On 14 November 2024 the Court of Justice of the European Union (CJEU) delivered a judgment addressing a cornerstone in European consumer protection law: the pivotal concept of the "average consumer". The case arose from a dispute involving Compass Banca's commercial practices, where bundled personal loans and insurance policies raised questions about consumer deception. The Italian Consiglio di Stato posed preliminary questions to the CJEU, most notably asking whether the "average consumer" standard should incorporate insights from behavioral economics, particularly cognitive biases such as framing effects, which can influence decision-making. The CJEU's judgment does not revolutionize European consumer protection law, but it does set the stage for heightened scrutiny of how modern marketing strategies may manipulate consumer behavior.
Clarifying the "average consumer"
The judgment reaffirms the traditional definition of the "average consumer" as a fictive, rational actor—a homo economicus—who is "reasonably informed, observant, and circumspect". This figure serves as an objective benchmark for assessing commercial practices across member states. However, the CJEU acknowledges that consumer decisions are often influenced by contextual factors, including cognitive biases. These insights do not fundamentally alter the "average consumer" benchmark. However, the CJEU does recognize that cognitive biases can influence consumer behavior, and holds that national courts must consider such biases when assessing the presumed expectations of the average consumer. Crucially, the judgment clarifies that not every risk of cognitive bias caused by a commercial practice will necessarily disrupt the behavior of the average consumer. Instead, courts must establish that, under the specific circumstances of a case, the practice in question could materially distort the behavior of a "reasonably informed, observant, and circumspect" consumer.
The bottom line: while the "average consumer" remains a rational, fictive construct, the CJEU underscores the obligation of national judges to incorporate demonstrably established cognitive distortions into their assessments.
Implications of the judgment
Although the judgment does not radically overhaul the EU "average consumer" concept, it enhances the flexibility and responsibility of national courts in addressing contemporary consumer behavior. Courts must balance the abstract idea of a rational average consumer with the reality of cognitive biases, ensuring that protections remain robust against sophisticated marketing tactics.
For businesses, this judgment underscores the importance of transparency. Practices that exploit cognitive biases, even subtly, risk being classified as misleading if they are shown to distort consumer autonomy in specific cases. For regulators, self-regulatory bodies and courts, the judgment opens the door to a more nuanced application of consumer protection rules and regulations, tailored to the complexities of modern markets.
A broader perspective
This ruling does not simply reaffirm the "average consumer" as a rational actor but acknowledges the intricate dynamics of human behavior in commercial contexts. The question moving forward is whether this balance between a theoretical benchmark and real-world influences will be enough to adequately safeguard consumers in an era of increasingly sophisticated marketing.
While the "average consumer" remains a rational, fictive construct, the CJEU underscores the obligation of national judges to incorporate demonstrably established cognitive distortions into their assessments
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