provision and education strategies

The information also needs to be useful, accessible andunderstandable. Consumers often ignore informationthey cannot understand, use or obtain easily.In a survey of young people, 18 per cent said that,prior to signing their mobile phone contract, theyeither did not read the contract or read but did notunderstand it (Funston & MacNeill 1999, p. 8). Theinformation needs to be clear, concise and relevant.Highly detailed, lengthy technical documents areimpractical for most consumers and would do little toimprove their choices. This makes designing practicalinformation disclosure requirements for someindustries, or some aspects of products or services, verydifficult. These complexities were acknowledged by theCommonwealth Government in disclosurerequirements for financial services:

However, the Government recognises community concernabout the amount and detail of information provided toconsumers through financial services disclosure. The contentrequirements for the various disclosure documents areresulting in excessively lengthy and complex documents(or, in the case of oral disclosure, excessively lengthytelephone ‘scripts’), which are difficult to reconcile withthe legislation’s requirement that information be presentedto consumers in a clear, concise and effective manner.

As a result, the purpose behind the disclosure requirements– that is, to assist consumers to make informed investmentdecisions – is possibly being undermined. (Treasury 2005,pp. 1–2)

In addition, once information is provided in a wayconsumers can understand, they also need to use it.Consumers often base decisions on criteria that reflectonly a partial analysis of the available information.Some relevant facts that do not fit with their usualdecision making criteria may be ignored. Informationdisclosure requirements should take account of howconsumers make decisions. If important information isbeing ignored, simply providing that information maybe insufficient. Information disclosure may need to becombined with general education so that people learnabout the information’s relevance, or the informationmay need to be provided in a way that is consistentwith the process that consumers use to make decisions.

These challenges are complicated by consumers’individual characteristics. Different groups often makedecisions using different criteria and, therefore, whatchanges the behaviour of one group may have alimited effect on others. The problems facingdisadvantaged consumers can be relevant here.

Many people cannot cope with the amount of informationthat is available, particularly those with poor reading ornumeracy skills. And some disabled people will needinformation in alternative formats. (DTI 1999, p. 15)

It is unclear whether unsophisticated consumers will beable to utilize the information to make effectivecomparisons, particularly between types of lendinginstitutions. (Lanyon 1997, p. 227)

One group that may benefit from informationdisclosure is consumers facing situational vulnerability;that is, consumers who are usually capable of makinginformed decisions, but have difficulty under somecircumstances. Usually well informed consumers mayhave difficulty in an industry in which theinformation needed to choose between products ishard to identify and obtain, or the circumstances ofthe consumer – for example, their state of health orthe stress surrounding the decision (health care orfuneral services, for example) – limits their ability tomake a considered choice.

Additional issues arise when there are other barriers tobehavioural change that cannot be overcome byimproving the availability and use of information.

Cost to traders and consumersWhile information disclosure requirements often carryrelatively low costs for the government, they mayimpose costs on consumers and traders. There can becosts for consumers trying to use complex or difficult-to-access information. Information disclosure can alsoimpose considerable costs on traders. There can beadditional costs if presenting the information reducesthe ability of traders to develop new products. ThePrices Surveillance Authority suggested that this wasthe case for credit card disclosure requirements:

The PSA [Prices Surveillance Authority] pointed out thatdiversity in pricing structure is one of the main types ofproduct innovation. It found that the requirement underthe Credit Acts to roll up all charges into the calculatedannual percentage rate confined credit providers to onesource of revenue: floating credit card rates. This impactedboth on product flexibility and pricing and led to economicinefficiency by divorcing the price of services from theiractual costs thus distorting the consumption of the servicesprovided. (Lanyon 1997, p. 234)

As noted above, the benefits of information disclosurecan be significant but are sometimes tenuous ifschemes do not deliver information that consumerswill actively use. Also, information disclosure may beunnecessary if consumers’ experience from pastpurchases, or the incentives for traders to cultivate andmaintain reputations as quality suppliers, compensatefor consumers’ information deficiencies. Becauseinformation disclosure can impose significant costs ontraders, care is needed to ensure it is not mandatedwhen the gains do not outweigh its costs.

Information provision and education strategies > 13

Information campaigns are a tool commonly used byconsumer agencies. While campaigns can, and oftendo, inform traders about their rights andresponsibilities, this section focuses on informationtargeting consumers.

