An institutional analysis of consumer law.

ABSTRACT

This Article explores the revival of interest in consumer protection in the United States, and the impact of this revival on the consumer movement. The Author examines the influence that political organizations and institutions have upon the final shape and content of consumer law in the United States and European Union. The Article begins with a general introduction to institutional theory across academic disciplines and to the institutional environment and arrangements in which consumer lawmaking proceeds in the United States and Europe. Next, the Article assesses consumer initiatives in the United States and the European Union, focusing on deceptive advertising, unfair contract terms, consumer credit, and consumer access to justice problems. The Author's assessment illuminates the institutional factors that shape consumer protection initiatives. Finally, the Article discusses the limits of traditional United States perspectives on consumer law. The Article concludes that an institutional approach provides a better and more accurate framework for analyzing consumer issues.

I. INTRODUCTION

The growth in the consumer economy, globalization, innovations in technology and communications, and efforts to modernize U.S. uniform commercial laws all have contributed to renewed concerns over legal regulation of consumer transactions. In the United States, this revival of interest in consumer protection seeks to build upon and perhaps to reinterpret issues raised and initially resolved decades earlier, a time during which consumer issues were at the forefront of legal attention domestically. (1) It was during the 1960s and 1970s that many of the principal consumer protection statutes were enacted. (2) The renewed attention to consumer protection issues suggests that the consumer movement may be undergoing a new transformation.

Many areas of legal doctrine and social policy are beginning to converge in recent debates. For U.S. lawyers and scholars, perhaps the most important development involves the Uniform Commercial Code (the UCC or the Code), which is in the final stages of a substantial revision project. (3) Throughout this lengthy project, the revisions have served as the central stage on which a battle has been taking place over consumer protection issues in the areas covered by the UCC. The revisions have provoked critical analysis not only of the substance of revisions to the Code but also of its sponsors, the National Conference of Commissioners on Uniform State Laws (the NCCUSL) and the American Law Institute (the ALI). (4) Consumer issues also have had a significant impact on the NCCUSL and ALI approval process and on the consideration of approved Official Drafts by state legislatures. (5) Related to this development, a growing body of literature employs positive political theory or economic analysis to evaluate the role of private lawmaking entities such as the NCCUSL and the ALI to assess their susceptibility to special interest group influences and to analyze the impact that such influences might have on NCCUSL and ALI products. (6) Thus, significant questions of institutional design and legislative methodology (7) have arisen out of the UCC experience.

The uniform laws debate raises a much broader structural issue regarding the proper allocation of governmental authority in regulating consumer transactions. While other parts of the world, such as the European Union, are moving more toward more centralized forms of government, the United States has experienced a movement away from federal regulation toward state and local government regulation. (8) This trend is antithetical to the strongly federalized ideology that supported much of the earlier consumer law initiatives. Moreover, somewhat paradoxically, the experience with the UCC suggests the possibility that more vigorous federal involvement in the area of consumer transactions may be warranted, if not necessary. (9) The new consumer debate therefore will not only involve issues of private legislatures and consumer values, but will raise federalism concerns as well. Federalism concerns are not isolated solely to the UCC and its treatment of consumer issues. Even foundational issues such as the validity of electronic signatures--which recently was addressed by Congress through The Electronic Signatures in Global and National Commerce Act (10)--now invoke substantial questions concerning the proper roles of international, federal, and state bodies in regulating commercial transactions. (11)

Finally, the view that consumer law is a domestic and internal matter is being called into question. (12) Consumer law has acquired an increasing transnational and international dimension as a result of economic integration and technological developments such as e-commerce. This suggests that the traditional roles played by legal organizations in consumer lawmaking perhaps ought to be questioned in light of increasing globalization. The impact of globalization on domestic U.S. contract law is often overlooked or de-emphasized. U.S. law reform efforts all too frequently proceed without serious reflection on the manner in which other jurisdictions have addressed and resolved similar issues. The new consumer debate, at least in the United States, often seems to continue the disturbing practice of avoidance, although the parochialism of the NCCUSL and ALI in the drafting of the UCC is a long-observed phenomenon. (13) Whether consumer protection issues ultimately will become global, rather than local, matters is, of course, a debatable question. Nonetheless, the shift in emphasis from the local to the global generally in the last decade merits consideration when evaluating U.S. perspectives on consumer law.

Consumer law in the future most likely will play out on a field vastly different from that which showcased the liberal, rights-oriented consumer debate decades ago. The reassessment of the NCCUSL and the ALI, the reordering of federal and state priorities in the United States, increasing internationalization, and the potential transformation of consumer issues from matters of local concern to matters of some global import all indicate that a radical reinterpretation of consumer law may eventually emerge. In the United States, this reinterpretation will raise broad issues regarding the state uniform laws process, consumer rights, and economic justice--which provide the source for much of the argument to date--but also much more subtle questions of institutional design, organizational competence, federalism, law and technology, and the global economy.

This Article addresses these issues by examining the influence that political organizations and institutions apart from consumer values and ideology potentially have on the final shape and content of consumer law in the United States and European Union. The Article advances and employs a comparative and institutional approach toward analysis rather than a more traditional "consumer values" approach. To evaluate the impact that organizational and institutional constraints play in the creation of consumer law, the Article contrasts consumer protection issues being addressed in the emerging dual system of the European Union with similar initiatives in the United States. While the European Union's characterization as a federal state, in a comprehensive and unitary sense, is in and of itself a provocative and much debated question beyond the scope of this Article, (14) the structures of the EU establish a layer of centralizing legal bodies (15) that makes an analogy to the United States federal system useful. These contrasting parallel developments suggest that institutional, organizational, and social constraints apart from consumer ideology play a significant role in shaping consumer law. Thus, the traditional focus on consumer values not only inaccurately describes legislative action, but is also inadequate for guiding the future development of consumer law.

The Article begins with a general introduction to institutional theory across academic disciplines, including legal theory, and to the institutional environment and arrangements (16) in which consumer lawmaking proceeds in the United States and Europe. (17) The Article continues with an assessment of consumer initiatives in the United States and the European Union in the areas of deceptive advertising, unfair contract terms, consumer credit, and consumer access to justice problems. (18) Such an assessment illuminates the institutional factors that act to shape consumer protection initiatives. The Article then discusses the limits of traditional U.S. perspectives on consumer law and concludes that an institutional approach provides a better and more accurate framework for analyzing consumer issues. (19)

II. INSTITUTIONS, ORGANIZATIONS, AND VALUES IN CONSUMER PROTECTION

The issue concerning why consumer transactions ought to be regulated at all, or at least treated differently from other types of contracts, provides the customary departure point for an inquiry into consumer protection issues. Under a traditional framework for analysis of consumer protection law, particular legal provisions or acts--for example, court opinions or statutes--are assessed in the context of how effectively they advance the values or goals that justified intervention in the first place. Alternative approaches can be compared or contrasted by critical evaluation of their efficacy in furthering established or held goals of consumer policy. From the prescriptive side, the traditional framework seeks to guide law reform efforts by advancing specific proposals for reform that would further such held goals. When competing or contradictory goals exist, the focus shifts to the normative and descriptive power of each goal. (20)

This traditional framework nonetheless provides a picture of consumer law and lawmaking that is, at best, incomplete. It has two weaknesses, each of which feeds off the other. First, the predominance of consumer law values and policies as the foundation for the traditional framework often acts to exclude political processes and organizations as immaterial, or at least operates on the assumption that all lawmaking bodies are roughly equivalent. In other words, it all too frequently assumes that the source of the law is insignificant--that, for example, whether a rule originated with the courts or agencies, with state or federal legislatures, with non-legal customs, or with private legislatures is irrelevant or tangential to the inquiry. Second, the power of any traditional value-based analysis increases or decreases in direct relation to the acceptance of the evaluative theory by the community. That is, when a strong consensus exists within the legal community as to the particular goals supporting regulation, the strength of the evaluation obviously increases. For example, if substantial agreement exists that accommodating informational imbalances between consumers and businesses ought to be the goal of legal intervention, a provision's failure or success in furthering that goal becomes much more authoritative than in cases in which divergent views on proper social policy uncomfortably coexist. Where such divergences exist, coupled with the disjunction that often exists between values and institutional processes and organizations, the traditional perspective's weaknesses become enhanced because it provides limited guidance for accommodating deeply divergent views across a multiplicity of organizations and their underlying environments.

As will be addressed in this section, legal processes and organizations matter profoundly and in a manner that the traditional perspective frequently fails to recognize. It also will be argued that the assumption of wide acceptance of the social goals of consumer protection is tenuous. The section begins with a discussion of an emerging institutional approach toward evaluating law and lawmakers, an approach that connects values with institutions and organizations and that provides an alternative to traditional methodologies. (21) The section continues with a detailed discussion of the formal political organizations (22) involved in consumer lawmaking and constraining principles (23) under which those organizations act.

A. An Institutional Perspective on Consumer Law

As with most areas of law, there is no widely held consensus on the underlying basis for regulating consumer transactions or on the goals of consumer law. The primary theoretical rationales usually advanced for consumer protection legislation might fall into three general categories: (1) policing for market failures or, in a related vein, creating efficient markets for consumer goods and services; (2) advancing ethical goals; or (3) paternalist protection of the consumer. (24) A market failure rationale for consumer protection relies upon the belief that government should only intervene in otherwise private transactions when a market failure exists and when the benefits of legal intervention exceed the costs. (25) Efficiency itself might be viewed as the goal of consumer law. (26) Ethical rationales for consumer protection law look to theories of justice to support intervening into consumer transactions. (27) In this vein, a reason for intervening on ethical grounds might be one of distributive justice, a desire to transfer wealth from wealthy corporate sellers to less wealthy consumer buyers. Distributive justice goals most frequently are invoked when transactions involving poorer consumers are at issue. (28) Shared community values also might provide an ethical justification for regulating consumer contracts, (29) as might, alternatively, norms such as preserving individual autonomy, dignity, or respect. (30) Norms such as individual liberty and autonomy underlie rules couched in terms of "freedom of contract" and are raised to support non-intervention in consumer contracts. Finally, a paternalist basis for intervention suggests that a consumer's individual preferences to some degree ought to be overruled by government judgment on the matter. (31) For many, this rationale has strongly negative connotations that make paternalist justifications for intervention unacceptable within the dominant Western liberal tradition, (32) This is most particularly so because, in overruling a consumer's personal appraisal of a desired course of action, paternalism poses a threat to individual liberty. (33)

Given these differing, and sometimes conflicting, justifications for consumer protection law, lawmaking bodies might demonstrate widely disparate approaches toward particular substantive consumer issues based solely upon the held ideology. For example, one legislative body might view intervention in consumer contracts as justifiable only where an identified and effectively curable market failure exists. A government with a more communitarian agenda might, by contrast, lean toward advancing communitarian goals through intervention. Even if some agreement on the underlying basis for intervention is present, that fact alone would not eliminate the possibility of non-uniform legal approaches to any specific consumer matter. Broad standards and values such as "efficiency," "equality," or "community" might in themselves suggest more than one legislative or judicial approach to the same issue. Consumer law's imperfection, therefore, stems first from the broad array of ideological premises on which it is based. The existence of a great number of formal and informal legal organizations involved in regulating consumer transactions heightens uncertainty.

