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13. Consumer protection and e-commerce

 

This module summarises Chapter 13 that covers aspects of consumer policy related to communication services and e-commerce. It addresses how consumer protection measures can inform and empower consumers, stimulating the market to innovate, improve quality and compete in pricing. This chapter presents an over-arching set of policy principles for ensuring that consumer interests are adequately protected. It also explores the importance of promoting e-commerce as a tool to broaden the scope of products, increase competition in the marketplace and allow consumers to compare price more easily. Finally, it presents best practices on consumer policy from the region and suggests areas that policy makers might consider going forward.

Explore this module

Main policy objectives
Tools for measurement and analysis
The LAC region
Leading good practices

 

Main policy objectives

Consumer protection

The main policy objectives for consumer protection in communication services can be divided into three broad categories that correspond to different phases in the relationship between the operator and the user:

  • Improving customer acquisition: Policy makers and/or regulators should aim to improve the first phase in the relationship between businesses and customers, which involves attracting customers through advertising and providing information about the services on offer. They should target actions towards the information provided about bundled services, advertising claims, and customer due diligence in researching offers.

  • Watching over contracts and engagement: Policy makers and/or regulators should also monitor and take action when necessary in the second stage in the relationship between businesses and consumers, when contracts and agreements are in force. Actions in this area involve disclosure issues, billing practices, quality of service, accessibility and how complaints are handled.

  • Facilitating switching and termination: The final stage of the relationship between businesses and customers, when they end the relationship, should also be monitored by policy makers and/or regulators. They should facilitate switching and termination by taking action to ensure number portability to new carriers and monitoring for SIM locking and termination charges.

E-commerce

The key policy objectives for e-commerce can be divided into three main groups:

  • Creating a framework for electronic settlements and payments: Optimal payment systems provide a way of transferring value between different parties in the economy and facilitate transactions at minimal costs.

  • Reducing barriers to e-commerce: This involves identifying the obstacles that inhibit the growth of businesses engaging in e-commerce or that prevent users from adopting services.

  • Promoting e-commerce adoption: This entails developing initiatives to promote the use of e-commerce among administrations, businesses and consumers.

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Tools for measurement and analysis

Consumer protection

To develop and implement sound policies for consumer protection, policy makers should be informed and guided by data whenever possible. Various sources of data support consumer protection policy making, including complaint information, surveys, market surveillance and in-depth market surveillance and consumer detriment assessments.

E-commerce

In the area of e-commerce, policy makers need statistics to evaluate key trends, such as the adoption of e-commerce by merchants and the willingness of businesses and consumers to engage in transactions online. Statistics are an important source of information about relative progress in urban and rural areas, but also for benchmarking exercises among countries in the region.

The OECD Model Survey on ICT Use in Businesses (discussed in the analysis and annex for Chapter 10) has a specific module on e-commerce (Module D) that sets out definitions and several indicators for assessing the penetration of different e-commerce transactions. They include:

  • enterprises conducting e-commerce sales (as a percentage of all enterprises)
  • e-sales value by platform and type of customer (as a percentage of total turnover)
  • web sales percentage breakdown by type of customer and geographic area
  • means of payment of accepted online sales (percentage of all enterprises, by means of payment)
  • barriers to online sales (percentage relevance among enterprises)
  • electronic data interchange (EDI) sales breakdown by geographic area (percentage of EDI sales)
  • enterprises conducting e-purchases (as a percentage of all enterprises)
  • e-purchase value by platform (as a percentage of total purchases).

Data on e-commerce can also be collected by national surveys on ICT use in households, as in Brazil in the LAC region. The e-commerce component of these surveys can include indicators such as:

  • individuals who have researched prices of goods or services online (percentage of Internet users)
  • individuals who have bought goods or services online (percentage of population)
  • individuals who have not bought goods or services online (percentage of Internet users, classified by reason why they don’t buy online)
  • individuals who have publicised or sold goods or services online (percentage of Internet users.

