Asia-Pacific Economic Cooperation Electronic Commerce Steering Group

Workshop on Consumer Protection

Consumer Protection in E-Commerce
Report on OECD Guidelines for Consumer Protection in the context of Electronic
Commerce
20 July 2000
Mr Allan Asher
Member of the OECD Committee for Consumer Policy
I!"#$%C!I#
About one-fifth of total electronic commerce is accounted for by business-to-
consumer transactions. Consumer and user trust is essential for its future
development.
Cooperation by business and consumer organisations in developing a united approach
to the development of consumer protection strategies for e-commerce is a vital step in
improving the extent of consumer protection and conseuently consumer confidence
in this ne! !ay of doing business.
"uch international cooperation can and is being achieved through international
net!or#s li#e the OECD$s Committee on Consumer Policy %CCP& !hich has been
successful in building consensus among government' business and civil society. (oth
business and consumer organisations no! participate in the committee$s !or# and
regularly attend its meetings and the CCP has proven to offer an excellent opportunity
for international cooperation and the development of consumer protection standards
for global commerce.
!&E G%I$E'IES
At the end of )***' and after )+ months of negotiation' the OECD completed and
adopted ,uidelines for Consumer Protection in the Context of Electronic Commerce.
-he ,uidelines set out the core characteristics of effective consumer protection for
on-line business-to-consumer transactions. -hese ,uidelines are proving helpful to
governments' business' and consumers in very practical !ays in trying to deal !ith
this ne! environment as they provide instructive principles for both applying existing
la!s and developing ne! ones if necessary as they !or# to establish consumer
protection mechanisms for e-commerce.
-he ,uidelines are a first step in encouraging a global approach to consumer
protection in the on-line mar#etplace' a sector that is inherently international --
borderless. -hey facilitate on-line commerce consumer protection mechanisms
!ithout erecting barriers to trade and by increasing consumer confidence in e-
commerce' they have the ability to help e-commerce reach its full potential.
Eight simple concepts form the basis of the recommendations. -hey are.
!ransparent an( Effecti)e Protection*
E-commerce consumers should be no less protected !hen shopping on-line than !hen
they buy from their local store or order from a catalogue.
+air ,usiness- A()ertising an( .arketing Practices*
Advertising should be clearly identifiable. (usinesses should respect consumers$
choices not to receive e-mail they don$t !ant. (usiness should ta#e special care !hen
targeting children' elderly' and others !ho may lac# the capacity to understand the
information as presented.
#n-line $isclosures A/out the ,usiness- the Goo(s an( Ser)ices- an( the
!ransaction*
Disclosure should include complete and accurate information about the business'
about the goods or services for sale and about ho! the transaction is made. /hat this
means is that e-customers should #no! !hich business they are really dealing !ith.
-hey should have a complete description of !hat they are buying. And they should
have enough information about the transaction process to be able to ma#e an informed
decision.
Confirmation Process*
-he confirmation process for a sale should give the consumer a chance to see !hat he
has agreed to buy and to change his mind if he !ants before the purchase is
completed.
Secure Payment Systems*
Payment systems need to be secure and easy to use.
"e(ress*
0n an international transaction' redress is one of the most difficult areas to address'
and the OECD recommendations recognise that further !or# is needed. -he
,uidelines articulate the principle that international e-commerce transactions are
sub1ect to an existing frame!or# on applicable la! and 1urisdiction' but that it may be
necessary to modify' or apply differently' this frame!or# to ma#e it effective to
provide redress for e-commerce. -he use of alternative dispute resolution is strongly
recommended.
Pri)acy*
-he OECD has been at the forefront of international privacy !or# for decades. Over
23 years ago' the OECD developed ,uidelines ,overning the Protection of Privacy
and -ransborder 4lo!s of Personal Data %)*+3&. -hese ,uidelines !ere developed
long before everyone started !orrying about privacy in e-commerce %because there
!as no e-commerce&. "till today' the OECD Privacy ,uidelines are considered to be a
5flagship5 OECD document and still serve member countries as the basis for current
international !or# on privacy in the on-line environment.
-he ,uidelines set out eight principles.