Such uncertainties suggest that an institutional framework for analysis of consumer protection issues might provide a viable and much more concise alternative to the traditional values-based approach. Institutional theory is most developed in the area of economics, in which two schools, New Institutional Economics (NIE) and Old Institutional Economics (OIE), have generated extensive scholarship in the area. (34) One of its most prominent articulations can be found in the work of NIE theorist Douglass North, whose work on the evolution of institutions serves as an offshoot of neoclassical economic theory. (35) Although NIE perhaps lacks a well-defined or unified agenda and is comprised of many sub-disciplines, (36) the basic focus of an institutional approach is on institutions--the rules of the game, in that they are "humanly devised constraints that shape human interaction." (37) As developed by North in the context of the evolution and development of institutions, a spectrum of political, economic, social, and educational organizations exists in any society that may, among other roles, influence the evolution of formal and informal institutions. (38) North begins by recognizing the reality that "[e]conomic (and political) models are specific to particular constellations of institutional constraints that vary radically both through time and cross sectionally in different economies." (39) In addition, an institutional perspective in transaction cost economics attempts to explore the impact that bounded rationality and imperfect information have on human behavior, (40) recognizing also that ideas and ideology may impact human behavior. (41) Finally, any modeling of the political or economic process must incorporate the institutions--or, from above, the rules of the game--invoked by that process in a way frequently absent from mainstream economic modeling. (42) According to NIE proponents, acceptance of these tenets acts to invigorate otherwise static neoclassical economic theory by incorporating incomplete information and social and human realities into economic modeling and analysis.

While institutional analysis has made substantial inroads in other academic disciplines in addition to economics, (43) the full parameters of a mature and highly developed institutional methodology for law are still largely unexplored. (44) Two major themes on institutional legal analysis have emerged from the legal literature to date. As an innovative perspective on legal analysis, institutional legal theory might start with the proposition that it is often impossible to separate the goals of law from the critical evaluation of the institutions that are selected to accomplish those goals. (45) This also suggests, however, as an initial matter, that the substance and form of law cannot be viewed apart from the political or economic organizations or actors that generate the law in question, whether courts, legislatures, agencies, or markets. In legal analysis, "[e]mbedded in every law and public policy analysis that ostensibly depends solely on goal choice is the judgment, often unarticulated, that the goal in question is best carried out by a particular institution." (46) The decision of who, or what, decides is an institutional choice, which "reflects the reality that the decision of who decides is really a decision of what decides." (47) It is therefore impossible, posits institutional legal theory, to separate goal choice from institutional--rule-choice or organizational--lawmaker-choice in the rigid manner that the traditional normative framework so often presupposes. (48) Given that the institution or organization chosen to advance a goal will impact the manner in which the goal ultimately might shape public policy, institutional and organizational choices must be evaluated against the goal to be attained and are essential, rather than tangential, components of legal analysis. (49)

An institutional approach toward legal analysis recognizes, first, that the issue of whether any specific legal provision or act successfully accomplishes a particular held policy goal or value is actually a radically incomplete picture of a much deeper question. Rather, goals and values are advanced through legal rules and, perhaps more importantly, by way of the actions of formal and informal organizations that operate within their own peculiar constraints and within the background rules that establish their institutional environments. (50) Any truly comprehensive analysis of law requires consideration of the underlying institutional arrangements and environment in a way that traditional legal perspectives frequently overlook, if not completely ignore.

From a prescriptive, law reform perspective, under an institutional framework, the social policy aims of consumer law must be balanced with the question of institutional and organizational choice--for example, by considering whether a goal is better accomplished through a particular type of rule and through a particular mechanism, such as markets, state legislatures, federal legislatures, and so forth. An institutional perspective in this way moves beyond the sole emphasis on consumer values towards a much richer framework that addresses the question of the interrelationship between values, the structure, design, or use of existing or new legal institutions--rules--that advance the underlying values, and the formal and informal organizations through which those institutions emerge. By making this transition, institutional legal theory shifts attention from policy norms or ethical values alone to a focus on the complex relations between legal rules, the players involved, the institutional environment, and norms and values.

Institutional theory's second theme provides important limits to the descriptive power of traditional norm-based legal analysis. Somewhat akin to the relation between neoclassical economics and NIE, an institutional model of legal analysis reflects a move away from a formally rational legal system that creates and applies universal rules. (51) While social policy, ethical norms, or consumer ideology certainly continue to be relevant factors in evaluating consumer law, other factors such as the governance structure in which legal decisions are made must also be taken into account. Thus, normative values are somewhat reduced in weight and recognized as necessarily an incomplete representation of law. (52) An institutional perspective on the lawmaking process begins from no fixed position. (53) The perspective would not choose between efficiency and social justice, for example, but might use, as one institutional theorist has suggested, "the methodologies derived from both approaches to explore the development of a common metric by which efficiency and social justice could be compared, balanced, and traded off in real institutional settings." (54)

By moving away from modern views of law based on formal rationality and static universal norms into a post-modern regime for evaluating law and legal acts based on particulars and concepts of fit, an institutional legal perspective brings with it two consequences. With respect to law reform proposals, it demands that political and legal organizations and structures receive consideration along with the traditional legal emphasis on social policy goals or ethical norms, as discussed above. (55) As a by-product of this stance, in evaluating products of legal organizations, institutional theory de-emphasizes formal evaluative criteria in favor of a much more open-ended and flexible inquiry into the relations and fit among institutions, organizations, and values. (56) This approach to evaluation of legal systems and their products presents a more completely post-modern theory of law, with an "emphasis on the particular and [a] ... corresponding distrust of generalizations." (57) General theories are not necessarily to be avoided, but "rather, the point is that discourses based on different normative premises are most likely to converge when they address specific issues. Within a given culture, the empirical grounding that specificity provides will tend to generate areas of common understanding and communication, if not complete substantive agreement." (58)

The area of consumer law--with its disputed ideological bases and broad array of lawmaking bodies--provides a rich area for application of institutional theory. Addressing any consumer protection issue under an institutional framework, however, becomes a much more complex task. Even the very basic question of whether a person ought to qualify as a "consumer" to be protected by a statute could conceivably invoke subtle, but in fact enormously complex, balancing issues. For example, under the U.K.'s Fair Trading Act 1973, "consumers" protected by the statute are persons who are supplied or seek to supply goods or services in the course of business of the supplier, but who do not receive goods or services in the course of a business. (59) Attention to inequality of bargaining power, a concern evoking ethical and market failure issues, is reflected in such a definition by contrasting the experience of the enterprise seller with the inexperience of the individual person buyer. Yet, by way of contrast, other legislative approaches expand the definition of "consumer" to encompass persons engaged in transactions of a personal nature, without regard for the status of the supplier. (60) This approach reflects less of a concern for the unequal status of the parties and focuses more on the inexperience of the buyer, perhaps incorporating more paternalist notions into the concept of the legally protected "consumer."

Thus, even with regard to this very primary definitional issue of what in fact a legally protected "consumer" is, ambiguity may arise from disparate views on the underlying theoretical goals of consumer law. The issue can be framed in terms of regulating an unequal relationship between business enterprises and individuals in an era of mass-market consumption or as one of protecting persons involved in personal transactions. A traditional perspective would leave it at that. While acknowledging that widely varying policy goals and values are an important component of any legal inquiry, an institutional legal framework also moves on to demand that institutional choice, organizational dynamics, and structural and cultural values that provide an equally important part of the institutional environment of law be considered along with social policy goals and values. Under an institutional perspective, in the examples given above, it would not be considered inconsequential that the former definition emerged from a national legislature now part of a broader economic union or that the latter was proposed by a private legislature involved in U.S. state law reform efforts. Consideration of these actual lawmaking bodies and the institutional constraints that guide their deliberations and actions, along with consumer values, provides a complex subtext to the analysis.

Traditional legal approaches and institutional legal approaches in this way provide competing frameworks for evaluating consumer protection law. As suggested above, an institutional framework requires a deeper analysis of the actual political organizations involved in lawmaking than the traditional perspective. The focus of this Article is on the factors apart from values in the United States and European Union that may act to impact consumer protection issues and the final form of consumer protection law. Thus, to provide a more comprehensive foundation for an institutional analysis of consumer law in those jurisdictions, the remainder of this section first outlines briefly the formal organizations involved in consumer lawmaking. (61) A discussion of the institutions that constrain and guide the activities of those organizations follows. (62)

B. Political Organizations

Consumer law emerges from a variety of lawmaking bodies. In the United States, for example, legislation is the task of either the federal government or state and local governments. Federal legislation has the obvious benefits of national uniformity, while state law, by contrast, can vary widely from state to state. To reduce interstate lack of uniformity, private legislatures such as the NCCUSL may propose uniform laws and model acts to state legislatures. The ALI Restatements of Law also seek to synthesize and modernize state law. The most successful NCCUSL and ALI project is perhaps the Uniform Commercial Code (UCC). The UCC's success in the state legislatures, however, is quite unique among NCCUSL products--many other NCCUSL uniform laws, particularly those in the consumer law area, have not been widely accepted by the states. (63)

The bodies responsible for enforcing U.S. consumer law change depending on the law being enforced. Courts can enforce statutory rights created by state or federal legislatures. Agencies also are key players in enforcing consumer rights. For example, the FTC plays a substantial role in enforcing federal laws that proscribe unfair and deceptive acts and practices, an issue discussed later in this Article in the context of deceptive advertising. (64) State agencies enforce state laws that also prohibit unfair or deceptive trade practices. (65) A more recent legislative technique has been the encouragement of parallel federal and state enforcement of federal consumer law. (66) Regulation of consumer transactions at the judicial level may begin with application of the common law. For example, Article 2 of the UCC does not apply to services contracts. (67) Via the UCC or common law, courts enforce the obligation of good faith and fair dealing and the doctrine of unconscionability, both of which frequently act to protect consumers. (68) Common law actions such as those based on deception or misrepresentation are within the ambit of judge-made law. Alternatively, areas may be covered by state legislation such as the UCC or state consumer statutes that give rise to statutory claims. As interpreters of consumer and commercial statutes, courts can play a simple, but significant, role.

