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Consumer protection laws need to be updated, says OECD

Countries need to bring their consumer protection laws up to date to address new risks posed by e-commerce, the Organisation for Economic Cooperation and Development (OECD) has said in newly published guidelines. 31 Mar 2016

People buying online should have the same protection as buyers in the physical world, the OECD Recommendation on Consumer Protection in E-Commerce said.

Governments should work with business and with consumer groups to identify legal changes to make this happen, the OECD said. In particular, consumer protection law should cover online apps and services that are offered for free in return for access to the user's personal data, it said.

Many consumers are wary of buying goods, services or digital content online because of concerns about privacy, payment security, legal recourse and doubts over whether consumer reviews are genuine, the OECD said.

A recent OECD report found that only 50% of people in OECD countries made an online purchase in 2014. Those who did not buy online cited concerns about security and privacy as their main reasons.

Countries should help to ensure consumers understand the terms and conditions in buying and using digital content like online music and movies – the fastest growing e-commerce category. Consumers should also have access to easy-to-use mechanisms to resolve domestic and cross-border e-commerce disputes, the OECD said.

Commercial law expert Elizabeth Dunford of Pinsent Masons, the law firm behind said: "The recent comments from the OECD come at a time when many businesses are looking to establish or expand their presence in the e-commerce market. The comments highlight the importance of businesses having clear and accessible terms of sale and privacy policies in place to instil consumer confidence when shopping online."

The UK government said in February that it has "no fundamental objection" to consumer rights being extended in cases where consumers trade their personal data for access to 'free' digital content but is concerned about the impact on business.

The UK government was responding to  legislative proposals published by the European Commission in December 2015 on contracts for the supply of digital content which, if introduced, would give consumers new rights of remedy and redress in relation to digital content supplied to them that is faulty or which otherwise fails to conform to sellers' descriptions.

The European Commission published a draft directive on contracts for the supply of digital content (33-page / 531KB PDF) which, once finalised, would apply to digital content providers in many sectors, although not in financial services, electronic communications, gambling or health care.

The UK's Competition and Markets Authority (CMA) also published its response to the EU proposals. It said that it consumers "should obtain similar protections to those available when purchasing digital content with money" when exchanging data for digital content (11-page / 315KB PDF). However, it said how the rights and remedies are accounted for in practice "will need careful consideration" to ensure "there is the correct balance of rights as between businesses and consumers".