Opinions
Canada’s consumer movement: where to now?
The consumer movement is at a crossroads. While the consumer world is more complex than ever, and consumers face challenges of historic proportions, consumer organizations are finding it harder to hold their own against multiple organizational and financial constraints and a daunting policy and regulatory environment. This article reviews some of these challenges and suggests potential ways the situation might be improved.
When you look around at the Canadian marketplace today, it can be a pretty scary place for a consumer. Admittedly, the marketplace is full of new and amazing products and services that ostensibly make life easier and better for us. But these advantages come with new problems and risks. Shopping online still has a lot of uncertainty attached to it in terms of knowing whether a product will fit, will be as it appears on screen, or will function as claimed; and getting redress can present challenges when the merchant is located in another jurisdiction. Further, the online environment is becoming an increasingly dangerous place to be, what with the proliferation of online scams, malware designed disrupt your computer or steal personal information, and data breaches by hackers that put your personal information at risk.
Adding to these problems is that more and more of what we buy, especially online, are services, not products. Because they are intangible, services are much more difficult for consumers to assess and often change in the blink of an eye so they are very difficult to master. Further, they are often governed by non-negotiable contracts that favour the supplier over the consumer. As well, marketplace choice, especially for services, is diminishing as the principal providers become fewer in number (telecommunications, financial services, etc.), and many of the new service providers (Google, Microsoft, Amazon) now dominate the service markets they pioneered, while others threaten to dominate conventional markets as well (Airbnb, Über).
Consumers are hardly well positioned to deal with these problems. In the last three decades, consumer debt levels have been rising to historically unprecedented levels, while income growth has stagnated in recent years, making purchasing decisions for consumers all the more critical as their household budgets get tighter. No longer can risks be taken with products or services that turn out to be poor value for money, not fit for purpose, or more expensive than anticipated. Finally, recent research from the behavioural sciences has demonstrated that consumers often make serious errors in the complex decision-making environments typical of today’s marketplace, and are far more prone to being manipulated and making poor decisions than was previously believed. All this brings into question many of the assumptions underlying not only our current consumer protection regimes, but also other regulatory regimes that are important for consumers, such as competition, privacy, telecommunications and energy.
A consumer movement struggling to keep up
With all these challenges facing consumers, one would think that there would be wholesale rebellion and that Canadian consumer groups would be at the forefront of a growing movement for change. Regrettably, this is not the case. While individual groups have had some success, particularly in campaigning for changes to mobile telecommunications and financial services, consumer groups as a whole are ill-equipped to assume a leadership role in battling for consumers in the new economy and dealing with the vast array of issues consumers now face.
Further, especially in English Canada, most groups have a low public profile. While Canada has a number of dedicated consumer groups, they are very small in comparison with their counterparts in other industrialized countries; they have difficulty recruiting and maintaining staff to carry out research and lobbying in support of consumers and responding to government demands for consumer input into laws, policies and regulations. In addition, they have serious problems fundraising and generating revenues. This is not a criticism of the organizations themselves. They are hard-working groups led by dedicated individuals, but they face significant handicaps that are a consequence of their history, the unique character of how the Canadian marketplace is regulated, and the changing character of public interest advocacy today.
We are now faced with a situation in Canada where a country of some 37 million people has a total of at least 6 organizations purporting to represent consumers, none of which has access to a product-testing magazine to bolster its profile or generate memberships, and all of which face significant financial challenges in maintaining their operations. Compared to their counterparts in most advanced industrial countries, they are small, lack profile, and are seriously underfunded for the task at hand.
Of course, advocating in the consumer interest has its problems everywhere. While the performance of major consumer organizations in other countries is impressive, they too have a hard time getting their voices heard in the crowded and competitive advocacy environment of their own countries, and even for them, fundraising can be challenging. For example, while subscription-based product-testing magazines and now websites have been very successful in the past for these organizations in raising significant revenues, their popularity is being dented by online consumer review sites, often hosted by major online retailers such as Amazon, where consumers post their own reviews of the products and services they have bought for the benefit of others considering a purchase. In the “something for nothing” ethos of the Internet today this phenomenon makes selling a monthly product-testing magazine, or charging an access fee to its website, a difficult proposition to sell. Perhaps the saving grace is that there are some significant issues with the consumer review sites themselves. The reviews are idiosyncratic, of inconsistent quality, and often overly negative. Also, they are known to be prone to fraud and manipulation by sellers and are no real substitute for professional product and service evaluations.