Collection limitation principle
Data uality principle
Purpose specification principle
"ecurity safeguards principle
Openness principle
0ndividual participation principle
Accountability principle
-he OECD Consumer Protection ,uidelines point directly to the )*+3 Privacy
,uidelines as the benchmar# for providing privacy protection by recognising that
5business-to-consumer e-commerce should be conducted in accordance !ith the
recognised principles set out in the )*+3 OECD Privacy ,uidelines.5
Education. 4inally' the OECD ,uidelines encourage governments' business and
consumers to !or# together to educate consumers about electronic commerce' to
foster informed decision ma#ing by consumers participating in electronic commerce'
and to increase business and consumer a!areness of the consumer protection
frame!or# that applies to their on-line activities.
+#''#W # AC!I#
-he ,uidelines are already proving to be an influential document.
-hey have been' or soon !ill be' translated into nearly every native language of the
OECD Member countries and !ill be available on the OECD !eb site.
Private sector organisations %both business and consumer& are using the ,uidelines as
they develop their o!n set of merchant and consumer guidelines.
,overnments are using the ,uidelines as a benchmar# !hen examining their national
la!s to ensure effective consumer protection on-line. And some have used the
guidelines in developing their o!n national code and trustmar# programs. 4or
example in Australia the ,uidelines formed the basis for our best practice model for
business titled (uilding Consumer "overeignty in Electronic Commerce - A best
practice model for business. "till others have hosted !or#shops on the ,uidelines to
educate business and consumers in their respective countries on the importance of the
implementation of the ,uidelines for providing effective consumer protection in the
on-line environment.
-he Committee on Consumer Policy !ill continue to cooperate !ith business and
consumer representatives' and all of civil society to ensure that the ,uidelines are
implemented effectively and help educate on-line consumers and business about their
rights and responsibilities on-line. -he CCP !ill also continue to foster the
international dialogue on consumer protection issues' encouraging government'
business and consumer representatives to !or# together and learn from eachother.
%PC#.IG E0E!S
#nline A$" Workshop - $ecem/er 2000
An innovative component of the ,uidelines !as the introduction of alternative
dispute resolution %AD6& as a means to provide consumer redress in a borderless
environment. AD6 is no! being explored globally in !or#shops and is held out by
many member countries as the means for providing consumer redress in the on-line
environment. -he OECD !ill hold a conference in the 7ague on ))-)2 December to
explore on-line AD6. -he conference is co-organised !ith the 7ague Conference on
Private 0nternational 8a! and the 0nternational Chamber of Commerce.
#EC$ Emerging .arket Economy +orum on Electronic Commerce - January
2001
-he OECD and Dubai are planning to 1ointly host an international conference on
electronic commerce in Dubai on )9-): ;anuary 233)' !ith a vie! to enhancing the
prospects for effective !orld!ide policy coordination in this important ne! area of
economic activity. -he 5Emerging Mar#et Economy 4orum on Electronic Commerce5
!ill be the first event of this #ind organised by the OECD in the Middle East.
-he t!o-day e-commerce conference !ill be preceded by a one-day Public <oice
Conference on )= ;anuary' !hich !ill provide a platform for consumer groups and
other civil society organisations. "ome >=3 delegates are expected to attend the
forum' including representatives from governments' !orld trade and policy-setting
bodies and business leaders.
#EC$ Gui(elines Workshop - .arch 2001
0n March 233)' the OECD Consumer Policy Committee !ill hold a !or#shop !ith
the private sector' including business and consumer representatives' in (erlin to
discuss and explore the ,uidelines and their effectiveness. one year later.
0nformation on these upcoming events !ill soon be available on the OECD !eb site.
C#C'%SI#
-he impact of globalisation on consumers and consumer policy is at the heart of the
activities of the OECD$s !or# on consumer policy. -he OECD has for many years
been examining a number of issues directly related to cross-border consumer
transactions' including !ays to build trust and confidence on-line and to overcome
existing barriers to a truly global mar#etplace.
(y setting out the core characteristics of effective consumer protection for on-line
business-to-consumer transactions' it is hoped the OECD ,uidelines for Consumer
Protection in Electronic Commerce !ill help eliminate some of the uncertainties that
both consumers and business encounter !hen buying and selling on-line and
ultimately assist on-line commerce in the global mar#etplace to reach its full
potential.