Abstract
Crowdsourced regulation has been discussed to date by legal and social science scholars mainly in the context of legislation and rulemaking, without paying sufficient attention to non-legislative regulatory functions. This article provides a richer theory of crowdsourced regulation which extends to all regulatory functions, focusing on monitoring and enforcement. Regulatory agencies worldwide harness the power of the public using digital platforms to carry out monitoring and enforcement tasks in regulated markets and sectors. For example, agencies operate online complaint databases that invite the public to report mistreatment of consumers and environmental nuisances by regulated firms. Agencies also publish information concerning corporate misbehavior to publicly shame companies into compliance. Crowdsourcing regulatory monitoring and enforcement can help minimize some prominent ailments of the regulatory task, such as poor resources, diminishing deterrence, declining legitimacy, and capture. It can also promote goals and values such as public participation, increased transparency, public trust in regulators, administrative efficiency, and effectiveness in achieving regulatory objectives. However, crowdsourcing regulatory monitoring and enforcement is subject to a new set of legal, administrative, and democratic failures that need to be acknowledged and addressed. The article develops a theory of crowdsourced regulation that supplies justifications and rationales for crowdsourced regulatory monitoring and enforcement, points out its main pitfalls, and normatively evaluates law and policy implications.
Introduction
Regulatory agencies worldwide harness the power of the public using digital platforms to carry out monitoring and enforcement tasks in regulated markets. For example, agencies operate online complaint databases that invite the public to report mistreatment of consumers and environmental nuisances by regulated firms. These firms can then be targeted for inquiries, inspections, and enforcement actions. Agencies also publish reports, announcements, rankings, and scores concerning corporate noncompliance with legal or social norms as an enforcement tool that relies on public shaming. The mechanism of regulatory shaming aims to pressure firms to improve performance through the threat of negative public response, such as condemnation and boycott.
Crowdsourcing regulatory mechanisms of monitoring and enforcing are gaining momentum in various fields and jurisdictions. For example, the U.S. Consumer Financial Protection Bureau (CFPB) operates a consumer complaint database that contains over three million complaints on financial products and services.[1] Similarly, the Israeli Capital Market, Insurance and Savings Authority ranks companies based, among other indicators, on customer complaints and customer satisfaction surveys performed by the Authority.[2] In another area of regulation, the Irish Environmental Protection Agency (EPA) ranks companies based on complaints, incidents, and non-compliance, and publishes the list on its websites.[3] In the field of worker safety, the U.S. Occupational Safety and Health Administration (OSHA) regularly tweets about corporate violations that have resulted in employee illness, injury, or death, and includes condemning regulatory statements that name the responsible companies as part of its “regulation by shaming” policy.[4]
Generally, crowdsourcing is a mechanism that harnesses the wisdom of the crowd, mostly through digital platforms. This relatively new term, which joins “crowd” and “outsourcing,” can be defined as a “distributed online problem-solving and production model that leverages the collective intelligence of online communities to serve specific organizational goals.”[5] It is considered a vehicle for improved outcomes in economy and society that entails fairly low costs.[6] Some have underscored the essence of crowdsourcing as giving an undefined set of people the opportunity to self-select and fulfil a task without any formal contractual commitment.[7]
Crowdsourcing is increasingly common in private spheres, in areas such as advancing knowledge, research, and science, collecting information and news, and software development.[8] Crowdsourcing is also common in public spheres and government operations such as crime solving,[9] political campaigns,[10] policymaking,[11] and legislation.[12] This article investigates a specific type of governmental crowdsourcing: the crowdsourcing of administrative regulation. For the purpose of this article, the term “regulation” is defined as any activity performed by an administrative authority in the executive branch of government that aims to control or influence the behavior of corporations and other private, non-governmental organizations that operate in markets and industry sectors.
The theory and practice of governmental regulation generally point to three main stages or pillars of regulation: rulemaking, monitoring for compliance, and enforcement,[13] which involve legislative, executive, and judicial functions, respectively, of regulatory agencies. Legal and social science scholarship of regulatory crowdsourcing—a small but growing literature—has so far focused on legislative functions, such as public commenting on new reforms, laws, and regulations.[14] This article provides a richer theory of crowdsourced regulation which extends to all key regulatory functions, focusing on monitoring and enforcement. A fuller account of the crowdsourcing of regulation, which includes non-legislative functions, can shed light on underexplored aspects of administrative regulation.
The present article also contributes to the understanding of crowdsourcing more generally. Whereas crowdsourcing is usually discussed in non-governmental, private, and commercial contexts, this article emphasizes the contemporary aspects of governmental crowdsourcing by shedding light on crowdsourcing the regulation of firms. This type of crowdsourcing functions not only as a force multiplier but as a unique knowledge-producing, process-driving instrument; it does not aim only to solve problems but also to detect them; it does not operate as a one-time problem-solving event but rather as an ongoing regulatory process; it does not focus on advancing the human knowledge or serving financial interests, but rather on promoting public goals; it is not initiated by firms, but corporate activities are the subject of crowdsourced regulation.
The need to theorize and normatively evaluate crowdsourced regulation from a broader perspective is of special relevance considering the prevalence of the practice. Regulators are increasingly using the “crowd” to monitor corporate compliance and corporate performance more generally, and to enforce compliance with legal and social norms. Many agencies currently develop such modes of regulation as part of their regulatory toolkit and expand existing crowdsourced regulatory frameworks. For example, the CFPB complaint database was expanded by the agency in 2013 from handling credit card complaints to complaints on various other financial products.[15] Environmental agencies worldwide also expand their use of regulatory shaming from passively publicizing ranking of companies on the website of the regulator to frequently posting social media posts that target specific firms,[16] and from eco-shaming firms to climate-shaming them as well.[17] Many financial regulators have recently introduced public ratings and rankings of firms, based, among others, on customer complaints and customer satisfaction surveys.[18] Regulators in various fields and jurisdictions are also expanding their shaming tactics in social media platforms, using pictures, condemning statements and frequent updates on enforcement actions.[19]
Importantly, crowdsourcing regulatory monitoring and enforcement can help minimize some prominent ailments of the regulatory task, such as poor resources, diminishing deterrence, capture, and declining legitimacy. It can also promote objectives and values such as public participation in regulation, increased transparency and access to regulatory information, public trust in regulators, administrative efficiency, and effectiveness in achieving regulatory goals. However, it is also subject to a new set of legal, administrative, and democratic failures that need to be acknowledged and addressed.
