Select Committee on European Union Written Evidence




1.  The group had a wide ranging discussion about e-commerce and the potential opportunities, benefits and threats associated with electronic transactions. We used e-commerce as a generic term for a wide range of activities and services ranging from e-shopping, information provision to so-called information society services.

  2.  A range of views was expressed, and we learnt about experiences in different countries within the EU and in the candidate countries. This reminded us that use and awareness of e-commerce varies enormously but we generally agreed that e-commerce is likely to expand, for governments and for consumers.

  3.  The discussions centred around several themes, summaries below.

    —  Access, affordability and availability—of the necessary equipment, the knowledge and skills to use e-commerce, and the means to pay. Poor literacy skills and technophobia, fears of unsuitable content (pornography) and security risks are real barriers for many consumers.

    Governments may have to intervene to ensure consumers have access at a "reasonable price", backed up by local and community initiatives.

    —  Information and education—so that consumers know what is available, how e-commerce works, how to get the best out of it and when it would be better to use alternatives. It is important to avoid too great a concentration on e-commerce and IT skills at the expense of other life, social and practical skills.

    —  Security, privacy, data protection—an area where regulation is required. Developments in technology may also help provide solutions—eg voice recognition, biometrics, encryption.

    —  Redress and cross border redress—effective mechanisms for co-operation between countries within the EU and with other states will be essential but a scheme needs to be rooted in law.

    —  Codes of practice—are proliferating as a short-term answer but are voluntary, do not always include cross border redress, and can be seen as industry-friendly. Codes, backed up by regulation which work in the offline world could be used as a model eg mail order.

    —  Technological change—e-commerce is at an early stage of development and we do not know how far it will extend. The related technology and means of access or delivery will also change. For example the PC/modem model may be superceded by other devices like the mobile telephone or digital TV.

  4.  Overall we agreed that there is no prospect of meaningful regulation being agreed and enforced globally, and that a pragmatic approach is needed when considering e-commerce. We concluded that, if e-commerce is to flourish, the processes and transactions involved must be easy and safe to use, and that consumers must be able to resolve difficulties and disputes quickly, cheaply and effectively.

  5.  Industry has a major role to play, for example in developing easy to use devices working with users and potential users, and by adopting best practice. A public policy lead is, however, essential to ensure consumers are effectively protected. As e-commerce is difficult to regulate, and regulation is strongly opposed by business interests, governments need other ways to establish standards for e-commerce.

6.  Bridging regulation and standards

  6.1  The Assembly, therefore, invites the Commission to examine the possibility of linking legislation and standards, to establish fair marketing and trading practices for consumers—particularly in the field of e-commerce.

  6.2  The standards would be referred to in broadly-based legislation, for example, establishing a duty to trade fairly. There would be a presumption that business conformed with the legislation if the standards were shown to be met. The standards could relate to specific areas which need to be resolved in the electronic environment, for example establishing the identity of the supplier, or dealing with lotteries or special promotions.

  6.3  Standardisation bodies, working with other interested parties including consumer organisations, would formulate the standards. Several models already exist. For example, the OECD guidelines for consumer protection in e-commerce may be a useful starting point, and could be extended to cover other schemes like BBB Online or TRUSTe.

  6.4  Such a bridge between legislation and standardisation has many advantages:

    —  being rooted in law it is likely to work, and generate confidence;

    —  it reduces binding legislation to a minimum;

    —  standards are more flexible than legislation, and can be reviewed at any time according to new developments, changes in marketing techniques, or the concerns of consumers;

    —  there is more democratic legitimacy in agreed standards than in a framework of purely private and voluntary codes of practice.

  6.5  The Assembly also recognises that an independent body for scrutiny, ensuring compliance and enforcement, and for redress, is a necessary element in making any scheme effective. Effective sanctions for those who fail to comply are also needed.

7.  Payment Protection

  7.1  Secure and reliable payment mechanisms are crucial for developing consumer confidence in electronic commerce. The Assembly, therefore, invites the Commission to explore ways of limiting the liability of consumers for unauthorised or fraudulent use of payment cards, including any related charges and the use of charge back mechanisms. A harmonised and mandatory level of consumer protection would be highly desirable. If this were realised, consumers would know they have the same level of protection throughout the EU.

  7.2  In conjunction with this would be a programme of consumer education and information so that consumers understood their rights and liabilities in relation to online and "not in person" payments. Card issuers would be in a position to resolve many matters.

  8.  Finally, the Assembly encourages the Commission to continue to pursue and develop mechanisms for effective complaints handling and out of court dispute resolution, including the establishment of an online ombudsman scheme accessible throughout the EU.

Alison Hopkins, rapporteur

National Consumer Council, UK

December 1999

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