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Jurisdiction II: Global Networks/Local Rules

September 11-12, 2000
San Francisco, CA

Announcement of Revision of ECOM Guidelines for Online Business To Build Confidence in B-to-C Electronic Commerce

Katsuhiro Iseki

Research Director

Electronic Commerce Promotion Council of Japan (ECOM)


1. Background of the Revision

ECOM announced its first "Guidelines" in March 1998, with a view to realize sound development of business-to-consumer electronic commerce.

The essence of the first "Guidelines" were completely adopted as self-regulatory codes by private sectors, including JADMA, Japan Direct Marketing Association, which is one of the business associations to actively seek consumer-oriented E-commerce.

In response to the recent dramatic development of E-commerce and the adoption of the OECD Guidelines, ECOM has launched intensive study to reflect the "new elements" of the OECD Guidelines on its own Guidelines.

The study was conducted in a working group containing experts from industries, consumer groups, academia, and MITI, in order to achieve well-balanced outcomes.

2. Outline of the Revised "Guidelines"

(1) Objectives

The Guidelines are expected to realize sound development of B-to-C electronic commerce by illustrating appropriate ways of business providing sufficient considerations of consumer protection.

(2) Compliance Rule (Morale Obligations)

All the business which seek to build consumer's confidence should comply with these Guidelines.

(3) Codes for Advertising, Marketing and Soliciting

Information should be expressed in a clear, conspicuous, accurate and easily-accessible manner.

Advertising should be done strictly in compliance to existing laws, such as "Door-to-door Sales and Other Direct Marketing Sales Law", "Law against Unjustifiable Premium and Misleading Representations", etc.

All necessary information should be provided to consumers:

  • business identity (name, geographical address, phone number, e-mail address, name of the representative person, any attempt relating to self-regulations/authentication/dispute resolution, etc.) ;
  • terms and conditions of transaction (price, shipping cost, other charges, payment method/timing, health/safety instructions, etc.) ; and
  • characteristics of goods sold or services offered.

Misleading or dazzling advertising is strictly prohibited.

Business is encouraged to provide "opt-out" system when advertising to individual consumers and should respect the consumer's choice.

(4) Process of Concluding Contracts

Procedures of concluding contracts should be clearly illustrated and the timing of conclusion should be accurately identified by consumers.

Following measures are encouraged to be taken in order to reduce chance of consumer's error or mistakes:

  • order reception confirmation message by e-mail ;
  • order confirmation screen (to give a chance to say YES/NO at the final stage of ordering) ;
  • order cancellation screen ; and
  • any other mechanisms to avoid consumer's error or mistake.

Unreasonable risks should not be born to consumers and the appropriate mechanisms should be developed.

Details of terms and conditions of transaction should be provided if a consumer needs such information.

Appropriate measures should be developed in order to enable consumers to keep all the relevant records of transaction and business should recommend consumers to keep such records.

In case of pre-payment, payment confirmation message e-mail is strongly recommended.

(5) Delivery

Speedy, secure and sure delivery method should be employed
(This should also be applied to downloading of "digital contents".)

In case of delay of delivery, such message should be informed to the relevant consumer.

(6) Return, Refund and Exchange

Business should accept return of goods in case of imperfect performance of a contract (i.e. if "bad" or "out-of-order" goods were delivered, etc.), and shipping cost should be paid by business for such a situation.

Business should accept return, refund or exchange of goods in principle. Furthermore, business should display messages relating to applicability of return, refund and exchange of goods (whether acceptable or not) with reasonable and complete explanations.

In case of "digital contents", measures to enable consumers to try the partial functions beforehand the purchase of full-scale functions, etc., since "digital contents" can not be returned by their nature.

(7) Payment

Secure and reliable method of payment should be employed and the information on the level of security should be informed to the respective consumer.

An appropriate "charge-back" mechanism should be developed based on a reasonably defined risk-sharing principle, with a view to prevent fraud or unlawful use of a credit card.

(8) Security Measures

Appropriate security measures should be taken against unlawful access to the computer system.

(9) Confidentiality of Customer's Privacy

Business should express the objectives of collection/use of consumer's personal information.

Business should keep personal information in a secure manner and should not disclose such information to the third party without the respective consumer's consent.

Business should take necessary measures to keep the confidentiality of customer's privacy by building strict in-house rules and providing education to employees, with a reliable audit.

(10) Measures in Case of Targeting Children or the Elderly

Business should pay particular attention in advertising or marketing when it targets children or the elderly.

  • to express an appropriate description in case of goods not for children ;
  • to arise guardian's attention ;
  • to prohibit of using unclear or misleading expressions ;
  • to secure guardian's prior consent to transactions ; and
  • to give sufficient considerations in case of advertising /marketing to the elderly.
(11) Dispute Resolution

In the event of dispute with a customer, such dispute should be properly and swiftly settled in a sincere manner.

In order to achieve the objective mentioned above, expeditious, fair and easy-to-use ADR (alternative dispute resolution) mechanism should be developed and employed.

(12) Languages

When advertising is made targeting overseas in foreign languages, all the necessary information should also be displayed in the language of the targeted country.

Business targeting overseas should give an appropriate consideration on cultural and legislative characteristics of the country targeted as possible.

(13) Exchange Rates of Foreign Currencies

When foreign currencies are accepted in payment, the name of the currency, exchange rate, and payment period (of which the exchange rate is fixed) should be clearly expressed.

(14) Applicable Laws and Jurisdiction

Business is strongly recommended to clearly state the applicable laws and rules regarding jurisdiction, when cross-border transactions are expected.

3. Measures for Dissemination of the "Guidelines"

ECOM and its member companies will make utmost efforts to disseminate these "Guidelines".

ECOM takes part in the process to develop domestic standard (JIS : Japan Industrial Standard) with a view to establish an internationally-standardized code of conduct at ISO in a near future.

Notes

In the process of making these "Guidelines", following items arouse interests of the Guideline Working Group members : implications of these "Guidelines" to other forms of electronic commerce business including C-to-C transactions and non-PC type transactions (i.e., mobile-based EC, Web-TV -based EC, etc.)

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