page deals with consumer legislation and codes of practice.
It covers -
As noted in the governance
guide elsewhere on this site, despite proposals for a
global Lex Internet, no legal regime covers all
of cyberspace. There is thus no single set of consumer
protection legislation or business law.
Perceptions about the rights and responsibilities of actors
(retailers and service providers, consumers, government
agencies, advocacy bodies, industry bodies) vary significantly
from one jurisdiction. That is reflected in different
market expectation and practices and in different legislation.
Business-to-consumer (B2C) trading across borders is not
new and predates the internet.
However, online commerce involving both and small businesses
poses particular challenges. In which jurisdiction should
any dispute be heard? Is resolution in another jurisdiction
inconsistent with a nation's consumer protection regime
(eg because cost or even language means that it is not
available to an ordinary consumer)? Are particular terms
& conditions invalid because they reflect another
jurisdiction's legal regime? What of regulation regarding
activity, such as spam, that is restricted in one jurisdiction
but unrestricted in another nation? And what of practice
within nations, where business practice in some sectors
is poor and government regulators either lack expertise
or interest in addressing abuses?
Consistent with principles of international law, governments
have responded to those questions in three ways.
Firstly they have slowly moved to articulate broad principles
and guidelines about consumer protection, with the expectation
that governments will reflect those principles in national
policies and thereby harmonise legislation across jurisdictions.
That is a challenge, because not all governments accept
the principles or have the capacity to put them into effect
(eg don't expect much protection in Papua New Guinea,
Togo or Afghanistan).
Others place a greater emphasis on self-regulation by
industry and on the autonomy of consumers. The broadness
of the guidelines means that there are disagreements about
interpretation, which extend from simple uncomprehension
to use of regulatory regimes as invisible trade barriers.
Some international actors are more influential than others.
As a major trading bloc the European Union electronic
commerce and data protection
directives, for example, have had a significant influence
outside the region in driving national legislation and
in encouraging international standards.
Secondly they have moved to establish bilateral and multilateral
agreements on specific issues (eg the Australia-South
Korea MOU on spam, highlighted here)
and to build links between regulatory agencies, eg between
the US Federal Trade Commission and the Australian Competition
& Consumer Commission.
Thirdly they have made some effort to educate consumers
about their rights, responsibilities and reasonable expectations
in the online environment, something explored in more
detail later in this guide.
consumer protection in an online global economy
John Goldring's prescient 1996 How Consumer Fraud
Might Be Addressed in the Networld paper
identified steps for the protection of consumers in the
global "virtual marketplace" -
the most obvious step would be for nations to seek bi-lateral
treaties that establish reciprocal arrangements for
enforcing consumer protection laws between nation-states
that have similar laws.
the most effective means, but most difficult to accomplish
would be an international agreement concerning the rights
of consumers online, similar to the international agreements
governing transnational postal services and telecommunications.
These, of course, depend ultimately on the agreement
of nation-states and implementation in national legislation.
Although such agreements as the Law of Outer
Space take years to conclude and promulgate, if
consumer transactions online become a major component
of international trade, the need to curb outrageous
and damaging behavior may become sufficiently compelling
to attract the interests of major trading nations to
participate in a broadly based effort to establish international
consumer protection norms.
the World Trade Organization might determine that consumer
fraud online constituted a threat to the viability of
international trade. As sanctions may be imposed upon
non-conforming nation-states, those countries that tolerated
reprehensible behavior on the part of commercial entities
operating within their territories might be censured
by imposing restrictions on their import/export privileges
with participating nation-states.
individual nation-states may enforce their own consumer
protection laws unilaterally by inhibiting the travel
of offending parties foreclosing entry into their territories
and/or by serving process upon such parties should they
choose to enter. This may be a reasonably effective
sanction to deter entrepreneurs who are global operators
by limiting their mobility-if sufficient important states
take this type of action. Also sanctions may be imposed
upon nationals who fund or serve as agents for offending
offshore parties. Moreover, consumer goods may be stopped
at the border if they come from offending merchants.
There are practical and political difficulties in such
unilateral action, and in any event it may contravene
obligations arising under international trade agreements
such as the General Agreement on Tariffs and Trade.
Information Service Providers and Internet Access Providers
may themselves unite to establish industry norms for
appropriate behavior in offering consumer transactions
over their systems. Commercial entities that fail to
comply may be refused service. Such arrangements are
strictly private, and, despite their beneficial consequences
for consumers, they may run the risk of offending against
national anti-trust or other pro-competition laws.
major commercial interests that choose to offer products
online may establish industry organizations that purport
to guarantee an optimum level of consumer protection
for purchasers of their products. Like the Good Housekeeping
seal of approval, participating companies may advertise
their compliance as a major attraction to consumers
who wish to be assured that they are engaged in a fair
and equitable transaction free of fraudulent and unverifiable
representations. This has the disadvantage that abuse
of consumers is more usually committed by marginal operators
rather than established firms with sound reputations,
and these marginal operators are unlikely to join industry
international consumer protection guidelines
EU 2000 Electronic Commerce Directive, 2002 Directive
on Privacy & Electronic Communications and
1980 UN Convention for the International Sale of Goods
In 1999 the international Organisation for Economic Co-Operation
& Development (OECD) adopted Guidelines
for consumer protection in online commerce.
