TopicsDigital consumers

Consumer protection in e-commerce

Growth of e-commerce will only be possible if consumer trust in a dynamic but complex international market is strengthened. Concerns include the growing complexity of online transactions and related terms and conditions, as well as the uncertainty about where consumers should turn when they suffer detriment as a result of misleading or fraudulent business practices, or unsafe products. They also relate to the wealth of data that consumers' online activities generate, which, while enabling businesses to sketch rich consumer profiles, also brings risks. Policy makers need to stay current with the evolving challenges.

The 2016 revisions to the OECD Recommendation on Consumer Protection in E-commerce (also available in French and Japanese) provide a blueprint for fair business practices, information disclosures, payment protections, unsafe products, dispute resolution, enforcement and education. Continued efforts are needed to assess how to apply consumer protection, product safety and liability frameworks to transactions involving new products and non-traditional actors, and which reflect the growing complexity of online interactions.

Based on questionnaire responses from 31 countries and supplemented by additional research,  a 2018 report on consumer protection enforcement in the global digital marketplace examines information on consumer protection enforcement authorities of OECD member and non-member countries and especially their ability to co-operate across borders.

Toolkit for protecting digital consumers

Despite the benefits and convenience of e-commerce, the ease and speed with which consumers can engage in online transactions – at anytime, anywhere, and in particular across borders – may create situations that are unfamiliar to them and put their interests at risk. 

Governments have a key role to play in creating, adapting and maintaining a consumer protection framework that is effective and responsive to the interconnected nature of e-commerce. This toolkit provides a set of principles and practices for protecting digital consumers and enhancing trust in ecommerce.

While the toolkit has been developed by the OECD at the request of the German G20 presidency, its relevance is not confined to G20 economies. Policy makers in any jurisdiction seeking to ensure consumers can engage confidently and securely in online transactions may find it to be a useful resource.

Improving online information disclosures

Do you read the fine print or do you just click “agree”? 

Access to good information is essential if consumers are to make decisions in their best interests when shopping online. For this reason, information disclosure requirements have been a key policy tool for empowering online consumers across the OECD.

But terms and conditions are not an effective way to communicate with consumers according to new insights on consumer behaviour.

Behavioural insights literature suggests consumers are subject to a number of behavioural biases that influence their ability to benefit from information disclosures when shopping online.

The Internet of Things

Consumer product safety in the Internet of Things

This report describes current and emerging IoT developments that may have implications for consumer product safety policy design and enforcement. It also draws attention to the potential for the IoT to give rise to new safety risks, and questions about whether existing liability and product safety regulatory regimes are adequate.


Consumer policy and the smart home

This paper outlines the key consumer benefits and risks associated with Internet of Things (IoT) devices in the “smart home”. The benefits include convenience, customisation and control. However, there are potential risks for smart home residents such as data privacy and cybersecurity threats, limitations on interoperability, the need for lifetime product support, complex supply chains and liability regimes, and product safety.

Protecting consumers in peer platform markets

Peer-to-peer transactions have long played a role in commerce, but today's online platforms enable them on a much greater scale. Early examples include platforms for the (re)sale of goods (e.g. online auction and classified listings sites). Newer models include the short-term rental of accommodation and transport or mobility services.

Peer platform markets raise new policy and regulatory challenges, including consumer protection issues. It can be difficult to apply existing consumer protection frameworks to business models that blur the boundaries between consumers and businesses. Some peer providers may generate sufficient commercial activity to suggest that they should bear consumer protection responsibilities, while at the same time appearing to be in a consumer relationship with the platform. Many peer platforms employ trust-building mechanisms for the users of their services (e.g. secure payment mechanisms, reputation or rating systems, pre-screening and verification, insurance, and complaints handling and dispute resolution). These mechanisms may help meet consumer protection objectives.

In 2016 the OECD's Committee on Consumer Policy (CCP) produced the report Protecting Consumers in Peer Platform Markets. It describes PPMs and outlines a set of issues for further research and consideration. To facilitate that consideration, the CCP commissioned an online survey to better understand the drivers of consumer trust in PPMs. The study that was carried out in early 2017 across ten OECD countries: Australia, Canada, Chile, Germany, Italy, Japan, Mexico, Norway, Turkey and the United States. >> Read the report on the survey findings on consumer trust in peer platform markets.

A November 2017 workshop on protecting consumers in peer platform markets continued the policy discussion.

Policy guidance

Consumer Policy Guidance on Intangible Digital Content Products

Digital content, such as e-books and apps that are available through streaming, downloads or cloud computing platforms, has become the fastest growing e-commerce product category. To support further growth, it is important that consumers, including children, understand what their rights and obligations are when acquiring and using such products. In particular, consumers need to know about the conditions under which they may copy and share products, and on which devices the products may be used. They also need to be informed about how their personal data may be collected and used, with whom it may be shared and why, and the type of redress that may be obtained when problems arise.


Consumer Policy Guidance on Mobile and Online Payments

This policy guidance is intended to boost consumer protection when using mobile and on-line payment systems and to identify ways in which policy makers and businesses can work together to strengthen consumer protection while spurring innovation in the marketplace. The guidance addresses a number of key issues in the emerging mobile and online payment area, including the need to establish minimum levels of consumer protection across payment mechanisms, enhanced privacy and child protection, and standards for transparent and accessible information disclosures.

Reports

Online Product Safety

This report explores the scope and magnitude of selected product safety challenges faced by consumers when purchasing tangible goods via e-commerce. It provides an overview of the government and business initiatives that have been carried out to protect consumers from three categories of unsafe products that are available for sale online in a number of jurisdictions. Such products include those: i) which have been banned or recalled; ii) with inadequate labelling and safety warnings; and iii) which do not meet voluntary and mandatory safety standards. The report is informed by the results of an OECD online product safety sweep in which 25 jurisdictions participated and inspected 1700 selected products available for sale online. 

>> More OECD work on consumer product safety


Algorithms and collusion: Competition policy in the digital age

The combination of data with technologically advanced tools such as pricing algorithms and machine learning is increasingly changing the competitive landscape in the digital markets. There is a growing number of firms using computer algorithms to improve their pricing models, customise services and predict market trends, which could generate efficiencies. However, the widespread usage of algorithms could also pose possible anti-competitive effects by making it easier for firms to achieve and sustain collusion without any formal agreement or human interaction.

>> More OECD work on competition


Robo-Advice for Pensions

Riding the wave of technological innovation in finance, the robo-advice model has emerged as one potential solution to increase the accessibility and affordability of getting help to invest savings for retirement. These models are challenging traditional distribution channels, and are rapidly gaining market share in terms of assets under management. This report provides an overview of the types of robo-advisors that are now available and discusses the potential benefits, risks and challenges of such platforms.

>> More OECD work on pensions


Ensuring Financial Education and Consumer Protection for All in the Digital Age

With the unprecedented pace of technological change and the proliferation of digital financial services around the world, the need to strengthen financial and digital literacy is an important component of the international policy agenda. 

>> More on financial education and consumer protection