2014 Workshop Summaries Public Policy Oriented Consumer Interest Research

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December 5^th, 2014

Supported by the Social Sciences and Humanities Research Council of Canada and by Partner Organizations

• A copy of the workshop agenda (PDF)
• Presenters’ bios (PDF)  

1. Co-organizers’ introduction to the CIR Partnership

Robert Kerton, University of Waterloo

One of the major objectives of the PPOCIR workshop is to help improve partnerships with external industry stakeholders.  Secondly, the Workshop is part of the plan to build research capacity through graduate student participation with respect to Canadian public policy oriented consumer interest issues.  Rigorous empirical research and the sharing lessons learned from practical experience can have a positive impact on policy-making in Canada.

Kernaghan Webb, Ryerson University

There is a long-standing interest in collecting and applying academic, NGO, and business oriented perspectives for relevant and powerful research on key consumer-oriented public policy issues.  With the support of SSHRC, the PPOCIR workshop is an important step in making this possible. The participation of multiple stakeholders not only provides depth, but also ensures that research efforts are focused on the right issues.

2. Research Session on Financial Consumers

 “Context-Setting: Canadian Consumer Finances”
Etienne Boucher, Graduate Student, Laval University

The presentation was based on data from the updated consumer trends report, which is published by the Office of Consumer Affairs at Industry Canada.  The presentation addressed three key areas – consumer income, consumer assets and consumer debts. The highlights of the report are as follows:

Consumer Income: Between January 2001 and October 2014, the average employment rate in Canada was 62.2%. The average employment rate for men was 68.8% employment and the average rate for women was 59.5%. The average unemployment rate was 7.43%. Average salary earnings increased by 11.8% and median salary earnings increased by 8.7%.  Hourly earnings in the private sector increased by 2.5% and only by 0.7% in the public sector. Private investments represented 12.9% of Canadians’ total income. Government transfers comprise 37% of the income of Canadians aged 65 and over.

Consumer Assets: The total assets held by Canadians were worth 9.4 trillion (CAD) in 2013.  The median net worth of Canadian family units increased by 44.5% since 2005. Households where the principle earner was between 55 and 64 years old had the highest median net worth – 533,600 (CAD) – whereas single parent families and unattached individuals had the lowest median net worth – 37,000 (CAD) and 22,000 (CAD) respectively. Families in the top quintile bracket of earnings owned 67.4% of all assets in Canada, representing a median net worth of 1.4 million (CAD), while families belonging to the lowest quintile owned -0.1% of assets. Not surprisingly, the main asset for Canadians was their principal residency, followed by their private pension assets.

Consumer Debt: Total consumer debt in Canada was 1.34 trillion (CAD). From 2000 to 2013, the total amount of debt per household increased by 75% and it amounts to 114,400 (CAD) in 2013.  In addition, the percentage of debt to income was 165.5%. The percentage of household revenue used to pay down debt decreased from 8.7% in 2000 to 7.1% in 2013. Mortgages represented 77% of the total debt of Canadian households.

Presentation slides (PDF)

“Consumer Credit: What do Newcomers Know About It?”
Maryse Guenette, Option consommateurs

The purpose of the study was to observe and analyze credit offers to newcomers and to determine whether newcomers have the tools to understand the full extent of their credit commitments. Canada has welcomed more than 800,000 people in the past three years. However, many of them are not familiar with the responsibilities associated with credit, which is made more challenging by the fact that many of them come from countries where the existing financial system is quite different from the one in Canada.  In the case of some countries, consumer credit is a foreign concept.

Most advertised credit offers aimed at newcomers are from chartered banks and credit unions. It is not uncommon for a newcomer to be provided with a credit card without having to provide any information related to his/her credit history.  In addition, the approaches to communicating credit-related rules, guidelines and other relevant information are unnecessarily complicated and are presented in a manner that makes it difficult to understand. Potential solutions can include the publishing and marketing of more objective, customized, third-party based information that can help newcomers make better informed decisions.

Presentation slides (PDF)

3. Updates on Graduate Student Research Projects

“Comparing the Public Policy Framework for Mobile Communication Devices in Canada, Australia, the United Kingdom and the United States: Convergence and Divergences”
Paul Goodrick, Masters Student
Ryerson University

Paul Goodrick discussed comparing public policy frameworks for mobile communication devices in Canada, Australia, UK and US.  He stated the scope of this comparison – at this stage – is very wide. Key questions in his study were (1) policy and sectoral regulatory bodies (2) competition policy and regulation (3) consumer protection policy and regulation and (4) spectrum allocation policy.  He summarized one initial finding as a general convergence in policies toward faster national broadband.  This analysis is more difficult because there are differences in the definition of the speed and in policy implementations among the countries.