Unlike mandatory disclosure provisions, informationcampaigns usually guide consumers on how to choosethe best product or service, or their rights if they arenot satisfied with the product or service they receive,rather than informing them about the characteristicsof specific products or services. Consumer AffairsVictoria’s guide to buying and selling real estate is anexample of this type of information. Other examplesare summarised in Box 4 (see also section 2).

4.2 Information campaigns byconsumer agencies

Box 4: Consumer guides

Buying and selling real estate

In 2004, Consumer Affairs Victoria released a guide forbuyers and sellers of real estate as part of a broadercampaign to inform consumers and industry aboutamendments introduced by the Estate Agents and Salesof Land (Amendment) Act 2003. The guide covers:

• obtaining finance• real estate agents and their roles and obligations• the seller’s obligations once an agent has been

engaged• the use of lawyers and conveyancers • how to choose a suitable property• processes for, and differences between, auctions and

private sales, and• the processes following the sale and before the

buyer takes possession of the property. (CAV 2004e)

Buying a car

In 2005, Consumer Affairs Victoria released a guide forbuyers of new or used cars. The guide covers:

• additional fees and charges• obtaining a loan and insurance• consumers’ rights and obligations in buying new or

used cars from licensed dealers, includingwarranties and trade-ins

• consumers’ rights and obligations in buying usedcars through private sale or auction

• a checklist for assessing the quality of the vehicle• tips on ongoing maintenance and upkeep• identifying the right repairer and the obligations

on the repairer and the owner, and• what to do in the case of an accident. (CAV 2005b)

Renting a home

In 2005, Consumer Affairs Victoria released a guide onwhat tenants, landlords and agents must do underVictoria’s residential tenancy laws. Landlords andagents that do not give residents a copy of the guidebefore they move in are liable for a $500 fine. Theguide covers:

• tips for tenants, landlords and agents to protecttheir rights

• the tenancy agreement• charges such as deposits, utilities, the bond and rent• condition reports, and rights and responsibilities in

regard to the condition, cleanliness, maintenanceand repair of the premises

• conditions on landlords or agents entering thepremises

• rights and responsibilities in ending the tenancy,and

• dispute resolution processes. (CAV 2005c)

14 > Information provision and education strategies

Such campaigns can potentially generate significantconsumer benefits. They can inform consumers earlyin their decision making processes and reach consumersbefore they are locked in to purchasing decisions. Theyare not dependent on the trader for implementation,reducing the risk that the message consumers receive isdistorted, or that the requirement to provide informationwill affect the traders’ potential product innovation.

Information campaigns encourage compliance byincreasing the profile of consumer regulation and theperception that when consumers know their rights,traders are less likely to get away with activities thatundermine those rights. The United Kingdom, forexample, argued that knowledgeable consumers arevery important for a strong enterprise culture (DTI2002, p. 4).

Targeting information campaignsInformation strategies can be costly for governmentagencies and, therefore, need to be well targeted toensure they deliver effective outcomes. ‘To be mosteffective, consumer education initiatives must befocused on clear priorities and targeted at those mostin need’ (OFT 2004, p. 2).

The potential benefits are not always easy to achieve.It is necessary to direct the information at the rightpeople, so it is taken up by those it is intended toinfluence. Victoria’s Business Licensing Authoritynoted that this is an ongoing task:

Education is not a one-off phenomenon, but a continuingchallenge. Relevant, practical, and clearly expressedinformation (including information provided in a varietyof languages) needs to be always accessible and, inparticular, accessible at places where transactions occur.Based on analysis of problems arising within particularindustries, information addressing those problems needs tobe compiled and delivered in a targeted way. (Smith & Ward2005, p. 111)

Such difficulties have also been recognised in theUnited Kingdom, where it has been argued that pasteducation strategies were often poorly targeted, focusingon the people that are easiest to reach, rather than thosein greatest need (OFT 2004, p. 3; DTI 1999, p. 39).

As with most information strategies, consumer agencies’information programs are ineffective if people areunaware they need the information; the information isnot provided at the right time in the decision makingprocess; it is not useful, accessible and understandable;and consumers do not use that information to makedecisions. The issues discussed in the previous sectionare relevant here. In particular, effective informationstrategies recognise the complexity in consumers’decision making, and include strategies to encourageconsumers to act on the information being provided.