Similarly diverse organizations and institutions exist in the European Union (EU). Consumer law in the EU stems generally from two sources, the first, and primary, being Member State law. (69) Reference to the governmental structures of the individual Member State will determine what constitutes Member State law. (70) Thus, in a common law jurisdiction such as the United Kingdom, the Member State law is comprised of both the common law and statutory law of the United Kingdom and emerges from the unique lawmaking organizations of that state. (71) Because the European Union is also comprised of a significant number of civil law jurisdictions, from a national perspective Member State law differs not only as to substance, but also with respect to fundamental epistemological and ontological issues devolving from the civil versus common law traditions. (72)

Community law is the second source for legal protection of consumers in the EU and has the potential for becoming the key means by which a comprehensive consumer policy will be established throughout Europe. (73) The emerging importance of Community law brings with it significant political and jurisprudential issues as the focus of European Union consumer policy moves away from the individual Member States to the European Community at large. (74) Such a shift in perspective not only brings with it the issues of transnational--Member State--relations and supranational--local versus central--concerns, but also introduces a new set of institutions and actors into the framework. (75) The first general area of consumer protection law in the EU falls into the classification of "negative consumer law." (76) Negative law devolves from Community action under what is now Article 28 of the Treaty of Amsterdam, (77) which provides that "[q]uantitative restrictions on imports and all measures having equivalent effect shall[, without prejudice to the following provisions,] be prohibited between Member States." (78) Article 29 contains a similar provision for exports. (79) The provisions in Articles 28 and 29, however, do not prevent Member States from implementing prohibitions or restrictions that are justified on a number of non-market public policy grounds. (80) In a series of cases over the years, the European Court of Justice has found Member State consumer-related law impacting imports and exports across the EU to be either compatible or incompatible with these treaty provisions--or their predecessors. (81) By means of this still developing jurisprudence on the free movement of goods, the ECJ has emerged as a principal player in consumer protection across the EU.

Until Maastricht and the Treaty on European Union (TEU), (82) however, no direct treaty language expressly allowed the creation of a Community-wide consumer policy, (83) although the lack of any express authorization did not by any means prevent a proactive Community stance toward consumer protection issues. Under Article 100 of the Treaty of Rome, (84) the Council had authority to pursue harmonization legislation in consumer transactions by providing as follows:

   The Council shall, acting unanimously on a proposal from the Commission and
   after consulting the European Parliament and the Economic and Social
   Committee, issue directives for the approximation of such laws, regulations
   or administrative provisions of the Member States as directly affect the
   establishment or functioning of the common market. (85)

Article 100a, added in 1987, gave similar power for the functioning of the internal market and allowed qualified majority voting in areas of Council competence. (86) Many of the Directives (87) discussed later in this Article were issued through the Council's Article 100 and Article 100a power.

In spite of the limited express authority initially given to EU bodies to regulate affirmatively in the area of consumer protection at the supranational level, consumer protection matters as a general policy concern have been a focus of EU-wide attention for many years. To a great extent the position taken is one that, at least by the rhetoric, consistently favors the consumer. Beyond harmonization legislation authorized by Articles 100 and 100a, the agenda for an aggressive stance favoring the consumer was set by a 1975 Council Resolution concerning the rights of consumers, (88) The resolution articulated five basic consumer rights: (1) the right to protection of health and safety; (2) the right to protection of economic interests; (3) the right of redress; (4) the right of information and education; and (5) the right of representation--the right to be heard (89) Programs of Community-wide activities building from these basic consumer rights followed in subsequent years. (90) Thus, prior to 1992, actions at the Community-wide level were largely directed toward internal market concerns, but within the larger context of a maturing conversation concerning consumer rights and protection in the Community at large.

In 1992, the TEU seemed to expand the express authority of EU political bodies to create Community-wide consumer protection measures that were not based upon Article 100 and 100a harmonization authority. (91) Community institutions' powers to regulate in consumer areas were, arguably, expanded even further in 1999 under the Treaty of Amsterdam. (92) These provisions have left an open and provocative question regarding the appropriate boundaries between, on the one hand, Member State institutions and local policies toward consumer protection and, on the other hand, EU institutions and Community policy. The progression from the 1975 Council Resolution to the Treaty of Amsterdam evidences an increasing centralization of consumer policymaking at the Community level, if only in theory. The TEU's shifting of Community priorities in consumer protection from regulation of the internal market alone to the establishment of an independent Community consumer policy and subsequent developments in the Treaty of Amsterdam provide a textual basis for the exercise of such powers. (93) The growing strength of Community political bodies suggests that a reorientation of issues from the national to the supranational arenas may be occurring, although increasing centralization should not be viewed as a surprising by-product of the emergence of centralizing organizations and institutions.

Whether in the United States or in the European Union, the relations between formal organizations and those organizations' respective spheres of jurisdiction and competence add another dimension to legal action. Moderating principles exist that will constrain and delimit formal activity in consumer areas. The next section addresses those principles.

C. Constraining Principles

In the United States, constitutional and political constraints act to balance consumer legislation among the domestic institutions mentioned in the previous section. For example, with respect to commercial legislation where uniformity is desirable, the NCCUSL and the federal government each are possible lawmaking bodies by which such legislation might be accomplished. (94) Concerns such as federalism, (95) efficiency or equity, (96) consumer justice, (97) or uniformity (98) are frequently raised as important considerations that not only ought to influence the substantive legal products of these legislatures, but also the basic decision of whether to intervene at all into the matter. For example, state versus federal action and federal versus agency action are regulated by the constitution, considerations of political comity, and--in the case of agencies--enabling legislation. Judicial deference towards legislative acts provides another example of a domestic political constraint in the United States.

While in the United States the constraints that act to delimit and define the boundaries between the formal political bodies discussed in this section are accepted--albeit fluid and at times hotly disputed--in the European Union, the boundaries of power are still unsettled and ambiguous after the TEU and Treaty of Amsterdam. Views on the allocation of power might fairly be said as falling anywhere along a broad spectrum of enhancing local diversity, on the one hand, to complete Community centralization, on the other. For example, the following excerpt advances a structural approach to the relationship among Member State autonomy, Community-wide consumer policy, and consumer markets:

   Europe's greatest strength is its diversity. It is essential to both the
   aims and the methods of consumer policy: essential to its aims, because a
   proper response to individual needs implies diversification of production;
   essential to its methods, because the policy must be sufficiently flexible
   to allow particular responses to particular circumstances. Community policy
   should not seek to impose uniform solutions for problems, but to establish
   the structures within which solutions can be implemented at the appropriate
   level, be it Community-wide, national, regional or local. Experience has
   taught the Community that the right level of government at which to execute
   a particular function is the lowest level at which the job can be
   efficiently done. (99)

By contrast to a "diversity" approach that rejects a strongly centralized conception of Community-wide involvement, an independent Community-based approach is also possible. (100)

Principles of subsidiarity and proportionality most likely will be the regulatory devices that ultimately will balance the proper spheres of authority between EC bodies and Member States. Subsidiarity, or the principle that "the right level of government to execute a particular function is the lowest level at which the job can be done," is expressly incorporated into the Treaty of Amsterdam. (101) Facially, subsidiarity appears to be a relatively straightforward concept. For U.S. lawyers, the principle of subsidiarity can be roughly analogized as incorporating many of the issues couched domestically in terms of federalism. (102) In spite of the similarity, the operation and parameters of the principle of subsidiarity as a justiciable principle in moderating the roles and respective powers of national and EU bodies has received limited attention. (103) The TEU and Treaty of Amsterdam fail to make explicit in their texts the goals that subsidiarity would advance, a silence that allows further ambiguity. (104) The boundaries that subsidiarity ultimately might place between Member State and Community bodies is therefore still an open question. (105) In the face of such ambiguity, subsidiarity could be interpreted between the broad extremes of diversity and centralization suggested earlier. It could be interpreted as a principle intended to advance expansive local power and discretion or, at the other extreme, as a principle containing a centralizing concept that has precisely the opposite effect of totalism. (106) In a similar vein, subsidiarity may advance diversity and pluralism within the European Union (107) or act contrary to diversity through harmonization, and therefore homogenization, actions by Community institutions. It also simply could be argued that the principle's extreme vagueness renders it an ineffective regulatory principle incapable of practical and certain application, albeit a pleasant enough catchword.

Even if understood as integral to accomplishing the goals of democratic legitimization (108) and for enhancing accountability in the decision-making processes of the Community, (109) subsidiarity's operation in the area of consumer transactions--most often considered matters of local concern (110)--is even more problematic in light of its ambiguity. The extremes mentioned above suggest widely different approaches toward consumer protection issues. Viewed as a diversity-enhancing preference toward the local, the final goal might be for the Community to emphasize structures that ultimately "delegate responsibility to the most effective agents in the process: the consumers themselves." (111) Under this interpretation, subsidiarity would be a regulative principle that weighs against creation of an autonomous consumer policy at the EC level. (112) At the other extreme, if subsidiarity is interpreted as establishing a centralizing and federalizing role for EU institutions, an active autonomous Community-wide policy addressing consumer issues could be possible, (113) consistent with the enhanced powers granted to EC institutions under Article 153 of the Treaty of Amsterdam. (114)

Another doctrine, also addressed in Article 5 of the Treaty of Amsterdam, (115) that restrains Community action vis-a-vis the Member States is "proportionality." As with subsidiarity, the impact that proportionality might have as an operative principle is still largely speculative:

   The doctrine of proportionality, which the Court of Justice largely derived
   from continental principles of constitutional and administrative law, is
   said to require that every Community measure satisfy three related
   criteria. First, the measure must bear a reasonable relationship to the
   objective -- presumably a legitimate one -- that the measure is intended to
   serve. This may be regarded as the doctrine's "rationality" component.
   Second, the costs of the measure must not manifestly outweigh its benefits.
   This may in turn be regarded as the doctrine's "utility" component.
   Finally, the measure chosen must represent the solution, among the various
   alternatives that were available for achieving the prescribed objective,
   that is least burdensome. This requirement to use the "least restrictive"
   or "least drastic" means is one that the Court of Justice has typically
   justified in terms of minimizing the burdens imposed by the Community on
   the private sector, but it can readily be used to minimize the Community's
   intrusions on the Member States and their subcommunities as well. Each of
   the three elements of proportionality has at least some resonance among
   levels of judicial scrutiny recognized in U.S. constitutional review. (116)

In the more precise area of consumer law in the European Union, proportionality suggests that Community-wide measures be based on a cost-benefit analysis and on developments in the internal market. (117)

In sum, whether subsidiarity and proportionality will be interpreted as centralizing or localizing principles remains an open question. Legislation at the Member State level might have advantages such as preserving cultural and legal diversity, which could be lost through Community-wide legislation. Community-wide consumer legislative initiatives, on the other hand, advance with them important values such as uniformity and certainty. The precise balance that ultimately will be struck between Member State autonomy, Community bodies, and the consumer remains an unfolding issue in the European Union.

D. Conclusion

As the discussion in this section suggests, the questions of whether and how legally to protect consumers in the market raise a myriad of complex political and ethical issues. Dissension begins with the underlying theoretical basis for policing consumer transactions. That basis may be focused on supporting markets or, at the other extreme, on intervening into markets based on economic, ethical, or paternalist rationales. Basic institutional design and organizational capacity issues may further act to complicate the initial question concerning values. A traditional framework for legal analysis seeks merely to evaluate legal products using shared values. Yet, an institutional framework of analysis provides an alternative to the traditional approach. Under this framework, imperfect information, behavioral realities, and the political and institutional constraints on legal organizations may influence those organizations in formulating a legislative response to any consumer protection issue. Such influences ultimately may act to impact the rules that emerge from political activity. Under an institutional approach for analyzing consumer law, background institutional and organizational factors such as those discussed in this section receive consideration along with consumer values.