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Overview of the situation in the LAC region

Consumer protection

In the LAC region, some practices are more prevalent with regards to protecting consumers during the customer acquisition phase of the relationship with operators. Advertising regulation is strong across the countries in the LAC region responding to the questionnaire, 88% having regulations in place governing how communications services are sold to customers. Often these regulations are not specific to telecommunications, but to all goods and services.

As for the monitoring of contracts and services, LAC countries have relatively high adoption of protection for users who have subscribed to a service. Roughly 89% of responding countries require networks to be monitored for quality of service (QoS), with reporting done either to the regulator or published on the company’s website. Slightly fewer countries (78%) have guidelines in place that protect users against unfair billing practices and require transparency in contracts and billing items.

Once subscribers choose to pursue contract termination and switching, some protections are widely adopted, while others are relatively less common. Most countries in the region (87%) have regulations in place to help facilitate the end of contracts for users (Figure 13.6).

E-commerce

The e-commerce market in the LAC region has experienced sustained growth for more than a decade, although from a relatively small base. Revenues generated by B2C e-commerce in this region doubled every two years in the period 2003-2013, by one estimate reaching USD 70 billion in 2013 (América Economía, 2012). In that period B2C revenue increased as a share of GDP in some of the major economies of the region (Brazil, Mexico and Chile). Although e-commerce has grown, its composition has remained nearly constant over recent years. According to OECD data, e-commerce is dominated by business-to-business (B2B) sales that are often handled via electronic data interchanges (EDI). Roughly 90% of the value of e-commerce transactions is from B2B. The remaining 10% of transactions are a combination of business-to-consumer (B2C), business-to-government (B2G) and consumer-to-consumer (C2C) activity (OECD, 2015b).

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Good practices

Consumer protection

The first phase of consumer protection policy making refers to customer acquisition,that is, when consumers select between competing providers based on information provided by carriers. This section describes good practices to deal with factors that influence users’ choices, in areas such as broadband mobile services, including advertising, bandwidth/speed claims and bundle options.
In the second phase of consumer protection policy making covers the monitoring of contracts and services after a consumer has entered into a contract with a communication provider, good practices shared relate to issues such as inadequate disclosure of the terms of the contract, unfair billing practices (transparency, bill shock, cramming), quality of service issues, ineffective handling of complaints, and accessibility issues.

The third phase of consumer policy relates to actions regarding switching of providers or termination of contracts. This section sheds light in practices to address issues related to switching such as number portability, SIM locking rules, the general state of competition, contract periods and termination charges.

E-commerce

A key policy area for promoting e-commerce is building sound frameworks for electronic settlements and payments. The main roles of a payment system are to provide a way of transferring value between different parties in the economy and to facilitate transactions at minimal cost. Policy makers can help promote economic activity by promoting a framework for electronic settlements and payments. The OECD’s “Policy Guidance on Mobile and Online Payments” (OECD, 2014b) provides a wealth of information on policy actions to build a framework for e-commerce that can be tailored to the LAC region.
Once governments have a legal and regulatory foundation in place to support e-commerce, the next step is removing barriers that inhibit the growth of businesses engaging in e-commerce or that prevent users from adopting the services.

When the foundational elements are in place and barriers for e-commerce are addressed, policy makers can focus on promoting adoption of e-commerce both by businesses and customers. Creating national platforms such as forums or chambers for e-commerce is a good practice for identifying bottlenecks and developing solutions based on a multi-stakeholder approach. It is critical that customers and suppliers of e-commerce-based services help set priorities in national e-commerce strategies. Attention should also be paid to measures to facilitate the effective participation of SMEs.

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BROWSE TOPICS OF THE TOOLKIT

Introduction •  Regulatory frameworks and digital strategies •  Spectrum policy •  Competition and infrastructure bottlenecks •  Extending broadband access and services •  Affordability, government charges and digital inclusion •  Convergence •  Regional integration •  Skills and Jobs •  Business uptake, entrepreneurship and digital content •  E-health •  Digital government •  Consumer protection and e-commerce •  Digital security management •  Privacy protection
 

 

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