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Beyond door-to-door: the implications of invited in-home selling.

Over the past 20 years, consumer groups and policymakers have expressed concerns about the high-pressure selling techniques used during in-home selling, often highlighting the distinction between typical door-to-door selling, and the type of selling that occurs when a salesperson is "invited" through a previous interaction to undertake a sales process in the consumer's home. This article explores these high-pressure selling techniques in the context of the invited in-home selling (IIHS) of educational software and the consequences in terms of consumer vulnerability and consumer protection policy. We conclude by drawing upon earlier discourse in this field to argue that policymakers, consumer advocates and businesses consider a holistic, multidimensional contextualization of consumer vulnerability as a means to consider consumer protection in this, and other contexts.

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"Large deceptions are built up from smaller deceptions. Real-world marketplace deception is an orchestrated process, not an isolated single act." (Boush, Friestad, and Wright 2009, 41)

This article explores the phenomenon of "invited in-home selling" (IIHS), focusing on the psychological and contextual factors in consumers' decision-making associated with the purchase of goods and services (and credit to assist with purchasing) from an in-home seller. Products sold in this way can include educational software, home security systems, encyclopedias, and vacuum cleaners. IIHS is distinguishable from other personal selling (also known as door-to-door selling or doorstep selling) in the home due to its reliance on an invitation being sought from the consumer, in a context removed from the home, prior to the actual sales presentation.

Door-to-door sales have been reported to have several benefits to both consumers and sellers. A review of the Australian door-to-door sales industry (which includes IIHS) described how this type of selling allows low-involvement products to be shown to consumers at their convenience, enables personal demonstrations or tailored service, is low investment with limited set-up costs, and is regarded by traders as good for raising brand awareness (Frost and Sullivan). Additionally, door-to-door sales frequently involve products or services that are relevant to most households, making it a cost effective means of selling (Frost and Sullivan). The nature of door-to-door sales also means that consumers living in particular regions can be targeted (Frost and Sullivan).

In addition, the particular nature of the in-home selling situation privileges the domestic and familiar environment of the home as the main setting, and may affect the context of the sale and the attitude of the consumers. Although there is potential for consumer vulnerability to be influenced once the salesman is in the home, it is also true that the home provides a familiar environment where consumers feel more confident and comfortable, can preserve their privacy and anonymity, and perceive less risk (Gillett 1976; McCorkle, Planchon, and William 1987).

Many of these benefits of the general door-to-door sales channel are also true of IIHS. Targeting of particular consumer groups can be further facilitated using IIHS by giving particular consumers (e.g., families with children) the opportunity to invite them to their home. For example, one Australian education sales organization describes its IIHS sale model as advantageous because it involves, "A qualified consultant (demonstrating) ... the power of the program in the comfort of your own home" (CAMI Worldwide).

In contrast to the aforementioned positive aspects, the United Kingdom Office of Fair Trading (OFT) has placed particular emphasis on warning consumers about high-pressure tactics where the consumer has invited the doorstep trader into the home (United Kingdom Office of Fair Trading 2012). A renewed OFT doorstep selling awareness campaign comes after a large number of calls to UK consumer help lines in 2012 about doorstep salespeople. Sales people who have been invited into people's homes are the source of the majority of complaints in Scotland with almost 2,311 complaints received in 2012 (Fife Council 2012).

In Australia, the legal aid and advocacy group Consumer Action Law Centre and the Victorian State Government's Department of Consumer Affairs have both received a large number of complaints related to the sale of educational software for primary and secondary school students (Innis 2007; Consumer Action Law Centre 2012; Consumer Affairs Victoria 2012). The complaints and concerns revolve around the high-pressure tactics often employed in personal selling of this nature. High-pressure selling of these products is of great concern given that these software packages are very expensive (AUD $5,000-$12,000), are often sold with high-interest (19%-25%) credit financing (referred to as associated credit), are usually sold to those with low incomes, and contribute to a rising level of consumer debt.

Similarly, in the United Kingdom high-pressure selling has been identified as problematic in the past five years. These problems have arisen in the sales of home insulation products and services (Fife Council 2012), fish door-to-door (Surry City Council 2011), timeshare resales (Rizi 2010), vacuum cleaners (Scott 2008), and high-price mobility products for the disabled (Levene 2008; Walker 2010).

In the United States, high-pressure door-to-door selling of security alarm systems has caused great concern among consumer professionals and regulators in the past five years (Shiffer 2008; Pyle 2009; Consumer Affairs 2010). Problems have also been reported in the United States in the high-pressure selling of motivational training (O'Donnell 2010) and travel club memberships (Huffman 2010). Consumer Affairs (2010) warns that homeowners should be on guard as door-to-door traveling sales agents may use high-pressure or deceptive sales tactics to lock citizens into costly agreements. In the United States, the Better Business Bureau is reported in newspaper articles on high-pressure door-to-door selling as advising consumers never to invite door-to-door sellers into the home (Tucci 2013).

These examples highlight a need for research that further explores this selling context, particularly in relation to potential consumer harm. Little is known about the processes used during IIHS and their effect on consumer decision-making. Given the apparent prevalence of high-pressure sales tactics in many jurisdictions, it is possible that the processes inherent to IIHS may produce a context where a consumer is particularly vulnerable to the effects of high-pressure techniques, may have been deceived into issuing the invitation, and may not be aware of the influence techniques being applied during the sales process. This article seeks to examine what level of consumer protection is acceptable to reduce consumer detriment and account for consumer vulnerability in this selling context.

