Understanding Consumer Protection: Why Businesses Should Do More in 2021

Which? is a UK consumer organization that fights for the rights of the regular buyer. That’s you and me. Recently at the GOSS-2021(link) organized by ScamAdviser, Katie Lips from Which? highlighted why they have a focus both on the financial losses and emotional harm suffered by consumers. 

You may not be surprised that falling victim to a scam leads to negative emotional impacts: 

• Loss of confidence, feeling vulnerable (20%)
• Anxiety and panic attacks (10%)
• Depression (5%)
• Insomnia (5%)

Then it gets interesting: determining the financial value in the emotional impact of a scam victim. The average drop in emotional well-being is equivalent to £2,509 - £3,684 per year per victim. Compare this to the average financial loss of £600 per year per victim who gets scammed. Then compute that annually 3.7 million fraud incidents occurred in 2019-2020.

So, consumers deserve better because they not only lose money but their emotional wellbeing is harmed as well. This has implications on their effective work hours and medical care needs which cost them far more.

Consumers deserve to be protected. Yet we expect consumers to spot scams and report them! This is one big assumption that has several problems: 

Consumers can’t spot scams!

What may come as a shock to you is that a recent survey by ScamAdviser revealed this. While most consumers said they were able to detect/spot scams, they still said they got scammed. 

Which? did a survey of their own on Facebook users to see if they could spot fake ads. They came to a similar conclusion:

• Out of 13 participants with high confidence, 8 misidentified at least one scam post as legitimate. The average number of misidentified posts was 3.
• Out of 22 participants with medium confidence, 13 misidentified a scam post as legitimate. The average number of misidentified posts is 2.
• Out of 13 participants with low confidence, 9 misidentified a scam post as legitimate. The average number of misidentified posts was 3.

Consumers are busy!

There ought to be more safeguards in place to protect consumers when they go online to shop or simply browse. Tasking them to spot scams as they enjoy the internet seems to be asking too much. When they are in shopping mode, they are in shopping mode and not scam spotting mode!

Reporting scams and following up to get a result is also another bad assumption. Time is precious and consumers seem to have better things to do. There really ought to be someone out there looking out for consumers, shouldn’t there?

Current Approach Not Working

The current whack-a-mole approach is not working. So far, the common action taken to stop scammers has been: 

• Consumer reports a scam
• Authority verifies the bad website or Ad, 
• The site/ad is taken down. 

Yet scams continue because scammers quickly replace a few names, product photos, and domains, then continue on their scamming spree! This approach is not working.

What Can Businesses and Stakeholders Do?

Businesses need to adopt an approach that enables them to know their customers better. Then they can protect them better.

There needs to be more done to go beyond taking down scammer websites through scam reports. What if businesses would be more transparent in identifying the bad actors and blocking them from using their platforms? Surely, that would be a game-changer. 

If businesses could share their intelligence more, there would be a stronger and more coordinated effort to lock out scammers out of the reach of their consumers. 

This is a plea to businesses and consumer organizations to consider amending their approach to fighting scams. More can be done proactively to protect consumers than letting them bear the bulk of guarding themselves against scams online. That is something we have seen that they are not good at!

Here is the video with these insights.