Presentation slides (PDF)

“Food Labeling for Children”
Shannon Allen
University of Alberta

Given the vulnerability of children, there are specific policies in place in Canada to protect them. The Canada Consumer Product Safety Act has many regulations pertaining to children’s products, but none specifically to children’s food. It is well known that poor eating behaviour in children can have a lasting, negative impact on their health (e.g. obesity, diabetes and heart disease). A recent survey revealed that 80% of children aged eight to twelve are making food-purchasing decisions independently from their parents. Hence, is it possible to customize food labeling in a way that makes a notable impact on children’s decisions to consume junk food?

Experience with labeling on tobacco products can be instructive and has been suggested by some as a way to discourage the consumption of unhealthy food, but these concepts must be applied cautiously given some fundamental differences between food and tobacco. Beyond potentially helping children make better food consumption decisions, labeling that is customized for children can potentially spur changes in how children’s food products are produced (e.g. mandatory trans-fat labeling resulted in voluntary reformulation of products by firms to remove the trans-fats).  Improved labeling cannot be the only tool, but determining an effective labeling method can be in important step in combating childhood obesity.

Presentation slides (PDF)

“The Intermittent Consumer of Organic Foods”
Camille Massey
Université Laval

The majority of organic food buyers are irregular consumers (organic foods do not constitute the bulk of their diet). The world-wide organic food market increased four-fold between 1999 to 2011 and was recently valued at USD $65.4 billion (USD). Canada’s market increased three-fold between 2006 and 2012 and was recently valued at $3 billion (CAD). However, the organic share of food purchases around the world is still relatively low (accounting for only 1.7% of food purchases in Canada and 4.4% in the U.S. in 2012).

A 2013 survey of organic food consumers in Quebec found that organic food only constitutes less than a third of the diet of over 80% of organic food consumers. This indicates that most organic consumers actually are intermittent consumers of organic foods, whose consumption can be characterized as being fragmented, occurring at irregular intervals, reversible (they can easily switch to conventional products) and eclectic (a broader range of considerations are involved, like the local origin of the product). We know little about these consumers and their rationale for picking organic in some instances and not in some others. It does seem however that consumers value organic differently depending on the product category, as studies reveal differences in the price premiums they are willing to pay for different products, and also differences in the motivations for purchasing different products. We need to better understand why consumers choose organic foods for some products and not others as well as the criteria they use in making these purchasing decisions.

Presentation slides (PDF)

“Younger Consumers’ Attitude toward Counterfeit Goods”
Amy Faria  M.Sc.
University of Guelph

Amy Faria presented her research about younger generations’ attitudes toward counterfeit goods. She stated the objective as (1) a review of existing research, (2) understanding specific factors influencing decision making and (3) understanding how the private sector marketing and communications help formulate attitudes. She found most of the previous findings inconclusive.  However, there are some trends that can be found: consumers in Asian countries have more favorable attitudes toward counterfeit goods.  All governmental, nongovernmental and academic research showed that pricing and quality were important factors in the attitude toward counterfeit goods. She outlined the methodology in obtaining data from the Canadian consumer’s attitude toward general counterfeit product, paying special attention to counterfeits in the health and safety category.  The research methodology being used is both quantitative and qualitative.  In the quantitative phase pre-existing scales would be used with the Qualtrics platform. The main target group of consumers consists of those in the age group of 18 to 24 years old.

4. International Insights for Consumer Interest Research: “Emerging Global Consumer Policy Issues” 

Michael Jenkin,
Chair of the OECD Committee on Consumer Policy

*Note: This presentation draws on Ch. 1 of the OECD’s Consumer Policy Toolkit (2010).

Over the last two decades four major structural changes have occurred in the consumer marketplace that have important implications for consumers: (1) deregulation (consumers have more choices as a result of deregulation, but they face new challenges in understanding how to make effective choices in deregulated markets such as utilities, telecommunications or financial services); (2) opening of the domestic marketplace to international commerce (offering more choice and competition but raising issues such as assessing  product quality and safety, as well as  value-based concerns – such as environmental sustainability, and fair labour or trade issues related to products produced abroad); (3) technological change (rapid pace of technological development and diffusion has given consumers a significant breadth of new choices, but it has also forced them to confront a variety of issues such as privacy, online security, redress, product obsolescence,  and understanding the value proposition of new technologies); and (4) a shift to a more service-oriented economy (services are intangible, they are difficult to evaluate before purchasing, their evaluation is highly subjective, they are usually one-sided and their interaction with new technology-based online service delivery platforms has created a variety of risks for consumers).  It is important to remember that, well-designed consumer policy that promotes a fair marketplace and includes knowledgeable consumers can also have positive spill-over effects in policy areas concerned with growth and innovation.