The article first explores these notions by investigating the phenomenon of IIHS in the context of the sale of educational software, emphasizing the contextual elements and psychological processes that occur in this unique selling environment. Consumer protection laws regarding this type of personal selling are then reviewed, where it is noted that many jurisdictions do not separately regulate IIHS sales and that existing regulations ignore the behavioral and psychological aspects of this selling environment. Based on the insights from this research, recommendations for including elements of psychology and behavioral economics in policies toward IIHS are provided.

CONTEXTUAL ELEMENTS OF INVITED IN-HOME SALES

Case Study of In-Home Selling of Educational Software

In December 2008, an Australian legal aid and advocacy group, the Consumer Action Law Centre, instituted legal proceedings against two separate companies, alleging high-pressure selling of maths software to two of their clients. Far from being an aberration, these cases were indicative of a continuing and emergent problem. Catriona Lowe, lawyer and joint chief executive of Consumer Action Law Centre in Victoria, observed that "these computer programs are number one on our list of complaints by consumers about a particular product" (Innis 2007).

While there is general recognition of the disadvantages faced by consumers in relation to unsolicited pressure sales, the current research illustrates that when a pressure sales situation arises from an invitation from the consumer for a salesperson (sometimes referred to as an education assessor) to visit his/her home, the consumer may be more vulnerable to the pressure techniques. In other words, we argue that the fact that the consumer has "solicited" the visit does not protect him/herself from the pressure-selling situation. Indeed, as we demonstrate in our analysis, the process of soliciting the invitation and the sales demonstration that follows as a result of the invitation has the potential to place the consumer in a more vulnerable position.

Unlike other forms of door-to-door and personal selling, IIHS is characterized by the "invitation" aspect inherent to its process. The IIHS of the educational software programs sales process often relies on soliciting an invitation to a consumer's house. This "invitation" from the consumer is often elicited from a telephone call, competition form, shopping center stall, "home show," or advertisement offering a free quote or demonstration. Notably, these invitations are usually sought at public places or through the completion of a form at a relatively low-involvement context, such as a take-away food store or a shopping mall. In such situations the optimism bias (Fiske and Taylor 1991) and self-enhancement bias (Sagarin et al. 2002) may influence the consumer's decision.

In the context of IIHS, a consumer who signs up for something that is presented to him/her as an in-home educational assessment might be unrealistically optimistic about what it will actually entail, and may not be aware that this will also include a sales process. Furthermore, consumers may believe they are less susceptible than others to the sales techniques used during IIHS, and thus become vulnerable and less likely to make a well-considered decision when placed under pressure.

Critical elements that distinguish the IIHS from typical door-to-door sales include:

* A sales presentation lasting at least an hour-sometimes many hours, often requiring that all family members are at home.

* Failure--or refusal--to mention the total price of the goods/services until the end of a presentation, along with complex explanations and comparisons to justify the cost of the goods/services.

* Sale of long-term services, e.g., "lifetime memberships" or educational software covering all primary and secondary schooling; arrangements made for credit if the consumer is unable to pay the price.

* The consumer makes an appointment, and therefore makes a practical and psychological commitment for a sales person to visit his/her home.

Given these premises, we argue that IIHS represents an ideal situation for salespeople to employ subtle high-pressure techniques which can "draw consumers in," often leading to decisions to purchases that, to an outsider, may appear irrational. Indeed, once in the consumers' home, social persuasion techniques are employed by sales people to make the sale. Although no academic studies on the differences between IIHS and in-store selling have been conducted to our knowledge, there are other studies which illustrate that the selling context does matter (e.g., Ballantine, Jack, and Parsons 2010; Morrison et al. 2011; Wang, Minor, and Wei 2011). These studies support the contention that selling context makes a difference to the nature and the psychology of a transaction. This means that the consumer's decision-making is influenced by factors that are not necessarily conscious, and may be deleterious to the consumer's judgment. It is therefore plausible that a consumer's decision-making is affected by contextual factors of IIHS that are not found in traditional door-to-door or store selling.

The consumer's personal and voluntary invitation to his or her home is critical in understanding the peculiar dynamics occurring in the IIHS. There is a social or relational dimension in the IIHS that is missing in uninvited in-home selling (UIHS) and that cannot be neglected in research contexts. In the IIHS, the consumer has not received an unexpected, ex abrupto or unsolicited visit from a salesman. The consumer has explicitly and voluntarily invited the salesperson, making the time for the meeting and opening their most private and intimate environment, the home, to him or her. By inviting the salesperson, it is arguable that the consumer has unconsciously accorded his/her trust to the "stranger."

The particular location in the home contributes to making the consumers more vulnerable toward this type of sales. Indeed, the home setting is the place where close, trusting, social relationships are carried out and where reciprocity easily manifests itself. As the phenomenon of the Tupperware parties (Clarke 1999) has clearly shown, many businesses have taken advantage of the social or relational aspect of these types of in-home sale contexts. The success of Tupperware parties, in which a host invites friends and neighbors for a product demonstration in his or her home, relies upon the social and interactional aspects of the sale. During such parties, consumers are continuously invited to experience the products ("yank it, bang it, jump on it," Clarke 1999, 79) and to interact among them, exchanging opinions and playing games. This synesthetic and interactive approach allows the consumer to fully experience the product giving up his/her apathy and resistance. As Clarke (1999, 86) observes, "sociality around purchasing reduced consumer resistance and made products like cosmetics acceptable among women."

Similar to Tupperware parties, in-home sales represent a kind of free trade zone that blurs "the boundaries between domesticity and commerce, work and leisure, friend and colleague, consumer and employee" (Clarke 1999, 108). In the in-home visits, consumers may perceive that the salesperson has done them a favor coming to their home, expending his or her time on a presentation, and offering them a special deal (as discussed later in this article in relation to an Australian Federal Court judgement). The relationship between the consumer and the salesperson may have become more of a personal transaction causing the social norm of reciprocity to be enhanced.

