Speech by Mozelle W. Thompson

"U.S. Implementation of the OECD E-Commerce Guidelines"
Remarks of Commissioner Mozelle W. Thompson
U.S. Federal Trade Commission
before the Transatlantic Consumer Dialogue
February 12, 2000

Greeting

Thank you for inviting me to address you today. I appreciate the opportunity to participate in this year's TACD meeting and I hope you have found it to be as productive as we in the U.S. Government have. As many of you know, I have to preface my remarks by stating that my views here today do not necessarily reflect the views of the Commission or other Commissioners. But I think I can say on behalf of the entire Commission and its staff that we welcome those of you from abroad to Washington and thank all of you for the opportunity to share in your dialogue.

I have been asked to speak to you about the OECD Consumer Protection Guidelines for E-Commerce and what we're doing here in the United States to implement them. Although we discussed this briefly yesterday in the working group, I'd like to elaborate for the benefit of the entire group this morning. At the conclusion of my remarks, however, I hope you'll allow me to take a moment to talk to you about some other things the FTC is doing that relate to your agenda.

Background

Global online commerce is growing at an unbelievable rate. However, we all know that it will never reach its full potential unless consumers are confident that they will have effective protections online. The OECD Guidelines are an important first step in international cooperation toward fostering that confidence.

I think most of you are quite familiar with the OECD Guidelines (some of you perhaps too familiar by now). For those who are not, let me briefly describe them. The Guidelines are the product of the OECD Committee on Consumer Policy. Although, as an OECD product, they are not legally binding. The mere fact that they exist represents a significant achievement because they represent an international consensus that there is a framework of core principles that should govern the relationship between buyers and sellers in cyberspace. The Guidelines do provide a solid blueprint for governments as they formulate and implement e-commerce policy; for the private sector, as it develops self-regulatory programs and codes of conduct; and for consumers, as they determine what fair business practices they should expect to encounter online.

The Guidelines are based on one of TACD's stated principles in the area of e-commerce, namely that consumers should not be disadvantaged when transacting business online rather than offline. The Guidelines call for fair business, marketing and advertising practices and state that businesses should provide all information required for consumers to make informed choices about businesses and the goods and services they offer.

We are quite pleased that the Guidelines reflect many of the core elements of current U.S. consumer protection law, so although they are not legally binding on U.S. businesses, a company which is not conducting business in accordance with the fair business, marketing and advertising practices elements of the Guidelines will, in many cases, be violating existing U.S. law and thus subject to law enforcement action. What might prove more significant, however, is the effect that the Guidelines will have in other countries where consumer protection frameworks are not as advanced. Given the global nature of e-commerce, we think the Guidelines will prove to be a useful tool to guide policy makers toward providing consumers with the same types of core protections.

As many of you know, developing the Guidelines was not an easy process. The OECD Consumer Policy Committee worked for two years to put together a final draft and was aided in that process by very constructive input from the organizations represented here today as well as the industries seeking to grow e-commerce. As head of the U.S. delegation to the Committee, I can tell you that we did our best to incorporate ideas from all points of view. I want to thank the U.S. consumer groups which participated in our workshops and discussions and especially wish to acknowledge the work of Susan Grant of the National Consumers League who was a member of the U.S. delegation. In light of all of the discussion at this meeting concerning transparency, I feel compelled to note that our delegation, to my knowledge, was the only country which actually included consumer and business representatives on its official delegation.

U.S. Government Actions

We in the U.S. Government understand that the Guidelines have little value if we don't take steps to implement them. Therefore, we have already embarked on a major effort, led by our Agency and the U.S. Department of Commerce to focus on areas where the U.S. might be lacking and to make the protections described in the Guidelines a reality. I'll briefly describe some of these activities

First, we think its essential to educate businesses and consumers about the existence and meaning of the Guidelines. The FTC has already developed and distributed materials to businesses and consumers describing the "rules of the road" for electronic commerce, and we are also developing additional educational materials based specifically on the Guidelines.