III. INSTITUTIONAL INFLUENCES ON CONSUMER LAW

To examine more deeply the impact that values, organizations, social context, and constraining principles on political actors and organizations ultimately may have on the final form of substantive consumer law, Part III compares and contrasts consumer protection initiatives in the United States and in the European Union. As mentioned in the previous section, each regime is similar in economic development, although they have different legal, organizational, and political histories. Nonetheless, the legal systems also have similar--albeit not identical--federalized structures that work under analogous constraints allocating power between the local, national, and supranational levels. In light of such similarities, the traditional framework would suggest that the two regimes should address similar issues in a similar manner in areas in which consensus on consumer ideology exists.

Yet, the legal treatment of consumer issues such as deceptive advertising, unfair contract terms, consumer credit issues, and dispute resolution often differs materially in the two systems, in spite of these similarities and in spite of shared values. It will be argued that such differences often do not emerge from serious differences over consumer values or ideology, but rather from institutional constraints--including political, social, and cultural constraints--particular to the systems. For example, the regimes for deceptive advertising and unfair contract terms reflect more deeply divergent attitudes toward centralization than toward substantive consumer social policy. (118) In other words, the differences may emerge if only in part from institutional or political constraints apart from consumer ideology. The treatment of consumer credit issues provides an example of how cultural integration may act to impact the final form, and ultimate success, of a consumer law. (119) Finally, differing values toward consumer access to justice issues reflect the effect that different systems and underlying views toward dispute resolution may have on final legal provisions. (120)

A. Federalization and Federalism

As discussed in Part II, principles of federalism and subsidiarity may act to constrain and guide lawmakers' activity. In this section, two areas of consumer protection law will be discussed: regulating deceptive advertising and policing unfair contract terms. The approaches taken by the United States and the European Union in these areas evidence the impact that federalism values may have on consumer protection law.

1. Deceptive Advertising

a. United States

Regulation of advertising in the United States begins at the federal level, which in spite of state and local responses retains the limelight in the area. Section 5(a)(1) of the Federal Trade Commission Act (FTC Act) provides that "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful." (121) Dissemination of "any false advertisement" likely to induce the purchase of food, drugs, devices, or cosmetics is defined under the FTC Act as an "unfair or deceptive act or practice." (122) False advertising, as defined by the FTC Act, is an advertisement that is misleading in a material respect. (123)

The proper standard for assessing the meaning of "deceptive" and "unfair" has been the subject of the most significant debate in the area, a debate that focuses principally on a 1983 FTC Policy Statement. (124) This Policy Statement articulated in detail the Commission's current views on the proper standard for deception and arguably established a more lenient, pro-business standard than that previously applied. (125) The proper interpretation of when an act or practice is "unfair" under the FTC Act is handled by a standard different from that set forth above for deception and has, along with deception, been a source of controversy. The vagueness of the standard made the FTC's unfairness jurisdiction another subject of maneuvering in the 1980s as the FTC arguably began to adopt a more pro-industry stance toward advertising regulation. (126) As a result of this shift in policy, when assessing the "unfairness" of an act or practice the focus is on actual economic or physical harm caused by the act. (127) The Commission has now expressly rejected the view that "unfairness" can be assessed by a standard of "immoral, unethical, oppressive, or unscrupulous" conduct. (128)

Underlying these shifting interpretations of unfairness and deception under the FTC Act lies a complex and interesting debate on the proper roles of the federal government versus the states in regulating deceptive advertising. Over the years, these roles have shifted from a strongly federal enforcement mechanism under the FTC Act to a state-dominated one under state law. If only by perception, prior to the 1980s, when the Reagan era brought "deregulation" to the fore, the FTC was viewed as adopting a much more heavy-handed and interventionist approach to consumer protection issues such as deceptive advertising, a position strongly opposed by industry. (129) The 1983 Policy Statement thus represented a move toward federal deregulation. The changes to the federal standards for deception and unfairness and the development of a hands-off, pro-industry federal regulatory attitude toward policing advertising also arguably had the effect of increased state enforcement of state laws. (130) In spite of the historically strong federal involvement in regulating deceptive advertising, states themselves nonetheless are active in the area. Every state also regulates deceptive advertising under what are generally called unfair and deceptive acts and practices statutes (UDAPS). Many of these statutes are modeled after the FTC Act itself and, ironically, were enacted at the urging of a then-activist FTC to facilitate a joint federal and state effort toward policing deception and unfairness in consumer transactions. (131) The substance of these statutes varies widely depending upon the state, (132) and state attorney general enforcement efforts vary in their positions from either pro-industry to pro-consumer. (133) It is, however, fair to assert that in response to the changes in the federal standards in the 1980s, many states have taken a much more aggressive attitude that favors the consumer, to the chagrin of some pro-industry, pro-deregulation commentators. (134) Deregulation at the federal level therefore had the effect of stepped-up enforcement, if not, in the view of some analysts, over-regulation, at the state level.

The shifting dialectic between federal and state enforcement efforts evidences the strongly federalized system for policing deceptive advertising that has evolved, with the predominant role being played by the FTC through federal agency action. Subsidiary to that role, states complement the FTC involvement through their own analogous statutes that regulate deception. (135) Coordinating and conflicting efforts will emerge depending on prevalent attitudes regarding federalism, deregulation, and consumer interests. The experience post-1983 suggests that efforts at decreased enforcement at the federal level may in fact result in heightened enforcement efforts at the state level. Thus, the current regime for policing deception in the United States operates on a system of dual-tiered formal enforcement efforts, with a tension arising between federal and state involvement when differences over values and the proper scope of intervention occurs.

b. European Union

Some control of advertising occurs through the European Court of Justice's decisions regarding Member State measures that impact the functioning of the internal market. (136) Most significantly, however, the Misleading Advertising Directive (Directive), (137) published in 1984 and amended in 1997, establishes general principles for advertising regulation in the EU. The Directive begins by recognizing that "the laws against misleading advertising now in force in the Member States differ widely" and that "since advertising reaches beyond the frontiers of individual Member States, it has a direct effect on the establishment and the functioning of the common market." (138) Under the Directive, Member States are required to "ensure that adequate and effective means exist for the control of misleading advertising (139) in the interests of consumers as well as competitors and the general public." (140)

These provisions suggest that the Directive is premised on many (141) of the same substantive policies and values that justify intervention in the United States. In contrast to the United States regime, however, the Directive gives to Member States broad latitude in determining the means by which to police misleading advertising. Voluntary control of misleading advertising through industry self-regulation, for example, is permitted, a phenomenon rarely seen in the United States. (142) Member States must ensure that legal or administrative proceedings are available to check misleading advertising. (143) The Directive serves to set a regulatory floor for misleading advertising because Member States are not precluded "from retaining or adopting provisions with a view to ensuring more extensive protection ... for consumers, persons carrying on a trade, business, craft or profession, and the general public." (144)

In spite of their reliance upon many shared values regarding the impact of deception on markets, important structural differences exist between the U.S. and EU legal regimes. As stated above, the U.S. enforcement scheme has proceeded within the tensions of state and federal authority and structural values of federalism, and of regulation versus deregulation. Decreased federal involvement may act to heighten state efforts as result of these tensions. It is also a regime that largely downplays self-regulation as a legislative response to the problem of misleading advertising. In the EU, by contrast, Member States retain greater power in regulating the issue, and sometimes radically different state enforcement schemes are preserved. (145) For example, the U.K. counterparts of the U.S. FTC Act and the FTC are the Fair Trading Act of 1973 (FTA) and the Director of Fair Trading. (146) The FTA gives the Director of Fair Trading authority over "consumer trade practices." (147) In the case of misleading practices, the Director may use an informal method of dispute resolution to attempt to remedy the procedure. (148) Most advertising regulation largely occurs at the informal level, however, because the United Kingdom has significant voluntary controls on advertising. In 1962, the advertising industry created the Advertising Standards Authority (ASA), an independent body with the task of supervising advertising standards--other than on radio and TV. (149) The Committee of Advertising Practice (CAP) administers the system along with the ASA and is the body responsible for producing the British Codes of Advertising and Sales Promotion (BCASP). (150) In 1999, the United Kingdom adopted a tripartite system of self-regulation: The independent ASA supervises the system and applies the BCASP; the advertising industry establishes the standards in light of all pertinent laws and regulations and writes the BCASP through the CAP; and the Advertising Standards Board of Finance (ASBF) provides the framework and funding for the self-regulatory program. (151)

The English case of Director General of Fair Trading v. Tobyward (152) provides a good illustration of the intersection between Community and Member State law and of the impact the British system of self-regulation has upon deceptive advertising within those legal frameworks. In Tobyward, the manufacturer of a diet product (153) published allegedly misleading advertisements (154) concerning the product in several newspapers. After receiving a number of complaints about the advertisements, the ASA contacted the manufacturer. The council of the ASA upheld the complaints, and, when the manufacturer continued to publish the advertisements, the ASA finally referred the matter to the Director of Fair Trading. (155) After subsequent meetings with the manufacturer, the Director sought to enjoin the advertisements under the regulations that implemented the Misleading Advertising Directive in the United Kingdom. (156)

The court granted the injunction, finding the advertisements to be prima facie misleading. (157) The court gave broad deference to the principle of self-regulation embodied in the ASA Code and the British system of self-regulation. Finding the Director's position on the advertisement to be "reasonable," the court found that:

   [A]dvertisers would be more inclined to accept the rulings of their
   self-regulatory bodies if it were generally known that in cases in which
   their procedures had been exhausted and the advertiser was still publishing
   an advertisement which appeared to the court to be prima facie misleading,
   an injunction would ordinarily be granted. (158)

In addition to viewing the court's predominant role as one of providing force to the system of self-regulation, the court believed the issuance of the injunction would not interfere with any legitimate interests of the manufacturer and would protect the consumer interest as well. (159)

Tobyward illustrates the very limited intrusion of the Misleading Advertising Directive into Member State systems, in spite of the differences existing among the states. The Directive gives much deference to the principle of self-regulation at the very local level, permitting in the case of the United Kingdom, formal legal intervention that only arises when all attempts at self-regulation have failed. This is the case even in the face of claims that self-regulation is anti-consumer. Consumer advocates in the United Kingdom, for example, have argued against the British method of self-regulation and the slow enforcement mechanism at the Director of Fair Trading level. (160) With respect to advertising complaints, informal resolution through the ASA mechanism makes legal intervention only a "last resort" and only viable in a small percentage of cases. (161)

When comparing the U.S. and EU regimes for policing deceptive advertising, one can discern principles of federalism and subsidiarity at work that in themselves create significant differences between the jurisdictions. In the United States, regulation is focused at the federal level through enforcement of the FTC Act, with state UDAPS mirroring, and even supplementing, federal efforts. Federalism principles and market regulation concerns act to allocate power between these bodies. Yet, by framing the debate as "state versus federal" and "regulation versus deregulation" questions, these principles and concerns also act to de-emphasize procedures such as self-regulation as a possible response to the problem. By contrast, the regime for misleading advertising established in the EU through the Misleading Advertising Directive is much more sophisticated, with broad supranational standards that nonetheless leave great enforcement discretion to Member States and their traditional systems. Obviously, each system is acting under constraints that are peculiar to their organizations and legal cultures. The First Amendment provides a significant barrier to heavy-handed regulation of advertising in the United States. (162) Federalization and federalism are long-established principles in U.S. law, thus making probable the framing of the debate in terms of federalism. The still emerging role of EU institutions and concerns over subsidiarity and proportionality dictate a deferential attitude toward existing Member State systems by EU bodies.

