Review of Building Consumer Sovereignty in Electronic Commerce
A Best Practice Model for Business
Discussion Paper
Expert Group on Electronic
Commerce
November 2003
Executive Summary
Introduction
Business-to-Consumer (B2C) electronic commerce (e-commerce) offers Australian consumers and businesses substantial economic and social benefits, while presenting consumers with a number of new challenges due to the differences between shopping online and in the traditional retail environment.
The Australian E-commerce Best Practice Model (the BPM) sets standards for consumer protection in e-commerce. It provides industry groups and individual businesses with a voluntary model code of conduct for dealing with consumers online, which is underpinned in several areas by legislative requirements. The BPM was developed with the advice of the Expert Group on Electronic Commerce (the Expert Group) and was released by the Australian Government in May 2000.
In order to assess whether the BPM has been effective in providing guidance to business on the best way to deal with consumers online and to ensure that the Australian Government responds effectively to recent and foreseeable developments in e-commerce, the BPM will now be formally reviewed. The review will be led by the Expert Group, which will conduct a public consultation process to inform interested parties about the review and to invite feedback.
The Internet and B2C E-Commerce
Since the BPM was developed in the late 1990s, there have been important changes in the way consumers use the Internet and e-commerce. Australians have grown more accustomed to the Internet and its applications. Points of access to the Internet have continued to grow, and mobile devices have increasingly become Internet enabled.
Australians now use the Internet to shop, make payments and access financial services with an ease and immediacy not previously available. On average, approximately one million Australians aged 14 years and over made a purchase online in each week of 2002-03. This represented an increase of 85 per cent since 2000-01. Travel related services are the most popular online shopping category.
The Best Practice Model
The BPM provides guidance to businesses and consumers on the elements of an effective self-regulatory framework for consumer protection in e-commerce. It is primarily designed to be adopted by industry associations and their members as part of their codes of conduct, and to guide the trading practices of individual businesses.
The development of the BPM was a key initiative arising from the Australian Government’s Policy Framework for Consumer Protection in Electronic Commerce (the Policy Framework). The Policy Framework established the objective of building a world-class consumer protection environment for e-commerce in Australia and described the principles that guide its initiatives in achieving this goal.
In developing the BPM, the Government sought to implement the elements of the Organisation for Economic Cooperation and Development (OECD) Guidelines for Consumer Protection in the Context of Electronic Commerce (the OECD Guidelines). The OECD Guidelines define the characteristics of effective consumer protection in e-commerce and were the result of several years of discussion and consultation between member countries, to which Australia made a major contribution.
The BPM consists of a series of guidance principles in a range of areas including: the provision of information to consumers; identification of businesses; fair business practices; security of payments; privacy; dispute resolution; and advertising and marketing. Many of the BPM’s guidance principles, while voluntary, are underpinned by legislation. In particular, the Trade Practices Act 1974, and State and Territory fair trading legislation protect consumers in online transactions in the same way that they provide safeguards in conventional transactions.
The Australian Government has encouraged industry associations and individual businesses to adopt the BPM by means of a targeted promotional campaign and the design of a BPM logo that is available to businesses that adopt the BPM guidance principles. In addition, the Australian Government has produced online and offline education resources for consumers that complement the BPM principles.
Current and Emerging Consumer Challenges
Since the release of the BPM in May 2000, many of the consumer protection issues identified in the Policy Framework and the BPM continue to evolve and require the ongoing attention of governments, businesses and consumers. These issues include the:
- vulnerability of consumers to scams and the need for appropriate security for consumers’ personal and payment information;
- growth of unsolicited commercial e-mail (spam);
- need to ensure that consumers’ private information is handled appropriately;
- need to ensure the disclosure and easy accessibility of the information important to consumers’ online purchasing decisions; and
- need for consumers to have ready access to effective avenues of redress, in the event that problems with an online purchase arise.
In addition, there have been several developments to the technologies and market relationships that are important in B2C e-commerce. Of particular significance is the emergence of mobile commerce (m-commerce), due to the increased use of Internet enabled mobile handsets and wireless fidelity (WiFi) technology.
These current and emerging consumer challenges have been addressed in a variety of ways by government and the private sector, both in Australia and internationally, through initiatives ranging from legislation to self-regulatory schemes and consumer education programmes.
The Expert Group has been asked to advise the Australian Government on ways in which it can effectively respond to the current and emerging consumer policy challenges in B2C e-commerce. Interested parties may comment on any matter of concern to them, which relates to consumer protection in B2C e-commerce. Submissions may contain suggestions for changes to the content or method of operation of the BPM or other action that the Australian Government might take outside of the BPM.
Conclusion
The Australian Government is committed to ensuring that Australians engaged in e-commerce enjoy a world-class consumer protection environment. The competitive position of Australian businesses will also be strengthened as Australia develops an international reputation as a centre of excellence for B2C e-commerce.
The review of the BPM will assist the Australian Government to achieve this goal, in partnership with industry and consumers. Consumers, businesses, and other interested parties are encouraged to participate in the review process.
List of Abbreviations
| 3G | Third Generation Mobile Networks |
| ABS | Australian Bureau of Statistics |
| ACA | Australian Communications Authority |
| ACCC | Australian Competition and Consumer Commission |
| ACIF | Australian Communications Industry Forum |
| ADMA | Australian Direct Marketing Association |
| ADR | Alternative Dispute Resolution |
| ADSL | Asymmetric Digital Subscriber Line |
| APEC | Asia-Pacific Economic Cooperation |
| ASIC | Australian Securities and Investments Commission |
| B2B | Business to Business |
| B2C | Business to Consumer |
| BPM | Best Practice Model |
| FTC | US Federal Trade Commission |
| ICPEN | International Consumer Protection and Enforcement Network |
| IIA | Internet Industry Association |
| ISDN | Integrated Services Digital Network |
| ISP | Internet Service Provider |
| MCCA | Ministerial Council on Consumer Affairs |
| NOIE | National Office for the Information Economy |
| NPPs | National Privacy Principles |
| ODR | Online Dispute Resolution |
| OECD | Organisation for Economic Cooperation and Development |
| PC | Personal Computer |
| PDA | Personal Digital Assistant |
| SET | Secure Electronic Transaction |
| SMEs | Small to Medium Enterprises |
| SMS | Short Message Service |
| STD | Subscriber Trunk Dialling |
| TPA | Trade Practices Act 1974 |
| URL | Uniform Resource Locater |
