March 26, 1999
RE: U.S. Perspectives on Consumer Protection in the Global Electronic Marketplace -- Comment, FTC File No. P994312
The Promotion Marketing Association, Inc. ("PMA") is the premier trade association representing the interests of promotion marketers, including more than 700 manufacturer, retailer and promotion supplier member companies. Also included among PMA's members are promotion agencies, law firms, incentive marketers, fulfillment organizations, and sampling and couponing companies in the United States and abroad. PMA membership also consists of various agencies and other suppliers providing vital services to promotion marketers, such as printing, production, fulfillment and promotion administration to marketers engaged in the conduct of sweepstakes promotions.
PMA was founded in 1911 and conducts educational seminars and conferences, publishes PMA's Law Bulletin, Law & Business Analysis & Planning Report, Promotion Marketing Law Handbook, Outlook, a bi-monthly membership newsletter, as well as a wide variety of other information publications, and provides other services pertaining to the promotion marketing industry.
PMA appreciates the FTC's invitation to submit its views on the very timely and important issues raised by the Federal Trade Commission in its Federal Register Notice of December 16, 1998, requesting public perspectives on consumer protection in the global electronic marketplace.
PMA acknowledges that the success and potential benefits of business-to-consumer electronic commerce will depend, in large part, on the development and fostering of consumer confidence in on-line commercial activities. Accordingly, PMA supports an electronic global marketplace that encourages the growth of electronic commerce while at the same time affording the necessary protections to consumers.
PMA believes that the development of an electronic global marketplace will best be accomplished by providing those businesses engaging in electronic commerce with the flexibility to adapt to and address the needs of consumers as their needs evolve. Companies who wish to do business with consumers will implement the necessary protections because consumers will demand that electronic commerce meet their needs. Otherwise, consumers simply will choose not to engage in electronic transactions. Many alternatives to electronic commerce exist in the traditional marketplace for consumers if they are not confident they will be reasonably protected when engaging in electronic commerce.
Furthermore, as the competition for consumers' business in the electronic context increases, the companies that best address consumers' concerns will effectively set the standards for the industry as a whole. Countless examples of businesses responding to consumer demands for protection when engaging in on-line transactions exist already. For example, those businesses that provide consumers with the opportunity to make secure transactions over the Internet using the most effective software available are creating the standard which other businesses who want to survive and grow are being forced to follow.
When considering the extent to which legislation or regulation is required to address privacy, security and other concerns, the Commission should consider the following important factors: (i) Many existing laws which provide protections for consumers in the traditional marketplace continue to provide protection for consumers when they conduct their activities in the electronic global marketplace and (ii) public and private agencies as well as businesses engaging in electronic commerce have recognized these concerns and are taking steps to address them.
At present, consumers engaging in electronic commerce are afforded many of the same protections as they receive when engaging in more traditional transactions. For instance, the FTC currently has the ability pursuant to Section 5 of the FTC Act to protect consumers against unfair or deceptive acts or practices in or affecting commerce. Many consumer protections embodied in FTC rules, such as the Mail and Telephone Order Merchandise Rule apply to electronic transactions. Current law and enforcement mechanisms also serve to protect consumers' interests in electronic marketplace. The FTC's suit against GeoCities regarding GeoCities' data collection practices is just one example of how the FTC has been able to use existing law to protect consumers who use the Internet.
At the state level, both codified and common state laws serve to protect consumers from misleading, unfair and deceptive practices that occur in the course of electronic commerce. Other state laws, including those governing sweepstakes and contests, also continue to apply to consumer-oriented activities taking place over the Internet.
Additionally, both public and private agencies as well as many businesses engaged in electronic commerce are aware of the need to establish consumer protections in the areas of privacy and transaction security so that consumers will have confidence when conducting electronic transactions. Indeed, self-regulatory agencies and associations such as the Council of Better Business Bureaus, Inc. and the Direct Marketing Association have taken the initiative of establishing privacy policies and programs. Just this month, BBBOnline, a subsidiary of the Council of Better Business Bureaus, Inc., launched its BBBOnLine Privacy Program. The BBBOnline Privacy Program permits online businesses to display a compliance seal if the business meets an extensive set of criteria, including agreement to resolve disputes pursuant to a voluntary, self-regulatory resolution procedure. Similarly, private organizations such as TRUSTe seek to provide consumers with confidence in electronic transactions by allowing only those Web sites that have satisfied certain privacy and data security criteria to display a compliance seal. The Direct Marketing Association has promulgated its "Privacy Promise" to which it is requiring its members to adhere. Many leading companies are supportive of one or more of these initiatives and, thus, are setting the standards by which other companies who wish to effectively engage in electronic commerce must comply.
Efforts are already underway by private agencies and organizations to address the need to create global trust in electronic trade transactions. For example, the International Chamber of Commerce through its Electronic Commerce Project has established GUIDEC (General Usage for International Digitally Ensured Commerce). GUIDEC was established to provide businesses with self-regulatory guidelines for Internet commerce, including the authentication of electronic transactions through the use of public key cryptography, digital signatures and trustworthy third party authenticators. Additionally, the American Bar Association's Section of Science and Technology has undertake several initiatives, including the Digital Signature Guidelines, to establish uniformity with respect to the legal effect of digital signatures. It is important that the Commission take changes in technology into consideration when contemplating this issue. PMA believes that companies responding to the legitimate needs of consumers will use existing technological tools to accomplish goals that serve consumer interests. The U.S. should cooperate with other countries in allowing companies the flexibility to explore such new technologies and should not mandate any specific form of technology to protect consumers.
It is clear that the benefits and efficiencies of electronic commerce can only be achieved if consumers are confident that their electronic commerce transactions are secure and their personal information remains under their control. Privacy and security standards will be established through consumer demand without the need for specific federal legislation or new regulation. Businesses competing for consumers electronically will need to sufficiently address consumers' needs in terms of privacy and security if they are to remain competitive in the global electronic marketplace. PMA's opinion that no specific legislation or new regulation is needed to address these issues is strengthened by the fact that many existing consumer protection laws can be applied (and in fact are being applied) to electronic commerce. The marketplace has already demonstrated that these issues will be satisfactorily addressed, as is evidenced by the initiatives undertaken by countless public and private self-regulatory agencies on both a domestic and international basis.
The PMA applauds the Commission's attention to this important issue and would like to participate actively in the FTC's workshop on "U.S. Perspectives on Consumer Protection in the Global Electronic Marketplace."
PROMOTION MARKETING ASSOCIATION, INC.