Socio-economic factors have also played an important role in determining how consumers are faring in the new marketplace: household finances (households in Canada and many other OECD countries are experiencing several financial challenges, including historically very high debt loads, stagnant income growth and difficulties saving for retirement or education); age (seniors are at a higher risk of being marginalized by rapid technological development and diffusion); skills & knowledge (a significant number of adults in Canada and many other OECD countries have insufficient literacy skills to meet the demands of a knowledge economy); and time availability (consumers increasingly have less time to spend on making considered decisions in an increasingly complex marketplace, which can make them more likely  to base decisions on emotional responses or “rules of thumb”) .

Given that policy operates in an increasingly dynamic and challenging environment, consumer policy-making needs to be more nimble, innovative, support and utilize interdisciplinary research, involve greater international collaboration on policy development and enforcement and place an increased focus on empowering consumers through better information, education and redress mechanisms.

5. Disciplinary Surveys: Discussion of Most Promising Interdisciplinary Avenues for Public Policy Oriented Consumer Interest Research in Canada 

“An Overview of the Behavioural Sciences”
Dilip Soman
University of Toronto

A central pursuit of the behavioural sciences is the understanding of actual behaviour.  In the domain of consumer policy, understanding the elements, processes and determinants of consumer decision-making and understanding how this knowledge is acted upon by firms and governments are important areas that require investigation.

There have been four major approaches to understanding decision-making: (1) Economics uses assumptions and logic to draw conclusions that can often be useful ,,, yet people make decisions that are frequently reflexive and intuitive, so assumptions made by traditional economic thought about rationality are insufficiently informed about human decision-making; (2) Cognitive Science takes into account factors such as information complexity, habit and ambiguity which have a major impact on people’s ability to make decisions); (3) Social Psychology which incorporates the importance of responses to societal norms and demonstrates the importance of context to how people make decisions; and (4) Transformational Consumer Research which applies multidisciplinary approaches to help us achieve more effective policy outcomes.

There are several “big application” areas for behavioural science researchers. Some of them include:

• “Decision repair/support” – augmenting people’s decision-making capabilities in a data-intense world and structuring choices in a manner that is more consumer-friendly.
• Consumer protection and disclosure – going beyond simply giving consumers more information and paying attention to areas such as how information is presented, its timeliness and the methods through which it is communicated.
• Innovation – exploring the frequent disconnect between how innovators think consumers will respond and how consumers actually respond.

“An Overview of Technology Law from the Perspective of Public Policy Oriented Consumer Interest Research”
Michael Geist
University of Ottawa

The emergence of the Internet and new technologies has had a dramatic impact on consumer issues and rights. As consumers gravitate toward e-commerce and engage with businesses in more interactive ways, new legal and policy issues must be considered from a consumer-interest perspective. Technology law covers an exceptionally broad array of issues, ranging from commercial transactions to valuable data generated by Internet usage. The consumer perspective has often been lost in the race to develop legal certainty for online transactions and to identify the appropriate legal forum to govern potential disputes.  Yet in recent years scholars have increasingly recognized that the consumer sits at the heart of many technology law issues.  Whether it is examining the applicability of consumer protection rules to e-commerce, developing dispute resolution systems that level the playing field between businesses and consumers, or grappling with emerging consumer concerns such as their data privacy or the right to access the content or use the applications of their choice, technology law research is now inextricably linked to consumer interest issues.

The initial consumer oriented concerns with technology focused primarily on shifting from offline paper contracts and face-to-face transactions to the online world.  These included online contracting, e-commerce law, dispute resolution, spam and internet marketing and jurisdictional concerns.  Given the high degree of adoption and proliferation of e-commerce capabilities, dispute resolution understandably became a top-of-mind issue due to the consumer disputes that can arise from online transactions (partly related to the fact that purchasers and vendors can be based in different legal jurisdictions). The legal jurisdiction issue continues to persist because different jurisdictions can adopt different views. For example, from a European perspective, the jurisdiction of the consumer’s side of the transaction applies, but it is the opposite case in the United States, where the law of the vendor’s jurisdiction would apply.

