Federal Trade Commission
Re: US Perspective on Consumer Protection in the Global Electronic Marketplace - comment PP994312
Comments from Consumers International
Dear Secretary Clark
Consumers International(1), the world-wide confederation of consumer organisations, welcomes the opportunity to submit these brief comments reflecting an international consumer perspective, to add to the consumer viewpoints and general principles already expressed by its US member organisations Consumers Union and the Consumer Federation of America. Consumers International also supports the recommendations related to electronic commerce issues submitted by the EU-US Transatlantic Consumer Dialogue (TACD).
In a market which is expanding at unprecedented speed, and in which traditional national boundary rules and regulations are being faced with increasing numbers of cross-border transactions, international agreement on consumer protection for users of electronic information and commercial services is urgently needed. Consumers International has been actively involved in promoting such agreements, as well as research and information related to electronic commerce issues:
-- As a participant in the OECD working group it has contributed to the development of the OECD Guidelines for Consumer Protection in the Context of Electronic Commerce for the past two years
-- It has initiated, obtained funding and managed an international comparative survey of consumer experiences of shopping over the internet in 12 countries
-- It has initiated, obtained funding and about to embark on a research project that will seek to identify how different companies in different countries treat personal information handed over the internet, as well as training consumer representatives in electronic commerce and data protection issues.
OECD Guidelines for Consumer Protection in the context of Electronic Commerce
With regard to the OECD guidelines, we note that at the present moment in time this is the only trans-national body that has taken on the task of developing a set of self-regulatory consumer protection precepts that could provide an effective framework for global, cross-border, electronic commerce. These draft guidelines go a long way in providing answers to the questions posed in the FTC Invitation to Comment of December 16, 1998, as commented in some detail in the paper submitted by the Australian Competition and Consumer Commission. There is a commitment - in the form of the declaration made by the OECD Ministers at the Ottawa conference in 1998 - to establish these guidelines within 1999. Consumers International believes that the finalisation of the OECD guidelines, already improperly delayed, and their implementation by OECD governments, is the most important and urgent action needed at the present time.
The question of what law should apply in electronic cross-border transactions, and where the consumer can get redress if things go wrong, is also a key one. The guiding principle for consumer protection, wherever the electronic transaction is conducted, should be that the consumer cannot be deprived of the protection afforded by the law of his/her country of residence; and that he/she has the right to have any dispute settled in his/her country of residence. It would be pointless to have a situation where the consumer was not able to take action in their own country, using the law of their own country. To expect a casual shopper to be able to use an unfamiliar law or court amounts to a denial of access to justice and would foster consumer mistrust. Whereas if a trader sets out to do business in another country, presumably with the intention of making many transactions, it is reasonable to expect that trader to understand the consumer protection laws in the country where it is doing business. There could be also other ways to establish effective right of redress for consumers in on-line transactions, such as the establishment of a third-party dispute handling body and internal mechanisms to handle errors, complaints, etc. provided by retailers.
Consumers International firmly believes that that following consumer protection concerns must be addressed at both the national and international levels. Namely that on-line consumers should:
· be afforded at least the same level of protection as apply to other methods of shopping under the national laws and practices of the country in which they live;
· be provided with reliable and full information about the products and services being offered (such as all costs, delivery arrangements, safety warnings, and conditions relating to return, exchange, cancellations and refunds);
· be confident in the security of payment systems;
· have the right to privacy and protection for personal and financial information and against unwanted and aggressive advertising and junk e-mail;
· be confident that children can be protected against exposure to pornography, violent material and indirect advertising;
· have access to effective redress mechanisms including complaint and dispute resolution procedures in their country of residence.
Several of these issues are addressed in the draft OECD guidelines and we urge that these guidelines are finalised, adopted and implemented by OECD governments at the earliest opportunity during 1999.
Those issues that are not currently covered by the draft OECD guidelines, for example, privacy and the protection of children, should be given priority in future discussions.
Further research and information
Concrete evidence of consumer experiences of electronic commerce is still scarce and there is some research evidence (outside US) to suggest that there is currently a high level of consumer mistrust in on-line transactions - for example in the UK Consumers Association carried out two pieces of market research which suggest that only a minority of consumers have actually purchased goods electronically, preferring to use the Net to get information about a product and then use more traditional means for the actual purchase. Last year Consumers International initiated a project that would provide a snapshot of consumer experiences when purchasing goods over the internet. The project and its research protocol is described in detail by Professor Robert Mayer of Utah University - data collection in the 12 countries has been completed and is currently being analysed; initial results suggest that non-delivery of goods and errors in what is supplied are not an uncommon occurrence.
A further research project, also co-ordinated by Consumers International is due to start shortly and will focus on training consumer representatives in e-commerce and data protection issues as well as carry out further concrete research related to personal privacy over the internet.
It must be noted here that consumer organisations in their role as information providers and independent consumer advisers have an important role to play in the future information provision to consumers of good and bad practices in e-commerce transactions, as well as building up, for example, a future database of 'recommended' retailers.
Last but not least is the reality that two-thirds of the world's people are currently no more than window shoppers on the electronic shopping mall, assuming they can get access to a PC in the first place or that they can have recourse to consumer protection or rights in their home country. Consumers International believes that there is a role for governments, businesses as well as public organisations in facilitating access to new technologies, providing information and training. For example by provision of terminals in public places, such as libraries, town halls, post offices or village general stores (the model of the popular 'Minitel' system in France provides a good example). For Consumers International, getting all its world-wide members on-line by the year 2000 has been a strategic priority - achieved already in the case of Eastern Europe this year and well underway via a funded project in Africa.
1.) Consumers International is a confederation of 246 organisations in 110 countries - its members include independent, not-for profit, non-political consumer organisations as well as government consumer protection agencies (government affiliates). It is a policy and campaigning organisation dedicated to making the consumer voice heard in international decision-making fora, as well as developing the consumer movement in countries where it is weak or undeveloped, through training, advice and project support. The headquarters are in London, UK, with four regional offices operating in Africa, Asia, Latin America and the UK.