Memorandum by the Joint Honours Students,
Imperial College, London, on Consumer Issues
ANALYSIS OF
EVIDENCE SUBMITTED
BY STUDENTS
OF IMPERIAL
COLLEGE MANAGEMENT
SCHOOL—CREATING
CONFIDENCE IN
CONSUMERS
We, the students of ICMS, have analysed the
evidence presented by the various industries with regard to promoting
growth in European e-commerce. Below we summarise the key issues,
as seen from the perspective of consumers, which need to be addressed
so as to create confidence and utilise the full potential of the
new e-commerce platform.
SECURITY
— Over half of those who responded
to the Consumer Association survey were concerned with fraud,
a third felt it was a danger to national security. (Consumer Association)
— Internet financial transaction fraud:
seems significantly more risky via internet, and this is what
is perceived by consumers (EURIM). But, conflicting views to this
arise from Adhocracy Consulting, who state that the risks are
no greater than with other forms of payment such as mail order.
Is it an issue of security or simply newness?
— Need a secure method to obtain fraud-free
payment. UK banks don't co-operate to verify information. In the
US, banks operate address verification and provide risk insurance
for fraud (E/99-00/B 138 Digital Exchange)
CRIME LEGAL
ASPECTS
— Abuse of the internet comes in many
forms such as the hacking of websites and servers, and the distribution
of viruses. Each of these activities has the potential to undermine
the confidence that is necessary for e-commerce to succeed. (Evidence
from The Association of Chief Police Officers Computer Crime Working
Group).
— Parental concern with regard to access
to indecent material. (Evidence from First Tuesday Club, Mr J
Browning).
— Legal uncertainty—consumers
need to be clear about their rights and obligations, State of
Origin principle (LIBA).
ACCESS
— The increasing demand for e-commerce
needs to be satisfied by greater network lines, greater speeds
(eg optical fibres). This is currently being pursued by most of
the telecommunications organisations (Motorola, Vodafone, BT).
— Access is also hindered by high,
unaffordable costs (Evidence from OFTEL, CER). Fixed, low cost
pricing schemes should be encouraged (eg The Australian Experience,
CER evidence).
— The ability to order goods online
could potentially overcome the problem faced by low income families
to gain access to many basic services (Consumer Association).
— The Swedish government has reduced
taxes on PCs making it easier to purchase a PC and thus gain access
to the internet. (Ministry of Industry, Employment and Communications)
— Provide equal access to e-commerce
for handicapped and socially excluded people—the Action
Plan does not address this (OFTEL, DIEL (Bob Twitching), Post
Office, CER).
EDUCATION/UNDERSTANDING
& PROMOTION
— We need to create a national culture
which is positive towards change. Many people in the UK ask what
is in it for them to be on the internet and if we can understand
it. (World Internet Forum)
— Students should be taught internet
skills as well as the three R's. (World Internet Forum)
— Set up adviser, gurus, workshops,
online services and communities to promote an e-culture.
— People should be educated on reputable
Trust providers. Trust providers must be more scrutinised. (Consumers
Association)
— Freely available information for
research and academic purposes—perhaps government should
create its own archive for public availability.
— Promotion of e-commerce by publicising
industries where it has had revolutionary effects, eg banking
& finance industry. (LIBA)
DELIVERY/QUALITY
OF SERVICE
— The EU website for directives should
be made more lay-reader friendly. (CIPS)
— The Government recently proposed
Trust UK hallmark initiative could be used to promote both creator
and consumer confidence in legitimate e-commerce traders by identifying
approved sites. CAFÉ have similar objectives. (British
Music Rights)
— Governments and trade associations
should collect, collate and publish information on the quality
of services available (response times, delivery, payment security).
(IMIS)
— Time and money in making the communication
between the consumer and the business more of a dialogue interaction.
In this we mean the level of redress, refund capabilities, personal
attention, must be ever nearing the levels maintained in the classical
store. This is important as the unclear information on cost and
the difficulty on obtaining any form of redress is great. (Consumers
Association)
— Recurring checks to make sure companies
are following laws as well as code of practice. (Consumers Association)
Below we highlight some of the key issues and
comments stated by the various witness companies in response to
the questions posed by the select committee. The issues are not
comprehensive, but are intended to provide a brief overview:
— The Action Plan needs to give a more
clear and convincing picture of future intentions and implementing
the strategies—it could perhaps provide more detail and
focus, and speed up the decision making processes. A more comprehensive
and clear report is that of [email protected] (AOL,
EURIM, WIF, NMTV, Silicon.com, Adhocracy Consulting)
— The Action Plan omits the importance
of R&D, and the issue of recognising the value of those who
have and are contributing to the success of e-commerce (EICTA).
— The Plan needs to give attention
to disabled members of society, and should further address issues
of accessibility and affordability (DIEL, Bob Twitching).
— Perhaps the Plan should not try to
compete with/compare to the US, but focus on the strengths of
EU—namely GSM and the mobile platform, and better taxation
acceptance (Adhocracy Consulting).
— With regard to regulation, the government
needs to address four main areas: Privacy, Fraud, Taxation, and
Intellectual property rights.
— The majority opinion is to allow
self-regulation. Through competition, the codes of conduct and
regulatory protection for consumers will be maintained by the
industry—intervention by EU or national government will
only constrain growth and progress. However, some bodies have
opinions to the contrary, eg Trade Union Congress.
— While self-regulation is preferred,
there still need to be central EU agreements and legislations
to aid cross-border dispute settlements, and to prevent avoiding
prosecution by loopholes. Perhaps we should consider developing
a non-regulatory cross-border dispute mechanism. We need EU level
co-ordination to prevent fragmentation of the single market. (Digital
Exchange, BTCellnet, Barclays).
— With regard to flexibility and coherence
between national and European bodies, most companies find the
EU and governments too slow and too bureaucratic to be able to
keep pace with the rate of change in e-commerce. Some countries
still have contradictory laws (France & Germany). (Evidence
from Confederation of British Industry, BT, People Energy, British
Music Rights, OFTEL, Post Office, Clifford Chance).
— With regard to current EU institutional
structures, the general opinion is the need for radical change
to adapt to a fast paced industry. The institutions should lead
by example, and have an open structure, transparent to make available
to public. (Digital Exchange, World Internet Forum, Confederation
of British Industry).
— Suggestions put forward to perhaps
have separate organisations that are equipped to handle such a
quick changing industry—a pan-European body, networked throughout
the member states (Trustmarque International, EURIM, Ministry
of Industry, Employment & Communication Sweden, Alternative
Thinking).
— Rather than seek structural changes,
the EU should support organisations like EURIM (IMIS).
— To speed up growth and change, the
EU needs to promote the single market principle and co-ordination
between member states, but allow the changes to take effect from
industry—organic growth (LIBA, Ministry of Industry, Employment
& Communications Sweden, CIPS)
— Change is required not only in terms
of structure, but also skill and expertise. A Chief Executive
(IT Manager) is needed to enforce change, not a politician (Digital
Exchange).
Some additional points to the above are that
the government needs to be aware that SMEs are ones which need
more convincing of e-commerce, these are the businesses that take
the higher risks due to initial expenditure. The main advantage
of Europe is in telecommunications and digital TV—e-commerce
should focus on enhancing and utilising these channels. In general,
minimal regulation and rules will greatly aid organic growth of
e-commerce, although certain legislations need to be in place,
especially to address criminal uses of the web.
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