Issues Facing the Online Consumer and Shopping Industry

happy woman shopping online at home

For years, the Internet has been criticized for being unsafe, thanks to shoplifting and other issues. However, many issues are misunderstood or misconstrued such as shipping costs and payment processor fraud. In this article, we’ll take a closer look at shopping and consumer protection on the Internet.

The first area we’ll look at is online shopping and consumer protection. Many consumers are very leery of online shopping due to the potential for low quality products and scams. However, recent improvements have addressed these issues. E-commerce sites are now required to meet certain standards regarding product quality and on-site customer support. This article aims to (I) describe five areas in consumer protection related to online shopping, (ii) outline some of the common scams that persist on the web, and (iii) discuss the Three-Sectoral governance model proposing that there is a low quality standard for most products.

Most leading consumer protection agencies and international law bodies agree that there is a strong need to strengthen electronic commerce and enhance the trustworthiness of online transactions. The key areas in this regard are: fraud and identity theft, copyright abuse and piracy, internet payment fraud, and security breaches. While Australia has not yet adopted a formal legislative scheme for combating these issues, there are certain practices that international organisations have adopted which may be beneficial to the Australian economy. For example, the European Union’s Venice Agreement and its Regulation on Electronic Commerce Safe Standards (R ESCS) can serve as a helpful model for promoting safer online business practices. These agreements are currently being reviewed by the international community in light of the ongoing global economic recession.

Another area of increasing concern is online disputes resolution. More consumers are experiencing difficulties with accepting payment through electronic commerce channels, such as credit cards, and it is becoming more challenging for consumers to receive fair and reasonable resolution of their disputes. The proposed amendments to the Consumer Debt Collection Act and the Australian Consumer Law Act are designed to address this situation by encouraging more responsible behavior on the part of service providers. In addition, the proposed amendments will enable consumers to better understand their rights and obligations. However, the current arrangements regarding dispute resolution are too lax, resulting in little if any benefit to consumers.

There are other areas for improvement in the regulation of online shopping. The ACL has been calling for more time to be allocated to evaluating and reviewing online shopping complaints and the complaints process of the ACL itself. Until such time, it is clear that consumers are dissatisfied with the current system, with the high number of rejected requests for refunds and the long waiting times for processing. Similarly, the ACL is consistently disappointed by the lack of clarity surrounding the registration of a website and the necessity for consumers to provide security passwords and other identifying information in order to process credit card online shopping. Despite these shortcomings, the ACL is likely to adopt a moderate position in relation to online shopping and consumer protection issues in the near future.

Other Commonwealth nations have been exploring options with the Aussie government to strengthen consumer protection and online security. At this point in time, the only comparable situation to Australia is the UK’s Electronic Communications Safety Act 1996 which falls several steps short of Australia’s standards. The ECSA developed a policy framework for electronic commerce and the UK government has been exploring legislative reform since then. However, both jurisdictions have been in a wait and see approach to seeing if Australia’s model will prove to be a source of inspiration.

The ECSA is an independent organization and despite government pressure and suggestions from the Howard government, the ACMA has remained an independent body. However, it has been vocal in its criticism of both the Howard Government’s online-shopping policy and the existing Fair Trading Act for failing to protect the interests of consumers and the interests of small businesses. The ACL believes that both policies have failed to provide sufficient protection to consumers. The ACL also believes that e-commerce legislation should be significantly strengthened to protect the interests of small businesses, home-based businesses and Australian suppliers. Currently, there is not enough evidence of harm when consumers purchase goods online. For this reason, the ACL calls for more evidence and research into the impact of online consumer protection and the impact of the existing e-commerce legislation on the Australian economy and the nation as a whole.

A further area that the ACL is examining is the impact of the Productivity Commission’s recent review into electronic commerce and its impact on the domestic consumer policy and practices of the states and territories. Although, this review identified numerous areas that could be improved, it also recommended some changes to the current laws and suggested that these changes should be considered in the context of other international conventions. The Productivity Commission also recommended that the state bodies be required to provide evidence of the impact of their electronic commerce legislation and evidence that the impact of the Productivity Commission’s recommendations has been or will be reduced. It is believed that this recommendation is designed to ensure that the Productivity Commission’s report and recommendations are taken into account when making legislative reform proposals. This information will also assist the states and territories to develop their own legislative reform package and ensure that the legislative reformulation occurs concurrently with the revision of the ACL.

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