The situation of a highly federalized, and at times federally dominated, scheme in the United States and a contrasting decentralized scheme in the EU is not universal in all areas of consumer protection. As the next section will show, the federalized U.S. and decentralized EU models reverse in the area of unfair contract terms.

2. Unfair Contract Terms

Another predominant concern of consumer protection policy focuses on policing the terms of the consumer contract. Values used in support of such intervention include fairness issues, market or information regulation, or concerns over the validity of an agreement entered into in situations of unequal bargaining power. Under each view, some sort of legal intervention may be warranted, although in different degrees depending upon the espoused view. As discussed in this section, similar to deceptive advertising, federalizing and decentralizing constraints on lawmakers may affect the ultimate legal response.

a. United States

In the United States, regulation of terms in the consumer contract largely occurs at the state level. Two very basic doctrines affecting use of terms are the obligation of good faith and fair dealing and the doctrine of unconscionability. The Uniform Commercial Code provides that "Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement." (163) Good faith can mean "honesty in fact in the conduct or transaction concerned," (164) but more importantly, in the case of a merchant, means "honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade." (165) Good faith, most particularly under the latter definition that incorporates notions of "fair" conduct, can check the use of perceived unfair terms in consumer contracts. (166) The doctrine of unconscionability acts to regulate terms by giving judges broad latitude to strike out "unconscionable" terms or to refuse to enforce "unconscionable" contracts. (167) Also at the state law level, specific types of contract terms may be heavily regulated. (168) State UDAPS may impact use of terms in consumer contracts. (169) Finally, individual states may prohibit particular types of terms--state law usury statutes limiting maximum interest rates, for example, are a type of legislative regulation of terms.

As can be seen from these provisions, much of the substantive regulation of terms in consumer contracts in the United States occurs at the state law level, often through open-textured standards such as "good faith," with relatively nominal involvement of the federal government. While comprehensive federal statutes governing disclosure of terms exist--such as the Truth in Lending Act (170)--their focus usually is upon disclosure of information and terms rather than substantive regulation of those terms. (171) Albeit somewhat of a generalization, the area of term regulation in consumer contracts largely has been the prerogative of the states and the NCCUSL. Thus, with respect to regulation of contract terms, the situation in the United States is somewhat a reversal of that seen in the area of policing deceptive advertising. In the latter area, strong federal authority historically was exercised through the FTC Act, within an overarching regime of cooperation and conflict between federal and state bodies. In the case of contract terms, only limited federal intervention has occurred to date, with the primary regulatory authority retained at the local state level. (172)

b. European Union

As with the United States, the balance of Community versus Member State authority also shifts in the European Union in the area of unfair contract terms. One of the EC's more recent Directives addressed specifically the propriety of including in consumer contracts many types of unfair contract terms. (173) The Unfair Terms in Consumer Contracts Directive (UTCC Directive) begins by recognizing that the disparity among Member State law treatment of unfair terms may result in distortions of competition between suppliers (174) and the consumer interests involved in such disparities. (175) Under the UTCC Directive, Member States must provide that "unfair terms" used in a contract concluded with a consumer (176) by a seller or supplier (177) not be binding on the consumer and that the contract continue to bind the parties, if it is capable of continuing in existence without the unfair terms. (178) Member States also must ensure that adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers. (179) Terms are "regarded as unfair if, contrary to the requirement of good faith, [they] cause[] a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer." (180)

Terms that have been "individually negotiated" are excepted or excluded from the general proscription on unfairness. (181) However, a term is deemed not to have been individually negotiated "where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract." (182) Even if particular aspects of a term or one specific term have been individually negotiated, that fact alone does not exclude the application of the UTCC Directive "if an overall assessment of the contract indicates that it is nevertheless a pre-formulated standard contract." (183) The Annex contains an indicative and non-exhaustive list of the terms that typically might be regarded as unfair. (184) In addition, all terms in written contracts must always be drafted in plain, intelligible language. (185) When there is doubt about the meaning of a term, the interpretation most favorable to the consumer is to prevail. (186) Member States are permitted to adopt or retain the most stringent provisions compatible with the EC Treaty in the area covered by the UTCC Directive to ensure a maximum level of protection for the consumer. (187) Although the UTCC Directive does not take the extreme measure of adopting a black-list of "unfair" terms, (188) even its gray-list approach evidenced by the Annex stands to intervene significantly into Member State law. While the Misleading Advertising Directive can be construed as attempting in at least some degree to preserve Member State regulation and existing systems, the UTCC Directive might have the opposite effect.

The intersection of British contract law and the Directive provides a good example of the way in which the UTCC Directive might fundamentally impact, if not change, the national law of a Member State within a very short period. The United Kingdom first implemented the UTCC Directive in 1994. (189) The first set of implementing regulations became effective as of July 1, 1995 and gave the Director of Fair Trading authority to consider complaints under the regulations. (190) This was replaced by another transposing instrument five years later. (191)

Under U.K. domestic law in effect prior to the UTCC Directive, consumers received substantially less protection than provided under the Directive. For example, under the Unfair Contract Terms Act 1977, only a limited number of terms were covered as "unfair." (192) A seller could not exclude or restrict his liability for death or personal injury resulting from negligence. (193) In the case of other loss or damage, exclusions or restrictions of liability for negligence were to satisfy a reasonableness requirement. (194) Thus, a greater number of terms may now be considered perhaps unfair in the United Kingdom after implementation of the UTCC Directive.

The Directive's incorporation of the obligation of good faith into consumer contracts also might fundamentally alter U.K. consumer contract law. The United Kingdom, at least prior to implementation of the Directive, often took a case-by-case approach to many types of unfair contract terms, an approach similar to U.S. state contract law. (195) Often the results were inconsistent. In the 1974 case of Lloyd's Bank Ltd. v. Bundy, (196) the court adopted a very liberal approach to policing the consumer contract. Lloyd's Bank involved an elderly farmer who had mortgaged the family farm to help his son. (197) The banks initiated foreclosure, and the trial court ruled in favor of the banks, feeling that there was nothing "`which takes this out of the vast range of commercial transactions.'" (198) The trial court ordered the farmer, Herbert Bundy, to give up possession of the farm to the bank. (199) Bundy appealed on the ground that the circumstances surrounding the transaction were so exceptional that he should not be held bound. (200)

The appellate court reversed. While noting that "in the vast majority of cases a customer who signs a bank guarantee or a charge cannot get out of it," (201) the court then articulated several exceptions to this rule, all of which were derived from a unifying principle of inequality of bargaining power. (202) Yet, the expansive approach of Lloyd's Bank has not been widely incorporated into English case law. For example, in Hart v. O'Connor, (203) the eighty-three year old trustee of an estate contracted to sell the land to the defendant, a neighbouring farmer. Unknown to the defendant, the vendor-trustee was of unsound mind. (204) A brother and his two sons instituted proceedings in the High Court of New Zealand against the defendant and the vendor, asserting that the contract should be rescinded for lack of mental capacity, unfairness, and unconscionability. (205) While the plaintiffs won at the lower court level, the appeal was allowed, and the court found that the plaintiff did not engage in unconscionable conduct. (206) The court found "no equitable fraud, no victimisation, no taking advantage, no overreaching or other description of unconscionable doings" that might justify a finding of unconscionability. (207) Some English commentators also have noted that English courts generally adopt an extremely conservative approach to the issues of good faith and unconscionability and question the implementation of good faith by the UTCC Directive:

   The use by [the UTCC] Directive of the notion of good faith raises the
   question of whether English Law requires that a party to a contract
   exercise his rights in good faith, whether the right in question concerns
   the creation of a contract or its performance. Such a question may be
   expressed in a variety of ways: put negatively, it may be asked whether a
   party's bad faith should affect his exercise of rights or whether his
   "unconscionable conduct" in the creation of a contract should affect its
   validity and put at its most general, whether this exercise should be
   recognised only if this is reasonable or fair. In 1766, in the context of
   recognising the duty of disclosure in contract of insurance, Lord Mansfield
   C.J. stated that "[t]he governing principle is applicable to all contracts
   and dealings. Good faith forbids either party by concealing what he
   privately knows, to draw the other into a bargain, from his ignorance of
   that fact, and his believing the contrary. But either party may be
   innocently silent, as to grounds open to both, to exercise their judgment
   upon." Nevertheless, the modern view is that, in keeping with the doctrines
   of freedom of contract and the binding force of contracts, in English
   contract law good faith is in principle irrelevant. (208)

This suggests that the UTCC Directive may significantly impact, or in fact has already impacted, English law and, most importantly, aspects of what might be considered very basic contract law policy. Nor is the impact limited to the United Kingdom, which arguably had a doctrine of unfairness that acted against the consumer interest that might justify activist intervention by EU bodies. For example, contract law in Nordic countries, which emphasizes strongly and integrally a fairness principle above that established by the UTCC Directive, also may be impacted adversely by the Directive. (209)

Such an impact on existing legal traditions among the Member States suggests an increasingly federalizing and centralizing approach toward regulating unfair contract terms. Under the Directive's approach, existing Member State contract law and attitudes ultimately may be altered--a position arguably much different from that suggested by the Misleading Advertising Directive. Moreover, the conflict between supranational standards that strongly favor the consumer interest and local contract policy is as much a conflict between appropriate views on local versus central powers as it is one of competing social policy goals or values. For example, it is hard to reconcile the position taken by the UTCC Directive with an interpretation of the principle of subsidiarity that would enhance diversity. (210) The UTCC Directive, in sum, stands as an example of what may eventually be the "Europeanization" of Member State private law. (211) While in the European Union an increasing centralizing trend in regulating consumer contract terms appears to be occurring, the United States to date has resisted this trend by leaving most of the authority in regulating the terms of the consumer contract to the individual states and the NCCUSL.

B. Integration: Consumer Credit

As the preceding section suggests, deceptive advertising and unfair contract terms provide examples of how federalism values may work into the final form of consumer law. The area of consumer credit disclosure suggests that cultural, linguistic, and economic integration also may impact involvement of political organizations in consumer lawmaking. Compulsory disclosure of information is a common tool for regulating consumer contracts, implicitly resting on the rationale that such disclosure may correct informational imbalances frequently present in consumer contracts. (212) As will be discussed in this section, the experience in the European Union suggests that a disclosure initiative requires a sufficient degree of common community values and integration of legal and economic cultures as a condition to successful implementation. Although mandated disclosure has been a successful federal legislative technique in the United States, where the individual states have relatively homogenous cultural and economic values, and a common language as well, similar disclosure initiatives in the European Union have been less successful.