In addition, studies have found that individuals can establish "parasocial relationships" with, and develop feelings of friendship and intimacy for, "personae" such as soap opera regulars, news anchors, and talk-show hosts (Perse and Rubin 1987; Grant, Guthrie, and Ball-Rokeach 1991). Similarly, entering their home, the in-home salespeople try to establish a social relationship with consumers and build social capital, which eventually leads to higher levels of trust (Frenzen and Davis 1990).

The main distinguishing feature of IIHS is the "hook-up" phase, where an advance commitment predisposes the consumer to agree to the sales demonstration and, later, the purchase. It is arguable that, dissimilar to traditional door-to-door sales, which involve an on-the-spot commitment to allow the salesperson into the home, the IIHS selling context requires a greater level of commitment to the sales process. Consumers are most receptive to sales contacts initiated by themselves (by agreeing to disclose their contact details during the hook-up phase) than to a drop-in canvass call (Jolson 1972). As Jolson (1972) explains, there are three levels of consumer resistance to the salesman, i.e., at the door, just before or during the sales presentation, and after the price of the product has been disclosed. This occurs because prospects have to make three main decisions in the sale context (Jolson 1972, 91), viz.: (1) Will I admit this sales person to my home?; (2) Will I listen to his story?; (3) Will I buy this product or service?

In IIHS the first two questions have already been answered in the affirmative, increasing the likelihood that the presentation will lead to the sale. It is arguable that in the period between the telephone contact and the salesperson visit (one or two weeks), the consumer has already internalized and implicitly answered questions 1 and 2. In addition, he/she has already set aside any skepticism or reserve that he/she could have shown in the case of an unexpected visit of the salesperson. It is therefore arguable that two obstacles to the sale have already been removed in the IIHS, i.e., the admission in the house and the availability to listen to the salesperson's proposition. In IIHS the focus is therefore centered on the decision of buying/not buying the product. In addition, the consistency principle will work more effectively in IIHS than in UIHS because consumers, who have already implicitly complied with two requests by agreeing to the sale in the home and listening to the salesperson's story, will try to be consistent with their self-image of being welcoming and well-disposed, and will be compelled to "go along" with subsequent requests (Freedman and Fraser 1966).

Research Framework and Methodology

The empirical research consisted of a qualitative data collection method involving in-depth interviews with 23 consumers. This phase sought to explore, in depth, the sales process involved in selling in the home. Additionally, the interviews sought to ascertain underlying attitudes that consumers had toward the salesperson, and the sales process. Satisfaction (or not) with the actual product was not a consideration; instead any psychological factors that might moderate or mediate rational decision-making as a result of the sales process were examined. Interviewees had either signed up for maths software sold in the home, or had a maths software consultant visit them in the home and undertake the sales process.

A content analysis of a number of consumer blogs relating to education software products was also conducted. Clearly these would not be normally considered objective sources, but in the context of qualitative research and contemporary communication tools they are useful in assisting with triangulation of the data (Hookway 2008). Additional interviews were conducted with three former salespeople of this type of software, one of whom provided a script given to the sales staff to be used when undertaking in-home sales. These "texts" assisted to inform both the data collection and the data analysis, and provided a form of data triangulation resulting in a more reliable data set for analysis (Banister et al. 1994).

The data from all sources were coded manually, with two of the researchers reading through the material separately, and identifying recurring themes. Qualitative research tool NVivo was used to assist in the coding and storage of data. Initially, the analysis included open, axial, and selective coding to interpret and develop a descriptive narrative around the key themes.

Analysis

In this section, the key moments in the sales process are highlighted, while consumer responses are examined. Where appropriate, comments by consumers or former salespeople, or excerpts from the sales script, are incorporated to further explicate the findings. We demonstrate that the combined force of a number of factors in the sales process may lead consumers to make decisions that may not be in their best interests. Stepping through the typical IIHS process will allow the role of social persuasion techniques, consistency and their increased impact compared to store selling, to be explored.

It is clear from the analysis of data collected for this research that the sales process of IIHS of educational software is a subtle, incremental, and meticulous contrivance. A number of psychological effects are used in concert to frame the sale in a way that leads the consumer toward purchasing the educational software. Through the analysis of interviews with both salespeople and customers, as well as the analysis of the sales script, it was found that the sale process consists of a series of steps or phases, each of which employs different psychological effects in order to achieve a specific outcome. The sales process incorporates two pre-sale phases and four main sale phases, as highlighted in Figure 1 and explained below.

Pre-Sale: Phase I and II (Hook-up and Telephone Contact)

The IIHS of educational software programs often relies on soliciting an invitation to a consumer's house, usually through public places, and the solicitation attempts to conceal the true intent of the process. As shown in Figure 2, promotional materials to attract potential consumers do not mention the educational software itself, which will be at the center of the sale process. In contrast, they simply focus on the possibility of the "entrant" winning an electronic gaming machine that incorporates an educational element (Nintendo DS), which will give children "an incredible advantage at school." Parents who complete these promotional forms are under the impression that they are entering a competition and disclose their personal details in the hope of winning. Words such as "free" and "win" are emphasized in this promotional material in order to promote heuristic information processing and facilitate the disclosure of personal details. There is an absence of reference to the in-home sale process in this particular hook-up phase and the consumers are likely to be unaware that they will be contacted for another purpose than the competition that they have entered.

These forms conceal the true intent of the promotion through a connection with a particular well-known brand or product. The consumer is then contacted (usually by telephone) by a sales representative from the IIHS company and an appointment at the consumer's house is made. In this context, a smaller request (filling out an expression of interest form to be contacted about the software) is followed by the larger request (allowing a salesperson to visit his/her home) (Freedman and Fraser 1966). In these phases, the consistency principle (Festinger 1957; Heider 1958; Newcomb 1953) is likely to be a key determinant in decisionmaking.