The article develops a theory of crowdsourced regulation that provides conceptualization, justifications, and rationales for crowdsourced regulatory monitoring and enforcement, points out its main pitfalls, and normatively evaluates its law and policy implications. The discussion is based on law and regulation scholarship, regulatory shaming literature, and crowdsourcing law and policy literature. The main argument set forth is that under the right circumstance, detailed in the article,[20] crowdsourced regulation can and should effectively and fairly be harnessed by regulators, carrying the potential not only to address some prominent ailments of governmental monitoring and enforcement but also to offer a substantial leap in regulatory capabilities, an improvement in regulatory relations with stakeholders, a significant widening of regulatory justifications and an important adjustment in regulatory goals.
The article is structured as follows: Part I presents the conceptual framework of crowdsourced regulatory monitoring and enforcement, revealing the unique characteristics of crowdsourced regulation and setting the scene for the normative analysis that follows; Part II discusses the rationales and justifications for crowdsourced regulatory monitoring and enforcement alongside the perils and challenges raised by this nascent approach; Part III normatively evaluates the practice from a law and policy perspective, paving the way for the future development of crowdsourced regulation by providing a set of suggested conditions, limitations, and directions for the practice. The final part concludes.
I Conceptual Framework of Crowdsourced Regulatory Monitoring and Enforcement
This part sketches the conceptual framework of crowdsourced regulation, focusing on monitoring and enforcement activities. The discussion outlines the key features of the crowdsourced regulation model, distinguishing it from other, closely related modes of regulation and governance, such as government outsourcing and private and commercial mechanisms of corporate monitoring and enforcement, as well as from classic governmental regulation models (primarily command-and-control). The unique features of crowdsourced regulation outlined and illustrated in this part have important and distinctive normative implications that are different from the normative assessment of other regulatory tools and approaches. These are discussed in Part III.
The crowdsourced regulatory monitoring and enforcement style is quite different from classic styles of regulatory monitoring and enforcement. Usually, regulators rely on their personnel to locate risks in markets, identify market failures, devise appropriate regulatory approaches and tactics for response, and in appropriate cases, take action. For example, government employees perform on-site inspections and reviews in places of business and issue citations when violations are detected.[21] They also review reports submitted to the regulator as part of the disclosure and reporting obligations of firms, for example, financial reports submitted by publicly traded firms and occupational safety reports submitted by companies on significant injuries and deaths.[22] The professional staff of administrative regulatory bodies also evaluate which type of firms and activities should be prioritized for regulation (by rulemaking, monitoring, and enforcement), based on the level of risk that they pose to public interest. Finally, regulators impose hard law administrative, civil, and criminal sanctions on non-compliant firms, for example, by means of fines, civil penalties, decrees, and license revocation, which often involve litigation. Softer forms of enforcement are also available for government regulators, for example, through regulatory contracts, in which regulators and regulatees agree on enforcement arrangements that typically include leniency and exemptions in exchange for above-compliance commitments.[23] Regulators also decide on the cases in which enforcement action is not needed or is undesirable.
Unlike the classic governmental regulation model, the crowdsourced model of regulation relies on the public to detect risks, evaluate market failures pertaining to products and services, and sanction misbehaving firms. For example, the public can use regulatory complaint databases or participate in surveys[24] to signal to regulators and to other users that a certain bank is under-performing in customer service; reveal new kinds of problems that arise in bank-customer relationships, which may inspire rulemaking; and publicly shame banks for under-performance, using the social rather than the legal license of the bank to operate.[25]
A case in point is the online consumer complaint database of the CFPB, which invites the public to submit complaints on financial companies pertaining to issues such as credit cards, checking and saving accounts, debt collection, mortgages, money services, vehicle loans, student loans, or other personal loans.[26] According to the CFPB policy statement, the goal of the database is to ensure that markets for consumer financial products and services operate not only transparently but also efficiently, supporting various regulatory goals and functions.[27] For example, the agency uses information gathered from the complaint database—which constitutes a form of crowdsourced monitoring—to set priorities in its supervision, monitoring, and enforcement processes,[28] and to draft rules and regulations.[29] According to the CFPB, the database allows the agency to hear directly from consumers about the challenges they face in the marketplace, to bring their concerns to the attention of companies, and to assist in addressing the complaints.[30] The agency also shares complaint data with other agencies, to assist them in fulfilling their duties and goals.[31]
Sanctioning of firms can also be transferred, in whole or in part, from authorized government regulators to the hands of the crowd, for example by relying on the resources of the crowd to shame companies.[32] Private sanctioning is performed in this way by many individuals who decide what and who is worth shaming and to what extent, based, among others, on the initial information published by the regulator. This model harnesses social and economic sanctions imposed by “the crowd” to pressure firms into compliance, and even “above compliance” (the adoption of corporate social responsibility norms and ethics in business).
Generally, enforcement by shaming is based on corporate sensitivity to reputational gains and losses, rather than on inflicting the type of emotional harm that is associated with the shaming of individuals.[33] The goal of this type of shaming is to impose multi-layered costs on the firm in question, beyond traditional penalties or monetary fines.[34] Generally, regulatory shaming invites relevant audiences to alter behavioral patterns, and change the discourse or ways of thinking about the shamed firm, for example, by disapproval, criticism, condemnation, denunciation, ex-communication, protest, boycott, and social, legal, and political activism of various kinds.[35] The threat of private sanctioning alone can deter and motivate firms to comply ex ante, thereby constituting a form of norm enforcement.[36]
Various stakeholders can shame companies, using different modes of operation. For example, consumers may boycott the products or services of a company; they may also condemn a certain company online, calling for others to join them; employees of a shamed company may strike or quit, and potential employees may steer away; shareholders and other investors may sell their holdings; the residents of the area in which the company is located may demonstrate against it and disrupt its activities; people may turn to the media or to politicians to further sanction the misbehaving firm through unfavorable media coverage or initiatives of regulatory reforms; they may also initiate class action suits.[37]
Shaming sanctions in the regulatory context—much like crowdsourced regulatory monitoring—are based on crowds, that is, on many individuals who can take part in the regulatory process. Namely, for the shaming sanction to succeed, many individuals need to respond to the initial publication, otherwise corporations will have little or no incentive to improve performance. To put differently, corporate reputational damage usually occurs when a certain number of people (a crowd) interprets the information unfavorably, is affected by it, and even sanctions the firm. For example, a large group of consumers or investors may decide to boycott a financial entity, such as a bank, if the bank is portrayed by regulatory shaming publications as aggressively collecting student debt. Yet boycotting the services of a certain company by one person or even by few people is unlikely to be effective in enforcing any kind of norm.