Different strategies are often needed for differentgroups in the community because they do not seekinformation in the same places, or they responddifferently to the way the information is delivered.Consumer Affairs Victoria has recognised thesedifferences and established units to target Indigenousand multicultural consumers. These units improveconsumer education and awareness and theaccessibility of Consumer Affairs Victoria’s services forIndigenous and multicultural communities. The needfor a multifaceted approach and the complexity ofeffective strategies means that, while informationstrategies are an important component of polices toaddress deficiencies in information, it is not practicalor effective for them to cover the whole communityand all issues.

In some industries, the private sector offersinformation services that meet the needs of somegroups. Producers may offer guarantees or warrantiesthat give consumers more certainty about theprotection available if problems arise with a product orservice. Third parties may also provide informationservices; for example, real estate buyers’ advocates andtravel agents assist consumers to buy products andservices in markets in which making an informedchoice depends on understanding a large amount ofinformation. Services, such as ratings schemes, haveemerged in other industries. AAA Tourism managesthe star ratings that inform consumers about thequality of tourist accommodation.

Government intervention in areas in which privateprovision is possible can stifle the development ofthese private alternatives. Consumer agencies mayachieve greater benefits by focusing their spendingon information strategies in areas in which privatesolutions are unlikely, or to disadvantaged groupsthat either cannot afford or do not use the privatealternatives.

Information provision and education strategies > 15

Much of the preceding discussion recognised thatpeople need access to information and to be able tounderstand and use that information. As noted byCayne and Trebilcock, access to information isnecessary but insufficient for good consumer choices:

… for an inability to utilize information will alwayssubvert a disclosure requirement. The educationalinadequacies associated with poverty are relevant in thiscontext… Thus a rule that requires a food packager todisclose vitamin and protein content can have little impactif the poor are unaware of the most elementary nutritionalprinciples. (Cayne & Trebilcock 1973, p. 406)

These issues have been explicitly recognised in theUnited Kingdom, where the government’s ConsumerWhite Paper noted, ‘Information is not on its own aremedy for all problems. People need skills to convertinformation into effective knowledge’ (DTI 1999, p. 23).

The 2004 education strategy by the United Kingdom’sOffice of Fair Trading included the following objective:

Objective 1: Identify the skills and knowledge needed byconsumers.

Consumers need a range of generic, transferable skills inorder to function confidently, effectively and responsibly.These skills might include the ability to:

• research, assimilate and critically analyse informationaccording to individual needs

• manage resources effectively

• assess risk and exercise balanced judgement in makingresponsible decisions

• communicate effectively in a wide range of consumersituations

• solve problems where they arise, and

• know when to seek professional advice.

Taking these examples as a starting point, we will conductresearch to determine what skills consumers need. Furtherresearch will identify the kind of knowledge consumersneed in specific consumer situations. (OFT 2004, p. 4)

In Victoria, the main strategy for helping consumersdevelop their skills is the provision of consumereducation in schools (Box 5). Consumer AffairsVictoria is also involved in adult education initiatives.

4.3 Education to buildconsumers’ skills

Box 5: Consumer education in schools

Affluenza is the increasing tendency of youngAustralians to spend beyond their means. The readyavailability of credit combined with a ‘must have’mentality has led to worrying levels of consumer debtamong young people. This increase in spending iscompounded by the lack of a corresponding increasein financial literacy among young people.

The Consumer Education in Schools project isConsumer Affairs Victoria’s response to thesetroubling consumer trends. A background researchreport set out to:

• investigate how consumer education was taughtnationally and internationally

• determine the level of awareness about ConsumerAffairs Victoria and consumer rights andresponsibilities among school students and otheryoung Victorians

• ascertain best practice in education methodology,information campaigns aimed at young people andthe teaching of consumer and financial literacy.

Overall, Consumer Affairs Victoria concluded that ina fast changing world and global marketplace, youngconsumers need more than just information andadvice, they need the skills to be able to analyse anduse both. The essential skills with which ConsumerAffairs Victoria wants young consumers to be armedare:

• money management• communication• problem solving• critical and creative thinking• emotional intelligence.