Despite these issues, it remains that compared to Canada, the performance of consumer organizations in other advanced industrialized countries is impressive in terms of the benefits they bring to consumers, and their presence in their national public advocacy environments.
Managing a Complex and Daunting Regulatory Environment
Canadian consumer groups are not helped by the regulatory structure of consumer protection in Canada. Unlike most countries, where consumer protection is managed by one government with a minister in charge, everywhere in Canada it is shared by two jurisdictions (one federal and one provincial) in ways that are neither wholly logical nor clear, and where consumer protection functions may be spread out among a number of departments within the same government. The result is that citizens, and even public officials, are often not sure which level of government, or which department, is responsible for a particular consumer problem. Further, many of the smaller provinces lack the resources for effective enforcement and policy making. With resources for policy-making and enforcement spread thinly over two jurisdictions and multiple governments, agencies and departments, there are huge losses in terms of efficiency and the instruments and mechanisms for collaboration are weak and under-utilized.
Moreover, in recent years, both the federal and provincial governments have been integrating their consumer protection agencies within larger departments focussed on broader issues—often in contexts where the available resources are stretched. At the federal level, several ministers are responsible for a diverse number of consumer issues and the minister with overall responsibility for consumer affairs is the Minister for Science, Innovation and Industry, who has many other pressing issues on his agenda. In English Canada, provincial consumer protection functions are housed in ministries such as justice or government services, where, again, other issues may take precedence over, or simply overwhelm, those of consumers. All of this makes lobbying in the consumer interest more time-consuming, expensive and difficult, especially when it comes to obtaining ministerial attention and focus.
While never robust, the level of government support for consumer organizations has gradually declined. Up until the early 1990s, the federal government provided sustaining funding for the CAC, which helped cover its annual operating costs. During that time, the CAC also published a bilingual magazine called Canadian Consumer / Le Consommateur which contained product-testing reviews, as well as articles on consumer protection issues and policies. In a major policy change under Program Review in the early 1990s, this assistance was eliminated and replaced with project funding that was open to any consumer group. While useful, this type of funding doesn’t cover the long-term costs of maintaining the organization, so that it often happens that the more work you do, the less likely you are to cover your long-term overhead costs. Likewise, while some regulatory agencies at both the federal and provincial levels do provide financial support for consumer groups’ interventions when they hold regulatory hearings, the practice is far from common and repayment of expenses can be unpredictable and slow. Also, when conducting consultations or hearings, parliamentary or legislative committees, public enquiries and government departments often expect consumer organizations to make submissions or provide testimony without payment, or only provide travel expenses, ignoring the very substantial costs that such work can entail in terms of staff time and research costs. As a result, organizations are often faced with significant costs that they can ill afford and difficult choices about participating in such activities or not.
Finally, consumer groups have to contend with a vastly different public interest advocacy environment today. When consumer groups were at their zenith in the mid-1960s, the public interest advocacy landscape was much simpler, with fewer issues and players. Today, this is a very crowded and competitive environment, with organizations dealing with everything from the environment, poverty, and privacy, to indigenous, cultural and gender-equality issues. The organizations that are succeeding in this environment are often very skilled at linking campaigning in public and social media with fundraising, moving nimbly from one issue to another in keeping with our fast-paced 24/7 entertainment- and media-driven political discourse.
What to do?
The first issue that needs to be addressed is increasing the effective scale of the consumer movement in Canada. It is not unusual for countries to have a number of different organizations devoted to consumer advocacy. What has happened in most cases, however, is the emergence of one dominant group, often a federation of existing organizations that has the financial resources to conduct significant levels of consumer research and advocacy in its own country. In the past, much of this revenue was generated by the sale of product-testing and consumer issues publications. These publishing activities also generated significant numbers of member/subscribers.
Admittedly, such a fund-raising and membership-generating tool is much more difficult for Canadian consumer groups to implement. In Quebec, Protegez-vous already publishes a French language magazine and subscription website, but is not affiliated to any Quebec-based consumer group that could access its subscribers as members, and given the relatively small market it serves, it is not noted for being a major source of surplus revenue.
