Author Name:   vishalcnlu

laws governing Consumer Protection in the age of E-Commerce, its implication and far reaching effects

 Consumer Protection in the age of E-Commerce

Some mature people memorize the time they were young and wished for a more comfortable and easy shopping alternative to buy what they needed much faster and in a manner to avoid the crowded stores and the irritating saleswoman with their ace attitude. A click of your mouse can bring you anything you like (if you pay for it off-course). Prices are even more convenient online. People often find in this way cheaper products and the fact that they can choose from a large variety of products is also a big benefit. Electronic Commerce is often interpreted as being just Internet commerce.

For customers, there is no distance limit using E-Commerce right now. "My legs are so tired that I have to go home and take what I need some other time", when you take it something online you are already home on your bed or coach or where ever you feel comfortable and can visit an unlimited number of shops because they all are close to you, in the cyber world. All the clients like to be well treated and become polite answers to their requirements about the products for sale which is not exactly what happens in the real marketing world where you get a superficial answer as though it would not be their job to tell you kindly about the products for sale. Online E-Commerce offers a friendly and attractive environment for the customers and if it is a respectable flourishing business, full and polite answers to the customers questions.

The development of electronic commerce poses a number of legal and consumer challenges. In India, we are seeing a convergence of new technologies and the deregulation of the financial sector. At a time of great change consumers need to be protected, and the law is struggling to keep up.

E-Commerce is not just about using network based technologies to conduct business. It is about moving organisations to fully electronic environment through change in their work procedures, reengineering their business processes, integrating them with their business partners beyond their traditional boundaries. Electronic Commerce has brought about a veritable revolution in the way businesses are conducted. There is a paradigm shift from paper based transactions to fully electronic organisations. Networking and messaging over networks is the key to the new scenario in which there is globalisation of organisations, and of markets. Information and Communication Technology (ICT) has wrought a new industrial revolution. It is the Internet which has helped realise globalisation of markets seamlessly. A business connected to the Internet is immediately global in reach and connectivity with no additional cost. One third of all the business transactions conducted electronically will be done through commerce on the Internet.

What is e-commerce?
Electronic commerce or ecommerce is a term for any type of business, or commercial transaction that involves the transfer of information across the Internet. It covers a range of different types of businesses, from consumer based retail sites, through auction or music sites, to business exchanges trading goods and services between corporations. It is currently one of the most important aspects of the Internet to emerge. E-Commerce allows consumers to electronically exchange goods and services with no barriers of time or distance. Electronic commerce has expanded rapidly over the past five years and is predicted to continue at this rate, or even accelerate. In the near future the boundaries between "conventional" and "electronic" commerce will become increasingly blurred as more and more businesses move sections of their operations onto the Internet.

Basically there is three types of E-Commerce are exists. They are:-
1) B2B (business to business)
2) B2C (business to consumer)
3) C2C (consumer to consumer)

What do you need to have an online store and what exactly is a shopping cart?
Shopping cart software is an operating system used to allow consumers to purchase goods and or services, track customers, and tie together all aspects of ecommerce into one cohesive whole. While there are many types of software that you can use, customizable, turnkey solutions are proven to be a cost effective method to build, edit and maintain an online store. How do online shopping carts differ from those found in a grocery store? The image is one of an invisible shopping cart. You enter an online store, see a product that fulfils your demand and you place it into your virtual shopping basket. When you are through browsing, you click checkout and complete the transaction by providing payment information

Whether e-commerce has insured the rights of consumers
Technology is facilitating the creation of new approaches to service delivery and permitting the introduction of new electronic products. For example, a number of major Canadian financial institutions are now offering financial products and services through the Internet. In many cases, their competitors are scrambling to catch up. Some financial institutions view the Internet as an alternative product delivery channel. For others, including the new Citizens Bank of Canada, a subsidiary of Vancouver Savings Credit Union and ING Direct, the trust company subsidiary of ING Bank (Netherlands), the Internet is a primary delivery channel. No proprietary software or private communication network is necessary. Customers can use industry standard Web browser software and must arrange their own access to the Internet through an Internet service provider.

The conduct of financial transactions through the Internet is not likely to displace other more traditional channels anytime soon. However, financial institutions appear to be drawn by two factors. The first is the lower transaction costs associated with transactions conducted electronically as opposed to their branch networks. The second attraction is the demographics of customers who are interested in using the Internet to access financial services. One American study projected that with respect to the banking industry, each Internet customer is likely to be 50-250% more profitable than the average banking customer. Some financial institutions have also begun experimenting with the use of electronic contracts formed through "click-through" or "Web-wrap" agreements. For instance, First Union, a US bank, offers an on-line application for a home equity loan. Part of the application procedure includes a notification of certain terms and conditions. To complete the process, applicants must click on a button marked "I understand and accept the above terms and conditions". A similar procedure is used by Bank of Montreal to process on-line applications for MasterCard products.

The use of such on-line contracts requires consideration of the extent to which such conduct by an applicant can legally constitute "acceptance" and of various writing and signature requirements applicable to certain types of transactions.
Consumer Issues: - Major consumer issues raised by Internet transaction systems include:
Ø Security
Ø Privacy
Ø Terms and Conditions
Ø Access
Ø Dispute Resolution
Ø Fees and Charges
Ø Fraud
Ø Jurisdiction issue is most important issue in E-commerce.