Oftentimes, crowdsourced monitoring and enforcement are based on integrated mechanisms. For example, the CFPB complaint database, in which many financial consumers operate as monitoring agents, can also function as a shaming mechanism. In this vein, American consumer groups have underscored the importance of transparency in the CFPB complaint database for pressuring firms to improve their business practices.[38] Namely, the publication of the names of arguably underperforming firms (firms that have received many complaints) can function as a reputation-based enforcement mechanism. The idea is that fearing loss of revenues and capital from consumers and investors, companies may be motivated to reduce the number of complaints by improving their business practices. Another example of complaint-based crowdsourced enforcement by shaming is the Irish EPA National Priority Sites system,[39] which was launched in 2017. The system collects complaints from the public not only for the purpose of risk detection, taking command-and-control enforcement measures, and rulemaking, but also for shaming corporations by publicly scoring companies based on complaints received and compliance level.[40] The EPA also publicizes periodic lists that name fewer than 10 of the most misbehaving companies out of approximately 700 licensed facilities in Ireland.[41] While the regulator collects complaints on all licensed facilities, and scores them accordingly, the “shame list” names only a few companies, drawing more attention to their poor performance. The list is published on the website of the agency and circulated as a press release, drawing attention to companies that received the highest number of complaints and to the names of companies that remain on the list after appearing on previous shaming lists.[42] The companies that are on the list may become targets for shaming as well as high-priority enforcement targets for the EPA.[43] This system therefore facilitates both crowdsourced monitoring and crowdsourced enforcement of environmental laws, regulations, and environmentally and socially responsible business practices.
Similar complaint-based regulatory models are being utilized by the U.K. Financial Conduct Authority (FCA), which publishes consumer complaints together with the names of the firms.[44] Within this framework, firms that are able to significantly reduce the number of complaints are exempt from such shaming and are thereby motivated to improve performance.[45]
Complaint-based shaming lists are also being compiled and published by local agencies in the Netherlands specializing in environmental protection.[46] These agencies compile and publish lists of companies that are most complained about by citizens.[47] A study based on interviews of industry stakeholders showed that the publication of these shaming lists had motivated managers to get off it by reducing environmental nuisances.[48] According to the study, companies that reacted strongly to the publication of the information understood it as harmful to their reputations.[49]
Similar models are implemented in Israel by agencies who specialize in finance, banking, and capital markets. For example, the Capital Market, Insurance and Savings Authority publishes annual online ranking lists of insurance companies, pension funds and provident funds, based, among others, on the number of complaints submitted by customers to the Authority and customer surveys performed by the Authority.[50] Regulated companies are scored according to various performance indicators (including complaints and satisfaction surveys) and are also assigned colors ranging from green to red, correlating to the assigned score.[51] Similarly, the Israeli Banking Supervision Department publishes annual rankings of named banks based on costumer satisfactions surveys performed by the regulator.[52] Banks are also being rated by the Department based on customer complaints,[53] and by the Ministry of Economy based on business satisfaction surveys.[54]
Like other forms of modern crowdsourcing, regulatory crowdsourcing is based on online platforms. For example, regulators harness digital platforms to enable users to easily submit, search, and view complaints and other regulatory data on government websites.[55] Regulators can now also easily and quickly disseminate shaming information to a large number of people, who can digitally continue the shaming process.[56] For example, OSHA uses Twitter daily to publicize information on corporate occupational safety violations that resulted in illness, injury, or death, naming and shaming individual firms.[57] Users can then use the information-sharing functions of the digital sphere to replicate, broadcast and respond to these shaming messages (and also organize social movements and initiate social activism outside of digital spheres).[58] Indeed, it is difficult to imagine a mechanism of crowdsourced regulation that does not rely on the digital capabilities of regulators and users alike.[59]
While crowdsourced regulation involves the transfer of regulatory functions from public to private hands, it is different from regulatory outsourcing, in which the government uses private firms to perform regulatory tasks.[60] Table 1 below points to five main differences between these two models of regulation. First, outsourced regulation is usually performed by companies, not by individuals. Second, in the privatized regulation model, regulatory roles are assigned to a few bodies, whereas the very idea of crowdsourcing regulation is to utilize many individuals. Third, while outsourced regulation focuses on accreditation, certifications and supervisory services, the crowdsourced regulation model focuses on rulemaking, monitoring and enforcement. Fourth, outsourced regulation involves a formal contract based on mutually exchanged commitments in which private firms receive compensation for their services, whereas crowdsourced regulatory monitoring and enforcement is carried out without a formal contractual mechanism or compensation to participating individuals. Fifth, crowdsourced regulation does not merely transfer regulatory functions of administrative agencies to private entities for reasons of efficiency but harnesses the public to perform regulatory roles that cannot be performed by agency staff (the interchangeability factor).
Outsourced versus crowdsourced regulation.
| Outsourced regulation | Crowdsourced regulation | |
|---|---|---|
| 1. Who is performing the regulatory functions? | Companies | Individuals |
| 2. How many are performing the regulatory functions? | Few | Many |
| 3. Types of regulatory functions | Accreditation, certification, and supervisory services | Rulemaking, monitoring, and enforcement |
| 4. Types of relationship with the regulator | Formal contract with appropriate compensation | No formal contract and no compensation |
| 5. Interchangeability | Transfers regulatory functions that administrative bodies can perform to private hands | Creates new regulatory capabilities that can be generated only by the crowd |
Another important aspect of the conceptualization of crowdsourced regulation relates to the different functions of the crowd. Importantly, the model of crowdsourced regulation does not treat the crowd as merely “human sensors” that collect data (the crowd as an object).[61] Rather, the crowd is a valued source of knowledge and preferences, for example, regarding new reforms, personal expectations of corporate ethics and standards, and required regulatory action on issues of customer dissatisfaction and poor business performance (the crowd as a subject). Namely, under the crowdsourced regulation model, regulators aim to utilize the resources of the public in order to learn from many individuals about what should be done, and not only to aid regulators in bridging technical informational gaps. In its most engaged mode, the crowd even serves as agents of regulation who have private enforcement capabilities that entail both quasi-judicial and executive functions (the crowd as co-regulator).
Figure 1 illustrates the different roles that the crowd can play in the regulatory process. As we move closer to the core regulatory functions of crowdsourcing, the crowd assumes the role of co-regulator, with regulatory-like input, capabilities, and decision-making; as we move further away from core regulatory functions, the crowd becomes more passive and performs technical assignments that does not require decision-making or the sharing of preferences and views. In theory, all modes of crowdsourcing can be used in various regulatory functions, such as rulemaking, monitoring, and enforcement.
The modes of crowdsourced regulation.
