CONSUMER RIGHTS ELECTRONIC COMMERCE Mrs Pamela

CONSUMER RIGHTS & ELECTRONIC COMMERCE Mrs Pamela W. S. Chan Chief Executive Consumer Council, HKSAR 26 March 2001

Consumer Confidence Consumer confidence is necessary to realise the full potential of e-commerce l On-line operators should respect 8 basic consumer rights. l

Eight Consumer Rights - UN l l l l Right to satisfaction of Basic Needs Right to Safety Right to be Informed Right to Choose Right to be Heard Right to Redress Right to Consumer Education Right to Healthy & Sustainable Environment

Eight Consumer Rights - UN l l l l Right to satisfaction of basic needs Right to safety Right to be informed Right to choose Right to be heard Right to redress Right to consumer education Right to healthy & sustainable environment

E-Commerce l l l On-line world shaping lives of consumers Soon regarded as basic service in developed economies Problem of Access: – – – no computer illiterate mentally deficient

Consumer Rights Right to be informed Consumers must be given appropriate information and ensured privacy lpassing of information not allowed unless with expressed consent lwhy & how information will be used lnamed individual for data protection

Consumer Rights Right to choose l l Sites that will respect their privacy. Data collection - necessary and reasonable Right to opt out, review and correct information Right to refuse the passing of information to third parties

Consumer Rights Right to redress l l Right to hold companies liable for privacy violation Easy access to dispute resolution mechanism

Consumer Rights Right to safety l Superior security system - safeguard electronic transaction and data protection l Clear definition of liability of firms

Consumer Protection in the Virtual Market l l l Same level of protection as in real market Achieved through national consumer protection and privacy law New challenges as E-traders adapt the technology for their own interests, not consumers

Consumers International Privacy Project By: consumer organizations from 14 countries/ territories l Objective - how much information is collected and how web sites take steps to protect privacy l 751 sites : l 300 US based 300 EU based l Sectors: l – – – Retail Financial and Health

Disclosure on Information Use EU & US sites fall short of international standards l EU: tight regulation l US: no comprehensive legal protection in consumer privacy But EU are no better

Personal Information l US & EU: +63% of sites collected personal information l Hong Kong: 80% of sites

Placement of Cookies Financial & Retail sites l US and EU +72% of sites place more than one cookies l HK: 85% Majority place 2 - 3 cookies One site +50 cookies

Compulsory information l Most common information collected: – – l name 81% email 70% telephone 49% address 46% In Hong Kong: – – – gender: 24% ID Card No: 4% date of birth: 9%

At what stage was information collected l Information was collected after user browsed the site, but before making a purchase in all jurisdictions

Did sites have privacy policy l Of the US and EU sites that collected information, 58% had a privacy policy. l Of Hong Kong sites, 84% had a policy l Information on what was done with information found to be lacking

How easy was it to find privacy policy l Ease of finding a policy determined by how prominent it was l 67% of EU and US sites were in this category l Hong Kong 77%

‘Opting Out’ of mailing lists and passing on of information l EU, US and Hong Kong sites were similar in that – 21% gave an opting out choice for their own mailing lists; – 3% about affiliates mailing lists – 3% about third party mailing lists

Was site a member of certification program l Over 95% of sites visited did not belong to any certification scheme l Only 3 sites in Hong Kong cited a trust mark reference

Trust Mark Schemes l l OECD Guidelines To be successful trust marks must address basic consumer concerns – – – on terms of payment and procedure, terms of delivery, guarantees, after sales service, cooling off periods, returns policy, statement on privacy

Online redress mechanism l l Given that most transactions will be outside a consumers jurisdiction, a major consideration will be alternative dispute resolution (ADR) by way of an online redress mechanism, A range of possibilities – – – assisted negotiation mediation binding arbitration

Key Elements of online redress l l l l Independence - impartiality of the third party Transparency - all aspects clearly known Visibility - needs to be well publicised Affordable - preferably free Timely - resolve disputes quickly Competent ADR officers Security of information

Key ADR Elements continued…. l l l Enforceability - sanctions should be available Due Process - fair to both sides Legality - participation should not foreclose possibility of legal action by consumer or appropriate enforcement agency

Insurance Schemes/Fidelity Funds l Provision for worst case scenario, if merchant fails to abide by ADR decision l In terms of consumer confidence, this would be major selling point

Monitoring Trust Marks l l l Business: worse scenario loss of trustmark Consumers: monetary Consumer expectation: close monitoring insurance/fidelity fund

International Standards l l Globalisation points to need for international rules, for government, business & consumers International standards on trust marks will provide an important benchmark ISO initiatives Need for consumer participation in setting standards

The future l Beneficial if one single forum emerges at some future date to ensure a harmonised approach l Not only for consumers, but for governments and business

Confucius The Wise, perplexes not, The Benevolent, worries not, The Brave, fears not. Thank You