Consumers Abused by Default Options

Beware of "Free" Product Deals!

We should be sensitive to the ugly reality that there are many consumers who simply do not comprehend all the consequences of product default options. The principal example being elderly and ill Americans that may have some reduced intellectual or cognitive capabilities. Younger consumers and overly busy ones can also fail to appreciate default options. Millions of people are vulnerable to slick "free" offers that cleverly hide or disguise costly default options.

Governments can also use default options. The power of default options was recently illustrated by a study of how the rates of organ donation consent vary among nations. In the US where the default option is a negative decision (you must positively declare your organ donation consent), the rate is 28 percent and is somewhat similar in other countries using that default option, including 17 percent in the United Kingdom and 12 percent in Germany. But in nations where the default option is a positive decision for organ donation the rates are consistently very high, including nearly 100 percent in France, Austria and Hungry. This huge national difference was explained by University of Chicago behavioral economist Richard Thaler: "God made us lazy and busy and prone to inertia."

Another example pertains to employers. When new workers are told that retirement accounts will automatically be started for them, unless they intentionally opt out (a positive default option), most gladly sign up. In contrast, if new hires are informed that such accounts will not be started unless they opt in (a negative default option), most do not sign up.

These two examples show the positive use of default options for the good of people and society.

This is not the case for consumer products.

People should always question "free" offers. Always ask yourself "Is there a costly default choice that will hit me?" Such a default choice is really no choice at all. Companies should not be free to deny us of real free choice when it comes to purchases.

I would like to see a federal consumer protection law that makes it illegal for all companies to use no-action default options that obligate consumers for future purchase. And so should you.