Consumer Affairs Victoria launched the first stageof Consumer Education in Schools in March 2004.The project provided resource books for middleschool teachers of commerce, English andmathematics. It also set up an interactive educationalwebsite (in partnership with the New South WalesOffice of Fair Trading). In May 2004, the firstMoneyStuff Challenge competition for Victoriansecondary students was launched. (CAV 2004a,pp. 91–92)

16 > Information provision and education strategies

It is recognised in Victoria that basic consumer skillsare essential to empower consumers:

These skills are the building blocks that enable people tobecome smart consumers who can make discerningchoices, manage their money effectively, and have theconfidence to resolve problems and the ability to seekfurther information and advice when required. While lawsand markets will always change, these essential skills willenable young Victorians to move through life‘independent, informed and in control’ as consumers whoare well aware that increased debt equals decreasedfreedom. (CAV 2004a, p. 92)

Given that consumers (particularly those that aredisadvantaged) have difficulty using information –even if it is available – education strategies areimportant to the long term success of consumer policy.Education that helps consumers develop skillsincreases their ability to make informed decisions,even without government intervention, and increasestheir ability to use information if it is provided. Itmakes markets and regulation work more effectively,but such strategies are long term. Their success isdifficult to measure and they cannot deal withimmediate issues.

Some consumer regulations require traders to provideinformation to the regulator. This can be part of aregistration or licensing process, or entail ongoingreporting or a requirement to provide information onrequest. In some industries, for example, traders mustreport annually on issues such as business activity,financial information, or the people managing oremployed in the business.

Estate agents, introduction agents, travel agents, cartraders, second hand dealers and pawnbrokers, creditproviders, and prostitution service providers mustsupply annual statements when they renew theirlicences. The statement for introduction agents (s. 35of the Introduction Agents Act 1997), for example, mustinclude:

• the name of the agent

• the date notice was given of the intention to act asan agent

• the date of the annual statement

• the agent’s address and any previous addresses

• any new directors, and

• any offences the agent has been charge with,pleaded guilty to, or been convicted of.

Information disclosure can help the regulator to detectand trace problems and collect the evidence necessaryto prosecute a breach of the regulation. It creates aperception in the various industries that activities arebeing monitored and that the chance of gettingcaught for inappropriate behaviour is increased. Thisencourages traders to comply.

One risk with mandatory reporting is that it couldcreate unrealistic expectations that governmentmonitoring guarantees consumer protection. This isnot the case. While reporting may encouragecompliance, it does not remove the risk of tradersbreaching consumer regulation. If consumersmistakenly believe the chance of detriment is low,they may reduce their vigilance and expose themselvesto greater risk.

All reporting requirements impose some compliancecosts on traders, thus the information collected shouldbe useful and used by the agency. The potentialbenefits from collecting information may be reduced ifthe collection and storage of that information isdeficient or inconsistent across similar industries, sothat rigorous comparisons and analysis are notpossible.

4.4 Mandating that traders provideinformation to the regulator

Information and consumer policy > 17

The preceding discussion highlights the complexityin consumers’ approaches to decision making and thediversity in policies that use information to reduceconsumer detriment. This analysis has implicationsfor when government intervention is warranted andwhich forms of intervention are most effective.To draw out the practical consequences for governmentpolicy development, it is useful to look at theimplications of the issues in this paper for three stagesin the policy process:

1. defining the problem

2. determining the range of feasible policy alternatives

3. identifying the preferred alternative.

When both the demand and supply sides of marketswork well they deliver good outcomes for consumers,but markets that fail result in behaviours by tradersand consumers that lead to consumer detriment.Analysing the problems that result in consumerdetriment requires an understanding of the three levelsshown in Figure 1.

Accurately defining consumer problems requires anunderstanding of how consumers use information tomake choices. It is not possible to obtain a realisticunderstanding of the causes of problematic behaviourwithout knowing how consumers use the informationavailable to them, and whether they ignore importantfacts. Understanding problematic behaviour requiresan awareness of the way consumers and traders reactto the availability, or lack of, information.