Crowdsourced regulation should also be differentiated from mechanisms of private governance, in which individuals or groups of individuals collect and digitally publish information on corporate performance and consumer satisfaction via commercial and other private platforms, such as WikiRate,[62] TripAdvisor,[63] or Amazon.[64] It should also be differentiated from corporate shaming performed by private users on social media without any state involvement. Although these models are based on the crowd monitoring businesses and enforcing social and legal norms, and are even sometimes utilized by the government ex-post,[65] the crowdsourced regulation model is initiated, actively guided, and facilitated by governmental regulatory agencies, which use it to promote public goals.
Crowdsourced regulation discussed in this article therefore refers to a nascent approach designed and implemented by governmental regulators, in which a large number of undefined individuals participate in rulemaking, monitoring corporate behavior (e.g., by complaint databases), and/or enforcing legal and social norms that apply to firms (for example by shaming), mainly through digital platforms and usually without any formal obligations between the government and the “crowd.”
II The Promise and Perils of Crowdsourced Regulatory Monitoring and Enforcement
In this part, I discuss the main advantages and disadvantages of crowdsourced regulation, focusing on monitoring and enforcement functions. These, along with the conceptual framework discussed in Part I, set the scene for the normative analysis in Part III. I begin with sketching some of the main benefits and rationales of crowdsourced regulatory monitoring and enforcement, then discuss some of the pitfalls of this tactic. The discussion aims to provide a broad-brush perspective, leaving room for more detailed research into crowdsourced regulation policies in the future.
Most of the analysis underscores the benefits and drawbacks of crowdsourced regulation in comparison to classic monitoring and enforcement actions. However, it is important to note that crowdsourced regulation can supplement or replace command-and-control, as well as other forms of regulation, including soft regulatory tools. These may include regulatory contracts, self-regulation, informational regulation, and voluntary regulation. As always, finding the right combination of tools is one of the main challenges of modern regulation in any given field.
A The Benefits of Crowdsourced Regulation
Generally, the crowdsourcing of regulatory monitoring and enforcement can be understood as a possible, although partial solution, to the problem of shortage of regulatory resources in government. Specifically, both monitoring and sanctioning require great regulatory resources of trained personnel, the expenses of on-site inspections and back-office reviews of industry reports and submissions, and the expenses of prolonged investigations and civil, administrative, or criminal litigation inside or outside the courts. Therefore, the cost of monitoring and enforcement often outweighs their benefits, and at times may not even be feasible.
This is of course undesirable and may lead to noncompliance. Yet, instead of leaving entire forms of business activities under-regulated or even unregulated, regulators can use the resources of the crowd to carry out monitoring and enforcement. Namely, instead of one governmental department or regulatory agency shouldering regulatory expenses with modest budgets, crowdsourced regulation divides the costs and efforts of monitoring and enforcement between a large number of people. The regulatory task is thus divided into very small portions, which do not overburden the citizens, but can add up to substantial regulation in quantity and quality.
Indeed, and as detailed in Part I, crowdsourced regulatory monitoring and enforcement do not entail the substitution of public servants with private “regulators” performing the same monitoring and enforcement tasks, but rather private monitors and enforcers carrying out new types of regulation that were not previously performed. Seemingly, crowdsourced regulation cannot replace classic regulation and cannot reduce the governmental workload. However, while the crowdsourced and governmental tasks are not identical, recent research into OSHA’s shaming policy indicates that crowdsourced regulation can be used to reduce the required scale of classic regulatory functions while maintaining the same levels of deterrence.
Generally, OSHA enforces its regulations and standards primarily by conducting governmental priority-based inspections, responding to imminent danger and fatalities.[66] It is a small agency with an annual budget of around $590 million, which employs about 1800 inspectors.[67] The inspectors are responsible for the health and safety of 130 million workers employed at more than 8 million worksites in the U.S., or approximately one compliance officer for every 70,000 workers.[68]
The study found that OSHA shaming press releases (a form of crowdsourced enforcement) of company violations have led companies in the same sector or geographical area as the shamed entities to improve their compliance and experience fewer occupational injuries.[69] In fact, according to the study, a single OSHA press release is the equivalent of a little over 200 inspections in the improvement in compliance that it achieves.[70] In theory, crowdsourced regulatory monitoring can yield similar results, substituting regulatory inspections with online user reports.[71]
Another important benefit of crowdsourcing regulation is the possibility to reduce regulatory capture.[72] This is because crowdsourced regulation replaces the interaction between a small number of regulators and regulatees (the firms), which is integral to classic monitoring and enforcement processes, with many private hands. Generally, regulatory capture is more likely to occur when close relations exist between government officials and regulated firms.[73] The mechanism of this type of capture is based on repeated interactions between a small group of government officials and industry managers (often in concentrated markets), which allows the managers to grab the regulator’s attention more easily and press for leniency and favorable regulation. Naturally, the regulator spends less time with public interest groups and more time with managers, which is required for carrying out regulatory tasks. Namely, both parties—the regulator and the regulatee—cooperate, or at least interact, in rulemaking processes, monitoring and inspections, even enforcement negotiations. Conversely, under the crowdsourced regulation model, which (at least partly) breaks this small group of closely interacting regulators and regulatees, the likelihood of government officials being captured by the interests of the regulated firms decreases. Within the crowdsourced model, regulators will no longer need to rely solely on direct monitoring and on-site inspections but instead can rely more on online complaint databases, for instance. Similarly, under this model, enforcement is being carried out by many individuals. Since governmental regulators are no longer the sole enforcers of norms, leniency cannot be achieved effectively by pressuring them as before. Reducing the possibility of regulatory capture can help build more balanced and more effective regulatory regimes that are less influenced by industry manipulations and pressure from private stakeholders.
Crowdsourced regulation can also serve as an effective response to the continued decline in public trust in regulatory frameworks more generally.[74] It can even help increase the democratic elements of regulation. Under the crowdsourced regulation model, many people outside government, with all its typical failures, take part in the regulatory process, replacing a handful of public officials, usually not elected by the public. It is the crowd that decides which companies to target for monitoring and condemnation, incorporating the views of many individuals and not one or two agency directors. As the regulatory process becomes more diffused and less centralized, it can gain legitimacy through numbers and the arguably neutral identity of the new regulators.
Providing the public with the opportunity to take part in the process of business regulation can also offer members of the public a healthy and productive way to channel their frustration and disappointment with underperforming corporations. Although somewhat paternalistic, a crowdsourced regulatory approach can serve intrinsic goals pertaining to the wellbeing of the public, which is given the opportunity to complain, vent, share, and condemn. In this vein, crowdsourced regulation can strengthen a sense of community and shared norms in members of the public who participate in this process.
