84. Requiring businesses to provide complete product information to customers
promotes various consumer interests, but at the same time imposes burdens on
businesses, government, and taxpayers. On balance, the burdens outweigh the benefits,
at least in most cases.
A threshold problem with disclosure requirements is that of determining what
constitutes complete information. Admittedly, legislating disclosure requirements
clarifies the duties of business and the rights of consumers. Yet determining what
requirements are fair in all cases is problematic. Should it suffice to list ingredients,
instructions, and intended uses, or should customers also be informed of precise
specifications, potential risks, and results of tests measuring a products effectiveness
vis-a-vis competing products? A closely related problem is that determining and
enforcing disclosure standards necessarily involves government regulation, thereby
adding to the ultimate cost to the consumer by way of higher taxes. Finally, failure to
comply may result in regulatory fines, a cost that may either have a chilling effect on
product innovation or be passed on to the customers in the form of higher prices. Either
result operates to the detriment of the consumer, the very party whom the regulations
are designed to protect.
These burdens must be weighed against the interest in protecting consumers
against fraud and undue health and safety hazards. To assume that businesses will
voluntarily disclose negative product information ignores the fact that businesses are
motivated by profit, not by public interest concerns. However, consumers today have
ready access to many consumer-protection resources, and may not need the protection
of government regulation. Although health and safety concerns are especially
compelling in the case of products that are inherently dangerous―power tools,
recreational equipment, and the like―or new and relatively untested products,
especially pharmaceuticals, narrow exceptions can always be carved out for these
products.
In conclusion, while stringent disclosure requirements may be appropriate for
certain products, businesses and consumers alike are generally better off without the
burdens imposed by requiring that businesses provide complete product information to
all customers.
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