Electronic Commerce and Consumer Protection Group

The Electronic Commerce and Consumer Protection Group, a coalition of leading companies in the Internet, online and electronic commerce industries, developed the Guidelines for Merchant-to-Consumer Transactions as a first step toward establishing a global jurisdictional framework for electronic commerce.

The application of traditional concepts of jurisdiction with respect to consumer protection law presents significant challenges to consumers, merchants, and governments alike. These challenges stem from the fact that merchants and consumers now do business on a global basis. Countries throughout the world have in place numerous different regimes intended to protect their citizens. It is impossible for the businesses, particularly small businesses, that are flocking to the Internet to comply simultaneously with inconsistent local consumer protection laws in the multiple jurisdictions where their customers may be located. At the same time, consumers will remain unnecessarily uncomfortable with shopping online if they do not know where the merchant they are dealing with is located and cannot be sure whether there is some reasonable prospect of obtaining relief if something should go wrong.

One of the difficulties in attempting to define a workable jurisdictional framework for consumer protection on the Internet is that the scope of the subject area that could be classified within the arena of "consumer protection" may be too broad to be governed by any one approach. The E-Commerce group decided to address transactions at this time, and not to address issues of fraud and deception, issues concerning content, and industries that are subject to broader forms of regulation. With respect to consumer protection for transactions, the group believes that at some point a framework will exist whereby local jurisdictions will be able to defer in the application of their laws to a new framework that provides both effective protections for consumers as well as legal certainty and simplification for merchants. After extensive consultation with businesses, governments, lawyers, consumers, and others, it is apparent to the Group that for such deference to be adopted, there needs to be significant operational experience to clearly demonstrate that a deference framework is best suited for dealing with transactional disputes in the online age.

It is for this reason that the E-Commerce Group has chosen to release these Guidelines at this time and encourage the development of alternative dispute resolution mechanisms.

Ultimately, the goal of the Guidelines and of the companies that helped develop them is not to amend or harmonize any laws. It is to produce satisfied consumers. Consumers should be empowered to choose to deal with reputable merchants, under rules with which they are comfortable, with assurance that any disagreements can be promptly and reasonably resolved. All legitimate online businesses share this goal. Achieving this result should lead to the moderation of the seemingly intractable dispute between (1) those who seek to apply a consumer’s local law to all online transactions (thereby potentially burdening e-commerce by requiring each online merchant to know and comply with many different and potentially inconsistent standards around the globe), and (2) those who argue for unqualified application of the law of the place of the merchant’s business, regardless of its substantive provisions (thereby potentially putting some consumers involuntarily at risk of receiving less than baseline protections online by merchants choosing locales with inadequate consumer protection laws).

Online dispute resolution mechanisms present a new potential means of resolving disputes across borders. Most existing laws and remedies were developed at a time when convenient dispute resolution meant going down to the local courthouse and consumer trust meant dealing only with the vendor down the street who was subject to regulation by local authorities. We now have a new global street that has many more shops and offers greater choice and more effective price competition, down which all concerned want consumers to be able to stroll in comfort. To get beyond the unworkable hodgepodge of local regulations, and idiosyncratic, expensive, and unenforceable local remedies, regulators, consumers, and businesses have begun to develop new dispute resolution services for the expanding global marketplace. Consumers also will be protected by a reduction in unnecessary costs of compliance with duplicative or inconsistent regulations--allowing more new shops, operating in a responsible manner and resolving disputes conveniently online, with greater choices and more competition.

In issuing these Guidelines, the E-Commerce Group intends both to show its good faith commitment to ensuring customer satisfaction and to call upon local regulatory authorities and consumer protection groups to continue to engage in a constructive and creative dialogue with the goal of creating a workable framework for resolving disputes that arise from online transactions.

Once it is easy for a consumer to tell who s/he is dealing with, and to confirm that the merchant operates under a legal regime that, while not identical in all respects to the consumer’s local laws, results in effective consumer protection--and once it is demonstrated that any disputes can be heard more quickly and disposed of more effectively online than could be accomplished either by relying on the consumer’s local courts or attempting to enforce judgments against foreign parties--the net effect will be an increase in consumer trust and in real consumer protection. This result will lead to a solution in which governments will feel comfortable in deferring to a new framework.

The E-Commerce Group encourages these new mechanisms for enhancing trust, protecting consumers, and spurring the growth of e-commerce. We call on businesses, governments, and consumer throughout the world to join with us in discussing these challenging issues as we all search for new ways to increase consumer satisfaction and encourage economic growth.