Another important point to consider in the discussion of crowdsourcing as a possible response to command-and-control deficiencies is that crowdsourcing is not necessarily dependent on legal infringements. Under the crowdsourced model of regulation, firms are accountable not only for legal violations but also, for example, for mistreating clients, cutting back on quality assurance, and violating environmental, social, and corporate governance (ESG) norms or other moral obligations. Crowdsourced regulation can nudge firms to not only comply with binding regulation but also adopt corporate social responsibility (CSR) norms,[75] fearing public response through institutionalized crowdsourced mechanisms. Conversely, command-and-control focuses on legally binding norms, like behavioral prohibitions, business limitations, license requirements, and product standards, and cannot directly enforce non-binding norms.
Additionally, crowdsourced regulation can diminish conflicts inherent in the regulator-regulatee relationship. As inspections, monitoring, and classic enforcement actions move away from public servants and into the hands of the crowd, frictions and quarrels of regulators with regulated companies may diminish. Because the regulatory monitoring and enforcement activities originate with many customers of the company, for example, it is much more difficult for companies to attack the regulatory process for being politically biased, unfair, overly burdensome, or uninformed.
Another important advantage of the crowdsourcing approach to regulation is that it makes possible new regulatory capabilities that were not previously available and cannot be performed by anyone other than the crowd. For example, regulatory shaming can be carried out only based on the public responding to it, or at least being willing and able to respond to it and can produce greater deterrence than most fines and civil penalties, especially of larger firms. Similarly, administrative regulators cannot carry out the monitoring of large amounts of transactions, incidents, and facilities in the same way that many individuals can, because individuals can share their personal experiences.
Crowdsourced monitoring and enforcement are therefore an important addition to the regulatory toolkit that does not function merely as force multiplier but opens new paths in regulatory methodology. These new apparatuses generate new kinds of data and processes that create an entirely new type of regulation. Because of the need to effectively regulate new types of firms and corporate activities, and new types of problems (for example, the climate crisis, the COVID-19 pandemic, cryptocurrencies, autonomous cars, privacy and surveillance issues, artificial intelligence, and big tech), innovative tools of regulation such as crowdsourcing are required.
Crowdsourcing also provides the quantities of data from a large number of individuals that is needed to build a relatively accurate picture of the regulated market. For instance, between 2018 and 2020, consumers have submitted close to one million complaints to the CFPB database. These complaints typically concern debt collection, vehicle loans, mortgages, money transfers, virtual currencies, credit cards, monetary services, and checking or saving accounts. The more complaints of different types are received from more financial consumers, the better the chance is that important regulatory problems will rise to the surface and can be addressed by the agency. The larger the participating crowd is in such mechanisms, the more accurate the data becomes, and the more valuable it is for the agency, which in turn can produce meaningful insights. Shaming is also dependent on numbers, as noted above, and being shamed by one consumer is usually not effective in nudging firms to do better.
Immediacy is another advantage of crowdsourced regulation, which may be especially useful in times of crisis and emergencies. Shaming allows regulators to post information online and publicize it quickly, reaching a large crowd in seconds. Unfavorable information on corporate performance, compliance, or ethics can go viral and create a meaningful shaming effect that can influence corporate decision making.
In the face of regulatory challenges of the type raised by the COVID-19 pandemic and the need to regulate business activities on issues such as businesses that are permitted to operate in times of lockdown, appointing COVID-19 officers, and implementing safety measures in offices and stores to protect customers and employees, crowdsourcing offers advantages of speed and responsiveness. Civilians who encounter COVID-19 violations could immediately report them digitally, and other users could view the report and refrain from visiting unprotected stores. Employees could pressure firms to improve their practices based on complaints accumulated in the regulatory database. Regulators could publish information on COVID infringements as a type of shaming, to pressure firms to comply with regulations.[76]
In addition, crowdsourcing regulation can be considered more reliable than other regulatory methods because it is unmediated, originating directly with the crowd. Crowdsourcing allows information to be submitted to the regulator by separate, uncoordinated individuals directly or almost directly, or disseminated to other users. This form of governance eliminates the classic intermediaries of regulatory information, such as firms and regulators, and may therefore reduce associated problems, such as selective disclosure and other types of firm manipulation pertaining to incident reporting and data submission obligations.
Also, information originating directly with the person who suffered harm from a business may also be more accurate and more relevant than information reported by businesses themselves (a popular method in classic regulatory styles), even without considering corporate bias and self-interest. Information provided by private persons may represent the public interest in a most fundamental, unmediated, democratic way, allowing the crowd to view other users’ data and input, with little regulatory intervention. This endows the outputs of crowdsourcing with credibility in the eyes of the crowd, the regulator, and the industry. Credibility is also enhanced by numbers, as the information is based on the input of many users.
Companies may also benefit from access to regulatory information and opinions collected, reported and shared by individuals, and use it to identify business and regulatory risks, and to correct possible failures in advance. In this sense, crowdsourced regulation becomes an important informational tool for companies that wish to minimize risks for shareholders and stakeholders. Firms can learn about complaints, opinions and criticism directed against them or against other firms as part of crowdsourced monitoring or enforcement processes to better their practices. This is another way in which crowdsourced monitoring and enforcement can achieve regulatory goals.
Lastly, although complaints and users are usually kept anonymous, some models of crowdsourced regulation allow users to see what others have written or even communicate. In this sense, individuals that are members of a crowd can empower one another and form a crowdsourcing community that may gain more capabilities based on cooperation, interactivity and sharing.
B Possible Pitfalls of Crowdsourced Regulation
Let us now consider some substantial challenges that may arise with crowdsourcing regulation. Although crowdsourcing can save government resources, it can also entail new direct and indirect expenses for regulators. Direct costs of crowdsourcing involve the building, managing, monitoring, facilitating, analyzing, and applying the crowdsourced mechanism, perhaps by outsourcing to a software company. Additional costs may include, for example, assigning personnel to review and examine complaints; uploading data with the results of the review and with the company responses; reading and screening user complaints; conducting surveys; and processing the information for important regulatory insights that may have implications for rulemaking, legislative amendments, inspections, investigations, and sanctioning. Shaming may also entail direct costs such as compiling and disseminating rankings, statements and posts, and creating databases. Although governments seemingly enjoy the free services of individuals performing regulatory tasks, these services are in effect not cost-free because individuals need to put in time and effort into monitoring and enforcing. Therefore, the crowd also carries some direct costs of crowdsourcing.