The Guidelines stress the need to create effective, easy to understand and affordable dispute resolution programs to complement judicial action. We all know that many of the transactions conducted over the Internet will not be of the scale where pursuing legal action against a foreign business makes sense given the cost of litigation and the practical difficulties in enforcing judgements in other countries. ADR can provide the means for consumers and businesses to resolve many disputes that arise as long as it is fair, quick, cheap and effective. With this goal in mind, the Federal Trade Commission and the Department of Commerce will host a workshop later this spring to explore the use of ADR mechanisms for consumer transactions in the online marketplace. The workshop aims to begin an open discussion of how alternative dispute resolution programs may contribute to fostering consumer confidence without unnecessarily burdening business.

In a Federal Register notice we published earlier this week, the agencies are seeking general comments and answers to 17 specific questions from industry and consumer representatives, the academic community and the public prior to the workshop to help frame the agenda. Questions center around existing alternative dispute resolution programs; challenges to developing alternative dispute resolution programs for online transactions; elements of fair and effective ADR; the role of governments if any, in the development of such programs; and the workshop agenda. we are also accepting requests to participate in the workshop and I hope many of you will do so as well as offer comments on the notice. You can access this information from either the FTC's or DOC's website.

We intend to back up the Guidelines by enforcing our existing consumer protection laws, some of the strongest protections in the world. As many of you know, the Commission has committed substantial resources to this area, commensurate with its top priority status. In fact, just this past week, I joined my fellow Commissioners in testifying before the U.S. Senate to ask for first significant increase in overall resources for the Agency in a number of years. This is largely in recognition of the new burdens placed on us by our commitment to vigilant law enforcement on the Internet.

Need for Cooperation

We believe strongly in the Guideline's call for international law enforcement cooperation. Effective law enforcement in the global context requires cooperation with our counterparts around the world. Thus, we are working hard to strengthen and expand our cooperative arrangements. Some of you are already aware of our Consumer Sentinel database of consumer complaints which we share with state and local law enforcement agencies and our colleagues in Canada. We hope to expand this tool, to include participation by more countries and jurisdictions. We have also developed cross-border task forces with our neighbors in Canada and Mexico. We are currently exploring enforcement cooperation and information sharing agreements with other countries on a bilateral basis.

Because many of you have worked on issued related to ICANN, I wanted to let you know that we have provided comments to the organization about the need for stricter requirements on their part regarding complete and accurate domain name registration information. Already in our law enforcement activities, we have uncovered fraudulent web sites only to be hampered in our ability to track the originators due to incomplete or inaccurate registration data. We believe that domain registrars can help us stop online fraud by requiring complete and verifiable contact information at the time a web site is registered.

In addition to these cooperative enforcement activities, I would like to take a moment to describe the goals of another organization to which the FTC belongs, the International Marketing Supervision Network (IMSN). The IMSN is made up of the consumer enforcement agencies of the OECD countries which, in cases like ours, are the same as the policy making bodies which sit on the Consumer Policy Committee, but in some cases may involve a totally different set of players. It goes without saying that we find it increasingly essential to coordinate not only on policy, but on enforcement actions as well. The IMSN maintains an information sharing system and has coordinated a number of global Internet sweeps to uncover fraud schemes online. Because the FTC will assume the presidency of the group this year, we hope to make this issue a priority and we look forward to working with all of you to develop its agenda.

Private Sector Activities

The U.S. Government is not alone in taking steps to implement the Guidelines. Several industry groups here in the United States are developing codes of conduct for online commerce. For example, BBB Online is in the process of expanding its online reliability seal program, which is already carried by over 4,800 companies, to other countries. We have worked with them closely with them on this effort, and see that their code is based largely on the OECD Guidelines. I encourage consumer representatives to get involved in these projects.