Failure to account for consumers’ reactions toinformation and uncertainty can result in overlysimplistic definitions of the causes of the problem,or a failure to recognise the behavioural responsesto underlying deficiencies in the market. Simplyconcluding there is information failure, for example,may lead to a misconception that providinginformation would remove the market failure. Theinformation failure could be a result of an inability orreluctance to use information, which makes providinginformation alone an ineffective strategy.

5Information andconsumer policy

5.1 Defining the problem

Figure 1: Defining problems that affect consumers

Consumer detriment: Analyse the effect onconsumers if the market is not delivering theexpected economic and social outcomes.

Problematic behaviour: Analyse the behaviours oftraders, consumers and third parties that lead toconsumer detriment.

Causes of problematic behaviour: Identify thesecauses (which can be deficiencies in either thedemand side or supply side of the market) that resultfrom market failure, regulatory failure or a failure toachieve other social policy objectives (for example,poverty or individual behaviour that is inconsistentwith the community’s social or ethical standards).

18 > Information and consumer policy

A full understanding of each of the three levels shownin Figure 1 is necessary because government action canbe targeted at each of these levels. The most effectivetools are likely to be those that remove the causes ofproblematic behaviour; for example, introducingcompetition into a market in which a monopolist isincreasing prices and exploiting consumers. This is notalways possible. As noted above, this paper cautionsagainst taking an overly simplistic view of the causesof the problem because this would result in actionsthat do not target the real cause and are, therefore,futile. In many cases, government action cannotremove the real market, regulatory or social policyfailure; for instance, intervention cannot removecauses that result from ingrained behaviouralcharacteristics, such as teenagers’ desires to fit in withtheir peer group or people’s tendency to take morenotice of the views of their friends than of writtenfactual material provided by a government agency.

If it is not practicable to remove the causes ofproblematic behaviour, the policy should considertargeting the second part of the chain: changing thatbehaviour. If it is not viable to change behaviour, thethird step is to consider whether the governmentshould offset the impact of the consumer detriment.This could include, for example, dispute resolutionprocesses or government insurance arrangements,which reduce the impact of consumer detriment onceit has occurred.

Policies that include information and educationstrategies are used at all three levels. Figure 2 provides afew indicative examples.

There are no prefabricated solutions for choosing themost effective policy tool. Consumer agencies needto draw on disciplines such as economics, law,psychology and marketing to understand the problemfully and design an effective policy response. Thispaper highlights several issues that are relevantto policy options that involve information oreducation strategies.

First, information strategies may be improved bychanging their design and/or delivery media toaccount for how people make decisions and useinformation. The strategy may need to convinceconsumers to use the information or change the waythey make decisions. This is not easy becauseapproaches to decision making can be ingrained. Suchdifficulties should be recognised when assessing theeffectiveness of an information-based strategy.

Second, the requirement to improve people’s ability tomake good decisions increases the significance ofeducation and skills development as long term goals.Helping people to improve their skills reduces the needfor government intervention and improves theeffectiveness of information if it is provided.

5.2 Identifying policyalternatives

Figure 2: Information-based policy tools

Consumer detriment: Informing consumers abouttheir rights at the time they complain about aproblem with a service provider.

Problematic behaviour:

• Using information to persuade people to changetheir behaviour, for example providing guidanceon how to make better decisions.

• Providing information to traders and consumerson policy changes to increase awareness andimprove their effectiveness.

• Requiring traders to provide customers withinformation to reduce the risk of consumerexploitation by traders.

• Requiring traders to provide information to theregulator to improve compliance with consumerregulation.

Causes of problematic behaviour:

• Educating consumers to help them improve theirability to make good choices.

• Providing information in markets in which a lackof information has been identified as a problem.

Information and consumer policy > 19

Third, because individual consumers’ choices areimportant, it is necessary to recognise that consumersare not a homogenous group. They take differentfactors into account and respond to different types ofinformation strategies. The approach to informationand education may, therefore, need to be multifaceted,targeting different groups.

Choosing between alternative policies involvesassessing their costs and benefits and selecting the onethat generates the greatest benefits compared with itscosts. Assessment of the benefits of an information oreducation strategy should consider how successful thepolicy is expected to be in reducing consumerdetriment. Again, this requires an understanding ofhow people make decisions and respond to theavailability, or lack, of information.