Monitoring and enforcement by crowdsourcing may also entail costs that relate to the creation of appropriate legal frameworks for crowdsourcing, such as legislation, rulemaking, procedures, etc. Generally, regulation by crowdsourcing is carried out worldwide by agencies based on explicit or broad, non-explicit statutory mandates, sometimes accompanied by agency procedures or rules.[77] For example, the CFPB is authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to facilitate the centralized collection, monitoring, and response to consumer complaints on financial products and services.[78]
Crowdsourcing also incurs indirect costs for regulators, who often need to deal with industry backlash before and after the implementation or the expansion of crowdsourced mechanisms. For example, the change in policy by the CFPB in 2013, which expanded the complaint database, did not go over smoothly because the financial industry opposed the expansion. Such responses may require the allocation of government resources for hearings, legal battles, and public relations. Indeed, while crowdsourced regulation can diminish existing conflicts between regulators and regulatees, it can also create new ones.
Another drawback of crowdsourcing regulation relates to over-reliance on private entities. While crowdsourcing may be alluring to regulators who wish to harness the resources of the crowd to compensate for lack of government resources and capabilities, it may stimulate the crowding out of the state from regulatory domains. Namely, the easiness of crowdsourcing may nudge regulators to invest less in developing their own resources and capabilities, allowing for private regulation, with all its typical failures, to take hold.
More specifically, privatized regulation could mean less accountability, since unlike regulatory agencies, members of the crowd who perform private monitoring and enforcement are generally not subject to public law (they are, however, subject to private law, such as defamation laws). Therefore, principles like fairness, reasonableness, due process, statutory authorization, proportionality, and other administrative and constitutional law principles do not generally apply to the “crowd.”
Regulators may also encounter problems of informational overload relating to input generated by members of the crowd, especially in privatized monitoring activities. While it is essential that a large number of people participate in crowdsourced monitoring to aid regulators in locating market deficiencies, it also means that a lot of information needs processing. Not only does this entail governmental resources but it also requires new regulatory expertise relating to the analysis of large quantities of data.
Another challenge of crowdsourced regulation concerns content. Although crowdsourcing monitoring and enforcement may be considered reliable because it facilitates direct democracy and allows almost unmediated regulation to take place, it can be criticized as unreliable and biased because it rests on public opinion, subjective reports, and often negative feelings of outrage and revenge, rather than facts. Crowdsourced regulation can therefore prove less professional than regulation performed by administrative agencies because private persons do not always see “the big picture” or possess the required legal, regulatory, or other professional experience and knowledge.
Put differently, the advantage of receiving unmediated information and responses from the crowd is also a disadvantage because it allows unfiltered emotions, belief systems, and inclinations to be part of the regulatory process and information gathering. Indeed, financial institutions have argued that the complaints posted on the CFPB database are likely to contain only unsubstantiated, inaccurate, and frivolous allegations, which could mislead consumers, and that the database should include only complaints found to have reported regulatory violations.[79] These types of failures may also be viewed as costs of crowdsourcing borne by firms, which may end up being over-regulated.
Moreover, while companies are subject to legal sanctions in cases of deceptive reporting, and the integrity of regulatory inspection is generally considered high (except in instances of corruption, which are subject to harsh sanctioning), false reporting by civilians does not usually have any real legal implications. Additionally, some mechanisms of crowdsourcing, such as shaming, guarantee user anonymity, which exacerbates the lack of accountability. Under such institutional design, citizens are inclined to exaggerate company misdeeds, overstate minor incidents, and use harsh language. There is also a risk of manipulation by businesses that organize to “drown” the database with false or misleading information, for example, to scuttle regulatory endeavors, harm the credibility of the mechanism, or harm competitors.
Crowdsourced regulation can also generate disproportional, unfair responses from the public through digitally enhanced processes and lead to over-deterrence. These may gravely harm the interests and rights of companies, for example, their right to due process and a good reputation, ruining firms financially.[80] While the structure of social media may help spread regulatory tasks between many users, who can quickly respond to the information, it also opens companies to the risk of being shamed and suffering extensive losses in a relatively short period of time with no real options for repairing their reputation. Once the platforms for crowdsourcing are set and unfavorable information is being published it may be difficult for regulators to control the responses from the crowd.
The contagion effect must also be considered. As adverse information is publicly expressed in digital spheres, people may be inclined to over-report or over-shame, perhaps submit fake reports, or answers in surveys, as part of the crowd mentality. Such crowd dynamics may also fuel adverse feelings of anger, disappointment, and discontent of business entities and the regulators responsible for monitoring them, as well as create an overall decrease in the public’s joy, fulfillment, and happiness in life. It can therefore be argued that crowdsourced regulation may exacerbate feelings of unhappiness and is not a form of action that is appropriate for the state to take.
Another contagion effect of crowdsourcing relates to increased transparency. As more eyes and ears monitor corporate compliance and publicly report noncompliance and unethical behavior, companies may be inclined to continue business as usual once they realize that many other companies are also under-performing. Over-exposing the misbehavior of firms and dissatisfaction of consumers, customers, patients, employees, etc. could create a race to the bottom, with counterproductive results for deterrence and compliance with both legal and CSR norms.
Additionally, increased transparency by shaming through rating, ranking, and the like, could work against underperforming small firms and in favor of large firms with extensive resources. This is because the publication of unfavorable information on the quality of service of companies can drive clients away, making it more difficult for firms to improve, as their revenues decrease. Underperforming firms often need financial resources to improve performance and publicizing unfavorable information on their operations can make it extremely difficult for them to break this cycle. Command-and-control is usually far less visible; therefore, it does not entail similar reputational damage for small firms.
Regulatory capture and obstruction of regulation are also of concern. Regulators and other policymakers are in a position to eliminate, revoke, roll back, or impede crowdsourcing mechanisms, therefore there is always a risk of companies influencing policymakers in their favor. Companies that perceive regulation by crowdsourcing as a mechanism that can harm their business may try to capture regulators and legislators to influence the institutional design of the crowdsourced mechanism in their favor. For example, they may argue for allowing some time before publishing unfavorable information, may demand that complaints not clearly pointing to legal violations be left out of the public database, may require that users identify themselves publicly, or may want shaming methods to remain soft, low in volume, and concentrate on naming corporations for good practices (“naming and faming.”).
For example, before the expansion of the CFPB database, companies argued that the database would unfairly damage their reputation and confuse consumers, that data would be unverified, unrepresentative, lacking in context, and open to manipulation.[81] Other issues raised by industry members were that the database does not distinguish between major and minor complaints, and allows users to claim that a regulatory violation took place when they do not fully understand the legal requirements imposed on the financial industry.[82] Such arguments are not without merit, but they may influence regulators to opt for crowdsourced designs that are too lenient.
