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E-Commerce Code For Consumer Protection

Media release
2 April 2000

E-Commerce Code For Consumer Protection

The Minister of Consumer Affairs, Hon Phillida Bunkle, wants to make sure Internet shopping is safe for consumers.

And to help achieve this, the Ministry is proposing the introduction of a New Zealand Model Code for Consumer Protection in Electronic Commerce, for adoption by New Zealand Internet traders.

"The aim is to increase consumer confidence in shopping online. This would benefit both consumers and Internet traders," said Ms Bunkle. "At the moment, I'm not convinced that consumers do have confidence in Internet shopping."

In 1999 the Ministry of Consumer Affairs joined international consumer agencies in a random assessment of Internet shopping sites to see how well they protected their customers interests.

Of over 700 sites visited:
 25 percent showed no physical address
 more than half failed to outline their payment security mechanisms
 62 percent provided no refund or exchange policies
 75 percent had no privacy policy
 78 percent failed to explain how to lodge a complaint
 90 percent failed to advise customers what laws applied to their transactions

"There were 54 New Zealand sites identified. Using a checklist of 10 categories for satisfying consumer protection, only 12 of those NZ sites met more than five of those requirements.

"If you take into account the number of overseas sites that New Zealanders can access, it's a daunting thought that many of those sites don't protect the consumer in a large of ways," Ms Bunkle said.



The results provided a challenge to New Zealand, she said.
"They send a very clear message to traders that, if they want to take advantage of electronic commerce opportunities, they must improve consumer confidence in their service."

Ms Bunkle wants the proposed model code to help achieve this. The code sets guidelines for Internet shopping sites in relation to:
 fair business practices
 truthful advertising and marketing
 providing information about the identity and location of a business
 providing information about the terms and conditions of contracts
 implementing mechanisms for concluding contracts
 establishing fair and effective procedures for handling complaints and resolving disputes
 adopting privacy principles
 providing information about payment, security and authentication mechanisms.

"A model code, or code of practice, would benefit both consumers and Internet businesses," she said.

"It would give consumers basic information such as the physical address of a business, whether our own or another country's legislation applies, what currency is used, security of personal information and on-line transactions and location for where complaints can be made. Internet businesses adhering to the standards would ideally be identified by a forgery-proof seal."

The model code could be used by indivdual businesses, trade associations, and as the basis for seal of approval schemes. The proposed code is modelled on already existing OECD Guidelines for Consumer Protection in the Context of Electronic Commerce and the Australian Best Practice Model for Electronic Commerce.

"This means New Zealand practices will be in line with international standards for consumer protection," said Ms Bunkle. "If this code is adopted and followed by New Zealand businesses they will be able to say that they are addressing consumers’ interests."

The Ministry has released a discussion paper on the proposed code, which includes information about other e-commerce initiatives currently underway. The paper is available from the Ministry.

"Once comments on the paper have been received, the Ministry will confirm with me whether the model code is appropriate and workable, and suggest a process of implementation," said Ms Bunkle.


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