How to protect your company and customers in e-commerce transactions

29/07/2016

protect your company and customers in ecommerce transactions

protect your company and customers in ecommerce transactions

As customers increasingly turn to the internet to do their shopping, the e-commerce world continues to evolve. While this can be great for both businesses and consumers alike, there are many challenges to face when safely and satisfactorily completing purchases online.

In addition to the issues of B2C data security and privacy, there are other consumer protection concerns in e-commerce that stem from the consumer’s inability to see for sure what is being ordered. What happens when the goods or services do not arrive, arrive damaged, items are not the quality promised in marketing materials, or there is a discrepancy with payments?

It’s time to update decades old policies

Existing consumer protection policies created in the 1960s and 1970s must be revisited to account for e-commerce. According to the OECD, jurisdictional challenges limiting a nation’s ability to protect consumers will have to be addressed through cooperation, communication, and bi- and multi-lateral agreements between nations.

The OECD encourages governments and leading private sector industries to work together to update existing consumer protection laws. It also helps implement new regulations that aim to achieve transparent and fair protection for consumers during advertising, marketing, contract terms and payments.

Consumers should be proactive about e-commerce by diligently reading and comprehending all terms and disclosures of online contracts.

They must conduct their own research, or consult qualified experts or consumer protection agencies in order to be certain the e-commerce business is an established enterprise by asking the following questions:

  • What methods does this company take to secure customer information?
  • What are the terms of the contract?
  • Does this company sell or market customer information to other businesses?
  • What are the payments options?
  • Is there an established return policy?
  • Is there information on the website about the company’s dispute resolution policy?

And as always, if it sounds too good to be true, it probably is.

The OECD approved general guidelines for Consumer Protection in the Context of Electronic Commerce in December of 1999. These guidelines are designed to offer consumers the same protections they enjoy when they purchase products from a local store or distributor.

Transparent and effective protection: Consumers who choose ecommerce as their preferred method of purchase and sale should be afforded the same transparent and effective protections as with all other forms of trade and commerce.

Fair business: All advertising and marketing practices should maintain similar standards of honesty and integrity as do traditional methods of marketing and advertising.

Online disclosures: Clear and obvious disclosure should be provided.

Confirmation process: The consumer should have a clear and precise description of the products they are purchasing, have the ability to change and modify their orders, express an informed and deliberate consent of the purchase and obtain a record of the transaction.

Payment: Consumers should have access to user-friendly and secure payment instruments, and be fully informed of the level of security they are afforded.

Dispute resolution: Consumers should be clearly informed of a fair dispute resolution process.

Privacy: All e-commerce should abide by the recognized privacy principles set out in the OECD Guidelines Governing the Protection of Privacy and Transborder Flow of Personal Data (1980) and take into account the OECD Ministerial Declaration on the Protection of Privacy on Global Networks (1998).

Education and awareness: Governments, businesses and consumer representatives should collaborate to educate consumers about e-commerce, to raise awareness of the protections consumers are afforded in their online activities.

These guidelines are designed to protect consumers’ sensitive information when sharing sensitive information online, to avoid fraud and misrepresentation, and to increase consumer confidence.

Fighting international fraud in e-commerce

Fraud and deceptive marketing are two of the biggest threats to the ecommerce market because they undermine consumer confidence. If consumers are not confident, they do not buy.

Like other consumer protection issues, most of the existing laws were created before the globalization boom and advent of the Internet, so they are limited in scope.

One of the greatest concerns with e-commerce fraud is the dispersal of perpetrators around the globe and the underlying challenges of identifying and locating the criminals. Perpetrators often work in teams and can be located in a number of different countries, relying on the complex network of communication technology to complete their crimes and conceal their locations and identities.

Cooperation between consumer protection agencies, governments and private industries is the key to mitigating the risk of fraudulent practices. The OECD recommends the following course of cooperative action:

  • Establish a domestic system for combating cross-border fraudulent and deceptive commercial practices against consumers
  • Enhance notification, information sharing, and investigative assistance
  • Improve the ability to protect both foreign and domestic consumers from domestic businesses engaged in fraudulent and deceptive commercial practices
  • Consider how to ensure effective redress for victimized consumers
  • Cooperate with relevant private sector entities

Cracking down on abusive terms in e-commerce

The importance of reading the fine print of a contract cannot be overstated. More and more courts are holding consumers responsible for the obligations contained in online contracts when clicking “I agree”. At the same time, national courts are setting precedents with some contractual terms it considers abusive or illegal to consumers, such as service disclaimers and arbitrary price changes.

In 2004, a French court found terms in ISP provider AOL’s contracts to be abusive and demanded them removed:

One of the court’s demands will mean a clause that allows the ISP to unilaterally modify the contact will be removed, as will clauses that foresee a tacit acceptance by the subscriber of changes to pricing, billing and general conditions and ones that absolve AOL from any responsibility for interruptions or errors in the service.

This ruling and other subsequent national court rulings are just the beginning of the wave of judicial decisions that will establish the new international framework for e-commerce regulations.

This content is an excerpt from the FITTskills Legal Aspects of International Trade textbook. Enhance your knowledge and credibility with the leading international trade training and certification experts.

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About the author

Pamela Hyatt

Author: Pamela Hyatt

I am a Content Marketing Specialist for the Forum for International Trade Training (FITT). You can find some of my work on TradeReady.ca. My background is in copywriting, journalism and social media. My passion lies in connecting people to the stories that are most important to them.

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