Select Committee on European Union Written Evidence

Memorandum by the National Consumer Council


The National Consumer Council welcomes the opportunity to give evidence to the Select Committee. NCC represents the interests of domestic consumers in the United Kingdom. We have a specific brief to represent the interests of disadvantaged consumers so the implications for access to goods and service and for consumers protection in the developing e-economy is of particular interest to NCC. Much of NCC's policy development is directed toward UK institutions although we do work at EU and international levels too. We liaise with several EU institutions including the Commission's European Information Society Forum, set up to advise on the social and societal implications of the information society. The Forum recently launched the EurVoice website to encourage citizens and consumers to join the debate. NCC also works with BEUC (the Bureaux Europeen des Unions de Consommateurs) the umbrella consumer group based in Brussels and with our colleagues in CEG (Consumers in Europe Group) who deal with a range of EU institutions. CEG are also submitting evidence to the committee.


  The barriers to using e-commerce are well documented and include: access and affordability, payment mechanisms, security and data protection, dispute resolution, redress and enforcement. National governments and the EU institutions need to work together to ensure people's concerns are met. The global nature of e-commerce makes it essential, however, that EU bodies also work at the international level to develop agreements and effective mechanisms to generate and sustain trust and confidence.


  Consumers need to feel confident that the effort and expense involved in engaging in e-commerce is justified, and not disproportionately burdensome. This includes factors such as expenditure on hardware, computers, interactive digital televisions, advanced mobile telephones, modems etc, on connection charges, subscription fees, and "online" costs. Transparent and predictable pricing, open and fair terms and conditions will help consumers to make comparisons and to come to informed decisions. The market and the technology are, however, still developing and consumers may be reluctant to spend money on equipment, which may quickly become obsolete. Questions of interoperability between networks, equipment and services need to be addressed so that people can be confident in their purchasing decisions. Skills and training, design and ease of use all contribute to improving access.

  3.1  Regulation may deal with some of these questions but a clear public policy lead is required on how to ensure the market will deliver on issues like transparency and interoperability, as well as how to cater for people who cannot access electronic services from their home. The question of universal access is especially pertinent in the context of access to essential information and the delivery of government services electronically. It is unlikely that liberalisation and competition alone will be sufficient to deliver access to consumers on a low income or who live in remote areas.


  Consumers are concerned about the potential for fraud in e-commerce. They need to be able to check onto the identity and reliability of sites and traders. Consumers also need to feel confidence that their financial details and transactions are secure and that their personal data is protected from misuse.

  4.1  Technological solutions and regulation provide some answers. Encryption and electronic signatures are being developed to protect the integrity of data and to ensure authenticity. But how will consumers be able to check the veracity of claims that their details are protected if they use a particular site or service?

  4.2  e-Commerce opens up opportunities for more efficient data collection and sharing and for developing sophisticated targeted marketing practices. Spamming, hacking and the user of cookies are less welcome aspects of the electronic market. The Data Protection Directive provides some reassurance for consumers that their personal information will not be misused but the global nature of communications gives rise to some concerns. Clear systems for complaints and redress must be in place for consumers within the EU and across non-EU boundaries. Consumers also need to be made fully aware of their rights with regard to data protection and privacy.

  4.3  A flexible and secure payment mechanism for low value electronic transactions would be particularly helpful for consumers who want to use e-commerce but who do not have a credit card or bank account.


  Consumers need to know they can resolve problems in e-commerce quickly, cheaply and easily—whichever trader or supplier they have dealt with. The question of cross border redress is fundamental to e-commerce, requiring co-operation between Member States of the EU and internationally. Cross-border purchases are not uncommon yet arrangements for dealing with problems and redress are limited, and consumers are ill-prepared to pursue redress outside their own country by formal or informal mechanisms.

  5.1  Codes of conduct and co-regulatory schemes have some advantages over formal regulation. For example, codes are relatively flexible and can be modified quickly in response to technological change. But, to inspire confidence in consumers, such codes need to meet a number of criteria—including some independence for the industry being regulated. Backing by legal instrument also makes a crucial difference. Codes and co-regulatory schemes are unlikely to be effective if they are allowed to develop in an ad hoc manner, in isolation from a common set of standards or guidelines. The NCC's "Models of self regulation" (NCC, 1999) gives an overview of schemes and their features, concluding with a "credibility checklist". (See appendix 1.) At the Annual Assembly of Consumer Associations, held in Brussels in November 1999, the working group on e-commerce asked the Commission to look into the possibility of linking a statutory requirement with standards. For example broad-based legislation establishing a duty to trade fairly would be linked to compliance with a set of standards for e-commerce. (See appendix 2, report from working group, section 6.)

  5.2  A proliferation of schemes will tend to confuse consumers and reduce credibility in the co-regulatory approach. At the EU level the Commission needs to consider the following:

    —  establish criteria for EU schemes, including independence, transparency, accountability;

    —  ensure there is consistency in the criteria and standards being adopted in Member States;

    —  avoid levelling down to the lowest common denominator;

    —  encourage mutual recognition of national schemes;

    —  establish a mechanism for dealing with cross border problems;

    —  insist on independent monitoring of national schemes;

    —  give clear guidance on the duties and powers of relevant national regulatory bodies.

  5.3  The global nature of e-commerce means that international agreements will also be required. The EU and national institutions need to take into account developments elsewhere, for example the OECD guidelines for consumer protection in e-commerce.

  5.4  Codes will never be comprehensive. There will always be traders and organisations which choose to stay outside a voluntary framework. As a last resort, consumers need to have an option to go to court—preferably in their own country. A system needs to be put in place that enables this to happen cheaply, and which operates throughout the EU. And if a co-regulatory approach fails then governments and the EU will need to consider other forms of intervention to protect consumers.

  5.5  UK consumers using a credit card to pay for goods and services with a value over £100 have an additional route to redress for non-performance, or for unsatisfactory products. (Under Section 75 of the UK Consumer Credit Act.) If consumers knew this level of protection applied to all transactions paid for by credit card, whatever their value and wherever the purchase was made, it would help boost confidence in using e-commerce. The commission could investigate the possibility of making all EU credit card providers subject to a similar kind of liability. Consumer and trader awareness of this added means of redress would stimulate confidence and encourage high standards in the e-commerce sector.

  5.6  Consumers and traders will need access to effective and up to date information and advice about how to deal with disputes, particularly in cross border cases. Consumer information centres or Euro-guichets could form the basic network for consumers. Consistency of remit and adequate funding will help to raise awareness of their role.

  6.  Policy development and co-ordination within the EU could be improved but the NCC does not wish to offer any specific suggestions about structural changes.

February 2000

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