Finally, crowdsourced regulation is based on digital spheres, therefore issues of the digital divide arise. Not everyone enjoys the same level of access to digital platforms, and individuals differ in the resources available to them, their technological capabilities, and their language proficiency. Complaint databases like the database operated by the CFPB may also be regarded extremely difficult to operate. Therefore, some can become members of the crowd and perform regulatory functions, while others are left outside this process. This creates a concern with inequality in crowdsourcing and a bias toward the privileged. The process of crowdsourcing regulation also prefers those who can afford the time to participate in monitoring and enforcement and who are aware of such mechanisms in the first place. Thus, the information collected and generated by crowdsourced regulation may not truly represent the public but only some portions of it. Additionally, those who cannot access the information that is being posted online by regulators and by other users cannot respond accordingly or take the information into account in their decision making.
In addition to concerns regarding equality and access to regulation and government, it can be argued that crowdsourced regulation suffers from problems of over-complexity and burdens stakeholders, including the public at large, with information overload. Informational overload may impede regulatory effectiveness and the realization of democratic values that crowdsourced regulation aspires to promote, such as public participation and public trust.
The complicated digital aspects of crowdsourced regulation also raise the issue of reliance on private firms that operate such platforms and activities for the government. The government may become overly dependent on private resources and subject to companies’ bias toward profit at the expense of the public interest.
III Law and Policy of Crowdsourced Regulatory Monitoring and Enforcement
While crowdsourcing regulation creates new challenges, failures could be substantially reduced under certain conditions, circumstances and limitations set forth in this Part, allowing regulators, businesses, and the public to enjoy the advantages of the new practice. Building on the previous parts, which mapped out some of the unique characteristics, advantages, and drawbacks of regulation by crowdsourcing, this part offers directions for law and policy development. Specifically, it refers to the type of regulators and regulations that best suit the practice of crowdsourced regulation, and to the ways in which regulators can best design and apply crowdsourcing mechanisms. These policy directions can potentially increase both legitimacy and effectiveness of crowdsourcing regulation.
Underbudgeted Regulatory Bodies or Tasks
The article has shown that while crowdsourced regulation can save government costs, it also involves direct and indirect costs of its own.[83] But because the potential for efficiency is great, it could be of special importance and value for small, underbudgeted regulatory bodies. These types of regulators could replace (at least some) expensive monitoring and enforcement tasks with fairly inexpensive crowdsourced mechanisms. The same is true for situations in which regulators (including large departments) realize that because of lack of resources, certain fields, types of activities, or firms are left unregulated despite the apparent need for government intervention.
In addition, crowdsourced regulation is especially well suited for underbudgeted regulatory bodies because it can increase public, political, and business awareness to otherwise relatively obscure regulators. Small agencies are often tasked with important yet underbudgeted regulatory goals, such as privacy protection, environmental protection, consumer protection, occupational safety, and fighting climate change, and lack command-and-control mandates. For this reason, such agencies often face dissolution. Crowdsourced regulation can not only increase compliance in these important fields but also protect small agencies from closure by providing reputational benefits that relate to regulatory action. Crowdsourcing regulatory monitoring and enforcement incorporates elements of publicity, for example through the use of social media, websites, press releases, and applications, which can help agencies gain public recognition and elevate their status.
Reducing Industry Backlash
While outsourced regulation may be especially suitable for small, underbudgeted agencies, these are also the type of agencies that are highly vulnerable to industry backlash. Therefore, agencies must carefully calculate such a risk and try to minimize it, for example, by regulatory contracts.[84] These contracts allow the industry to negotiate with the regulator, possibly with some public involvement, the terms and scope of the crowdsourcing.
Another way, which can also support consensus-based crowdsourcing, involves a regulator-industry dialogue, in which the regulator underscores the advantages of crowdsourced regulation to businesses. Based on the advantages of crowdsourced regulation discussed in Part II, regulators should present crowdsourcing to industries as soft law, informational tools that could replace inspections, streamline regulatory relations between regulators and regulatees, promote consumer satisfaction, and provide increased transparency. Regulators should also underscore that crowdsourcing can serve businesses by providing information about competitors, help improve business practices in a way that reduces the exposure of firms, and also showcase firms that perform well, providing them with recognition and rewarding them reputationally.
Policy Formation
Another important point that was discussed in the article was that crowdsourced regulation has advantages not only as a problem-solving tool but also as a problem-detecting mechanism. Therefore, it may be especially useful for regulators who are in the process of building their policies, drafting rules and regulations, initiating new laws, or developing monitoring or enforcement strategies. Crowdsourced regulation can therefore be especially relevant in responding to new challenges arising in markets or sectors, as well as in creating initial regulatory policies for new agencies.
Promoting Ethics
Using the power of the crowd can also be useful when legislation or rulemaking is not viable, for example because of the urgency of the matter. For instance, regulators can harness the power of the crowd to monitor unfair or unethical corporate behavior, like refusing to suspend car insurance policies in times of lockdown due to the COVID-19 pandemic or selling hand sanitizers at excessive prices. Regulators can also publicize or facilitate the publication of consumer complaints or of processed regulatory information, such as the ranking of firms according to the friendliness of their COVID-19 policies.[85] The crowd can then determine whether a private sanction, such as condemnation or boycott, is warranted. This mechanism can induce companies to act ethically even when a legally binding norm is absent.
In order to avoid a race to the bottom in compliance to legal and ethical norms, which may be the product of increased transparency (firms become better informed about industry noncompliance), regulators should highlight positive information on corporate behavior within the crowdsourced platforms. For example, regulators could provide information on firms that received the least complaints or allow users to submit positive reviews alongside complaints. Regulatory naming and shaming mechanisms might also be based on naming and faming firms that have improved performance or have made above-compliance commitments.
Meaningful Participation
Crowdsourcing regulation is recommended in situations in which input from individuals is meaningful to the regulatory tasks and closer to regulation than to outsourcing. As explained in Part I, crowdsourced regulation is more about treating individuals as regulatory agents that can produce meaningful, valuable content, than about treating them as vehicles to mechanically collect data. Crowdsourcing that adheres to these principles should be considered more legitimate than other types that may be regarded as inappropriately exploiting civilians.
In this vein, regulators should consider facilitating communication channels that will allow unconnected users to create a community. While communities can organize in ways that may adversely impact the integrity of the regulatory process, the possibility to organize should not be denied from civilians who are essentially working for the government for free. Ensuring democratic design of crowdsourced regulation is of crucial importance to its success. Regulators should therefore consider aspects of community formation when designing crowdsourcing mechanisms.
