CONSUMER RIGHTS & ELECTRONIC COMMERCE

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

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

3. Eight Consumer Rights - UN • 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

4. Eight Consumer Rights - UN • 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

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

6. Consumer Rights Right to be informed Consumers must be given appropriate information and ensuredprivacy • passing of information not allowed unless with expressed consent • why & how information will be used • named individual for data protection

7. Consumer Rights Right to choose • 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

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

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

10. Consumer Protection in the Virtual Market • 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

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

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

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

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

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

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

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

18. How easy was it to find privacy policy • Ease of finding a policy determined by how prominent it was • 67% of EU and US sites were in this category • Hong Kong77%

19. ‘Opting Out’ of mailing lists and passing on of information • 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

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

21. Trust Mark Schemes • 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

22. Online redress mechanism • 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

23. Key Elements of online redress • 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

24. Key ADR Elements continued…. • 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

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

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

27. International Standards • 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

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

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