August 24, 2009

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The European Commission in July outlined a project that seeks a harmonized system for collecting and classifying consumer complaints, including related to safety. It is seeking comment on the project until October. The EU estimates that more than half of consumers wanting to complain about problems use third parties, and there are hundreds of such organizations each with their own methods. The system – which would be voluntary – would focus on collecting common criteria like selling method, business type and product category. Highlights of the finding of an initial European study on the matter include:

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• There are more than 700 third-party organization collecting consumer complaints, which the authors state, “exceed expectations and indicate a much greater scale and potential value of the project.”
• There are numerous methods for collecting, handling and storing complaints, with differences related to varying goals for seeking the data, including giving advice to consumers, informing policy decisions, enhancing enforcement, and others.
• There are differences in complaint bodies’ resources, ranging from their being well-staffed and well funded to being volunteer dependent. These differences affect the detail of data, which ranges from simple spreadsheets to complex databases.
• There is a need for more data related to types of complaints and markets involved and a need for most complaint groups to have more detailed methodology.
• There is increasing acceptance of the idea of a harmonized methodology.

The EU outlined the system in its July report, explaining (verbatim):

Structure of the harmonised methodology

The draft methodology consists of three sections made up of recommended and voluntary fields for collecting data:

Section 1) General information about the complaint,

Section 2) Sector information about the complaint, and

Section 3) Information about the type of complaint.

The recommended fields are considered essential for collecting information whereas the voluntary fields are designed to provide a greater degree of detail for those organisations that wish it. The recommended fields are based on the policy needs for the Scoreboard and the consensus from the earlier public consultation, the results of the work of the expert group, the Member State visits and the detailed study.

Organisations that decide to participate voluntarily will have to report the underlying micro-data corresponding to these recommended fields. This is necessary in order to be able to cross-reference types of problems to sectors when data from more than one organisation is aggregated. The recommended fields contain no personal data.

The recommended fields are: the country of the consumer and the trader, the name of the complaint centre, the complaint date, a distinction between a complaint and an enquiry, the selling method, the sector and the type of complaint. The Commission's work has shown that the majority of complaint bodies already collect information about most of these recommended fields. Therefore, adoption of the harmonised methodology will not entail extra work but only a one-off change.

The voluntary fields are suggestions for collecting additional data. One of the voluntary fields that could be of special interest to national authorities is the "name of the trader". This could be extremely useful to enforcement agencies. National authorities could choose to exchange complaints figures for particular businesses to identify pan-European problems. The Committee on Consumer Protection Cooperation has a separate secure IT tool (CPCS) which can facilitate the exchange of this kind of sensitive data between enforcement authorities.

Of course, if complaint bodies wish, they can collect further information which they consider to be important, for example on the socio-demographic characteristics of complainants, or information about the outcome of complaints.

Section I: General information about the complaint

Most of these fields such as "Country of consumer", "Complaint date" etc. are already collected by complaint bodies. One of the additional recommended fields is the "Selling Method" field. The reason for including this as recommended is because there can be a significant divergence in the nature of complaints, even within a sector, depending on the selling method. Regulatory regimes also differ between selling methods.

Section 2: Sector information

The second section defines a tree structure, consisting of three levels, namely Sector, Market and Market description. Complaint bodies should classify complaints and enquiries according to this structure, presented in the Staff working document linked to this Communication. In order to find out detailed enough information concerning the most problematic markets, data about each complaint should be recorded at the "Market" level. This will also allow direct comparability with data coming from the Consumer Markets Scoreboard such as consumer satisfaction, switching and prices.

The combination of both data sets will provide national consumer authorities with a complete database on the functioning of consumer markets at both national level and European level. An analysis of the data collected by national authorities has shown that complaints relate to the entire economy rather than just a few sectors. It is therefore necessary to use a structure that captures the whole spectrum of the market in order to encompass all sectors where there is detriment to consumers.

Complaint bodies which currently classify consumer complaints according to sector level will only have to use a more detailed classification structure. This does not entail additional encoding, just encoding using a more disaggregated methodology. Complaint bodies which deal with complaints covering the whole consumer economy would use the complete structure whereas bodies whose line of work is focused on particular sectors (e.g. sectoral regulators, sectoral alternative dispute resolution bodies, sectoral complaints boards) could use only the relevant part of the methodology.

Section 3: Type of complaint

The third section consists of a recommended first level and voluntary second level. The bulk of EU consumer legislation is of a horizontal rather than vertical nature, applying to most sectors of the consumer economy. Data on the type of complaint will help identify any possible market malfunctioning across sectors and facilitate better regulation when the same types of consumer problems are met across the board. Therefore the fields for the "type of complaint" are made up of horizontal values such as misleading advertising, safety and prices. For example, the use of safety as one of the recommended fields will allow the identification of safety problems ranging from food to electronic goods and the provision of services.

Reporting and availability of data

The complaint bodies that decide voluntarily to adopt the harmonised methodology should report the data directly to the Commission. All participant organisations should report data, at a micro level, corresponding to all recommended fields. Participants are also encouraged to report data corresponding to the voluntary fields. The Commission does not wish to receive, or make public, data concerning the names or allowing the identification of traders.

The frequency of reporting and publishing of data is one of the questions for consultation. The Commission will make the data it receives readily available to all organisations and the public.

The report also explained (verbatim) that the system will target five goals:

The data classified using the harmonised methodology should be comparable with other data sets, such as consumer satisfaction, from the Consumer Markets Scoreboard.

The harmonised classification methodology should have COICOP as its base of departure. This will allow comparability with both price inflation and household budget data collected by Eurostat and the national statistical offices.

The design must facilitate a seamless transition from the current classifications to a harmonised methodology.

The implementation costs of the classification methodology should be minimised and acceptable to the consumer complaint bodies.

The harmonised methodology should be adaptable in the future as markets evolve.

Portions of this article appeared in the July 13, 2009 edition of our premium sister service, Product Safety Letter. It is just one of the hundreds of similar stories that subscribers read over the course of an annual subscription. Subscription information is here