Sale Phase I (Introduction)

The first phase of the sale process starts with the arrival of the company representative at the customer's home. In order to create a comfortable atmosphere, the salesperson breaks the ice by asking what are referred to in the salesperson's script as "warm-up questions." At this stage, it is critical to build rapport because, as the salespeople are taught in their training, everything will run smoothly if the likeability and similarity principles are at work. The likeability principle-which states that "people prefer to say yes to individuals they know, are similar to, and like" (Cialdini 2001, 23)--works best in conjunction with other psychological principles. The likeability principle can act to enhance the probability of compliance with a request because it arises when salient cues indicate that his/her interlocutor is the kind of person that a person would usually say yes to or agree with.

For instance, individuals are more willing to comply when requesters are dressed in a manner similar to them (Emswiller, Deaux and Willits 1971):

"It was a young guy that came, pretty professional, wearing my kind of thing, nice suit, briefcase and I thought it was a home loan guy." [interview: consumer 13]

... are physically attractive (Reingen and Kernan 1993):

"The person who came was quite a young lady, very attractive.... And we virtually signed up on the spot." [interview: consumer 5]

... and interact using first names (Garrity and Degelman 1990):

"He'd turn around and say "We think that Chantel (the daughter) needs this--because they're all in different categories, she needs the junior maths." [interview: consumer 7].

Finally, reciprocity, i.e., the "social interaction where movement of one party evokes compensating movement in some other party" (Houston and Gassenheimer 1987, 11), plays a critical role:

"You just sort of felt obligated that they've put their time into showing us so we just wanted to let them finish the presentation." [interview: consumer 1]

Sale Phase II (Educational Assessment and Parent Interview)

By this stage, the salesperson hopes to have achieved two objectives: that the parents like the salesperson (similarity and likeability heuristics) and have accepted his role as the playmaker (control):

"You make the kids trust you first ... you know 'What's your favourite sport? What do you want to be when you older?' That was a big one. You've probably heard this. 'What do you want to be when you are older?"' [interview: salesperson 2].

The salesperson then gets the children to undertake an educational assessment (test) and begins the second phase of the sale process, i.e., the educational assessment:

"And then you'd get them to sit down, and you'd sorta get a bit serious. And the first thing you'd do is ... you would take the kids through this sorta, like ... questionnaire. The goal of the questionnaire was to build the parents' concern about their kid's academic achievement... The first half of the presentation was to generate anxiety. The second half was to solve the anxiety." [interview: salesperson 2],

Anxiety and concern are stimulated as soon as children start struggling to solve the questions in the assessment:

"... And the idea behind is to build anxiety, right? And look concerned. 'OK, so what do you find difficult? Oh, I'm not very good at my times tables ... talking to the kids. Oh yeah, if you thought you were better at times tables, do you think that'd make you feel a bit more confident at school? You'd feel a bit better about going to school, wouldn't you?"' [interview: salesperson 1].

After the questionnaire/test, through a series of questions directed at the children, the salesperson attempts to build up the parents' hopes and desires concerning the children's academic achievement. Indeed, the salesperson attempts to create a rapport with the child by suggesting that he or she is empathetic with the child and parents' academic struggles:

"I just recall lines like, 'How do you feel your children are doing at school?' Along those lines, and 'Do you feel they are being left behind in the classroom? How often do you speak to the teacher about it? Has the teacher ever approached you?"' [interview: consumer 19]

Finally, at this stage, the salesperson's training is focused upon anticipating and deflecting questions and objections, and keeping control of the situation. Indeed, the sales process is a sequential process in which the salesperson builds mutual agreement (among the parents, the child, and the salesperson) around the inevitability of the situation, and "shuts down" any attempts to object to any statements. Consistency and commitment heuristics are the salesperson's best ally.

"The sales routine that we had was often referred to as a 'sheep paddock,' where you would go around shutting the gates as you went through your routine. So that at the end, the only gate left open was to buy." [interview: salesperson 1]

Sale Phase III and IV Purchase and Closing

At this stage, the salesperson's goal is to achieve a purchase and possibly a credit contract. By this time the salesperson is likely to have been at the consumer's house for an extended period (up to three hours) and the consumer is likely to be both physically and psychologically exhausted. By now, the consumer may have already experienced high levels of self-regulatory resource depletion (Fennis, Janssen, and Vohs 2009), and may be more passive (Baumeister et al. 1998) and less capable of rational processing, high-level calculation, and typical self-control.

Certain moods and attitudes are influenced by heuristic processing, e.g., anxiety, low self-efficacy (Bohner, Chaiken, and Hunyadi 1994). The internal need for consistency and reciprocity, along with the activation of other factors, such as scarcity, ego-depletion, anxiety, and endowment, may also distort the consumer's ability to scrutinize information and impede the decision-making process of the consumer (Russo et al. 2008). This combination of influences and others mentioned earlier may reduce the consumer's ability to make a well-thought-out decision.

Urgency is obtained through the scarcity effect (people judge rare products to be of high value or quality) and anticipated regret (Zeelenberg 1999). By describing the educational software as something unique, unusual, or difficult to obtain, using statements such as "We'll only be in the neighbourhood tonight" [interview: Salesmen 1], salesmen manage to evoke a sense of scarcity (Cialdini 1993). One of the first to mention the scarcity effect was Adam Smith (1937, 172) who stated that " ... the merit of an object, which is in any degree either useful or beautiful, is greatly enhanced by its scarcity, or by the great labor which it requires to collect any considerable quantity of it ...."

