Superintendencia de Industria y Comercio

– Daniela Salazar Diaz – International Affairs Group – Superintendence of Industry and Commerce of Colombia

In a world where globalization and technological advances many times exceed comprehension and human capacity to adapt to changes, therefore surpassing regulation authorities capacities, internet dynamics spread and expand rapidly, challenging authorities in terms of control and regulation. 

In this context, with the boom of smartphones, mobile applications, social networks and peer platforms, among others, regulation authorities should be at the forefront of the contemporary world studying new mechanisms to protect consumers from potential threats that may arise from e-commerce.  For this reason, the Superintendence of Industry and Commerce hosted the First International Congress on E-Commerce, from March 15 to March 16, in Medellin, Colombia. This Congress aimed to provide a favorable scenario to express, in the way of conferences and high-level panels, the main concerns of the regulation authorities at international level and of the trade sector in terms of e-commerce, as well as to expose the potential e-consumer protection mechanisms.

The Congress included the participation of the highest regulation authorities' representatives, namely the National Director of Consumer Protection of Argentina, Fernando Blanco; the Federal Consumer Attorney of Mexico from the Federal Attorney’s Office of Consumer(PROFECO), Rogelio Cerda; the Technical Secretary for the Oversight Commission on Unfair Competition from the National Institute for the Defense of Competition and the Protection of Intellectual Property (INDECOPI) of Peru, Abelardo Aramayo; the Consumer Policy Specialist from the UK Competition and Markets Authority (CMA), Alex Schofield;  and the Deputy Director for International Consumer Protection at the US Federal Trade Commission’s (FTC) of International Affairs. It also counted with the contribution of the Consumer Policy Advisor of the Organization for Economic Co-operation and Development (OECD), Akira Yoshida.   

This article seeks to highlight the main challenges identified by the regulation authorities in the Congress as well as the mechanisms, legal frameworks, and instruments used by the Authorities to address the challenges posed by e-commerce.

First, Mr. Yoshida from the OECD highlighted the fact that ubiquitous computing is marking the beginning of digital transformation with data and analytics transforming production, fueling new types of disruptive innovation and affecting all activities such as energy, health, public administration, transportation, manufacturing, agriculture and trade. In this context, e-commerce spreads rapidly thanks to Internet's dissemination and mobile penetration, to the increase in product choices at competitive prices, to the augmentation on the amount of active consumers accessing, comparing, and sharing information easily, to the growing number of platforms facilitating consumer-to-consumer transactions, and finally thanks to the growing range of online and mobile payment mechanisms. However, in this scenario, consumers benefit from more choices but face greater complexity and risks, particularly on product safety. The OECD draws particular attention to the fact that banned and recalled products are still available for sale online.

Accordingly, the OECD created a Global Recalls Portal in 2012 to identify and to address safety issues at an early point, to improve awareness of dangerous non-food products at global level. To this purpose, it has also launched several global awareness campaigns. 

Furthermore, the OECD has expressed its concerns about the lack of awareness of relevant safety regulations by overseas e-retailers, consumers' inability to determine whether products sold online meet safety standards, and the difficulties for authorities to undertake enforcement actions across borders.

As a result, the OECD recommends that countries should modernize their consumer protection laws to address new risks posed by online commerce, including “free” apps and peer-to-peer Internet transactions, according to new OECD guidelines for member countries and emerging economies. Moreover, the OECD recommends to strengthen consumer trust in digital markets, to enhance cross-border co-operation, to improve enforcement information sharing, to study the emerging role of platforms, to foster greater consumer control over their personal data and to implement international standards for consumer protection (UN, OECD).

Second, Mr. Stevenson from the FTC underlined the importance of trust and integrity in e-commerce. The misleading commercial practices against consumers undermine the national and international markets' integrity at the expense of companies and consumers, discouraging consumer trust on these markets. In order to tackle this problem, the FTC created the Consumer Sentinel Network to gather information from FTC and other organizations about misleading practices in e-commerce. Thanks to this system, the FTC identified the top three categories on fraud reports, namely debt collection, identity theft (23% credit card fraud/ 46% tax fraud) , and imposter scams ($500 million US dollars-median loss).  This system also allowed the FTC to classify fraud category by total amount lost. Some of the main categories reporting more economic losses were imposter scams; prizes, sweepstakes and lotteries; shop-at-home-and catalog sales; business and jobs opportunities; travel, vacations, and timeshare plans.

In consequence, the FTC, based on OECD recommendations, suggested that consumers who participate in e-commerce should be afforded transparent and effective consumer protection that is not less than the level of protection afforded in other forms of commerce. Additionally, the FTC recommended that governments and stakeholders should work towards enabling their consumer protection enforcement authorities to take action, on the one hand, against domestic businesses engaged in fraudulent and deceptive commercial practices against foreign consumers, and on the other hand, against foreign businesses engaged in fraudulent and deceptive commercial practices against domestic consumers. Moreover, the FTC recommends to strengthen legal frameworks in order to allow efficient research and cross-border cooperation. On this matter, the FTC proposed assistance, information exchange and complaints exchange on an informal basis. The FTC also suggested coordinating execution actions and settling priorities, as well as developing international mechanisms such as those developed by the International Consumer Protection and Enforcement Network (ICPEN), those produced by the International Mass Marketing Fraud Working Group (IMMFWG), and Memorandums of Understanding (MoU).

