FTC to Study Consumer Protection in International Electronic Commerce

(December 15, 1998)  The Federal Trade Commission announced on Monday, December 14, that it will organize a workshop on consumer protection in the global electronic marketplace.

The Federal Trade Commission issued a press release (see below) stating that the "public workshop will explore various issues that consumers confront as they buy goods or services from foreign businesses. These issues concern questions of what laws apply to direct, international business-to-consumer transactions, where disputes are heard, and which governments have authority to protect consumers."

This will be "a Commission workshop, but staff in the Bureau of Consumer Protection is organizing it," said Jonathan Smollen, of the Division of Financial Practices, in the FTC Bureau of Consumer Protection.  Smollen spoke with Tech Law Journal on Monday.  Lisa Rosenthal, legal advisor on international issues in the FTC Bureau of Consumer Protection, is coordinating the workshop with the Division of Financial Practices.

However, this is not part of a rule making process.  The "end product sometimes depends on what we find out in the process," said Smollen, but "it is not a rule making."  Rather, the purpose is to "define a set of issues."

When the FTC holds a workshop it sometimes releases a transcript of the workshop, and sometimes produces a report.

The FTC requests that comments be filed by February 26, 1999.  Smollen stated that no date for the workshop has yet been set, but it is likely to take place in May.

FTC Press Release.
Re: Consumer Protection in International Electronic Marketplace.
Date: December 14, 1998.
Source: FTC.

FTC to Explore International Consumer Protection Concerns in the Electronic Marketplace

Spring Workshop to Examine How to Protect Online Consumers When They Do Business with Foreign Firms

As growing numbers of consumers participate in the global marketplace, the issue of international consumer protection is becoming increasingly relevant, the Federal Trade Commission said today as it announced a 1999 spring workshop to examine U.S. perspectives on this new consumer protection topic. The public workshop will explore various issues that consumers confront as they buy goods or services from foreign businesses. These issues concern questions of what laws apply to direct, international business-to-consumer transactions, where disputes are heard, and which governments have authority to protect consumers.

"Whether it is chocolate from Belgium or olive oil from Italy, consumers who cybershop can now buy directly from foreign companies from the comfort of their living room," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "More and more consumers are engaging in e-commerce shopping. Wherever they go -- a Web site based in Naples, Italy, or Naples, Florida -- shoppers venturing on the Internet, should not have to worry about which consumer protection laws apply to their purchase. Our workshop will bring all interested parties together to address that issue."

The FTC's work in protecting consumers online was highlighted in the First Annual Report of the U.S. Government Working Group on Electronic Commerce. Noting that the agency "has taken the offensive against misleading and deceptive practices online," the report points out that international consumer protection issues are becoming more important. "In order to protect consumers online, the global community must address complex issues involving choice of law and jurisdiction -- how to decide where a virtual transaction takes place and what consumer protection laws apply. ... By placing an emphasis on consumer protection for the coming year, the U.S. hopes to promote global understanding of the issues at stake and develop a thoughtful, pro-active approach to pave the way for Internet retailing to reach its full potential."

The FTC workshop to examine U.S. perspectives on consumer protection in the global electronic marketplace will examine how businesses, consumers and government can work together to ensure that consumers are protected when buying from foreign firms online. According to the Commission, a determination of how to provide effective international consumer protection involves complex issues of law, fact and policy. "Interested parties, including academics, industry members, consumer advocates, and government representatives, are requested to submit academic papers or written comments on any issue of fact, law, or policy that may inform the Commission. ... Because U.S. perspectives on these issues should be informed by international approaches, comments should not be limited to examinations of domestic laws or policies," the agency's Federal Register Notice announcing the workshop states.

The Notice, which will be published in the Federal Register shortly, sets forth a number of questions intended as examples relevant to the Commission's examination. The questions focus on issues such as: current consumer protections in electronic commerce with foreign businesses, the extent to which existing protections need to be modified, the laws which govern transactions involving foreign businesses, which court system adjudicates disputes arising from electronic commerce transactions, the circumstances under which judgments are recognized, the extent to which electronic contracts protect consumers, the proper role for law enforcement agencies and consumer and business education issues.

Academic papers and written comments should be submitted on or before February 26, 1999. Six hard copies of each paper and written comment should be submitted to: Secretary, Federal Trade Commission, Room H-159, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580. Comments should be captioned "U.S. Perspectives on Consumer Protection in the Global Electronic Marketplace -- Comment, P994312."

The Commission vote to issue the Federal Register Notice was 4-0.