The scarcity effect is indeed related to commodity theory (Brock 1968), which suggests that "any commodity will be valued to the extent that it is unavailable" (Brock 1968, 246). Thus, scarcity is considered to be a heuristic (Brannon and Brock 2001) and a cue to value, such that people uncritically apply an implicit rule, "what is rare is good" (Lynn 1991; Cialdini 1993) or "what is scarce is extreme" (Ditto and Jemmott 1989). Perceived scarcity can lead to perceived value or utility of a good, generate pressure on customers, and construct a vivid representation in the mind of the consumer of future usage, by anticipating pleasure (Loewenstein 1987).

Marketers and advertisers are completely aware of and make extensive use of the scarcity effect. Cialdini (1987), for instance, suggests that the scarcity heuristic is often used by marketers to increase utility, e.g., through the use of "limited edition" labels. Moreover, Szybillo (1975) found that perceptions of scarcity improved the desirability of fashion clothing; while Verhallen (1982) registered greater preferences toward recipe books perceived as scarce due to market forces.

In the in-home sale context, the scarcity effect is induced in different ways. First, by saying that he/she is very busy, the seller provides the product/service he/she is offering with an aura of uniqueness and depicts it as a privileged offer. In addition, scarcity relates to time because the offer is limited and has a clear deadline:

They [said that they] were very busy. They [said that they] would see whether they could schedule us. [interview: consumer 9]

Second, scarcity refers to the privilege accorded to the consumers (only a certain number of people have been offered the credit increase):

As I mentioned before, we work area by area. In each area we take no more than 100 enrolments. Just like a school, once we reach our 100 quota, we close enrolments and move to the next area. So we had to work out a criteria to sell the 100 enrolments. It would be unfair to do it by socio-economic class ... the most important criteria for us are the parents. That's why I conducted the interview earlier. [sales script]

In addition, scarcity is also related to the product/service itself. The salesperson emphasizes that the family was lucky enough to be selected for a presentation in that only a certain number of enrollments are allowed:

The salesman said, that the offer won't be there so you must sign tonight and it's worth this much money, an extra thousand dollars or whatever for nothing and it just went on and on and on about what a fantastic deal it was for tonight, it had to be tonight, [interview: consumer 21]

He said to me;--oh no worries I've already sold a few packages this week and they're going out the door. Pretty much tonight's the final offer, [interview: consumer 23]

Thus, scarcity is critical in this particular sales process because it acts as a cue, thus favoring heuristic, as opposed to systematic, information processing (Petty and Cacioppo 1981, 1986).

POLICY FRAMEWORK OF INVITED IN-HOME SALES

The findings of this research indicate that there may be a need for specific consumer protection measures to address the problems of high-pressure IIHS. As discussed, different processes may be occurring during the IIHS consumer decision-making process than in the traditional transactional setting. As such, marketers, ethicists, policymakers, and academicians should consider whether this particular setting provides a "fair" environment for optimal decision-making.

In particular, the process aims to create a need for the product, and then urgency for an immediate purchase. The process starts with the engaging of similarity and likeability principles, followed by the activating of the principles of consistency, reciprocity, scarcity, and anticipated regret. The interaction of each of these psychological principles is critical in exerting pressure on consumers to purchase. The effects are incremental, cumulative, and the result of the carefully constructed series of phases outlined.

While there is general recognition of the disadvantages faced by consumers in relation to unsolicited pressure sales, this research illustrates that the unique context of IIHS results in a high degree of consumer vulnerability. This is predominantly due to the fact that the pressure in the sales situation arises from an invitation from the consumer for a salesperson (or "educational assessor") to visit his/her home where the consumer may be more vulnerable to the pressure techniques. The fact that the consumer has "solicited" the visit does not necessarily protect the consumer from the pressure-selling situation. Further, the fact that in many cases the invitation has been solicited partially through a deception (in the case of this study, the promise of an educational assessment), we argue that consumer protections need to be considered in this context.

Problematically, the consumer protection framework for invited in-home sales in most countries appears to be ignorant of these important contextual factors. A review of several countries' consumer policy (Federal Trade Commission ; Micklitz, Monazzahian, and Robler 1999; United Kingdom, 2008b; Commonwealth of Australia 2010) reveals that IIHS are sometimes explicitly excluded from regulation, and further suggests that the consumer is frequently viewed as a rational being capable of weighting all the options available to him/her to make an optimal decision (Schmidt and Spreng 1996; Amir et al. 2005; Shafir 2005; Australian Government Productivity Commission 2007).

This is so despite the assumptions of rational choice theory having been challenged for several decades (Olshavsky and Granbois 1979; Tversky and Kahneman 1992; Trope and Liberman 2010). Consumer behavior research has shown that decision-making does not always occur in a methodical and rational way. For instance, in their seminal article, "Consumer Decision Making: Fact or Fiction?," Olshavsky and Granbois (1979, 98) provided support for the argument that purchases can occur out of necessity; can be derived from culturally mandated lifestyles or from interlocked purchases; may reflect preferences acquired in early childhood; can result from simple conformity to group norms or from imitation of others; can be made exclusively on recommendations from personal or nonpersonal sources, and can even occur on a random or superficial basis.

Nonetheless, the IIF1S process, and how policymakers view its influence on consumer behavior, has considerable variability in legislatures around the world. For the purposes of establishing the specific policy context, a brief review of consumer protection policy related to personal selling and IIHS in Australia, Europe, the United States, and the United Kingdom follows. Table 1 provides a summary comparison between consumer protection of door-to-door sales and invited door-to-door sales (or IIHS) across the countries discussed.

