Five ways to increase trust in e-commerce

Amazon 2019

(Copyright: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Ioannis Lianos, Professor of Global Competition Law and Public Policy, University College London & Kimberley Botwright, Community Lead, Global Trade and Investment SI, World Economic Forum


Trust between consumers and suppliers is often a bigger issue online than it is offline.

Online, there is a limit to both physical interaction and the opportunity to test the professionalism of a retailer or suppliers. According to one survey of 24,000 internet users in 24 countries, 22% said they never shop online – and of those, 49% gave lack of trust as the reason.

Not unsurprisingly, developing online trust gets more complicated when a consumer is in one country and a supplier is in another. Consumers might not be sure that they benefit from the same protections. Will their card details be handled safely, and will they be able to return a faulty item? In some cases consumers may not realise they are shopping abroad.

From a supplier’s perspective, low levels of cross-border trust can impact export opportunities, particularly for small businesses without global brand power. Unclear rules on consumer trust can equally cause uncertainty around compliance, and it can be cumbersome to adapt to different approaches between countries.

 Cross-border online purchases are increasing, along with consumers' wariness

Image: Consumer Conditions Scoreboard / Consumer Centres

Based on insights from a new white paper, The Global Governance of Online Consumer Protection and E-commerce, here are five ways policymakers can increase trust in e-commerce.

1. Create relevant online consumer protection rules

While most countries have a legal framework for consumer protection, just 52% have updated theirs to cover online activities, according to the United Nations Conference on Trade and Development (UNCTAD) CyberLaw Tracker. For other countries, laws are at the draft stage; there is nothing on the books, or no information is available.

2. Focus on personal data protection

Many stakeholders also consider rules protecting personal information to be part of the online consumer protection toolkit – particularly relating to information in a business-to-consumer (B2C) exchange. According to UNCTAD, 58% of countries have rules in place while 21% do not, with data falling short on the rest.

Research suggests that these measures play a role in boosting online trust. In a survey by KPMG of 18,000 online consumers in 50 countries, 41% of respondents said having control of how their personal data was used was more likely to make them trust a company, especially in North America, Europe and South Africa.

3. Address variation in the rules

Online consumer protection rules can cover all aspects of a B2C relationship, starting from before the purchase is made to after. The challenges policymakers try to address include information asymmetry, unfair commercial practices, e-spam, contract terms, payment security, liability and returns. Countries may have different approaches, and preferences vary for industry self-regulation and standards.

Technological changes also raise new questions. For example, should an online marketplace be held accountable by the consumer for misleading actions by a third-party seller? Some countries have requirements for online marketplaces to inform customers about with whom the contract is being concluded, though this is not always the case.

4. Increase international cooperation on e-commerce

E-commerce has become increasingly important over the past two decades. Some estimates suggest it is a $25.3 trillion – and growing – market. Yet for online retailers, going global and connecting to consumers in different countries remains a challenge. Cross-border e-commerce activity accounted for just 7% of total online B2C sales in 2015.

Many factors, from logistics to payments, may have an impact. Perceptions that shopping abroad may be less secure and that remedies do not exist for when something goes wrong certainly have an impact. There is a need to reinforce international policy cooperation to raise system-wide online trust, alongside reducing international friction, if demand is to meet supply.

5. Engage in international e-commerce talks

Countries have made efforts to align their approaches towards online consumer protection rules at the Organisation for Economic Co-operation and Development (OECD) and UNCTAD. Although so-called ‘soft law’ is a good step in the right direction for alignment, it may do little to affect consumer distrust in poor regulatory environments with little prospect of change.

An increasing number of preferential trade agreements (PTAs) aim to reinforce standards and ensure transparent approaches. Some encourage cooperation between online consumer protection agencies while others mandate putting personal information protection laws in place.

In January 2019, 76 nations responsible for 90% of global trade committed to begin negotiations on the trade-related aspects of e-commerce. Although it is too early to tell on the exact scope of these talks, proposals in the preparatory phase have included online consumer protection issues. These are mostly vague on substantive content, but talks could move toward global trade rules, encouraging minimum legal frameworks and convergence on the principles driving regulation.

Whatever the outcome, it will be important to future-proof against rapid technological change. Aligning and scaling governance for developments around ‘smart contracts’ based on blockchain technologies, for example, may be challenging. It will also be important in the context of the global digital economy.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Eurozone: How safe are our deposits? Which banks will survive?

