Over the past decade, online reviews and ratings have transformed the way consumers choose products and services - think Tripadvisor, Uber and Airbnb. What can we learn from these developments? Can reviews and ratings by regulators be as influential in shaping consumer and provider behaviours?
This article explores the use of ratings in regulatory contexts and outlines why ratings are a useful tool for regulators as well as for consumer protection, using three examples of ratings programs in action.
Consumer protection aims
Published and accessible ratings are a regulatory tool that can help to assure the quality of products and services in a market, drive providers to continuously improve against standards and empower consumers to make informed decisions. They are a regulatory means of protecting the rights of consumers as reflected in the United Nations Guidelines for Consumer Protection :
- The right to be informed - To be given facts needed to make an informed choice, and to be protected against dishonest or misleading advertising.
- The right to choose - To be able to select from a range of products and services, offered at competitive prices with an assurance of satisfactory quality.
These rights are also reflected in numerous laws, charters, codes and policies aimed at regulating a diversity of products and services across a variety of sectors. Governments recognise that consumers have incomplete and unreliable information when navigating many markets. Regulatory ratings programs can work to address this asymmetry of information and thus play a vital role in consumer protection, particularly in markets where there are risks to wellbeing from poor quality products or services.
Three examples of ratings programs in action outlined in the article are:
- Australian Children’s Education and Care
- Scores on Doors (food safety inspections)
- Aged care