Efforts should also be made to accommodate the problem of the digital divide where possible, for example, by allowing people to submit complaints by email, regular mail, phone, and office visits. Although such measures may reduce efficiency, they provide a more solid basis for the crowdsourcing approach to regulation from the point of view of democratic values and civil participation. Efforts should also be made to design accessible platforms, databases, and digital processes to enable the active, easy, free and intuitive participation of the crowd in monitoring and enforcement. Regulators must also consider the ability of third parties, such as individuals, businesses, NGOs, other regulators and policymakers, and the media, to easily view, search, understand, and download relevant crowdsourced information in order to maximize its benefits.
In addition, regulators need to carefully choose topics for crowdsourcing that can trigger meaningful participation of the public. Namely, crowdsourced regulation should be used in situations where corporate behavior directly affects people, for example in consumer matters; concerns a large number of people, for example banking services; and attracts public attention and triggers public responses, such as in matters of environmental pollution, greenhouse gas emissions, and COVID-19 violations.
Fairness
Crowdsourced regulation constitutes a form of privatization, in which private parties in effect function as co-regulators but are generally not subject to public law limitations and safeguards. Additionally, unlike other forms of privatization, under the crowdsourcing of regulation members of the crowd are not bind by formal obligations to deliver quality service. Government regulators should therefore develop rules and procedures that will ensure fairness by focusing on professional and critical analysis of users’ input. Thicker control mechanisms on crowdsourced regulation could ease some of the problems relating to the privatizing of governmental powers. Regulators should aim to strike a delicate balance between relying on private monitoring and enforcement systems discussed in this article, and maintaining professional oversight, control, and supervision.
For example, immediacy and responsiveness are considered key advantages of crowdsourcing regulation, but as is noted in Part II, they also have their downsides. It is therefore necessary for regulatory agencies to devise measures to balance the problems associated with the immediacy that digital platforms allow. For example, the CFPB sends all submitted complaints to the target companies for response, but the complaints are published in the database after 15 days even if the company has not responded. This type of mechanism can be considered more proportional and fairer than those that facilitate immediate reaction.
Other safeguards could focus on ensuring that crowdsourcing platforms are not manipulated.[86] For example, when submitting a complaint to the CFPB, consumers are required to affirm that the information is true to the best of their knowledge and belief. Similar measures are needed to reduce the scope and likelihood of manipulation and abuse.
However, in this process of “publitization,” policymakers need to be careful not to over-regulate systems of crowdsourced monitoring and enforcement so that advantages such as unmediated responsiveness, reduced risk of capture, and credibility of information are preserved. While developing safeguards, rules and procedures can infuse important public law norms into regulatory crowdsourcing mechanisms, it could also reduce regulatory and civic motivations to use these mechanisms.
Transparency
Crowdsourced regulation is highly suited for regulators and industries who are prone to capture. As discussed in Part II, crowdsourced regulation has the potential to reduce capture. Policymakers such as legislators should therefore consider crowdsourced regulatory models in cases where research or practice have indicated that regulators tend to favor industry at the expense of the public interest because of industry manipulation.
The crowdsourced model is also highly suitable for industries with low number of large, resourceful regulated bodies, close regulator-regulatee relations, and occurring instances of “revolving doors,”[87] which encourage regulatory capture. To avoid instances of industry manipulation and capture regarding the crowdsourcing of regulation itself, and maintain public trust in the mechanism, high level of administrative transparency is needed.
More specifically, regulators must be obliged to reveal any interaction with industry regarding the design and implementation of the crowdsourced model and to allow the public to participate in the process as well by commenting on the proposed model and its application. Regulators should also publicize, from time to time, reports on the misuse of crowdsourced regulation processes and platforms by firms, organizations or individuals. Such publication—a type of shaming in itself—could deter this type of activity and provide increased transparency and trust.
It is also important that regulators and legislators clearly state the goals, stages of the process, and implications of regulation by crowdsourcing when adopting and implementing these mechanisms. This would help avoid misunderstandings and possible claims or feelings of deceit or exploitation by members of the crowd who are not necessarily aware of the regulatory roles they assume by, for example, filing a complaint or reacting to a shaming post.[88] Regulators should therefore develop and publish policies that articulate the meaning of crowdsourcing monitoring and enforcement. This type of transparency may also encourage individuals who were not fully aware of the significance of this type of activities to join the crowdsourced regulation efforts.
Conclusions
Crowdsourced regulation by administrative agencies is possible not only with regard to legislative processes, such as inviting the public to comment online on new reforms, legislation, rules, and policies. Other central regulatory functions, such as monitoring and enforcement, are also being crowdsourced using mechanisms such as public complaint databases and regulation by shaming, allowing for new regulatory capabilities that must be studied and explored further. The Article has offered main paths for developing the law and policy of crowdsourced regulation, adopting an overall positive yet complex stance toward this nascent approach.
First, the Article has established a comprehensive conceptual framework for crowdsourced regulation, developing the theories of regulatory tools and of crowdsourcing, especially by governments. After weighing the promise and pitfalls of crowdsourcing monitoring and enforcement, the Article has outlined a path for a balanced legal framework that considers economic, administrative, regulatory, and democratic needs, values, interests, and rights of regulators, regulatees, members of the crowd and the public at large.
Crowdsourcing regulation is yet another step in the evolution of the modern regulatory state, which correlates with technological advances, current patterns of civic engagement, and the challenge of regulating large corporations in many areas, involving various operations and many facilities. Crowdsourced regulation also addresses the need of government to be responsive to everchanging social and economic challenges and to the needs and thoughts of the public, and it correlates with the decline of command-and-control and the rise of soft regulation.
Regulatory crowdsourcing is currently being advanced worldwide, raising various legal challenges that warrant further consideration and development. These new types of questions lie at the crossroad of e-regulation, crowdsourcing, and soft law and will become the future focus of crowdlaw theory. I believe that under the right circumstances, as is detailed in the article,[89] crowdsourcing can effectively and fairly be harnessed by regulators, carrying the potential not only to address some prominent ailments of governmental monitoring and enforcement, but also to offer a substantial leap in regulatory capabilities, relations, and goals.
Acknowledgments
The article was presented at the 17th International Human Rights Researchers’ Workshop on Crowdsourcing and the Decline of the Individual. I wish to thank the organizers and participants for their helpful comments, especially Gila Stopler, Shelly Kreiczer-Levy, Tamar Megiddo, and Alon Jasper. I also thank the editors of the journal of Law & Ethics of Human Rights and the anonymous reviewer for their insightful feedback. Special thanks to Daniela Repolo, Anat Halpern, and Michele Manspeizer for preparing this article for publication.
© 2023 the author(s), published by De Gruyter, Berlin/Boston
This work is licensed under the Creative Commons Attribution 4.0 International License.