1. United States

The archetype of all modern consumer disclosure statutes is perhaps the United States federal Truth in Lending Act (TILA), (213) which among other things requires creditors to disclose clearly and conspicuously the "annual percentage rate" and "finance charge" in consumer credit transactions. (214) Regulation Z, (215) promulgated by the Board of Governors of the Federal Reserve, implements TILA. From a technical standpoint, perhaps the most significant problem with consumer credit disclosure is developing a common working definition of "finance charge" and "annual percentage rate." In the United States, the issue of whether the cost of credit--the finance charge--includes points, loan fees, credit, or other insurance is an issue that results in significant TILA questions. Similarly, quoted rates of interest may vary widely depending on the method used to calculate annual percentage rate (APR). Detailed regulations promulgated under TILA attempt to resolve these problems. (216)

While it is a target of criticism for its underlying rationales or for its failed methodology (217) and is widely excoriated by the financial community, (218) TILA nonetheless can be considered a successful disclosure act when measured by its staying power alone. Differences, often harsh, most often arise concerning the proper interpretation of the statute and also its underlying effectiveness. (219) It is difficult, however, to argue in favor of repealing "truth." While to its critics inadvisable or ineffectual, consumer credit disclosure not only was possible legislatively in the United States, but has proven to be a consumer protection device of lasting duration.

2. European Union

Some attempts to regulate disclosure of the cost of consumer credit have occurred at the EC level. Unlike in the United States, however, these attempts have been modest and, to date, successful only in incremental degrees and with nominal actual impact. In 1987, a Council Directive first addressed consumer credit disclosure issues. (220) Similar to TILA, this Directive, to a limited extent, attempted to impose mandatory disclosure to consumers of interest

rates. The Directive required that all credit agreements be in writing and that the consumer receive a copy of the written agreement. (221) The written agreement was to include a statement of the annual percentage rate of charge, (222) a statement of the conditions under which the annual percentage rate of charge may be amended, and the other essential terms of the contract. (223)

Yet, due to the lack of a shared Community method for calculating annual percentage rate, an issue long resolved in the United States through TILA and through federal regulatory involvement, the 1987 Directive could only defer to Member State methods for calculating APR. (224) Significant amendments attempting to address these problems related to lack of a common method for calculating APR followed later. (225) In 1990, the Consumer Credit Directive was amended to provide a uniform method for calculating consumer credit costs and APR throughout the European Union, to be phased over a three-year period. (226) Yet, this amended Directive has had only limited success, with delays occurring in implementation. (227) Another amendment to the Consumer Credit Directive, this time to modify the uniform method and thus to establish a common Community APR and to create an EU symbol to indicate that APR, followed in 1998. (228) Well into the second decade of initiatives to harmonize consumer credit disclosure rules in the European Union, progress on the matter has been limited.

Raw interest group politics and Member State interests (229) admittedly may play a role in the slow development of a Community-wide APR standard. In addition to those factors, the limited success and frequent delays in implementation of a common method of interest rate disclosure suggests also that limited integration of credit markets among the Member States of the European Union may impact the development of consumer law. (230) Significant discrepancies in business practices, Member State legislation, and tax issues provide additional hurdles along with credit market development. (231) The limited volume of cross-border transactions to date, in which a common method of computing interest rates would prove most useful, also has weighed against success. (232) Coupled with slow market integration are political considerations weighing against success. EC imposition of a Community-wide disclosure method might act to test the boundaries of subsidiarity and proportionality. (233) Finally, because disclosure of information invokes with it language issues, cultural concerns related to language preservation may also be related to the slow progress of consumer credit disclosure in the European Union. (234)

Factors such as these, which are acting to check successful EU level disclosure initiatives, illuminate some crucial antecedents for successful harmonization. The history of consumer credit disclosure initiatives provides an example of how legal, business, and social culture can impact the form and success of consumer law at the national or transnational level. As the EU experience demonstrates, a sufficient amount of legal, cultural, and economic integration must exist prior to creation of largely uniform, and successful, disclosure standards across borders.

The limited success of credit disclosure in the European Union also, through implication, demonstrates some factors that advanced TILA's success in the United States. Returning again to the United States experience with TILA, and contrasting the success of TILA with the EU experience, it is likely that many factors apart from consumer politics and consumer ideology contributed to the success of TILA. TILA was enacted at a time when the states had attained a sufficient amount of economic and legal integration to make TILA a political possibility at the federal level. The preference for federal over state action during the time of enactment made congressional action politically palatable, if not self-evidently proper, under then-prevalent views on appropriate federal action. Most critically, the existence of an established regulatory body such as the Federal Reserve that had both the expertise and desire to enforce TILA after its enactment ensured the "success" of the law. Focusing the debate exclusively on whether federal action through TILA was wise or improper, as traditional legal analysis might suggest, thus would overlook the political, organizational, cultural, and economic factors--such as economic and legal integration, developed political bodies, common language, and federalism values--that were present at the time of enactment so as to permit legislative action. And, the experience of credit disclosure comparatively indicates that these factors are not insignificant aspects in the development of disclosure laws.

C. Systems: Consumer Arbitration

The question of creating just and accessible systems for resolving consumer disputes plays an important role in consumer protection. To paraphrase the old saying, rights must have remedies. A great number of consumer dispute mechanisms exist, which vary from jurisdiction to jurisdiction. For example, both the United States and Europe rely significantly on consumer complaint mechanisms as an informal means of enforcing consumer disputes. The Better Business Bureau in the United States is an example of this method of dispute resolution. Member States of the European Union have similar entities to assist consumers, such as, in the United Kingdom, organizations including Consumer Advise Centres, Citizens' Advice Bureaus, and trade associations. (235) The EC has begun to work on the transnational level to provide methods of informal dispute resolution by establishing a pilot project that has opened "frontier centres" in European cities to provide information on consumer issues and consumer law. (236) The centers are run by private or public sector agencies experienced in consumer affairs and are assisted by the Commission. (237)

Beyond the purely informal methods of dispute resolution exists a myriad of enforcement schemes that fall short of traditional judicial dispute resolution. The British Code of Advertising Practice provides a good example of industry self-regulation, an approach less favored in the United States, which usually emphasizes dispute resolution within more formal legal structures. (238) The U.S. FTC Act (239) and the U.K. Fair Trading Act (240) are examples of employing agencies to enforce consumer rights, with the primary agency remedy being the injunction or cease and desist order. (241) In the arena of formal judicial dispute resolution, many procedural devices are used to secure consumer access to justice. In the United States, the predominant scheme is to allow private rights of action. For example, many state deceptive practices statutes employ consumers as private attorneys general by allowing consumers to bring a private action under the statute. (242) Burdens of proof, provisions for statutory damages and for punitive damages, authorization for class actions, and awarding of attorneys fees are all additional devices that are intended to provide consumers with greater access to the courts in the United States. Class actions, nonetheless, are a U.S. phenomenon and an approach rarely available in the European Union, although the 1998 Directive on injunctions in the consumer context has brought a somewhat similar device by allowing specified national bodies to bring actions for injunctions in other Member States to protect the "collective interest of consumers" in the enjoining jurisdiction. (243) Punitive damages rarely are recoverable in the European Union unless expressly authorized by statute, and no statutes presently in force provide for such damages. (244)

Such wide variety of types of informal and formal devices for dispute resolution and differing attitudes toward implementation of those devices to enhance consumer access to justice will act to cause significant variations in legislation among states or countries. The question of enforceability of arbitration clauses in consumer contracts, perhaps one of the most important issues concerning access to justice today, provides a good example of the serious differences that can emerge due to differing attitudes and values toward dispute resolution systems. The legal response to the enforceability of such clauses diverges between the United States and European Union.

Each jurisdiction begins at the same factual point--arbitration increasingly is becoming a key mechanism for consumer dispute resolution in both the United States and the European Union and contractual waivers of a judicial forum in consumer transactions are frequent. Yet, beyond that, significant differences arise when addressing the legal response to this reality. In the United States, the propriety of enforcing arbitration clauses in consumer contracts has become one of the most hotly contested areas of consumer law and evokes with it basic conceptual issues about both contract law and federalism. The subject has been the focus of extensive scholarly debate. (245) In the United States Supreme Court case of Allied-Bruce Terminix Cos. & Terminix International Co. v. Dobson, (246) the contract law and institutional issues were conjoined. The Terminix case involved the enforceability of an arbitration clause in a termite protection plan originally entered into between a franchisee of the companies and the seller of the plaintiff's house in Alabama. The contract had been transferred to the plaintiff after he and his wife purchased the owner's house. (247) Although the franchisee upon the sale re-inspected the house and found it free of termites, a termite infestation was discovered almost immediately after the sale. (248) The franchisee made efforts to treat and repair the house, but the plaintiff found the efforts unsatisfactory and sued the franchisee and franchisors in Alabama state court. (249)

The defendants asked for the state court to stay the matter because the contract contained an arbitration clause providing that any controversy or claims arising out of or relating to the agreement were to be settled exclusively by arbitration. (250) Under Alabama law, however, pre-dispute arbitration agreements were invalid and unenforceable. (251) The trial court therefore denied the motion for a stay, and on appeal the Alabama Supreme Court upheld the denial. (252) Although the Federal Arbitration Act (FAA) provides that a "written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract," (253) the Alabama Supreme Court found the FAA inapplicable. (254) The state court first interpreted the FAA's language of "evidencing a transaction involving commerce" as requiring that the parties at the time of entering into the contract "contemplated substantial interstate activity." (255) Finding that the parties in the dispute--a local franchisee and a home purchaser--contemplated a primarily local transaction, the court refused to enforce the arbitration clause, as required by Alabama state law. (256)

The United States Supreme Court reversed the denial of the stay. It rejected the "contemplation of the parties" test applied by the Alabama Supreme Court and several other courts (257) to determine whether the FAA applied and held that the FAA applied whenever there was interstate "commerce in fact," irrespective of the reasonable expectations of the parties. (258) Because there was no dispute that the contract involved interstate commerce in fact, the FAA's broad validation of the arbitration clause applied irrespective of the state policy against enforcement. (259) In response to arguments that the "commerce in fact" rule acted against the interests of consumers, the Court appeared to take the position that arbitration is often in the interest of individuals. (260) While the Court indicated that states have some freedom to regulate individual arbitration clauses, such regulatory means appear to be limited only to employment of "general contract law principles" that do not treat arbitration clauses less favorably than any other sort of term. (261)

Yet, "general contract law principles" provide a limited arsenal for consumer lawyers seeking to invalidate arbitration clauses in consumer contracts, most particularly in light of the Court's expansive reading of the FAA in other areas. A requirement that an arbitration clause be prominently displayed in a consumer contract most likely might be found to be inconsistent with the FAA. (262) That the clause has not been brought to the consumer's attention could be largely irrelevant. (263) In the notable case of Hill v. Gateway 2000, (264) the court found enforceable an arbitration clause included in a list of terms shipped in the box along with the goods. The manufacturer employed an "accept-or-return" policy under which the list of terms would be deemed to have become part of the contract unless the goods were returned within thirty days. (265) The court found such a practice binding on the consumer. (266) In response to arguments concerning the unfairness of arbitration to consumers, the court merely stated that was an issue "for Congress and the contracting parties to consider." (267)

The patent hostility to consumer access to courts in the United States through judicial enforcement of arbitration clauses is by no means universal. Applying general contract principles, courts have refused to enforce arbitration clauses because of lack of mutuality of consent (268) or by applying the doctrine of unconscionability. (269) Enforcement also has been denied where enforcement of an arbitration agreement would create a barrier to the consumer's effective exercise of rights created under other consumer statutes. (270) Such activist courts, however, appear to be the exception rather than representative of a pro-consumer trend in the courts. (271) The vehemently pro-FAA case law from the Supreme Court, when coupled with judicial interpretations of state contract law regarding fundamental fairness and consent that often disfavor the consumer, has resulted in a strong--if not in some courts nearly irrebuttable--presumption that favors enforcement of arbitration clauses in consumer contracts.

