Unintended Consequences and the Design of Consumer Protection Legislation

Article by Shmuel I. Becher

The policy that guides consumer law strives to find the right balance between two conflicting forces.  On the one hand, it seeks to intervene in the market to advance consumers’ interests and protect them.  On the other hand, it aspires to avoid inefficient interventions that may impose excess hardship on businesses.  Consumer law policy may influence—and be influenced by—innovation, competition, and overall market efficiency.  As Part II illustrates, finding the subtle balance of fair and efficient legal intervention is not an easy task.  Legislation in general and consumer law legislation in particular suffers from “noise” and is not an exact science.  It is typically affected by various players and driven by diverse motivations.  Inevitably then, the legislative process generates some mistakes.  Legislation—even when well-intended—sometimes fails to provide the desired results. 

Pro-consumer legislation is at times not only ineffective but also rather harmful.  The design and process of consumer protection legislation does not receive sufficient scholarly attention.  This Article seeks to narrow this gap.  Part III examines the problem of backfiring legislation, pointing out some prominent examples.  Thereafter, Part IV proposes ways to improve the process of consumer lawmaking.  Subpart A suggests a more careful approach to legislation, where legislatures progress in a gradual and moderate way.  Subpart B recommends employing a multidisciplinary, empirical approach to legislation by emphasizing the need to move to a more evidence-based consumer protection lawmaking regime.  Although an evidence-based consumer law regime is advantageous, it is not a panacea.  Much of what we believe to be true knowledge and correct facts today will turn out to be untrue within a few years.  Therefore, consumer protection legislation can be proved wrong and may merit future revision.  To supplement an evidence-based regime, subpart C suggests adopting a modest decision-making process that employs temporary consumer protection laws.  Lastly, subpart D further recommends diffusing and delegating some legislative responsibility to administrative agencies and consumer organizations. 

The contribution of this Article is twofold.  Descriptively, it seeks to point to predominant flaws in the legislative process and to the problem of unintended consequences. Normatively and prescriptively, the Article proposes a nuanced and unassuming approach to consumer law policy, one that benefits from healthy skepticism.  Such an approach can minimize destructive noise and pressure, counteract “sticky legislation,” better account for legislatures’ biases and mistakes, and better cope with dynamic markets and ever evolving empirical findings.

About the Author

Associate Professor, Victoria University of Wellington; LL.M., J.S.D., Yale University


93 Tul. L. Rev. 105 (2018)