Consumer Protection Memo Essay

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Consumer Protection

Memo: Consumer Protection

In their article in the Harvard Business Review, Robinson, Viscusi & Zeckhauser (2016) argue that consumer warning labels are not effective. They resoundingly assert that the labels do not communicate adequate information for consumers, especially in terms of benefits and risks. Essentially, the current labeling system is miserably ineffective in differentiating between significant and insignificant risks, or between "wolves" and "puppies" as the authors put it. Most of the consumer warning labels place the same emphasis on both small and huge risks. Such a warning system, according to the authors of the article, is of little benefit to the consumer. In the long-term, consumers tend to disregard warnings as they come across considerably more insignificant risks (puppies) than significant risks (wolves). In other words, treating both minor and major risks with the same weight tends to increase consumers' skepticism about warnings, which may cause truly hazardous risks to get snubbed. Accordingly, it is imperative for consumer warning labels to clearly differentiate big risks from small risks, and to avoid conveying even the modest of risks.

Analysis

Consumer warning labels are intended to ensure the health and safety of consumers. From foods and drinks to drugs, cars, cigarettes, and electronics, the labels give the consumer information about the risks associated with a given product or service.
This information empowers the consumer to weigh the benefits and risks of a product or an activity, enabling the consumer to decide whether to take the risks and the precautions to observe in taking the risks (Robinson, Viscusi & Zeckhauser, 2016).

Consumer protection is a topic subject to intense government regulation. Several regulations have been enacted to protect the consumer in several fronts, ranging from consumer products and marketing practices to financial services (Argo & Main, 2004). The area of consumer products is one that has been subject to extensive regulatory supervision. Government regulations mandate businesses to properly label every consumer product, clearly highlighting the risks associated with consuming the product. As early as 1927, the U.S. government passed the Federal Caustic Poison Act, keen on requiring consumer product organizations to disclose toxic hazards. Since then, several other consumer protection regulations have been passed, notably the Food, Drug, and Cosmetic Act (1938), cigarette warning regulations (1966), Consumer Product Safety Act (1972), and the Federal Hazardous Substances Act. Besides federal regulations, states have their own consumer product safety regulations, a further….....

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References

Argo, J., & Main, K. (2004). Meta-analyses of the effectiveness of warning labels. Journal of Public Policy & Marketing, 23(2), 193-208.

Purmehdi, M., Legoux, R., Carrillat, F., & Senecal, S. (2016). The effectiveness of warning labels for consumers: a meta-analytic investigation into their underlying process and contingencies. Journal of Public Policy & Marketing. doi: http://dx.doi.org/10.1509/jppm.14.047

Robinson, L., Viscusi, W., & Zeckhauser, R. (2016, November 30). Consumer warning labels aren't working. Harvard Business Review. Retrieved from: https://hbr.org/2016/11/consumer-warning-labels-arent-working

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