While the issue of arbitration of consumer disputes in the United States is being addressed via the judiciary and rests facially upon doctrines of federalism and freedom of contract, in Europe a somewhat opposite attitude toward enforcement of mandatory arbitration clauses in standard form consumer contracts is emerging. Consumer arbitration clauses are gray-listed under the UTCC Directive discussed earlier. (272) While this EC action does not necessarily act to invalidate all mandatory arbitration clauses, because those terms only "may" be considered unfair under the Directive, the gray-listing is significant. Appearance on the Annex suggests a reversal of the presumption, implicit and virtually irrebutable in U.S. case law, to the effect that arbitration acts in the interests of consumers. (273) Thus, the two jurisdictions, while beginning from the same point that recognizes that arbitration is used as a consumer dispute mechanism, immediately diverge into different perspectives on the propriety of that mechanism.

These differences, moreover, exist despite the fact that the EU and U.S. approaches toward arbitration reflect similar federalizing notions. In each case, intervention through federal bodies is preferred over state action or policy, such as the strongly anti-arbitration policy of Alabama. While a pro-consumer anti-arbitration policy has been achieved through active Community-wide intervention in the European Union, such a policy has been unable effectively to be brought about in the United States. Thus, while the jurisdictions demonstrate analogous federalizing trends, they come out largely on different sides on the issue of the propriety of consumer arbitration.

Finally, the UTCC Directive differs significantly from the United States regarding basic contract law policy. By gray-listing terms in the consumer contract through the UTCC Directive, the European Union moves toward an anti-contract approach to consumer arbitration, in which consent plays less of a role in determining whether a term ought to be enforced. This approach stands in opposition to the current U.S. approach, which emphasizes contract and consent as primary issues, be that emphasis right or wrong. (274)

The experience with consumer arbitration clauses suggests that consumer access to justice--in the case of arbitration, consumer access to courts--may be shaped by attitudes regarding social policy (the propriety of consumer arbitration as a means of dispute resolution), federalism (state versus federal action), and contract law policy (the role of consent in consumer contracting). In the case of arbitration, this mix of pressures has led to significantly different legal responses in the United States and European Union. Nor is the difference confined solely to consumer arbitration. For example, attitudes toward informal dispute resolution or legal traditions regarding class actions may impact the remedies available to consumers. Federalism issues such as those surfacing in interpretations of the FAA by the U.S. Supreme Court and in implementation of the UTCC Directive also may affect available remedies. In these ways, substantive access to justice issues can be defined by, and interrelated with, institutional and systems issues that exist independently of consumer values and ideology.

D. Conclusion

As can be seen from the materials discussed in this Part III, a comparative institutional perspective on consumer protection law reveals a wide array of values, political considerations, structural concerns, systems issues, and cultural factors that potentially influence final legal responses to consumer protection issues. Even within narrow substantive areas, approaches sometimes may differ significantly, as demonstrated by the attitudes toward enforceability of consumer arbitration clauses in the European Union and United States just discussed. Yet, even where consumer values coincide among jurisdictions, as is the case often with respect to deceptive advertising (275) or with respect to unfair contract terms, (276) significantly different legislative or judicial approaches may emerge to address the issue. Nor can centralized or localized responses be necessarily tied to a specific consumer value. While the European Union and United States hold largely similar values regarding deception and unfair contract terms, for example, those concerns are addressed through different localized or centralized responses.

It has been argued that many of these differences may be related, if only partially, to environmental factors apart from consumer norms or goals, such as federalization and federalism, cultural and economic integration, and existing legal and social systems. This conclusion suggests that the traditional perspective on consumer protection law, which evaluates law primarily in terms of the underlying social policy goals it advances, (277) perhaps overestimates the impact that consumer policy plays in the crafting of consumer legislation. At the same, the traditional framework arguably underestimates the impact that legitimate social and political institutions apart from consumer policy and ideology have on the decision of whether and how to intervene in consumer transactions and on the substance of the final legal product. The following section addresses some of the implications that this perspective may have on the development of consumer protection law and theory.

IV. IMPLICATIONS OF INSTITUTIONAL THEORY FOR CONSUMER LAW

The wide-ranging formal legal responses to consumer issues reflected in the contrast of the U.S. and EU initiatives in the previous section raise a number of questions for consumer law and theory both in the United States and internationally. They first test some of the assumptions on which the current U.S. discourse about consumer law, if only intuitively, proceeds. They also call into question reliance on perceived shared policy goals when analyzing and critiquing recent consumer initiatives. Finally, they point toward whether--even assuming that the current discourse relies upon often flawed lines of argument--any alternatives exist to proceeding along as in the past, albeit imperfectly.

The influence that existing institutional factors may have in the development of consumer law raises again the question, posited earlier, concerning the proper approach toward formulating and evaluating legal responses to consumer issues. The prevailing approach often posits that ostensibly shared values be the dominant, if not exclusive, basis for evaluating a consumer protection measure. Thus, for example, under this approach a particular measure such as the enforcement of arbitration clauses in consumer contracts would be evaluated on whether such enforcement would advance a particular consumer value, such as fairness, efficiency, or other values or goals held to be dominant. (278) Under this rubric, factors related to the underlying environment from which such measures emerged, such as institutional constraints, organizational values, political culture, and social context, are, if not completely irrelevant, certainly downplayed as less than central to the inquiry. By contrast, as discussed earlier in Part II, an institutional approach would employ a much less precise methodology that attempts to accommodate context, including organizational roles and values apart from substantive consumer policy or theory, within its overall framework of analysis. Such an accommodation occurs even at the expense of rejecting modern conventions of formal rationality. (279)

The comparative discussion in the previous section highlights the tenuous assumptions upon which the traditional social po]icy model of legal analysis builds. First, the model often assumes that the values or social policy goals used to evaluate any particular legal issue or action are widely shared. The comparison of U.S. and EU consumer protection initiatives, however, suggests that, even across very similar Western cultures and economies, the premise of shared values can be a debatable point. For example, the regimes are beginning to demonstrate substantially different perspectives on consumer arbitration as a systems value, and that difference resonates in their consumer law. Even where shared values coincide, institutional responses legitimately may vary given political or social considerations. Institutions and organizations matter, as does the context in which they are formulated and operate. The assumption that legitimate political and social values apart from substantive consumer policy do not properly enter into a lawmaker's decision to regulate, and how to regulate, consumer transactions is flawed. Significant questions therefore exist regarding whether structuring a discourse around consumer policy values or goals alone either accurately results in describing fully legislative and legal activity in the consumer arena or provides a foundation upon which to develop consumer law in an increasingly pluralist and global environment. In such an environment, legal responses must be responsive to not only different values but also to different institutional environments.

From the domestic U.S. perspective, a values-oriented approach to consumer protection analysis, which eschews the underlying institutional arrangements and environment in the name of consumer values alone, therefore needs to be rejected. This is most particularly the case given the influence that such approaches have secured in recent years. One can discern some of the underpinnings of such an approach in many of the debates emerging from the revisions to the UCC. (280) Underlying many critiques of the uniform laws legislative process in the United States is the suggestion that individual legislatures have a particular, or perhaps special, competence in promulgating particular types of consumer protection laws. For example, in the United States either the federal or state governments have been suggested to be of significant importance in protecting consumers. (281) In a similar argument, it has been suggested that some legislatures, such as the NCCUSL and ALI, perhaps are elite institutions, at least comparatively viewed, through which the "best," or at least "better" consumer protection law should emerge. (282) Thus, under this argument, in order to attain the desired goal through legislative action, the question should become merely one of organizational selection. By reverse implication, if the desired goal is not obtained through the chosen legislative process, that fact alone seems authoritatively to speak on legislative competence. In other words, under this line of analysis because the selection of lawmaker presumptively was correct, the final product can be scientifically examined to discern pathologies in the process, such as interest group influences or perhaps ineptitude of the body. (283) In the face of those identified pathologies, substantial reform or even abolishment of the lawmaker may be warranted.

A fair articulation of this extreme critique of the uniform laws process is that legislatures, courts, and other legal actors involved in the lawmaking process are producers of products. The lawmaker's task, as manufacturer, is to align the particular product with shared social goals, be they paternalism, policing market failure, advancing efficiency, or ensuring consumer justice. Failure to produce a product that is aligned with the shared value suggests that the lawmaker acted for less than legitimate reasons, acted under interest group influences--whether legitimate or otherwise--or simply got it wrong. The "legislature as producer," and the connected concept that desirable law is only a step away from the matter of choosing the right legislature that knows its job and does it well, is closely linked to the traditional framework of consumer law analysis advanced earlier in this Article. (284) By evaluating law and legislative action largely by how efficaciously their rules advance specific consumer values, the uniform laws process critique is grounded in the traditional legal framework set forth above.

These arguments have attained substantial practical impact. They have, for example, impacted the drafting process for the UCC revisions, one of the most significant projects impacting commercial law in the United States. In a debate that has surrounded the revisions, concerns have been raised over the ability of the uniform laws process to accommodate the interests of the consumer and the perceived influence of business interests in the drafting process often buttressing these arguments by close analysis of the ideological bases or the bare form of the law produced. (285) As discussed above, however, many of the assumptions that seem to underlie this critique are, if not critically flawed, certainly tenuous. The weaknesses arise not only from the issue of whether any consensus upon shared values, assumed by the argument, in fact exists. More importantly, the view that the activity of legislatures, lawmakers, and legal products readily can be analyzed solely by reference to consumer values and policy, without reference to other political, institutional, and social values is highly questionable. As suggested in the previous section, such an easy comparison cannot obviously be drawn. Consider the issues that an analysis of the product of the NCCUSL versus that of the European Union, or that of a Member State of the European Union, or that of the state or federal government in the United States in fact raises. It is hard to imagine that such an analysis can proceed without reference to context and culture, in other words, to institutional and political values such as federalism, legal and social culture, attitudes toward--and systems designed to ensure--access to justice, and other factors completely independent of consumer ideology but important components of the institutional arrangements and environment.