In Australia, all state and territory governments have recently agreed to a new consumer policy framework, comprising a single national consumer law and streamlined enforcement arrangements. In 2010 all states adopted the Australian Consumer Law (ACL) in which personal selling is addressed. In Chapter 3, Part 3-2, Division 2 of the ACL, unsolicited consumer agreements provide increased consumer protection in the area of door-to-door selling (Commonwealth of Australia 2010). This protection specifically excludes, under section 61 (s), the situation where the consumers have "invited the dealer to approach or telephone them for the purpose of entering into negotiations to supply goods or services," which is a reduction in protections for consumers from earlier consumer protection legislation in this context.

In Europe, the Directive 85/577/EEC (Doorstep Selling Directive) was constituted in 1985 "to protect the consumer in respect of contracts negotiated away from business premises" (Micklitz, Monazzahian, and Robler 1999). However, under the Directive member states can exclude contracts that have been concluded during a visit for which the consumer has made an express request. Article 1 states that the directive applies to "contracts under which a trader supplies goods or services to a consumer and which are concluded during an excursion organized by the trader away from his business premises, or during a visit by a trader (1) to the consumer's home or to that of another consumer; (2) to the consumer's place of work; where the visit does not take place at the express request of the consumer" (Micklitz, Monazzahian, and Robler 1999).

A summary table of the consumer protection policy related to doorstep selling in five European countries presented in Table 2 illustrates the differences across the countries. On the basis of this information, it is evident how different applications of the directive lead to different degrees of consumer protection. It is arguable that countries such as France and Italy offer more thorough protection of consumers by not distinguishing between contracts concluded during a visit for which the consumer has requested, and contracts concluded during an unexpected visit. Countries such as Denmark, however, make it very difficult for the consumer to cancel the contract if he or she has personally applied for a visit at home. In this way, the invitation to the home would become a form of justification for avoiding the regulation in part.

In the United States, Title 61 Part 429 of the Code of Federal Regulations regulates consumer protection from deceptive sales tactics and high-pressure sales pitches in their homes (Federal Trade Commission, FTC). The scope of the regulation is extensive in that it applies to small sales of goods or services of $25 or more, occurring anywhere other than the seller's principle place of business. It applies to any "door-to-door" sale, which is broadly defined as "a sale, lease or rental of consumer goods or services with a purchase price of $25 or more, whether under single or multiple contracts, in which the seller or his representative personally solicits the sale, including those in response to or following an invitation by the buyer, and the buyer's agreement or offer to purchase is made at a place other than the place of business of the seller." (1) Based on this federal regulation, US state governments have developed their own statutes governing door-to-door contracts and customers' rescission rights. The FTC guarantees the states a degree of freedom so long as their statutes do not directly contravene the regulation. Thus, some states may give consumers greater rights than those provided by the FTC regulation (Grimes 1996). For instance, in some states the cancelation period does not begin until, and unless, the seller gives both oral and written notice of the buyer's right to cancel. Therefore, if a distributor forgets to orally inform the buyer of his cancelation right, the buyer could technically argue for rescission at any time after his purchase. Some states require different notification and/or rescission language. A few states give a buyer a longer period in which to rescind the contract (Grimes 1996).

Albeit broader in scope than that of the EU, it could be argued that the US regulation relies upon the mainstream economic axiom that the consumer, endowed with perfect knowledge as to the market, rationally makes his or her choices taking into account all the risks involved. The US regulation assumes that the consumer can easily initiate a withdrawal during the cancelation period and does not consider that such an action requires considerable cognitive effort on the part of the consumer who must reject their previous commitments and decisions (Baumeister, Vohs, and Tice 2007; Vohs, Baumeister, and Ciarocco 2005; Baumeister, Muraven, and Tice 2000; Baumeister et al. 1998). That is, no mention is made as to psychological risks potentially implicated in the IHHS process.

In the United Kingdom, the Cancellation of Contracts made in a Consumer's Home or Place of Work, etc. Regulations cover contracts with a total payment of more than 35[pounds sterling] that are made during either solicited or unsolicited visits by traders (United Kingdom 2008b). Similar to the US regulations, these protection measures are broad in scope, but do not take into account the psychological risks that may be associated with IHHS. Additionally, however, the UK Unfair Trading Regulations specifically stipulates the notion of "unfairness" in consumer transactions (United Kingdom 2008a). Under Regulation Five, a contractual term is defined as unfair if, "contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of the consumer." This notion of fairness being considered in terms of the detriment to consumers--any consumers--and recognition of a potential imbalance of power that a consumer may possess in a commercial transaction is somewhat unique in consumer legislation.

This overview paints a picture of the differing levels of consumer protection currently provided under legislation in various countries. The summary comparison table shows that consumers in only around half the countries considered have some level of protection in the case of invited door-to-door sales. Additionally, even though some countries have protective measures that cover "solicited" or "invited" sales visits, they do not incorporate elements of psychology and behavioral economics into their regulations. Instead, much consumer protection policy continues to be based on the premise that the consumer makes rational decisions based on a careful assessment of all possible information.

At its core, policy must be grounded on a more realistic view of the individual, as an agent endowed with imperfect knowledge of factors/risks involved and subjected to a myriad of potentially influential stimuli--beyond price or financial considerations--entering his or her decision-making process and interpretation of reality. (2) The next section of the article provides policy recommendations for regulating IIHS based upon these principles.

POLICY RECOMMENDATIONS

The problems related to high-pressure IIHS appear to arise from a combination of factors. When considering consumer protection in this context, notions of vulnerability need to be considered more broadly and policies need to be designed to tackle vulnerability at earlier stages, as once a consumer has made a "bad" decision it can be difficult to rectify (Micklitz, Monazzahian, and Robler 1999).

