A recent report by ECC-Net highlighted the main problems that consumers face when engaging in cross-border transactions online. The report is especially relevant for traders aiming to build greater consumer trust in their online services. Jon Round reports.
Who: The European Consumer Centre Network (ECC-Net)
When: October 2012
Where: European Union
Law stated as at: November 2012
As readers of marketinglaw will no doubt be aware, e-commerce is becoming increasingly popular (who hasn’t browsed Amazon in the run-up to Christmas for example?). However, across the EU, it nonetheless remains largely untapped as a retail platform and, according to a recent European Commission report, only 3.4% of all products and services are sold via the internet in Europe.
Against this background, a recent report by ECC-Net highlighted the main problems that consumers face when engaging in cross-border transactions online. The report appears especially pertinent to traders aiming to build greater consumer trust in their online services.
Give me solutions not problems
The main problem areas identified by the report are detailed below, alongside the potential steps online retailers can take to avoid these common pitfalls.
• Cooling Off period
– Problem – Failure to inform consumers that the right of withdrawal is lost where performance of the service or good has begun. This is of particular significance for digital content sold online, where consumers make rapid decisions to purchase and download/launch applications without appreciating they will be unable to refuse it afterwards.
– Compliance – Consumers should be made aware of this exception prior to purchasing products; a particularly savvy step considering that this forms a requirement under the proposed Consumer Rights Directive, expected to come into force in the UK from June 2014.
• Display of Prices
– Problems – Non/incorrect display of prices and hidden costs i.e. failure to give a “clear and unambiguous indication of prices” and whether the price includes taxes and delivery costs, both contrary to the Distance Selling Directive.
– Compliance – In situations where traders are unable to determine the full price (including taxes, packaging or delivery), traders are advised to provide consumers with information on the manner in which the price is to be calculated (e.g. reference to the terms and conditions or FAQ).
In a bid to aid transparency, EEC-Net also proposes that the total price for a good or service is provided upfront, followed by additional information on the composition of the price. Given that partitioning prices into a base price and surcharge can increase the relative value as perceived by consumers and increase their purchase intentions for the products, greater transparency may also make sound commercial sense for traders.
• Methods of Payment
– Problem – Lack of consumer perceived security and trust in vendors and payment systems (identified by the European Commission as one of the main barriers to the future growth of e-commerce). This includes failure to safeguard against and/or make consumers aware of, security issues arising from online transactions, which may lead to reduced consumer confidence and reluctance to adopt new technologies for payment.
– Compliance – As consumers have limited means of checking whether a site is secure, traders should make the security protection measures as visible as possible, whilst encouraging consumers to make payments from secure devices.
As regards new technologies, such as contactless or remote mobile payments, EEC-Net calls for traders to place a greater emphasis on making these secure, transparent and cost-effective in order to improve consumer confidence and consequential uptake.
– Problem – A lack of transparency regarding the handling and storage of personal data; a finding consistent with Osborne Clarke’s own “Data Gold Rush” research, published in October 2012.
– Compliance – Traders are advised to empower consumers to decide whether or not personal information may be passed on to other companies, provide easily accessible privacy statements explaining procedures for handling personal information and ensure that websites are compliant with Europe’s new cookies laws by implementing mechanisms to explain and obtain consent for cookie usage.
Given the European Commission’s recent proposals to overhaul the Data Protection Directive – including plans to increase the regulatory burdens on organisations and the penalties on those that get it wrong – the case for traders to take action now is compelling.
Why this matters:
The consequences of failing to address these common pitfalls are twofold:
– Regulatory intervention – for example in September 2012 the Office of Fair Trading, the UK’s consumer and competition authority, wrote to over 50 of the top UK retailers after it found their websites were not compliant with the Distance Selling Regulations (which could give rise to court action or fines and in extreme scenarios prison) and E-Commerce Regulations; and/or
– Reputational danger of unhappy consumers – given that lack of consumer trust in vendors has been identified by the European Commission as one of the main barriers to the future growth of e-commerce, traders willing to address consumer concerns are those most likely to profit from increased consumer confidence in, and uptake of, their online services.
For retailers trading online, whether cross-border or not, this may be a timely reminder to conduct a website audit to ensure that it is not falling foul of the common complaints highlighted in the report.