Introduction

I appreciate the opportunity to provide input for the FTC's upcoming public workshop on consumer protection concerns in the area of international electronic commerce. I submit these comments as an academic who has studied consumer policy issues for the past 25 years. More specifically, my comments stem from my current participation in a research project, funded by the European Union, entitled, "Consumer Experiences of Electronic Commerce: An International Comparative Survey." This project brings together researchers in twelve countries for the purpose of documenting and evaluating consumer experiences when buying goods over the internet from both domestic and foreign sites. Data collection for the project took place between December 1998 and February 1999. By highlighting both positive and negative consumer experiences across a variety of product classes, the results provide elements of both a needs assessment and a baseline measure against which future consumer protection efforts may be judged.

Project Overview

The project seeks to provide valuable information to individual consumers, consumer organizations, internet firms, self-regulatory bodies, and policymakers regarding practices that create, avoid, or remediate consumer problems in electronic commerce. Reflecting the global reach of internet sales, data was collected from the perspective of buyers located in twelve countries on four continents: Australia, Belgium, Germany, Greece, Japan, Netherlands, Norway, Portugal, Spain, Sweden, United Kingdom, and United States. In most instances, data collection was carried out by consumer organizations. In the United States, data collection took place through an academic institution, the University of Utah. (Consumers International, an international confederation headquartered in London, is managing the project.)

The study focused on the purchase of eight product classes that comprise a large percentage of actual internet purchases--books, software, RAM, toys, hair dryer, clothing, chocolate, and champagne. (Higher priced items such as computer systems and airline tickets were omitted for budgetary reasons.) For each of the eight products, study participants were instructed to purchase one item from a domestic site and one from a foreign site. All told, the study's data base covers 192 purchases, half of which involve transactions across national borders.

Specific sites were selected with the goal of simulating the selection process of normal, everyday consumers. Major search engines like Yahoo and Infoseek were used to identify sites in some instances. In others, sites recommended by magazines like PC Magazine and Newsweek were selected. If anything, the sample of sites was biased toward reputable sites where consumer problems, one would think, would be minimal.

Major Points of Investigation

For each transaction, there are three questionnaires covering purchase; receipt; and, where feasible, return of goods. Specific points of investigation include the extent to which internet sellers:

1. clearly specify the price of an item and its shipping costs
2. allow consumers to review their orders before finalizing the transaction
3. take steps to insure the security of on-line financial transactions
4. only collect personal information that is necessary for the transaction
5. articulate a policy regarding the reselling of information about customers
6. confirm the specifics of a transaction
7. deliver goods within the time frame quoted
8. provide a convenient, inexpensive, and readily accessible policy for returning goods
9. provide refunds within a reasonable period of time
10. disclose the use of "cookies"

All of the above practices have equally significance in domestic and transborder purchases. Regarding transborder purchases only, the project data allow for the investigation of additional questions:

1. What constitutes a domestic vs. foreign site, and how do consumers know when they are purchasing from a foreign site?
2. What special actions, if any, do consumers have to take to "find" foreign sites?
3. How often are consumers automatically switched among countries during a transaction?
4. How much a barrier is language to English-speaking consumers seeking to buy from foreign sites?
5. How clearly, and at what point in a transaction, do sites indicate whether they will ship goods to a particular foreign country?
6. How clearly, and at what point in a transaction, do sites indicate the price of an item and cost of shipping in various currencies?
7. To what extent do payment options vary between domestic and foreign buyers?
8. How intelligible are various certifications and seals of approval to foreign-based buyers?
9. How clearly, and at what point in a transaction, is the country whose laws govern the transaction specified?
10. To what extent are various consumer protections--such as refund and rescission periods-- tailored to reflect the special circumstances of foreign buyers (e.g., longer times for delivery)?

Study Results

At this point in time, I only have access to the results from the United States, that is, eight purchases made within the U.S. and eight made from foreign sites. Unexpectedly positive and negative experiences can be reported for both domestic and foreign sites. On the positive side, immediate confirmation via email was a common practice, and delivery from even foreign sites could be rapid. In one instance, billing has not occurred to this point--more than 100 days after the transaction. Negative experiences included the non-arrival of goods until a complaint was lodged 45 days after the transaction, refusal to sell due to erroneous credit card information, non-disclosure of exact shipping costs, and the high cost of returning merchandise. Based on the U.S.-based shopping experiences alone, consumers are slightly more likely to encounter problems of information, security, privacy, and redress when shopping at foreign sites than at domestic ones. Many of these problems seem, however, to be a function of "immature" site development rather than an absence of regulation or self-regulation.

The results from all twelve countries are currently being coded and combined. A meeting will take place in London on May 10th at which the twelve study participants will discuss the meaning of their composite results and outline a final report. The final report will be disseminated by the end of June, 1999. Only preliminary results can be guaranteed by the time of the FTC's workshop on June 8-9. Nevertheless, even the preliminary data should be sufficiently rich to contribute to a discussion of several of the questions identified in the December 16 notice in the Federal Register. I would enjoy the opportunity to share these results in oral or written form at the June 1999 workshop.