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OECD Issues Guidelines for Consumer Protection in the Context of Electronic Commerce

Date: Feb 14, 2000


The Organization of Economic Cooperation and Development (OECD) issued Guidelines for Consumer Protection in the Context of Electronic Commerce on December 9, 1999. The Guidelines closely track existing U.S. consumer protection standards and enforcement actions, and have been haled by the FTC as "blueprint" for governments working to address consumer protection schemes for e-commerce. The Guidelines support and recommend development of self-regulatory practices and private sector leadership, as well as global cooperation, including cooperation in investigating and prosecuting fraudulent, misleading and unfair commercial conduct online. A primary concern in this regard is the ability of Internet scam artists to shield their identity online or to locate their businesses in particular regions as a means of avoiding legal process.

The U.S. Federal Trade Commission (FTC) immediately endorsed the Guidelines - not surprisingly, since FTC Commissioner Mozelle W. Thompson led the U.S. delegation as the OECD considered them. The FTC, in conjunction with the Department of Commerce (DOC), plans a workshop on the issue of consumer protection later on this spring. Click here for related article.

Key Requirements

E-businesses, according to the Guidelines, among other things, should:

    • Avoid representations or practices likely to be deceptive, misleading, fraudulent or unfair.

    • Make information about themselves, their goods and their services available in a clear, conspicuous, accurate and accessible manner.

    • Comply with representations.

    • Consider various regulatory characteristics of the markets they target.

    • Not exploit the special characteristics of the Internet to hide their identity or avoid compliance with consumer protection standards or enforcement mechanisms.

    • Delineate between advertising and other content.

    • Substantiate their representations.

    • Implement procedures to allow consumers to choose whether to receive unsolicited e-mail.

    • Observe special care in advertising or marketing to children.

Online Disclosures

Clear, conspicuous disclosures should include:

    • Name, address, telephone number, e-mail address and relevant licensing or government registration information (where applicable).

    • Location for service of legal process and contact by law enforcement and regulatory officials.

    • Itemization of all costs (in the applicable currency).

    • Terms of delivery or performance.

    • Terms, conditions and methods of payment.

    • Conditions of purchase, such as approval by a parent or guardian, or regional or time restrictions.

    • Instructions for use, including safety and health warnings.

    • Information on after-sales service.

    • Refund, return, exchange, cancellation, withdrawal or termination policies.

    • Warranties and guaranties.

Confirmation and Payment

Consumers did not succeed in including a three-day cancellation right or "cooling off" period, or other specific language to assure that the consumer truly wishes to make the purchase. Instead, the Guidelines simply provide that the consumer should be able to cancel the transaction before concluding the purchase. The Guidelines also suggest providing consumers with easy-to-use, secure payment mechanisms and information on the level of security involved, along with limitations of liability, to encourage consumer confidence.

Dispute Resolution and Redress

A key issue in the e-commerce world has been the knotty question of applicable law, including jurisdiction, venue and choice of law for online disputes. Consumer groups, which seek imposition of a blanket rule requiring that the law of the consumer's home apply to e-transactions, failed in an effort to insert language into the OECD Guidelines. Instead, the Guidelines suggest that governments consider "whether the existing framework for applicable law and jurisdiction should be modified, or applied differently, to ensure effective and transparent consumer protection in the context of the continued growth of electronic commerce." Alternative dispute resolution (ADR) mechanisms are encouraged, and the guidelines suggest that businesses, consumer groups and governments work together to achieve an appropriate process for the borderless e-commerce world.

Privacy

The Guidelines also contain an explicit recommendation that business-to-consumer activities online should be conducted in accordance with the OECD Guidelines Governing the Protection of Privacy and Transborder Flow of Personal Data (1980), taking into account the OECD Ministerial Declaration for the Protection of Privacy on Global Networks (1998).

Implementation

The Guidelines suggest a combination of educational efforts, continued promotion of private sector leadership and self-regulatory initiatives, and ongoing global cooperation to achieve the objectives of the Guidelines.

For more information, contact Sheila A. Millar at (202) 434-4143 or via e-mail at millar@khlaw.com