As online commerce becomes a central part of the consumer landscape, new policy issues have come to the fore. The conception of consumer-related issues has shifted from transactional oriented concerns toward broader environmental and marketplace issues.  These issues have a direct impact on competition, consumers’ ability to access online commerce, and govern the interactions between consumers and businesses. These include privacy, wireless competition, Internet access (including net neutrality), intellectual property and user rights, social media concerns, cyber security and online harms.

The emergence of technology law as a field of study in Canada in recent years has led to a significant expansion in research initiatives and accompanying scholarship. The field has grown demonstrably in recent years. While technology law was studied and researched in relatively few institutions in the late 1990s, that has now changed.  Most Canadian law faculties have faculty with an interest and expertise in some aspect of technology and student demand has increased significantly, leading to more courses and research opportunities. Scholarship in the technology law area tends to be “open” in the sense that the works are openly available under open access licenses. External funding has played an important role in the development of research and scholarship in the field.

It should be noted that the vast majority of research and scholarship does not adopt a consumer perspective. There are the occasional outliers that may directly involve consumer protection legislation, but most other areas are not instinctively viewed as PROCIR even if there is considerable overlap in concerns.  The lack of a direct connection between technology law scholars and research on the one hand, and consumer-oriented public policy research on the other, confirms that there is work to be done to enhance the profile of consumer issues within the field as well as a need to raise awareness of the importance of a consumer perspective on many technology law issues.

Presentation Slides (PDF)

“Survey of Business Management Literature on the Intersection of new Internet-based Business Models and Consumer Protection: A progress report”
Kernaghan Webb
Ryerson University

Dr. Webb presented his ongoing work surveying existing business management literature in the area of internet-based business models, as it is potentially relevant to consumers and consumer protection.   He highlighted the fact that business models are predominantly focused on the opportunities for financial gain without consideration of the consumers’ perspective.  The focus of his research is (1) the emerging business models and their relation to consumers and consumer protection.  He described and compared the businesses models in the past and present. in internet-based business models, it has been observed by business management scholars that increasingly, the connections between the value proposition, value creation and the revenue resource stream are becoming more tightly coupled, allowing for new and different ongoing connections between businesses and consumers throughout all three phases, where information plays a critical role.  He explained that in emerging internet-based business models, there are interesting attempts to construct consumer trust among the parties, for example, through ranking and reviews among consumers and sellers with eBay.

In some models, boundaries between consumers and businesses are being redefined – like Uber and Airbnb, where parties get access to each other’s lodgings, as part of an apparent evolution towards the “sharing economy”.  There are significant public policy implications that flow from these new business models, such as the possible need to re-think who and how governments can regulate.

6. Addressing Consumer Problems through Research: A Focus on Best Practices

“Where do Canadian Consumers Look for Information and Help”
David Clerk,
Editions Protégez-vous   

A survey of 1000 Canadians was conducted by Protégez-Vous in 2014 to better understand where Canadian consumers look for information, the type of information they are seeking and the information being provided to consumers by the media.  Highlights of the study results include:

• Before making a purchase, 72% of Canadians seek information. Over 50% of the people over 55 frequently seek information, whereas only 25% of people between 18 and 34 seek information.
• Of the 72% of Canadians who seek information before making a purchase, 72% of them do so through the Internet.  Print magazines are only consulted by 6%.
• While there is a variety of the type of information Canadians search for, the bulk of their information needs are connected to testimonials (24%) and product reviews (20%). In this regard, there is a slight difference between English-speaking Canada and Quebec – more Quebecers are searching for product reviews (27%) than testimonials (15%)
• Health, food and identity theft/privacy are the top three areas of interest for Canadian consumers.
• 17% of Canadians rarely or never find answers to their consumer-related questions.
• While the TV shows CBC’s Marketplace and CTV’s W5 as well as the publications Consumer Reports, Canadian Consumer and Money Sense have a high degree of popularity in English-speaking Canada; their popularity is significantly lower in Quebec, where Protégez-Vous is much more popular.
• There seems to be some discrepancy in terms of the type of information consumers are looking for and the type of information being offered by the media. For example, information related to motor vehicles was made available in much greater quantity than information related to personal finance, which consumers ranked higher in terms of their information needs.
• Consumers in English-speaking Canada and Quebec ranked consumer associations as being the most credible organizations (55% and 64% respectively), followed by the media (24% and 15%) and the government (10% and 15%).   

Presentation Slides (PDF)

“Ontario’s Consumer Marketplace and Business Intelligence”
David Sobel
Ontario Ministry of Government and Consumer Services (MGCS)

David Sobel presented MGCS’ plan to improve consumer protection outcomes through the use of business intelligence analysis. He explained the meaning of ‘business intelligence’ and how it is essential for providing efficient and effective services and protections for Ontario consumers and businesses.