In English Canada, the problem is that since the CAC’s Canadian Consumer ceased publication in the 1980s, the market for a product-testing magazine has largely been occupied by the U.S. based Consumer Reports. However, it is difficult to know to what extent, as the numbers of its subscribers/members in Canada is not publicly available, and CR claims that newsstand sales in Canada are modest, “in the low double digits” (presumably of thousands) of copies. The irony is that the content in the magazine that deals with consumer regulatory policy and consumer service offerings (e.g. mobile telecommunications, insurance, financial services, or retail chains) is not terribly relevant to Canadian consumers, as it relates to US federal or state regulatory issues, or to U.S. service providers that have no presence in Canada. In fact, even the product reviews often cover models or product lines that are not available or difficult to obtain in Canada. For Canadians, its major attraction is probably those products that are relatively standardized internationally in terms of their specifications, such as cars, consumer electronics and some white goods. So, using a product testing magazine, or a subscription website, as models for building a national consumer movement like those in other countries will be a difficult undertaking for the Canadian consumer movement, although maybe not an impossible one.
Nevertheless, some kind of coalition building by consumer groups in Canada is going to be necessary to provide the scale and scope of capabilities required, since no one organization currently has the financial or staff resources to conduct the level and breadth of consumer research and advocacy necessary to succeed in addressing the wide array of issues now facing consumers in today’s crowded public interest advocacy marketplace. Coalition building could take place through strategic alliances, research partnerships, shared media platforms and developing common advocacy agendas. The danger is that without building a stronger coalition there is a very real possibility that several of the existing organizations that are in precarious financial circumstances will close and the skills sets they have developed will be lost.
One thing is clear, and that is that to be successful in today’s public interest advocacy environment, access to a mass membership base is essential, not only to ensure a stable source of funding, but also to be able to demonstrate that the organization is representative and legitimate, an important attribute in a crowded advocacy environment where not every player can make such a claim when attempting to deal with politicians, senior officials in departments and regulators.
Further, given the changing nature of today’s public advocacy environment, consumer groups will likely need to alter their approach to campaigning and advocacy. Traditionally, most Canadian consumer groups have sought policy and regulatory change both by doing research and presenting it to governments. This has been accompanied with fairly modest media relations involving perhaps a press conference or media release. In some cases, these initiatives have been complemented by the launching of class actions, testifying before public or parliamentary enquiries, or interventions before regulators.
All of these strategies are important and necessary, but to make an impact today, advocacy has to be backed up with integrated public campaigns that use social and electronic media to not only activate the membership base, but also to reach out directly to the public and to decision makers and by deftly exploiting controversial issues that arise regularly in our 24/7 news cycle. Campaigning in this environment requires significant skills and resources, but can be very effective, not only in reaching the public and decision-makers, but also in fundraising. Many environmental groups and those concerned with privacy and security in the online world such as Open Media have been very successful in this regard. If consumer groups are to be successful, they too will need to follow this model as the public’s, and politicians’ perceptions of what constitute key issues are increasingly influenced by on-line and social media rather than by traditional communications channels such as newspapers and magazines, network TV and radio.
Finally, governments’ approach to funding consumer organizations must undergo fundamental change. First of all, the level of support needs to increase significantly given the growth and complexity of the issues that consumer groups need to address, particularly those related to the digital economy. Current levels of government support are very modest and have not increased for many years, despite significant levels of growth in the consumer economy. In addition, the nature of this support needs to change. Currently, the largest sums of money allotted to consumer groups are for research projects. While valuable and important, a much greater range of consumer group activities needs to be supported. These include: those related to providing information products to the public and the associated tools necessary to maintain and diffuse them in the online environment; and to cover the costs involved in public interest advocacy today using sophisticated public and social media tools.
Also, further consideration needs to be given to assisting consumer groups with their overhead costs both in terms of: (i) being able to maintain research and operational staff over the long term so that the experience and intellectual capital developed can be retained, enriched and effectively deployed, and (ii) dealing with rising accommodation and IT costs that are becoming an increasing problem for public interest advocates. Moreover, all provincial and federal departments and regulatory agencies should be required to support the full range of intervenor or witness costs when conducting regulatory hearings or public consultations including travel, research, and time spent by staff in preparing briefs and attending hearings. After all, private companies have significant incentives to invest considerable sums in lobbying for their interests because a very significant part of their costs are tax deductible. Government needs to level the playing field for consumer interest advocates.
