Consumer protection a vexed issue

Consumer rights are beginning to emerge as one of the biggest potential barriers to the swift development of a comprehensive, global electronic commerce environment in both Europe and North America.

Of course, this is not the fault of consumers, but rather, highlights the extent to which the development of legal and political frameworks for e-commerce has thus far taken a corporate rather than consumer perspective. In addition, it underlines the challenge of shifting real-world policies - in many cases, laws that have evolved over centuries of practical application - into the borderless domain of cyberspace.

Many in the legal profession have argued that existing law will usually transfer quite well to the Internet. But, as states attempt to draft legislation that addresses key e-commerce issues, they are finding that the Net introduces unexpected subtleties and conflicts. Debates in the last two weeks in Brussels and Washington DC have pinpointed some of the troublespots that lie ahead. In both cases, the problems centre on guaranteeing consumer protections while at the same time creating an open e-commerce environment that doesn't become strangled by a tangle of incompatible international regulations. It's not hard to see how important this task is - already, an estimated 25 per cent of online transactions are conducted between parties in different states and that percentage will increase as the Internet continues its global spread.

In Europe, the complications are over online jurisdiction: determining the jurisdication in which a dispute will be resolved. Because laws - particularly, consumer protections - vary from jurisdiction to jurisdiction, and within the US, from state to state, the jurisdiction for resolving a dispute has huge implications for each party.

In Brussels this week, some 400 participants met to discuss proposed changes to the Brussels convention that would allow a consumer to pursue a company in the court of the consumer's state rather than the state in which the company is based. The change is intended to give consumers more power when they have purchased faulty goods from abroad. At the moment, it is expensive to go after someone beyond one's own national borders - an estimated €2,000 to €8,000, according to a 1995 EU study.

Many involved or interested in e-commerce, including international organisations like the Global Internet Project (www.gip.org), are strongly opposed to the change because of the stifling effect they believe it would have on e-commerce development.

The law is intended to protect consumers when any business, no matter where it is based, purposefully advertises in their state. But the GIP, among others, argues that consumers go to the Web to hunt down suppliers in other states - the suppliers are not "travelling peddlers" (as GIP notes in a discussion document) and they are not always deliberately targeting consumers in a particular state. They cannot block who looks at their website. If a small business has to learn the legal implications of doing business in 15 EU states, it is unlikely to set up a website, say e-commerce activists.

On the other hand, argue consumer groups, without such protections the Web could allow dubious operators to sell shoddy goods, secure in the knowledge that few consumers would take the trouble to prosecute. Meanwhile, last week in the US, some lawmakers and consumer groups raised serious concerns about the wording of a bill that would give electronic signatures the same legal standing as written or other legally-recognised print signatures. Concerns were such that after a heated debate, the bill was rejected by the US House of Representatives earlier this week. A law addressing digital signatures is considered to be a cornerstone of e-commerce - the Government here is close to producing its own legislation on the same subject. In the US, the very pro-electronic commerce White House originally gave the bill its imprimatur.

But subsequently it distanced itself from the cross-party legislation after opponents said that the bill gave fewer consumer protections than legislation governing written and other paper-based signatures. The US government's own general consul from the Commerce Department, Mr Andrew Pincus, said in a letter to the White House that he was concerned about "the spillover effect of these provisions on existing consumer protection and regulatory standards", according to the Washington Post.

Politicians and lawmakers, for the moment, do not have the answers to such consumer concerns, but crucially, they at least are now being debated openly. Without a doubt, they highlight the difficulty of implementing a global framework for e-commerce - and an agreed universal e-commerce environment seems necessary for the large-scale adoption of e-commerce.

At the same time, none of the consumer groups or the e-commerce proponents feels the problems are irresolvable.

Indeed, both sides emphasise that alternative solutions exist and could be adapted in a range of forms. For example, in the case of jurisdiction, some have suggested that the established concept of "freedom of contract", used between businesses, could be used by consumers.

Freedom of contract allows the two parties to a contract to agree which laws in which jurisdiction will apply to the contract.

Given the swift expansion of e-commerce, though, such issues will need to be resolved soon, or the growth of a global electronic market will stall as it encounters the de facto infliction of a crippling series of international trade embargoes.

Karlin Lillington is at klillington@irish-times.ie