UNCTAD brings together government representatives and other stakeholders to discuss key areas to enhance consumer protection in digital markets.
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UNCTAD estimated in April 2022 that 60% of internet users shopped online following the start of COVID-19, compared to 53% in 2019. Top consumer-focused e-commerce platforms increased their sales value by 63% from 2019 to 2021.
But consumer trust in the digital market remains fragile. A joint survey by UNCTAD and its partners found prevalent user distrust of the internet. Digital platforms have increasingly contributed to the distrust, pushing some consumers to reduce online purchases, financial transactions and social media use.
“Online platforms have become central to online consumption. However, consumers are concerned about false or incomplete information and misleading advertising, unsafe online products, data protection and inadequate dispute resolution,” said Teresa Moreira, head of competition and consumer policies at UNCTAD.
UNCTAD’s meeting of the intergovernmental group of experts on consumer protection law and policy taking place in Geneva on 3 and 4 July focuses on tackling digital consumers’ heightened vulnerability. Explore the background note for the meeting.
Here are six ways to boost consumer trust in online platforms:
1 Clear information
Consumers need adequate, reliable and accessible information to make informed choices. But in the digital market, they often have difficulty finding information and understanding complicated terms.
Consumers rely heavily on ratings and consumer reviews to make decisions in platform markets. But a recent inquiry in France found serious transparency issues, including deletion or delay of negative reviews and tolerance of fake reviews.
Regulators are also paying attention to endorsements by digital influencers. Colombia, Peru, Poland and the United States have issued guidelines underlining the responsibility of influencers to make appropriate and clear disclosures to consumers.
Consumer protection authorities should ensure better consumer information through clearer rules, guidance and consumer education.
2 Safe products
While consumers can access more products and easily compare options in the digital market, they can’t assume everything sold online is safe.
A 2021 internet sweep covering 21 countries found that unsafe products, which had been prohibited from sale or recalled from the market, remained on sale online.
Cross-border e-commerce gives rise to another risk – products known to be unsafe in one country being sold in foreign markets.
Australia, the European Commission and the Republic of Korea have urged platforms to sign product safety pledges. By doing so, platforms pledge to take down dangerous products, prevent relisting of such products, cooperate with government authorities and report on the outcomes of cases.
UNCTAD’s recommendation on product safety encourages governments to strengthen international cooperation and raise awareness among consumers and businesses. Digital platforms, especially those with transnational reach, can promote product safety through collaboration with national authorities.
3 Adequate data protection
Data is central to how digital platforms operate and create value. But many consumers are unaware of and have limited control over how platforms collect, use and share their personal data.
Social media platforms use personalized recommendation algorithms and variable rewards to exploit users’ attention, possibly resulting in harmful addiction and negative effects on mental health, raising concerns about platform liability.
A recent survey by the Hong Kong Consumers Council found that 74% of the respondents were worried about excessive data collection by online stores. And 72% were worried that if artificial intelligence algorithms went wrong, no one would be responsible for the problems caused.
UNCTAD encourages governments to adopt adequate ex-ante regulations to protect consumer data and further collaborate with consumer protection, competition and data protection authorities.
4 Effective dispute resolution
Despite the convenience of shopping online, many consumers find it cumbersome to return, replace or obtain redress over products, especially those bought from foreign vendors.
Platforms increasingly provide complaints’ handling and internal dispute resolution services between consumers and third-party providers. And more member states are establishing public online dispute resolution mechanisms.
UNCTAD research shows effective online dispute resolution can increase consumer trust and is particularly promising for cross-border e-commerce.
5 Clearly defined platform liabilities
The fast-evolving platform economy creates new regulatory questions. Platforms provide intermediary services, but some also make rules and offer essential marketplace infrastructure. What are their responsibilities and liabilities?
Governments and online platforms should make sure consumers and providers are informed of their rights and obligations. Online platforms should also protect consumers.
UNCTAD recommends that consumer protection laws and policies consider different levels of platform involvement when defining platforms’ obligations in protecting consumers.
6 Strong law enforcement
The increasing volume of online transactions poses heavy enforcement burdens on consumer protection authorities and raises new challenges, such as dark commercial patterns.
Such patterns include default settings used to unwittingly track and monitor a user’s activity, “confirmshaming” to guilt consumers into opting into something and unfounded urgency and scarcity cues that hasten consumption decisions.
To boost law enforcement, UNCTAD’s informal working group on consumer protection in e-commerce called for better cooperation among consumer protection authorities, business guidance and use of digital technologies.
As both developed and developing countries should enhance consumer protection in digital markets, UNCTAD continues to provide a global platform for policy dialogues and international cooperation on this, and provides technical assistance to strengthen capacities in developing countries.