A brief history of a great movement
It’s hard to talk about the consumer movement in Canada without first acknowledging that it is really two movements. The first, which originated in Quebec, is primarily francophone and a product of the unique circumstances leading up to and during the quiet revolution. The second originated in English Canada, largely in response to the economic issues of the post-war consumer economy, and drew its inspiration from consumer activism in the United States and Great Britain. The result was that there has been relatively limited collaboration or joint work between the two groups and they have largely remained two solitudes.
In English Canada
Activists—mainly women—established a national organization, the Consumers’ Association of Canada, in the late 1940s. The CAC was focussed on the role of the federal government in dealing with issues such as the impact of consumer prices and product safety on homemakers. While it had branches in the provinces, the CAC was primarily national in its orientation and, in 1963, following the lead of many consumer organizations worldwide, it launched the bilingual product testing and consumer issues magazine, Canadian Consumer/Le Consommateur, which greatly increased its ability to generate memberships. At its peak in the 1980s, the CAC had over 160,000 members, and was active in lobbying the federal and provincial governments on consumer issues. Those lobbying efforts contributed in part to the federal government establishing a consumer affairs department in the mid-1960s, a move followed by many provincial governments.
Sadly, this period of activism did not last. The CAC, in particular, failed to recruit new members and as the post-war core of activists from the 1950s and 60s retired, membership dwindled. The failure of the CAC’s magazine—due to an unsuccessful attempt to contract out its management—further contributed to the loss of a very effective tool for attracting new members.
In Quebec
The impetus for the birth of the consumer movement in Québec came in the very early 1960s when the CSN created its family budget service. Community organizations then began to appear throughout Quebec. Their main focus was helping households manage their budgets and deal with related issues. At a time when no protections existed for consumers, these associations demanded that effective regulatory measures be introduced. In 1970, they united to form the Fédération des ACEF du Québec, which went on to spearhead numerous battles for consumer rights.
In 1971, the Quebec government launched Protégez-Vous, a magazine that continues today to feature product tests and consumer issues. From 1973 to 1991, the magazine also appeared in English as Protect Yourself. Later, Protégez-Vous became an independent NGO, publishing content in both print and online.
By the 1970s, consumer rights groups were well established, dynamic, and enjoyed wide public recognition. In 1971, the first Consumer Protection Act was passed; it was greatly improved in 1978, when the budget of the Office de la protection des consommateurs increased considerably along with the sums allotted to Protégez-Vous magazine. Since that time, the Quebec government has made a number of improvements to its consumer protections, including in areas relating to financial services, telecommunications and privacy. However, as in most governments, expenditures devoted to consumer protection have not escaped initiatives in recent years to restrain pubic expenditures.
Today there are approximately 34 locally-based consumer associations in Quebec. Most of these associations have amalgamated into two groups: Union des consommateurs (UC) and Coalition des associations des consommateurs du Québec (CACQ). A few consumer associations, such as Option consommateurs (OC) in Montreal and Service d’aide aux consommateurs (SAC) in Shawinigan, remained Independent, however. Today, UC, CACQ and OC have emerged as the major consumer organizations with a significant profile across Quebec and are generally the organizations that defend the interests of Quebec consumers before various political and regulatory bodies and in the public arena. Unfortunately, even these larger organizations have at their disposal only very limited resources for representing consumers in the current context.
On the international scene: How Canada Compares
The size and resources available to Canadian consumer groups contrasts unfavourably with that in most other OECD countries:
- The United States, with a population of 328 million, has several national consumer organizations, but is dominated by Consumer Reports, which not only publishes the product testing magazine and website of the same name, but also has significant policy research and lobbying capacity. The organization has over 6 million members and an operating budget of approximately CAN$322 million.
- In the UK, with a population roughly twice the size of Canada’s (66 million), the Consumers Association of Great Britain (now known as Which?) has 1.5 million members and an operating budget equivalent to CAN$172 million annually.
- Australia’s national consumer organization, CHOICE, has revenues equivalent to CAN$17.6 million and over 200,000 subscribers—in a country with only two-thirds of Canada’s population.
- The Dutch consumer organization, Consumentenbond, founded in 1953, has about 500,000 members and hosts the largest subscription-based website in the Netherlands in a country with less than half of Canada’s population.