The private sector has also taken the lead in beginning the dialogue on the ADR issues I just mentioned. Frank Torres of Consumers Union, together with Hewlett-Packard, is coordinating a series of public meetings to discuss ADR, and the FTC and DOC have observed these with great interest.

Jurisdiction

Although I was not asked to address the topic directly, I'd like to spend a moment talking about jurisdiction because the U.S. Government is actively participating in discussions in a number of forums to try to reach better understandings on the issues of jurisdiction and choice of law. Those of you who participated in yesterday's e-commerce working group heard Andy Pincus, the General Counsel of the Commerce Department describe the U.S. position which, summarized briefly, is that we support a balanced, practical approach recognizing that neither consumers nor many businesses have the capability to review and understand the relevant laws of the many countries with which they may interact. Even under a rule of destination framework, which for the most part already exists, real remedies for consumers-especially for low-dollar transactions-are for the most part unavailable. Let me stress that, above all, we are committed to ensuring that consumers in the U.S. and abroad have as many avenues as possible for settling their disputes in a quick and effective manner.

We are also participating in Hague negotiations on judgement recognition. We want to make sure that any such international arrangement will be applicable in e-commerce, as it is in this area that we expect to see the most need for international recognition of consumer judgments.

Remarks on TACD 2000 Meeting

If you'll allow me to move off the subject of the Guidelines for a moment, I'd like to talk briefly about some other issues of mutual interest.

As our Director of Consumer Protection, Jodie Bernstein, pointed out yesterday, you made several recommendations last year at your Brussels meeting and we have acted on them. We have brought close to 120 Internet-related law enforcement actions against nearly 300 businesses, more, we believe, than all of our colleagues combined. These cases have included about 20 actions against the sending of deceptive spam and others against deceptive or unfair advertising directed to children.

We have successfully completed a rule making implementing the Children's Online Privacy Protection Act, which requires web site operators to give parents notice of their information practices and get verifiable consent to collect and use their children's personal information. Also, with respect to children, we've taken several high profile law enforcement actions to limit what we believed were harmful advertising, and we are in the midst of undertaking a major study at the request of the U.S. Congress concerning the violence in the marketing of products to children.

The Agency is now developing a proposed rule to implement the privacy provisions of the recently passed financial modernization act. This law requires the FTC and other agencies to implement major new restrictions on the collection and sharing of consumers' personal financial information.

And throughout all of this, the FTC has taken every possible opportunity to seek consumer input in our policy actions, whether it is in the form of written comments to our rules and notices, or in participation in the many workshops and public forums which we have held on electronic commerce and other subjects. Recently, for example, we cosponsored a workshop on fraud directed at the elderly, with the State of Florida and local consumer groups.

Finally, let me offer some thoughts on the OECD Consumer Policy Committee. For those of you who don't follow the Committee's actions closely, let me tell you that this Committee has come perilously close to disappearance several times in the last five years. Were it not for the voluntary contributions of some of the member countries, the Committee would have ceased to function long ago and the E-Commerce Guidelines would be little more than a dream at this point. I am proud to say that, as a result of our work and that of some of the other countries represented here today, the Committee has received funding this year to undertake its activities.

Some have suggested that the OECD is perhaps not the ideal forum for the international discussion of consumer policy issues, in part because it represents the views of only developed nations. While we agree that ultimately, all views must be taken into account, I must point out that the OECD Consumer Policy Committee is at present the only international forum for governments to have these discussions and we have trouble sustaining it. I ask all of you, particularly those from other countries, to urge your official representatives to the OECD to support the work of the Committee.

Conclusion

In conclusion, let me again thank you for inviting us to participate and for your enormous contribution to the development of sound policy on consumer issues. As a result of our shared efforts, the United States and Western Europe are the most prosperous, stable, peaceful and healthy societies in the world.

At this meeting of the TACD, you have an built on your earlier recommendations in the areas of electronic commerce, trade and food issues, and speaking for the FTC, I can tell you that we will reflect on and consider your new positions on e-commerce carefully as we refine our policy goals over the coming months.