Discussion Paper Summary

August 1997

• International developments
• Electronic commerce issues - consumer protection issues, analysis and strategies for the Ministry of Consumer Affairs
• The way forward

Electronic Commerce and the New Zealand Consumer

Note: While this paper was produced in 1997, it still has relevance in 1999. A revised version will be posted on this site before the end of 1999. 

The Ministry of Consumer Affairs works to ensure that there is a fair and informed marketplace. We provide advice to the Government on key laws, practices and policies affecting consumers, and develop information, education and advice programmes to enable consumers to function effectively and equitably in the marketplace. We are also responsible for the administration and enforcement of trade measurement legislation and for consumer safety functions under the Fair Trading Act.

The Ministry has identified the development of electronic commerce as a key area of focus over the next three years and beyond, for a number of reasons:

• It is changing the way consumers and business relate to each other domestically and internationally.
• It can provide New Zealand consumers with opportunities to access a wider range of goods and services, potentially at cheaper prices, within New Zealand and across borders.
• For New Zealand consumers to take full advantage of these opportunities, they will need to have confidence in matters such as the use of personal information provided, the security of transactions, the quality of goods and services available, and the availability of redress if things go wrong.
• For the Ministry to fulfil its responsibilities to New Zealand consumers it is necessary to:
  • understand the changes that are occurring
  • assess whether current consumer protection mechanisms are relevant to new and emerging ways of doing business (and take appropriate action where they are not)
  • educate and inform consumers about relevant issues.

International developments

Recent international conferences and activities have aimed at identifying the issues raised by electronic commerce.

Activities that the Ministry has been directly involved in are summarised below.

New Zealand and Australian consumer agencies have identified electronic commerce as a priority issue for action in the workplan of the Ministerial Council of Consumer Affairs.

The OECD:

• has released its draft guidelines on Chargebacks and Distant Selling. These set guidelines for standards by which codes of practice could be drafted to ensure international harmonisation
• is developing a project to generate consumer protection guidelines to be submitted to the OECD Council for approval as a council recommendation
• has been addressing issues such as the deregulation of postal systems and the efficiency and cost of customs procedures, both of which can create barriers to consumers taking part in the global marketplace
• is reviewing safety labelling in the global marketplace as a result of concerns that there is a proliferation of safety and conformity marks, and a lack of understanding by consumers and business as to what these marks stand for
• Consumers International has established a network of members to deal with consumer issues in the information society. The Ministry is part of that network.

Consumers International recently held a conference in New Delhi.

The International Marketing Supervision Network (IMSN) is focussing on electronic commerce issues.

All of the above serve to highlight that there is much work going on internationally to deal with electronic commerce issues from a consumer perspective. This list includes only the issues that the Ministry is involved in. One challenge is simply to remain aware of developments so that they can be built on appropriately for New Zealand consumers.

Electronic commerce issues - consumer protection issues, analysis and strategies for the Ministry of Consumer Affairs

Consumer protection issues arise in respect to Internet and telephone technology, Internet payment systems, smartcards, creditcards and debit cards, etc.

At a domestic level not much changes. Current laws and self regulatory frameworks in New Zealand tend to apply regardless of the way consumers relate to businesses. The real challenge is in the increased amount of cross border trade.

The way forward

The Ministry's role is to promote a fair and informed marketplace, for the benefit of all New Zealanders. Where fair and informed markets do not exist, the Ministry is committed to examining all options, from education, through self-regulation, to formal government regulation, to find the most effective and efficient solutions to address consumer problems.

There are a number of issues that suggest solutions to any problems in the electronic marketplace will stop short of developing formal government regulation. The issues are:

• The electronic marketplace is in its early stages. Any problems may be described as potential or emerging to a large degree
• The electronic marketplace is a global phenomenon. Any solutions to problems will need to be global
• The electronic marketplace is developing rapidly. Legislation, even if appropriate for other reasons, could probably not be developed, modified or removed quickly enough to meet the needs of the marketplace
• It is in the interests of participants to work out ways around most problems. Every day news reports indicate a new development designed to increase security or confidence in the electronic marketplace.

The Ministry will therefore focus on four broad areas which are outlined below.

Consumer education/information activities

• Educate and inform consumers on their rights and responsibilities in electronic commerce.
• Inform consumers of the potential dangers in buying from traders who do not commit to accepted codes of practice.
• Monitor traders operating at a standard lower than code / regulatory requirements, and seek appropriate compliance action.
• Ensure consumer representation in the development of self regulatory mechanisms.

International networking activities

• Participate in discussion and development of international codes, bi-lateral and multi-lateral mutual recognition, harmonisation of rules, and enforcement activities.
• Participate in discussion and development of international agreements, guidelines and standards relating to electronic commerce.

Business self-regulatory activities

• Liaise with industry groups, business and government agencies to establish or improve industry codes of practice.
• Assist industry in the promotion and awareness of codes to consumers.
• Encourage the use of seal-of-approval schemes.

Monitoring market developments, market solutions and international activities

• We will formalise our monitoring processes for gathering information about developments in the international marketplace.
• Maintain an up to date understanding of developing issues so that they can be appropriately addressed.
• Undertake market research on consumer responses to electronic commerce over a period of time.

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