Drawbacks of e-commerce
We see electronic commerce as a profoundly pro-consumer development. It offers consumers a range and variety of products, and a source of relevant information with which consumers can protect their own interests, that exceeds anything we have seen before. As with all radical economic developments, there are potential downsides:
1. The Internet has become a fertile field for fraud. It allows fraud promoters to mimic legitimate business more convincingly, reach potential victims efficiently, elude detection by maintaining anonymity, and frustrate enforcement officials by locating (or relocating when detected) in remote jurisdictions that have no relevant law or no serious enforcement.
2. The technology of the Internet -- its ability to marshal and sort vast amounts of information, sometimes without the online consumer even knowing information is being collected -- is a new and potent threat to traditional privacy values.
3. Because electronic commerce respects no borders, cooperation and coordination in international law enforcement -- a set of problems not really very pressing in more conventional forms of marketing -- becomes increasingly essential to protect consumers and protect the medium.
4. Finally, there is a subject no one should neglect. The electronic commerce revolution, for all its promise, may widen the divide between the haves and have not's, between nations and even within nation states. As we celebrate the promise of the digital revolution, we must also acknowledge the threat it poses to individual welfare and to the stability of international order.

E-Commerce on a Global Scale
Globalization offers businesses a vastly larger market and consumers more choice, but it also presents complexities and greater risks. The dilemma can be stated quite simply:

1. When a business goes online, it may subject itself to the jurisdiction and systems of law of every country around the world. Is that fair?

The seller's connection with the jurisdiction of the purchaser may be tenuous and remote. It may have limited control over who accesses its advertising and sales messages once they are launched in cyberspace, and it may have no intention to make a sale in particular jurisdictions. Laws about permissible targets of marketing, discounts, product safety and required disclosures vary greatly from country to country -- even within countries -- and are fairly constantly in flux. Can sellers, especially mom&pop operations, do business in an environment that is so unpredictable and imposes such substantial burdens? Or should the law and courts of the seller, and only the seller, govern?

2. On the other hand, when consumers go online, they may lose the benefit of domestic consumer protection laws. Is that fair?

Consumers are accustomed to domestic law that tends to protect their interests, and they are accustomed to having this law apply when they do business from home with distant companies, like mail-order sales. They may be astonished at how little protection they are accorded in the country of the seller (assuming the consumer even knows the seller is located in a foreign country, let alone which country). Given the costs of travel, delay, lack of familiarity with local law, a system of remedies that depends on the law and courts of the seller, and not the law where the consumer lives, may mean no remedy at all. Arguably the law that applies in the location of the buyer should control.

As we learned at an FTC public workshop on this very topic last summer, no simple answer is available. On the international level, we see real strides being made by the OECD, which recently issued non-binding guidelines based on the overarching principle that online shoppers are entitled to effective consumer protections that are not less than they receive offline. The Guidelines offer building blocks to instill consumer confidence and give guidance to businesses about what are "best practices" online.

But, the Guidelines do not resolve the core questions of jurisdiction: What happens when a U.S. consumer buys from a seller located in a foreign country or a consumer in a foreign country buys in the U.S.? Whose laws apply and where does the consumer sue? There are pros and cons to the county-of-origin approach and country-of-destination approach. I know some businesses favour the certainty and security offered by allowing parties to choose the applicable law by contract, using the country-of-origin's laws as the default. A similar approach has worked well in the business-to-business context. At the same time, I have a sense that business appreciates that this is not now the case and is not a likely outcome in the business-to-consumer arena. Here, the purchasers may be less sophisticated and may have less incentive, given the high number of low-dollar transactions, to invest the time and money to negotiate protective terms. In addition, there are real concerns about encouraging a race to the bottom, where businesses have an incentive to operate in jurisdictions with weak consumer protections. Moreover, governments will not lightly pass off the responsibility of protecting their citizens to unfamiliar jurisdictions that offer lesser consumer protections. I suspect neither approach alone is likely to become the rule of law.

These jurisdictional and choice of law issues would be less troubling if we could reach international convergence on consumer protection laws. This is a difficult process. I am sceptical we will achieve broad, substantive convergence in the near future. Of course, bilateral treaties have been highly effective in the past and could complement multilateral efforts such as the OECD and the 29-country International Marketing Supervision Network.

We know from the FTC's workshop on international consumer protection issues last summer and work of the Global Business Dialogue on E-Commerce, among others, that industry representatives around the world are developing ways to address the concerns of online consumers. For example, I know that seal programs are evolving along with novel escrow and insurance plans.

At a minimum, and as recommended in the OECD Guidelines, Alternative Dispute Resolution ("ADR") processes can and should provide vehicles for redress and certainty at acceptable costs. The credit card companies already are resolving many Internet disputes through their chargeback system. Also, there is no reason ADR cannot be implemented using the Internet itself as the forum for resolution. This spring, the FTC and the Department of Commerce plan to host a workshop devoted exclusively to the applicability of ADR programs to online consumer transactions, which we hope will spur the development and use of ADR online.

Support of the OECD Guidelines for Consumer Protection in the Context of Electronic Commerce
Regulation of this area in the U.S. should be governed by the OCED Guidelines on Consumer Protection which were released in 1999. These Guidelines are predicated on the basis that consumers should not be offered any less protection when participating in electronic commerce than they are in other forms of commerce. The main protections which the Guidelines propose include;
# Fair Business, Advertising and Marketing Practices
# Sufficient disclosure of relevant information
# A clear and unambiguous confirmation process
# Proper means of redress in the case of cross border disputes and clarification of applicable jurisdiction.
# A secure method of payment, minimizing the risk of financial loss.
# A reliable system of international Alternative Dispute Resolution to provide a workable alternative to litigation, which may be costly and disproportionate in the case of long distance transactions

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