For example, in the context of IIHS, a traditional "cooling-off' period (where the consumer signs an agreement, but must cancel the agreement within a certain time-frame) may not be adequate. This is because a cancelation requires cognitive effort for the consumer to initiate the withdrawal, resulting in a rejection of previous choices, and high ego costs (Baumeister, Vohs, and Tice 2007). This could be solved by a law that allows consumers to make a lesser form of commitment (e.g., "I am interested"), but requires that they are given a period of one to three days to formally reinforce that commitment by contacting the sales company to advise that they wish to "go ahead"--what we have termed a "double opt-in" clause. In this context, it is important that the consumer contacts the sales company, as opposed to the sales company contacting the consumer, because the consumer will be able to make a decision without duress, as he/she has initiated the contact.

Having a double opt-in gives consumers the opportunity to consider and confirm their decision after the sales process has taken place in the home. This provides a gap in time after the IIHS, where the consumer decision is likely to have been influenced by the high-pressure context or persuasive sales techniques discussed, and the final "go ahead decision. In addition, this gap provides an opportunity for the consumers to "test" their decision-making with a trusted source (e.g., partner) allowing a more considered approach. This is recommended because the consumers influenced by a need to reciprocate (e.g., for the time and effort the sales person has put into the IIHS demonstration) may not make the same decision if they had time after the sales process to further consider their decision. The need to reciprocate dissipates quickly (Burger et al. 1997), and thus is not likely to affect responses a day or two after the initial request.

Additionally, if the salesperson has portrayed the product as scarce because the offer is limited or because the salesperson has chosen them for the sales demonstration, the consumers put on the spot may use this scarcity as a heuristic in their purchase decision. In the situation where the consumers must opt-in a second time after a designated period, they may be able to make a decision without this psychological duress.

Requiring the salesperson to get written consent to continue after the first hour, and every half hour later, gives the consumers an opportunity to opt out of the sales process. The repetition of this process provides the consumers with a reminder that they are not obliged to continue. This reminder may help if the consumers are feeling pressure to continue with the sales demonstration after inviting the salesperson into their home. This requirement would go some way to balance out a selling situation that appears to be currently weighted toward the seller, and thus failing the fairness test discussed. Although, at a practical level, this may be difficult to enforce within the home, the consumers will have a form of redress in the courts if they are able to show that this opportunity was not afforded to them during the sales process.

The UK notion of "unfairness" might also be applied in the context of IIHS when psychological factors or other processes mean a consumer is vulnerable and suffers some form of detriment. Processes inherent to this type of personal selling may be seen to be weighted toward the seller and thereby failing the fairness test. Guidance on the UK Directive indicates that a number of factors can be taken into consideration in determining whether a practice is unfair, including whether the consumer might be misled, and whether the practice is likely to materially distort the economic behavior of the consumer with regard to the product (United Kingdom 2008a). When examining IIHS under the United Kingdom fairness test (United Kingdom 2008a), a number of factors contribute to the IIHS practices being unfair, including the misleading use of terms such as "Institute" (used by at least three promoters), and "educational assessment," combined with the selling techniques, the period in the home, and pressure to sign immediately.

The fairness test makes it possible to consider each case individually so that some form of precedent can be established in court. For example, the European Directive 2005/29/EC defines a practice as unfair if it materially distorts the economic behavior of consumers' and impairs the consumer's ability to make an informed decision. It is arguable that the fairness test, therefore, takes into account the particular circumstances of the IIHS, allows for flexibility and takes into consideration the bounded rationality of consumers.

CONCLUSION

It is arguable that public policy in many countries does not appropriately address the complex issue of consumer vulnerability. For example, the Australian Competition and Consumer Commission definition of "disadvantaged or vulnerable consumers" focuses on groups of consumers, such as those that have a low income or are from a non-English speaking background (Australian Competition and Consumer Commission 2013). Similarly, British law does not currently have a consistent approach to the treatment of vulnerable consumers, and, like Australian law, assumes that external factors give rise to vulnerability, e.g., people with low-incomes (Micklitz, Monazzahian, and Robler 1999). Definitions that are limited in this way fail to consider consumer vulnerability in a holistic manner that incorporates transient vulnerability or vulnerability due to social persuasion techniques (Baker, Gentry, and Rittenburg 2005).

In particular, policymakers may consider the value of extending their conceptualization of vulnerability beyond typical and predominantly "observable" consumer demographics such as age, disability, race, or ethnicity. In a review of consumer vulnerability research, Baker, Gentry, and Rittenburg (2005) noted that the characteristics of individuals should not be the sole basis on which to define consumer vulnerability. Indeed, any consumers, not just those of a certain demographic or those with a specific disability, can experience loss of utility because of unethical means of marketing (e.g., Sprott and Miyazaki 2002).

It might also be useful in recognizing that consumer vulnerability does not have to be enduring or binary (Baker, Gentry, and Rittenburg 2005), and can be argued to rise from an interaction of factors rather than a single individual characteristic. An examination of the vulnerability of consumers in specific selling situations through an alternative framing of vulnerability allows policymakers to readily identify public policy measures that might facilitate consumer protection. Additionally, it might be preferable to consider how consumer vulnerability can be tackled at earlier stages, as once a consumer has made a "bad" decision it can be difficult to rectify (Micklitz, Monazzahian, and Robler 1999). Policy that takes a more comprehensive perspective of the vulnerable consumer and is holistic and multi-dimensional should include internal factors such as psychological processes and thus be more proactive in nature.

Finally, it has been speculated that a state-based view of consumer vulnerability assumes consumer vulnerability is triggered by factors external to the consumer and this creates a reactive stance for public policymakers (Commuri and Ekici 2008). Debate in this field contends that policy should be directed toward facilitating individual empowerment (Moschis, Mosteller, and Fatt 2011), focused on actual vulnerability (rather than perceived vulnerability) and be consumer driven. We argue that policy that places the vulnerable consumer at the center of deliberations provides the best chance of facilitating fairness.

