Literature Review on Analytical Frameworks

Background Paper to Creating Confident Consumers

May 2003

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What Is the Scope of Consumer Policy?

There are two definitions of the consumer interest: narrow and broad. The narrow definition focuses mainly on citizens entering transactions to obtain products and services from commercial enterprises (Cranston, 1978). This definition is consistent with the thrust of consumer protection legislation, which confines itself to transactions involving goods and services. The definitions of goods and services exclude such items as tenancy agreements, social welfare benefits and land. Although the scope of the legislation may extend to transactions between commercial enterprises-for example the Fair Trading Act-its primary focus (and its raison d'être) is on transactions entered into for domestic or personal purposes.

The theoretical literature also adopts the narrow definition of the consumer interest. Its overwhelming concern is with transactions that take place in a marketplace, with a particular focus on the institution of the contract. Discussion only occasionally extends to transactions outside the marketplace-such as the social welfare or public education system-or between commercial enterprises, even when one party is at a bargaining disadvantage.

Under the wider view of the consumer interest, the term "consumer" is virtually equivalent to that of "citizen" (Cranston, 1978). It is said that the "consumer interest is involved when citizens enter exchange relationships with institutions like hospitals, libraries, police forces and various government agencies, as well as businesses". (ibid.)

This broad view has been adopted by the non-governmental consumer movement. Cranston describes Ralph Nader's move from a narrow to a broad definition. Similarly, the definition of a consumer used by the UK National Consumer Council is "everybody in society in one part of their life: that is, as the purchaser or user of goods and services, whether privately or publicly supplied". (Mitchell et al, 2001.)

In their guidelines for consumer policy, Mitchell et al (who represent various international consumer groups) draw a distinction between the consumer interest and the producer issues: "... issues about wages and conditions of employment are clearly producer issues and do not come within the scope of consumer policy". Also excluded are "citizen" issues such as "constitutional matters, taxation and the distribution of public resources". There is an overlap with citizen issues such as "the quality of public services, the most effective ways of delivering public services to consumers, the administration of justice, data privacy" and environmental and trade policies.

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