Select Committee on European Union Minutes of Evidence

Memorandum by the Joint Honours Students, Imperial College, London, on Consumer Issues


  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.


    —  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)


    —  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).


    —  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).


    —  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)

    —  Open source promotion.

    —  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)


    —  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 (AOL, EURIM, WIF, NMTV,, 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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