Third, Alex Schofield from the UK CMA, emphasized the importance of consumer safety on peer platforms.  According to the CMA, there is a potential threat for consumers to be misled when making transactions online using peer platforms. Enforcers can use different pieces of legislation to protect consumers; where there is evidence of assisting a breach of consumer law, a Court will make a decision based on the individual case circumstances. To ensure the market functions effectively, the CMA encourages peer platforms to be at their best to raise the profile and reputation of the business model and to give consumers wider choice when purchasing products or services.

The CMA representative stated that peer platforms must take steps to collect information from sellers and to ensure it is accurate before they allow sellers to use their platform to sell a product/service. Furthermore, Mr. Schofield specified that peer platforms should take more responsibility to ensure that consumers get all the information they need to make an “informed decision” in order to minimize the risk of legal pressure. He also indicated that peer platforms should recognize that they are the first point of contact for consumers and users of their platform (as it is their commercial business model where the consumers transact online).

To face the challenges posed by peer platforms, the CMA recommends building capability to work internationally by developing enforcement networks in the International Consumer Protection Enforcement Network (ICPEN), by developing policy through the OECD Committee on Consumer Policy (and OECD Consumer Bureau), and by strengthening cross-border working arrangements through the development of Memorandum of Understandings (MoUs) and bilateral working relationships.

Fourth, the Federal Consumer Attorney of Mexico, Mr. Rogelio Cerda, stressed the fact that consumer geographic segmentation could be a barrier for consumers around the world to access the same prices and contents in different regions. In other words, prices are differentiated by region and not by shipping price, which prevents consumers from accessing more options. According to the challenges highlighted above for the other regulation authorities, the representative of PROFECO proposed to promote multilateral researches against antitrust practices affecting consumers, to monitor peer platforms, to develop a Memorandum of Understanding to undertake controls and to settle behavior patterns, to strengthen sanction mechanisms and to guide suppliers to comply with fair parameters to benefit consumers.

Fifth, the National Director of Consumer Protection of Argentina, Fernando Blanco, encouraged suppliers through self regulation mechanisms and public administrations, endowed with an appropriate legal framework, to work together to ensure from both sides that consumers obtain the products and services they have bought within the terms and conditions agreed during the transaction.

Finally, the INDECOPI representative, Abelardo Aramayo, underlined the importance of avoiding over regulation, considering, according to him, that excessive regulation measures may in fact have the opposite effect and could therefore undermine consumer protection.

In conclusion, regulation authorities globally agreed on the importance of trust in e-commerce. For this reason, each of them have proposed some mechanisms to prevent fraud and misleading practices that undermine consumer trust in e-commerce.

Some of the concerns shared by the authorities are product safety, fraud and deceptive practices prevention, consumer safety on peer-platforms and consumer geographic segmentation.

To face these concerns the authorities have also agreed to strenghten legal frameworks in order to allow cross-border cooperation, to develop international mechanisms, to build capacity to work internationally by creating enforcement networks in international scenarios such as ICPEN meetings and the OECD Committee on Consumer Policy, to develop Memorandum of Understandings to undertake controls and strenghten sanction mechanisms, and, finally, to enforce bilateral working relationships.

Gathering efforts and strenghtening regulation capacities would lead the authorities to successfully address current and upcoming challenges in e-commerce, such as ensuring e-commerce trust on peer platforms and social media.

Colombia’s initiative on E-Consumer Protection

Fraud Prevention Month 2018. ICPEN - Colombia Coordinator Country– Gloria Isabel Ortiz Castañeda – Product Safety and Markets Surveillance Coordinator –Deputy Superintendence for Consumer Protection – Superintendence of Industry and Commerce of Colombia

The Fraud Prevention Month Materials that Colombia has conceived for 2018 campaign, focus on the marketing through social media as a special component of the E – Commerce, understood as the first and perhaps more important step on consumer’s purchase decision, which can be compelled by a third party’s endorsement or advice that might not be genuine.

Given that nowadays, social media have foreseen mechanism to buy through the official profiles or accounts of sellers and marketers, the materials foresee the integrality of the purchase process on internet, in order to provide awareness tools for consumers in each one of these steps.

During the First International E – Commerce Conference held by the Superintendency of Industry and Commerce, the Deputy Superintendent for Consumer Protection moderated a panel about the role of social media on the transactions, in which important precisions were made about the nature of communications and what would be considered as advertising. In this framework, it is important to say that this mean to sell products cannot always be labelled as bad and that the most important premise in this context is to educate all actors involved in the value chain of the advertising message aiming to do business with ethics.

These materials gather in one concept, the Fraud Prevention Month subject with the terms and conditions 2018 sweep, because this campaign aims to cover all the phases involved on sales contracts on internet on the grounds that each one of them imply risks to consumers trust in E – Commerce which is valuable to structure a cohesive digital economy policy, fundamental for the society progress.

The campaign contains a great number of graphic (posters) and visual pieces (such as videos – one of them about influencers and the other one about online shopping security advices with voices on off and with text as well) in Spanish, English and French. By this time, we have received compliments from Netherlands and the Turkish ICPEN Presidency: “Congratulations on this fantastic results! I saw the materials before and they look great.  Am sure that it’s an inspiration for ICPEN members for shapening their consumer campaigns”, “We consider, that the most remarkable feature of these materials is that they provide important advices to consumers in such a comprehensible manner, which is the main goal to achieve in the aw