The benefits of an information or education strategyare likely to be greatest if:

• it is possible to use information to counter therelevant causes of problematic behaviour, theproblematic behaviour itself or the consumerdetriment

• the information would assist in breaking downbarriers or enhancing the benefits for consumersconsidering changing their behaviour

• the channels used to deliver the information totraders and/or consumers make the informationaccessible and credible, and

• the information can be directed and tailored to thetarget audience, particularly the groups that aredisadvantaged most by the consumer detriment.

A realistic prediction of the success of the policyshould be incorporated into the analysis of its benefits.

It is also important to ensure that the informationstrategy itself is effective. The many differentinformation based strategies discussed in this paperand the different objectives of these strategiesillustrates that information and education campaignsare diverse. Effective information campaigns targetclearly identified problems with effectivecommunication tools and use evaluation tocontinuously improve their outcomes. Research is acritical foundation for any campaign. It is used toanalyse the problem the campaign will target and thetypes of information and delivery mechanism the

audience is likely to respond to. An action plan is thendeveloped that draws on this research to identify theproblem, target audience and messages that will be thefocus of the campaign. Communication techniquesthat fit within the campaigns timeframe and budgetand deliver its key messages are then chosen. Finallyeffective campaigns need to be evaluated to determinewhether they have met their objectives and howfuture campaigns can be improved. Within thisprocess there are five key features of an effectiveinformation strategy. The information providedthrough these strategies needs to be:

Available — Those that use the information and thosethat provide the information need to be able to accessit readily. In practise, this means that the distributionof information by consumer agencies and tradersneeds to get to the right people at the right time. Inaddition, if the information is supplied by traders (tothe regulator or directly to consumers), those tradersneed to be able to obtain and report the informationwithout excessive cost.

Accurate — The content of the information needs tobe correct. Consumer agencies need to take care not toover-simplify their publications and messages and thismaterial needs to be updated when necessary. If theinformation is provided by traders or third parties, itneeds to be practical for them to obtain accurateinformation and mechanisms may be required toensure it is reported correctly.

Clear — A critical element of any informationcampaign is that its messages are readily understoodby those using it. This means getting the right balancebetween simplicity and technical detail.

Trusted — If consumers or traders do not trust theinformation as reliable they will ignore it. Thus thesource of the information and the integrity of theprocesses for assuring its accuracy are important. Theinformation needs to generate certainty amongconsumers and traders before they will respondconfidently to its messages.

Used — As discussed in this paper, simply providingconsumers and traders with clear, accessibleinformation, even if they are confident of its accuracy,may insufficient to generate the changes consumerpolicy is seeking. Consideration also needs to be givento whether the information is affecting the way peoplebehave. If this is not occurring, the informationcampaign may need to be changed or additionalpolicies may be needed to make these programseffective.

5.3 Choosing the best strategy

Conclusion > 21

This paper discusses consumer policy problems thatresult from consumers not having access to, or notusing, information to make informed decisions, andsolutions that involve information and educationstrategies. While there are other causes of consumerdetriment and many other policy tools available toconsumer agencies, information is a significant issue inconsumer policy.

Information and education strategies make animportant contribution to empowering consumers,improving the operation of markets and encouragingsuppliers to comply with fair trading laws. Suchstrategies should reflect an understanding ofconsumers’ decision making in the relevant market,however, or they can be costly and ineffective.

Conclusion

Appendix 1: Approaches to information provision and education > 23

Consumer agencies use a range of media to deliverinformation and education programs. This appendixdescribes some of the most common.

Most consumer agencies’ websites provide consumersand traders with a substantial amount of information.The use of this information has increased significantly.In 2003–04, Consumer Affairs Victoria received morethan 600,000 visits to its website; one third more thanthe previous year. The Business Licensing Authority,Liquor Licensing and the Rental Tenancies BondAuthority all had increased website activity in2003–04, compared with 2002–03 (CAV 2004a pp.85–86). While websites are a useful way for people toaccess information about consumer affairs issues, anduse of the web is increasing, they are still not acomplete solution.

Many agencies use leaflets, brochures, fact sheets andother publications to inform and educate consumersand traders. In 2003, Consumer Affairs Victoria distributed1,58 million publications. Major campaigns focused onreal estate and tenancy issues and young consumersand debt (CAV 2004a, p. 3). Box A1.1 outlinesexamples of Consumer Affairs Victoria’s publications.