EU Leaders’ meeting in Sofia: Completing a trusted Digital Single Market for the benefit of all

EU-U.S. trade talks: milestone reached in mutual recognition on pharmaceuticals

7 innovative projects making cities more sustainable

It’s time to switch to a four-day working week, say these two Davos experts

Local innovation, international impact: SMEs and the ITU Telecom World Awards

YOUTH RIGHTS AT RISK FROM RISE OF EXTREME-RIGHT AND POPULISTS IN THE EUROPEAN PARLIAMENT

Tuesday’s Daily Brief: prizewinning journalists freed in Myanmar, new tracking tool for suspected terrorists, and a global bid to stop snakebite deaths

How fungi could save the world

Parliament votes reform for better European Co2 market but critics want it sooner than later

Endocrine disruptors: A strategy for the future that protects EU citizens and the environment

Youth unemployment: No light at the end of the tunnel

What’s the difference between carbon negative and carbon neutral?

The global issue of migration in 2017

He died so I could live: UN peacekeeper pays tribute to fallen colleague

UN must provide redress for minorities placed in toxic Kosovo camps, says rights expert

FROM THE FIELD: Saving the tree kangaroos of Papua New Guinea

Quelling antimicrobial resistance: a clinico-pharmacological exigency

Anti-Money Laundering: Commission decides to refer Austria, Belgium and the Netherlands to the Court of Justice of the EU for failing to fully implement EU anti-money laundering rules

3 ways governments can address cybersecurity in the post-pandemic world

What next for Europe? Three (completely) different Davos views

This Dutch butcher makes plants taste just like meat

‘We will not give up on looking for peace for South Sudan’: UN deputy chief

EU guidance on the handling of visa applications from residents of Ukraine’s Donetsk and Luhansk regions

‘Ground Zero’: Report from the former Semipalatinsk Test Site in Kazakhstan

Sweden well ahead in digital transformation yet has more to do

UN envoy commends successful conclusion of Guinea-Bissau presidential election

5 ways companies can support their remote workforce

In the age of the tourism backlash, we need ‘destination stewards’

Lagarde discusses the European Central Bank’s policy revamp with MEPs

Governments should step up their efforts to give people skills to seize opportunities in a digital world

Ebola in DR Congo: UN chief ‘outraged’ by recent killings of civilians and health workers

When is Berlin telling the truth about the EU banking union?

The role of junior entrepreneurs as a bridge between academia and business world

The online junk information grows, but so we shall

Thoughtful blockchain implementation is key to improving supply chains in a post-COVID world

Commission reinforces tools to ensure Europe’s interests in international trade

Mergers: Commission approves Assa Abloy’s acquisition of Agta Record, subject to conditions

Blue bonds: What they are, and how they can help the oceans

Student-teacher ratio in terms of numbers and quality: an opinion article of nowadays context worldwide

Fairness in the food supply chain: Commission proposes to increase price transparency

Take care of your borders and then expand them

How to decarbonize shipping without spending billions

More refugees being helped by family, work and study permits, finds OECD and UNHCR study

Wednesday’s Daily Brief: migration tragedy in the Rio Grande, drugs report, Torture Victims Day

The quality of health education around the globe

Ten reasons to be optimistic in 2019

Women vital for ‘new paradigm’ in Africa’s Sahel region, Security Council hears

A staggering one-in-three women, experience physical, sexual abuse

Mobile technology, a necessary pearl in developing countries

Why 2020 will see the birth of the ‘trust economy’

World Food Day: here’s what the UN is doing to fix ‘intolerable’ wrong of hunger

Indonesian tsunami death toll climbs over 400 as Government-led relief efforts are stepped up

Primary Healthcare vs Specialization Careers, how to promote PHC to the Young Health Workforce?

EU-China Light Bridge in Brussels signals the bright coming of the Year of The Dog

NHS: A great healthcare system but how accessible is it to migrants?

Ebola Outbreak in Democratic Republic Congo is ‘largely contained’: WHO

How technology is leading us to new climate change solutions

With millions of girls ‘at risk’ today of genital mutilation, UN chief calls for zero tolerance

Climate change update: will the UN member states regain momentum despite the little progress at COP23?

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s