The OECD Guidelines for Protecting Consumers from
Fraudulent and Deceptive Commercial Practices Across Borders
were adopted in 2003. The guidelines establish a common
framework for combatting cross-border fraud (whether online
or offline) through "closer, faster, and more efficient"
cooperation between consumer protection agencies. They
are meant to address pyramid and lottery schemes, travel
and credit-related scams, telemarketing scams and modem
and web page hijacking.
of international initiatives for consumer protection in
the electronic marketplace is provided by the August 1999
report for the Global Information Infrastructure Commission
and by The Consumer Law Sourcebook 2000: Electronic
Commerce & the Global Economy (Washington: EPIC
2000) edited by Sarah Andrews.
Bodies such as the American Bar Association, in its major
cyberspace law project report,
have called for a global commission to set international
rules regarding consumer protection, privacy, taxation,
banking, gambling and other online activities. In January
2001 Ralph Nader called for a World Consumer Protection
on the model of the World Intellectual Property Organization
but "more democratically run". Those calls are
unlikely to bear fruit.
That means consumer protection, along with e-business
law as a whole, will continue to be a patchwork of national
(and local legislation), bilateral/multilateral agreements,
industry codes, market pressure and consumer savvy.
The proposed Hague Convention on Jurisdiction &
Foreign Judgements in Civil & Commercial Matters
international agreement applying to most private litigation,
is one way of tying together the patches. There's a succinct
introduction in a Commonwealth Attorney-General's discussion
for an opposing view see the criticism
by the Consumer Project on Technology (CPT)
and Richard Stallman's Harm from the Hague
Cross-border issues are explored in International
Perspectives on Consumers' Access to Justice (Cambridge:
Cambridge Uni Press 2004) edited by Charles Rickett &
Another perspective is provided by John Braithwaite &
Peter Drahos in Global Business Regulation
(Cambridge: Cambridge Uni Press 2000) and Dealing in
Virtue: International Commercial Arbitration & the
Construction of a Transnational Legal Order by Yves
Dezalay & Bryant Garth (Chicago: Uni of Chicago Press
Particular markets are also setting de facto global consumer
protection standards. The most notable example is the
adoption of the EU data protection regime, described in
our privacy guide, by New
Zealand, Canada and (for transborder data flows) the US.
US perspectives on Consumer Protection in the Global
Electronic Marketplace (CPGEM)
were provided mid-2000 by a major conference under the
auspices of the Federal Trade Commission. The Advisory
Committee on Online Access & Security (ACOAS)
of the Federal Trade Commission (FTC)
on consumer access to information collected by commercial
websites and the security of that information.
the European Union
In June 2000 the EU adopted a major E-Commerce Directive
to ensure that providers/users of 'information society
services' across Europe benefit from the principles of
free movement of services and freedom of establishment.
It extended the 1997 Distance Selling Directive
2000 Directive embraces B2B and B2C activity, including
services that are funded by advertising or sponsorship
and those using online electronic transactions, such as
interactive online shopping. Sectors covered include online
newspapers, databases, financial services, professional
services (such as lawyers, doctors and accountants), entertainment
services (such as video on demand), direct marketing and
internet service providers or content hosting.
The Directive articulates -
requirements regarding the role of national authorities;
requirements for web advertising;
principles relating to contracting online;
to the liability of Internet intermediaries; and
regarding disclosure of any codes of conduct, such as
for online-dispute settlement, by which the service
provider is bound.
Directive was extended in 2002 by the Directive on
Privacy and Electronic Communications (PDF),
which includes some protection against spam.
The US Electronic Commerce & Consumer Protection Group
Group) includes America Online, AT&T, Dell, IBM,
Microsoft, Network Solutions, and AOL Time Warner.
In launching the group a spokesman indicated that "we
are proposing a model that can now be evaluated by all
companies doing business online, consumers, and governments
around the world," going on to describe its new guidelines
as a contribution to "an important global dialogue
on how to construct a set of global rules for a global
The guidelines cover marketing practices and information
about goods and services, transactions, cancellation,
security, privacy, and customer support. Merchants are
encouraged to participate in third-party dispute resolution
All very well, say consumer advocates, but the code of
practice doesn't go far enough.
Locally the Australian Direct Marketing Association (ADMA)
has placed its direct marketing Merchant Code of Conduct
online and the Institute of Chartered Accountants licenses
members under the global WebTrust
There is increasing interest in online alternate dispute
resolution (ADR) mechanisms that allow businesses and
consumers to address e-commerce disputes outside the courts.
That is of potential value when the disputants are located
in different jurisdictions. It builds on the long history
of B2B arbitration discussed in Dezalay & Garth's
Dealing in Virtue. This site features a profile
on B2B and B2C ADR schemes and issues.
Retailers and service providers have sought to encourage
consumer confidence by the inclusion of website 'seals'
(aka trustmarks), indicating that the site owner complies
with voluntary codes of practice. We've discussed the
major 'certification' businesses, such as TRUSTe and BBBOnline,
later in this guide and in a more detailed profile.
For the CISG see John Honnold's Uniform Law for International
Sales (The Hague: Kluwer Law 1999). Other perspectives
are provided in Consumer Protection in the Age of
the 'Information Economy' (Aldershot: Ashgate 2006)
edited by Jane Winn and Consumer Protection in the
21st Century: A Global Perspective (Berkeley: Transnational
2002) by William Vukowich
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