A1.1 Websites

A1.2 Publications

Box A1.1: Consumer publications

CAV Link: An electronic quarterly newsletter that isavailable on the Consumer Affairs Victoria websiteand emailed to 1,000 recipients. It includesinformation on policy development and views onconsumer protection issues.

Building and Renovating: A guide for consumers:A publication to inform consumers consideringbuilding or renovating a home. It includes hints andadvice for all stages of the building project, includingcheck lists, contact information and budgeting tools.

Renting a Home: A guide for tenants and landlords:A publication that covers tenancy agreements, bonds,condition reports, paying rent, installation andconnection charges, repairs, entry by landlords, rentincreases, ending a tenancy and useful contacts. It isavailable in English, Arabic, Chinese, Greek, Italian,Russian, Serbian, Turkish and Vietnamese. Large printand audio versions are also available.

Stuff: A magazine for school leavers, withcomprehensive information about consumer rightsand responsibilities. It covers buying a car, movingout of home, getting a job, enrolling to vote, mobilephone contracts, housing loans, banking, responsiblepartying and tax. The magazine is provided to all VCE(Victorian Certificate of Education) coordinators fordistribution to year 12 students, TAFE (Technical andFurther Education) students and youth groups inmetropolitan and regional Victoria.

Discussion papers: Consumer Affairs Victoriapublishes discussion and research papers to assistorganisations and other stakeholders provide feedbackon policy and legislation.

Appendix 1: Approachesto information provisionand education

24 > Appendix 1: Approaches to information provision and education

Consumer Affairs Victoria reviewed its approach toconsumer eduction in schools in 2003 (CAV 2003).The MoneyStuff package was released in 2004 inresponse to the recommendations of that review.The package includes resource books for teachers, aninteractive website and information cards for students.It is designed to mesh with the Victorian curriculain mathematics, English and studies of society andenvironment. Issues covered include credit cards,mobile phone contracts, buying a car, consumerrights and responsibilities, and residential tenancies(CAV 2004a, p. 90).

Agencies use advertising to target specific consumerissues:

• In 2003, Consumer Affairs Victoria ran a radiocampaign at Christmas to encourage youngconsumers to avoid credit.

• Home buyers and sellers were encouraged to obtaina copy of Consumer Affairs Victoria’s real estateguide via a direct response advertising campaigninvolving print media, radio and the Internet.

• Advertising brochures on Building Advice andConciliation Victoria were delivered to all homeowners who obtained building permits.

While seminars and conferences are used to informconsumers and traders of their rights and obligations,they are most frequently directed at traders. In2003–04, Consumer Affairs Victoria conductedseminars and conferences for traders on:

• unfair contract terms: to assist understanding ofamendments to the Victorian Fair Trading Act 1999

• the food and grocery industry: to discuss trademeasurement packaging compliance issues and thebenefits of implementing effective qualitymanagement processes

• the motor car industry: to discuss current industryissues and Consumer Affairs Victoria’s role inregulating the industry

• bodies corporate: to discuss the future direction ofbodies corporate legislation.

In 2003, Consumer Affairs Victoria also held consumerawareness seminars for Chinese, Arabic, Turkish andSomali audiences. Residential tenancy forums wereconducted for non-English speaking groups.

A1.3 Education programs

A1.4 Advertising

A1.5 Seminars and conferences

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Consumer Affairs Victoria Reseach and Discussion Papers to Date > 27

1. Consumer Education in Schools: Background reportNovember 2003

2. What do we Mean by ‘Vulnerable’ and ‘Disadvantaged’Consumers? March 2004

3. Information Provision and Education StrategiesMarch 2006

4. Social Marketing and Consumer Policy March 2006

5. Designing Quality Rating Schemes for Service ProvidersMarch 2006

6. Regulating the Cost of Credit March 2006

7. Consumer Advocacy in Victoria March 2006

Consumer Affairs VictoriaResearch and DiscussionPapers

July 2006C-41-01-903

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Victorian Consumer & Business Centre113 Exhibition StreetMelbourne 3000Telephone 1300 55 81 81 (local call charge)Email consumer@justice.vic.gov.auWebsite www.consumer.vic.gov.au