Update Online Consumer Protection Laws

By Sunny Lewis

 PARIS, France, June 2, 2016 (Maximpact.com News) – OECD Countries should modernize their consumer protection laws to address new risks posed by online commerce, including “free” apps and peer-to-peer Internet transactions, according to new OECD guidelines for member countries and emerging economies in a new Recommendation. While not legally binding, it puts peer pressure on countries to conform.

Entitled, “Recommendation of the Council on Consumer Protection in E-commerce,” the guidelines cover business-to-consumer e-commerce. And they address issues arising from the relationship between consumers and the Internet platforms that enable consumer-to-consumer transactions.

Consumers have been playing a more active role, and an economy of sharing has emerged, the OECD acknowledges. Yet business to consumer e-commerce has not reached its full potential, still representing a relatively small share of overall retail sales.

“Well-tailored consumer protections can encourage e-commerce and provide the opportunity for the online marketplace, including the sharing economy, to prosper,” says the OECD, a unique forum where the governments of 34 democracies with market economies work with each other and with more than 70 non-member economies to promote economic growth, prosperity, and sustainable development.

The Organization for Economic Cooperation and Development (OECD) provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies.

Today, OECD member countries account for 63 percent of world GDP, three-quarters of world trade, 95 percent of world official development assistance, over half of the world’s energy consumption, and 18 percent of the world’s population.

The OECD Recommendation on Consumer Protection in E-Commerce says people buying online are entitled to the same level of protection as with conventional transactions.

It calls on governments to work with business and consumer groups to determine legal changes that could improve consumer trust in e-commerce.

On June 21-23, government ministers and other stakeholders will gather at the Moon Palace Hotel in Cancún, Mexico to do just that.

The OECD Ministerial Meeting on the Digital Economy, titled “Innovation, Growth and Social Prosperity,” is intended to move the digital agenda forward in four policy areas that are key to the growth of the digital economy.

Internet openness is high on policy agendas; digital trust needs to be strengthened; global connectivity is reaching an unprecedented scale, while jobs and skills are being radically transformed.

The conference will be chaired by Mexico’s Minister of the Economy Ildefonso Guajardo Villarreal.

 One of the panels – on the connections between consumer trust and market growth – will feature Gerd Billen, state secretary at the German Federal Ministry of Justice and Consumer Protection; Welmer Ramos, Costa Rica’s Minister of Economy, Industry and Commerce; and Chairwoman of the U.S. Federal Trade Commission Edith Ramirez.

 This panel will explore the link between consumer trust and market growth, discussing how consumer policy can encourage e-commerce within and across borders. It will consider ways to promote the revised OECD 1999 E-commerce Recommendation and steps to encourage its implementation. It will also address a set of challenging consumer issues raised by emerging business models associated with the sharing economy.

New developments in e-commerce that are addressed by the Recommendation include:

  • Non-monetary transactions. Consumers increasingly acquire “free” goods and services in exchange for their personal data and these transactions are now explicitly included in the scope of the Recommendation. Governments and stakeholders are asked to consider ways to provide redress to consumers who have problem with such transactions.
  • Digital content products. Transactions involving digital content often come with technical or contractual access or usage limitations and many consumers have difficulty understanding their rights and obligations. New language has been added to clarify that consumers should be provided with clear information about such limitations, as well as on functionality and interoperability.
  • Active consumers. Current e-commerce business models increasingly blur the boundaries between consumers and businesses, with consumers playing a participatory role in product promotion and development, and entering into transactions with other consumers. As a result, the OECD has broadened the scope of its Recommendation, and it now encompasses business activities that facilitate consumer-to-consumer transactions. A new provision is added to ensure that consumer endorsements are truthful and transparent.
  • Mobile devices. The growing use of mobile devices for e-commerce brings a number of technical challenges to making information disclosures effective on small screens and can constrain record keeping by consumers. Two new provisions are included to highlight the need to account for the technological limitations or special characteristics of the device used.
  • Privacy and security risks. Consumer data is at the core of many e-commerce services and elevates privacy and security risks. The Recommendation recalls the need to address these risks consistent with other OECD instruments and includes two new provisions highlighting specific protections of particular importance for B2C e-commerce.
  • Payment protection. Recognizing that the level of payment protection can vary depending on the type of payment mechanism used, the Recommendation calls on governments and stakeholders to work together to develop minimum levels of consumer protection across payment mechanisms.
  • Product safety. In a number of countries, a range of unsafe products, which have been prohibited from sale or recalled from the offline retail market, are available in e-commerce. A new provision is added to the Recommendation to ensure that unsafe products are not offered to consumers online, and that businesses cooperate with the relevant authorities to address the problem.

In its Recommendation, the OECD suggests consumer protection laws should cover online apps and services offered for free in exchange for gaining access to the user’s personal data.

While many consumers are drawn to the convenience and choice of online commerce, many others remain wary due to concerns about privacy, payment security or legal recourse in case of a problem.

Other concerns include online product safety risks and doubts over whether consumer reviews are genuine.

While 75 percent of potential consumers in OECD countries access the Internet each day, a recent OECD report finds that just half of them made an online purchase in 2014. Those who did not buy cited security and privacy concerns as the main reasons holding them back.

In view of these facts, the OECD recommends that online businesses not misrepresent or hide terms and conditions likely to affect a decision to buy or try to conceal their identity or location.

Nor should they engage in deceptive practices related to the collection or use of personal data. They should take special care in marketing targeted at children or other vulnerable consumers, the OECD advises.

Provisions should be made to ensure consumers understand the terms and conditions relating to the acquisition and use of digital content like online music and movies – the fastest growing e-commerce category and often sold with legal or technical usage limitations.

Finally, the OECD recommends that consumers should also have access to easy-to-use mechanisms to resolve domestic and cross-border e-commerce disputes in a timely manner.

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