The FTC says in a new report that without "a workable framework for jurisdiction and applicable law," consumer confidence in the global electronic marketplace could be undermined.
Among its recommendations, the FTC calls for partial international convergence of consumer protection laws and development of international alternative dispute resolution mechanisms.
The FTC report looks at several issues receiving increasing attention from governments, businesses and consumer groups, including what laws and courts should govern when consumers shop at foreign web sites. The report cautions against allowing on-line sellers to be governed only by their own country's laws and courts, or only by the laws they prescribe in their sales contracts, as some have proposed. The report recognises that partial legal convergence, marketplace competition, alternative dispute resolution (ADR), private-sector initiatives and cross-border co-operation are also key to a safe global electronic marketplace.
The report makes several recommendations for ensuring effective consumer protection in the global electronic marketplace including:
- Develop a workable framework for jurisdiction and applicable law. The current system generally allows consumers to rely on their own country's core protections. This approach raises concerns about predictability and compliance burdens for online sellers. The task now is to address these concerns without moving to adopt a system that subjects sellers only to the laws and courts of their own country or as prescribed in the sales contract. Such a change from the current approach risks undermining consumer protection, and ultimately consumer confidence in e-commerce.
- Encourage continued development of private-sector programs that better inform consumers and prevent disputes. Private-sector initiatives that address consumer concerns, like certification programs, rating systems, codes of conduct and escrow and insurance programs, are key to the continued growth of e-commerce.
- Encourage the development of arrangements for cross-border judgement recognition and enforcement for both private and public actions. Judgements obtained by consumers and consumer protection agencies against foreign companies must be enforceable and effective across borders. These ends can be achieved through international agreements on judgement recognition and enforcement.
- Develop effective ways for consumer protection agencies world wide to share information and co-operate. Effective international enforcement of consumer protection laws depends on extensive and systematic information sharing and co-ordinated action across borders.