David outlined the Ministry’s plan to improve how it uses data to address consumer risks and to streamline case management and front line services for Ontarians.  The Ministry’s new I.T. system, set to launch in 2016, will support many business intelligence initiatives, including risk analysis and complaint triaging. He also explored the development of a Knowledge Management System (KMS) to support consumer education and to efficiently field enquiries received by the Ministry. The KMS will also allow the Ministry to track consumer marketplace trends and issues by assessing the frequency of inquiries received.

The Ministry has also created and distributed strategic educational materials for businesses and high-risk consumers to prevent consumer issues, such as a Business Guide to Consumer Protection and a Newcomer’s Guide to Consumer Protection.

David also presented summary statistics about complaints and inquiries reported to the Ministry for 2014.

“Using Public Policy-Oriented Consumer Research in Regulatory Proceedings to Advance the Consumer Interest”
Jonathan Bishop
Public Interest Advocacy Centre

In 2010, banks and communications service providers began charging some of their customers a fee for not switching to online billing. The reasoning behind the fee was to reportedly encourage customers to “go green”.  The practice was eventually labeled “pay to pay” by critics, who said that it unfairly targets a segment of the population that is not prepared to receive and pay bills online. “Pay to pay” eventually attracted the attention of the CRTC, which started asking Bell Canada questions in 2012 after an unspecified number of complaints were submitted.

PIAC (Public Interest Advocacy Center) conducted a survey of 2000 Canadians in 2013. The survey asked whether people should have the right to receive a paper bill in the mail without having to pay extra. Over 80% of respondents believed they have the right to receive a paper bill without having to pay extra (60% strongly agreed and 23% somewhat agreed). In addition, over a third of respondents reported that they are not comfortable receiving bills/invoices online and would prefer receiving statements in paper format. Also, 54% of respondents paid to receive a paper bill and they were well aware of the fact that they were being charged for not switching to online billing. PIAC’s research also revealed that Canadians who do not have Internet access or could not afford it were paying, on average, 77 to 102 million (CAD) dollars per year. Moreover, if this amount were added to the expenditure of 3 in 10 Canadians with Internet access who chose to continue receiving paper bills, then the total amount climbs to between 495 and 734 million dollars (CAD).

As a result of increased research and pressure on the government, the Minister of Industry committed, in 2014, to eliminating “pay to pay” billing through legislation (the commitment was also mentioned in the 2014 budget and the 2014 throne speech). Amendments to the Telecommunications Act and the Broadcasting Act were passed shortly after this presentation and are now in force. PIAC noted the “pay to pay” billing practice has not completely ceased in the banking sector, and provided estimates of how much this practice costs Canadians consumers on an annual basis.

Presentation Slides (PDF)

Commentator: Kernaghan Webb
Ryerson University

In a summary comment, Dr. Webb highlighted few fundamental questions based on the presentations in the workshop session: (1) Among market participants, NGOs, consumer agencies and others, who do consumers trust? (2) What types of information do consumers need/want? (3) What modes of delivering or acquiring information are considered to be appropriate and effective? (4) When are consumers receptive to getting the information? (5) What are the implicit models behind our mechanisms for delivery of reliable information?

7. Forward-Planning of Partnership Activities: A Call for Input

Robert Kerton
University of Waterloo

Ongoing support and development of graduate students specializing in consumer interest research is a key priority and an important part of building capacity. One opportunity to build on these efforts is to improve the efficiency and effectiveness of how university researchers connect with industry partners and graduate students. A website that profiles and specifies the research interests of participating university researchers and their graduate students as well as their past and current collaborations with industry partners provides an online forum where industry partners have the opportunity to recommend research topics for future collaboration and participate.

Beyond matters related to capacity building, there are other areas where improvement and feedback are needed. These include:

• Finding better means to accurately measure the impact of PPOCIR research on public policy.
• Improving the efficiency of how policy-oriented research is put into practice.
• Engaging and collaborating with NGOs on applied research projects.

To the credit of Industry Canada, two field survey research projects have already been completed and a third is well underway.  However, there are seven additional research project areas on PPOCIR’s agenda:

• Internet-based business models and consumer protection
• Sociology of consumption, family home economics
• Consumer studies
• Consumer education
• History of consumerism
• Consumer law and political studies.

Conclusion

Kernaghan Webb
Ryerson University

Dr. Webb concluded by acknowledging the dense and powerful presentations during the workshop.  He offered sincere thanks to everyone and encouraged participants to voice their final comments and thoughts.