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DOI:10.1111/joca.12027

(1.) Recently, the US FTC has decided to seek public comment on a proposed increase in the exempted dollar amount identified in section 429.0(a) of the Rule from $25 to $130, and is discussed later in the paper in relation to future policy directions.

(2.) While it is problematic to try to understand fully the rationale for details contained within particular legislation, commentary from a legal judgment related to this particular element of the Australian Consumer Law (2010) offers some insight on why IIHS might receive less protection in this particular context: Cl. 22. There are other respects in which the strength of the bargaining positions of the householder's [the consumer] and the respondent's [the salesperson] representatives may also be considered. After the conduct of a maintenance check on the householder's existing vacuum cleaner, it would have cost her nothing to send the representative on his way. But the housecall itself, and the time spent carrying out the maintenance check, were to the representative's account in the sense that, if a sale did not ensue, he would have spent much of his time, and incurred the relevant traveling costs, for no return. The longer the conversation lasted, the more the representative stood to lose (in productive time) if ultimately he were unable to sell the new machine to the householder. If a transaction is looked at it in this way, there is a sense in which the representative's bargaining position was somewhat weaker than that of the householder. (Federal Court of Australia 2013). In his judgment, Australian Federal Court Justice Jessup approaches the analysis of the sales process in a psychologically rational and utilitarian frame. Indeed, His Honor implies that since the sale takes place in the home, the consumer has an increased advantage over the salesperson. It is plausible that when constructing legislation in some jurisdictions, lawmakers might have only considered what goes on "in the home" as the antecedent to the purchase (or not) of a product sold in the home.

Paul Harrison (paul.harrison@deakin.edu.au) is Senior Lecturer at Deakin University. Marta Massi (martamassi@yahoo.it) is a doctoral student at Carleton University and a research associate at Deakin University. Kathryn Chalmers (kjchalmers@gmail.com) is a research associate at Deakin University.

TABLE 1

Comparison of Protections Between Door-to-Door and
Invited In-Home Sales

                      Consumer        Consumer Protected
                  Protected During      During Invited
Country          Door-to-Door Sales   Door-to-Door Sales

Australia             [check]                 X
Austria               [check]                 X
Denmark               [check]                 X
France                [check]              [check]
Germany               [check]                 X
Italy                 [check]              [check]
United Kingdom        [check]              [check]
United States         [check]              [check]

TABLE 2

Consumer Protection Policy in Relation to Doorstop Selling in Europe

Country/Region   Protection Provided

Italy            Consumer is protected even if they
                 invite the trader and conclude a
                 contract concerning exactly the
                 products for which they had
                 asked for a visit. Law 173/2005
                 forces all in-home sellers to wear
                 and show an identification card.

France           Consumer is protected even if they
                 invite the trader and conclude a
                 contract concerning exactly the
                 products for which they had
                 asked for a visit.

Austria

Denmark          In Denmark, door-to-door selling
                 without prior consumer request is
                 forbidden under the Consumer
                 Contracts Act, although this does
                 not apply to selling of books,
                 newspaper subscriptions, and
                 insurance.

Germany

Country/Region   Relevant Exclusions

Italy            Nil

France           Nil

Austria          The European Union directive does
                 not apply to any contracts
                 concluded on a visit requested or
                 initiated by the consumer in
                 Austria.

Denmark          The directive, along with the right
                 of cancelation, is not applicable
                 whether the consumer has
                 personally asked for a visit at
                 home. However, in the situation
                 where the consumer has asked for
                 the visit via the telephone or in
                 writing then the directive is
                 applicable.

Germany          The directive is not applied to visits
                 which have been invited by the
                 consumer.

FIGURE 1

The Invited In-Home Sales Process

PHASES                      EXAMPLES (educational software)

PRESALE

Hook up (5-10 min.)         Children or parents are offered a gift
Appeal to individuals       or a competition form in shopping
(through the offer of a     malls or through intermediary
gift) to get their          advertising (e.g., fast food store or
contact details             school newsletter)

Telephone contact           Parents are contacted by a call center
Approximately 1-2 weeks     and asked if they would like to have
after initial hook-up,      their child's educational abilities
individuals are contacted   assessed. An appointment is made, with
by a call center to make    the telephone representative insisting
an appointment              that all parents be present when the
                            assessment and demonstration
                            take place.

SALE (in the consumer's
home)

Phase l: Introduction       The salesperson employs the
(5 min.) The salesperson    likeability and similarity principles.
arrives at the home of      He/she interacts by asking warm-up
the consumers. The          questions and calling the children
objective of this stage     by their first names.
is to build rapport and
"take control" of the
situation

Phase II: Interview         The salesperson conducts a parent
(1-3 h) The salesperson     interview while the child undertakes
anticipates and deflects    an educational assessment. He/she
questions and objections,   discusses issues around the child's
in order to keep control    educational achievements and the
of the situation.           educational system in general.
                            Salesperson corrects educational
                            assessment udertaken by child.

Phase III: Sale (15 min.)   The salesperson does not discuss
The salesperson             specific pricing and introduces
introduces the product      option of financial loan if parents
and explains how this       are concerned about the cost
will benefit the            of the software.
consumers.

Phase IV: Closing the       The salesperson describes the
sale (5 min.) The           educational software as something
salesperson provides the    unique, unusual or difficult to obtain
contract, highlights the    in order to evoke a sense of scarcity
weekly payments and asks    and close the sale.
consumers to sign it.
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Article Details
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Title Annotation:ORIGINAL RESEARCH
Author:Harrison, Paul; Massi, Marta; Chalmers, Kathryn
Publication:Journal of Consumer Affairs
Article Type:Report
Geographic Code:1USA
Date:Mar 22, 2014
Words:10851
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