Attempting to measure the quality or performance of a lawmaker principally by a quasi-scientific evaluation of the normative desirability of its product, another tenet often implicit in many critiques of the NCCUSL drafting project, is a similarly questionable enterprise. If the UTCC Directive discussed earlier in the Article (286) were decided to be "better" in terms of protecting the perceived consumer interest, that fact alone is not dispositive on the "quality" of the legislative body enacting the legislation. Desirability alone, in other words, under held values, does not lead logically and inescapably to the conclusion that the European Commission lacks interest group pressures or resists them more successfully than the NCCUSL drafting process does. As suggested above, factors such as cultural integration and federalism values in fact may impact the content of the final product. Thus, any coherent and complete analysis of legislatures and legislative products demands much more than applying accepted views about efficiency or consumer justice or any favored and desired consumer goal to the product.

In addition to relying upon debatable assumptions regarding fungible law and even more fungible lawmakers that exist and create law independent of any political and social constraints, the values-oriented approach also often fails to provide guidance on when and how to create uniformity or to tolerate diversity in consumer law. While the need for uniformity is a long honored goal of commercial law codification and harmonization efforts and uniformity generally is considered beneficial, uniformity and harmonization do have costs. (287) Consumer law may become largely uniform through a myriad of means, but three general legislative methods have emerged. At the lowest and highest levels, private institutions such as the NCCUSL and international bodies such as the United Nations Commission on International Trade Law may play a significant unifying role by promulgating model or uniform acts for enactment by public legislatures. (288) At the federal or quasi-federal level, institutions such as the Congress in the United States or the EC in the European Union, may create uniformity through action either by federal legislation or directive, as the case may be. At all levels, the failure to act may result in diversity and bring with it values and costs attained thereby. Rigid assumptions about law as product and legislature as producer fail to provide any workable rubric for determining the proper "level" or legal mechanism by which uniformity should emerge or diversity should be tolerated. (289)

Beyond the question of the level of government--the local, the central, or the international--and the mechanism by which desirable law should emerge, a consumer values approach, finally, fails to provide standards from which acceptable levels of uniformity or non-uniformity can be identified. As discussed in the previous section, significant lack of uniformity may emerge as a result of concerns apart from consumer values alone. For example, preservation of self-regulatory schemes at the local level may occur, such as is the case with the Misleading Advertising Directive, partially responsive to concerns over centralization and federalization. A uniform response may fail due to limited integration across borders as consumer credit disclosure initiatives in the European Union suggests. Even where uniformity is possible, it may not be desirable. For example, an approach that leads to substantial uniformity at the state level in the United States may not necessarily be viewed as satisfactory to the extent that a proposed uniform law might marginalize domestic states from the international community at large. Given that greater diversity in approaches and attitudes towards consumer issues inevitably will emerge when issues are viewed across cultures or globally, the emergence of globalization makes the traditional emphasis on consumer values seem even more parochial.

In sum, a consumer law discourse that proceeds largely along consumer social policy goals provides, at best, a woefully incomplete picture of consumer lawmaking in action. It overlooks key factors such as federalism, social and cultural values, economic and legal integration issues, and differing access to justice systems. Yet, those factors impact the evolution of consumer protection law. At the same time, it fails to provide a satisfactory framework for assessing the need for uniformity in commercial law, the level at which uniformity might be obtained, and the means by which uniformity will emerge, all issues that will remain increasingly important as globalization proceeds.

Yet, what alternatives exist to such an approach? What would a comprehensive, institutional-regarding framework for analysis of consumer protection law look like? It might begin by returning first to one premise of institutional analysis, one that rejects as wholly authoritative Western--and usually U.S.--concepts of formal rationality. (290) Such a move would begin by accepting that consumer law is shaped as much, if not more, by the underlying governance structures and institutional environments through which the law emerges as by held notions of what is right or by the clash of interest group desires. A perspective based on comprehensive rationality is not, however, a flight from rationality but rather an attempt to move towards accommodating within consumer law a comprehensive perspective on what a truly rational law might look like. (291)

Such an institutional approach toward law would adopt a much broader perspective on legal analysis and law reform than that advanced by the traditional values-oriented approach. In the specific area of consumer protection, an institutional and comprehensively rational framework for evaluating consumer protection would seek to take into account the organizations and the institutions that guide and constrain them, as well as values and concerns such as federalism, integration, and existing social and legal systems, when making any assessment of a particular consumer protection issue. Instead of rejecting these factors as inconsequential in the way that the traditional approach so frequently does, an institutional approach would validate such concerns as legitimate considerations to be weighed when addressing consumer lawmaking and to be employed in legal analysis of consumer protection initiatives.

To provide two examples of how such a comprehensively rational and institutional analysis of consumer protection might proceed, consider first the debates that have surrounded the NCCUSL and the UCC revision process, discussed above. Evaluation of a NCCUSL consumer protection issue under a new institutional framework would proceed within a matrix of the role that NCCUSL plays in the state, national, and global lawmaking process, of federalism values, of local state culture and legal systems, and of the historical development of the uniform laws process. Values such as interstate uniformity, legal diversity, state autonomy in regulating the subject areas, federalism concerns, organizational integrity, and integration among the states would be important considerations when evaluating any particular UCC provision, in addition to consumer ideology and contract law theory. This is not to suggest that consumer and contract values are irrelevant even under an institutional framework, but rather that any failure to advance specific values through a rule, or to express those values through a particular form of rule, does not end the inquiry or prove in and of itself much regarding the law or lawmaker.

The differing treatment of consumer arbitration clauses in the United States and European Union suggests another example for how an institutional dialogue might proceed. (292) The UTCC Directive's gray-list approach recognizes the consumer concerns with arbitration as a means of dispute resolution by presumptively invalidating such clauses. By contrast, the United States broadly validates arbitration clauses under the rubric of freedom of contract, with the domestic argument largely devolving into one of whether or not enforcement is sound as a matter of consumer policy. An institutional approach toward consumer arbitration would bring into the debate issues of federalization, preemption, and state autonomy in regulating contracts. Moreover, the fact that EU entities recognize consumer concerns rejected frequently in the U.S. approach would not be regarded as inconsequential.

Such an institutional framework for developing and critiquing consumer law holds greater promise for broader application than a values-based approach, thereby circumventing the parochialism of the latter approach. The institutional model provides a framework for analyzing consumer law that is capable of working across political boundaries. By providing a matrix through which local institutional environments and governance structures that impact consumer lawmaking are taken into account, an institutional framework remains sensitive to cultural difference and local political values while providing a mechanism for comparative assessment of consumer law. Thus, fully developed, it holds the promise of being capable of guiding lawmakers on when uniformity is acceptable while remaining respectful of local culture, issues of increasing consequence in a quickly shrinking world.

V. CONCLUSION

This Article has examined recent consumer protection initiatives in the United States and European Union to identify values and institutional factors other than purely consumer policy values that may act to shape consumer protection law. The wide disparity in approaches toward misleading advertising, unfair contract terms, consumer credit issues, and access to justice problems demonstrates that institutional constraints and culture may play a much stronger role in determining the shape and scope of consumer protection law than perhaps previously thought. Values such as federalism and federalization, organizational competence and constraints, economic and cultural integration, and existing systems do impact the shape and form of consumer law. Thus, the prevailing framework for evaluating consumer law is flawed when it assumes, as it all too frequently does, that factors such as these are largely irrelevant. An institutional legal approach that would give weight to the differing functions that lawmaking bodies play in local contexts in the global community, to economic and social integration factors, and to existing legal systems provides a better methodology by which to critique consumer law and to formulate new consumer protection initiatives in an era of globalization.

(1.) See generally Ralph J. Rohner, Multiple Sources of Consumer Law and Enforcement (Or: "Still in Search of a Uniform Policy"), 9 GA. ST. U. L. REV. 881, 882-89 (1993) (discussing growth of consumer movement in the 1960s and consumer legislation that emerged from movement). Nonetheless, consumer protection issues and legal protection of consumers have been a source of concern throughout history. See, e.g., Paul B. Rasor, Biblical Roots of Modern Consumer Credit Law, 10 J. L. & RELIGION 157 (1993-94) (delineating biblical regulations affecting consumer credit); Richard J. Barber, Government and the Consumer, 64 MICH. L. REV. 1203, 1205-06 (1966) (presenting medieval consumer protection measures).

(2.) Rohner, supra note 1, at 884-85.

(3.) Over the past decade nearly every article of the UCC has undergone revision, although the status of the revisions within NCCUSL and with state legislatures differs with the article. To find the status of current NCCUSL revision projects see NCCUSL, Introductions & Adoptions of Uniform Acts, at http://www.nccusl.org/uniformacts.asp. Articles 2 and 2A, the last major articles to be revised, are currently in the midst of a lengthy and politically controversial drafting process. See infra note 5.

(4.) For sustained critiques, from a consumerist perspective, of the NCCUSL revisions to Articles 3 and 4 of the UCC see Kathleen Patchel, Interest Group Politics, Federalism, and the Uniform Laws Process: Some Lessons from the Uniform Commercial Code, 78 MINN. L. REV. 83 (1993) (discussing how uniform laws process can be affected by interest groups, and applying this thesis to UCC revisions); Edward L. Rubin, Thinking Like a Lawyer, Acting Like a Lobbyist: Some Notes on the Process of Revising Articles 3 and 4, 26 LOY. L.A.L. REV. 743 (1993) (presenting an account of political biases of drafting processes by participant in process). For more general discussions of consumer issues raised in the Code revision project see Jean Braucher, Foreward: Consumer Protection and the Uniform Commercial Code, 75 WASH. U. L.Q. 1 (1997) (providing current articles on Code revisions and consumer issues); Kerry Lynn Macintosh, Liberty, Trade, and the Uniform Commercial Code: When Should Default Rules Be Based on Business Practices?, 38 WM. & MARY L. REV. 1465 (1997) (developing framework for determining extent of UCC involvement in consumer issues); Fred H. Miller, Realism Not Idealism in Uniform Laws--Observations from the Revision of the UCC, 39 S. TEX. L. REV. 707 (1998) (presenting an account of revision efforts); A. Brooke Overby, Modeling UCC Drafting, 29 LOY. L.A.L. REV. 645, 650-68 (1996) (discussing current perspectives on relationship between consumer protection and Code revision process).

(5.) Notable events in the revision process included the refusal of the NCCUSL and ALI to approve the draft revisions of Article 2 (Sales) presented at the July 1999 meeting, allegedly due to business pressures, which resulted in the resignation of the Reporters to the project. See generally William J. Woodward, Jr., Private Legislation in the United States--How the Uniform Commercial Code Becomes Law, 72 TEMP. L. REV. 451, 460 n.39 (1999) (describing events of Summer 1999 relating to Article 2 revisions). A new drafting committee thereupon was formed. Press Release, NCCUSL, ALI and NCCUSL Announce New Drafting Committee for UCC Articles 2 and 2A (Aug. 18, 1999), available at http://ww