Online consumer protection
Heather Clayton
Senior Director, Office of Fair Trading
Jevons Colloquium 7th July 2010
1
●  Background
-  OFT work programme
•  Updating what we do
-  Police, OFT, TSS, ICO
•
Mind the gap, not the overlap?
•
How you look at it…
-  Trust in online markets
●  Online behavioural advertising and pricing
-  Concerns
-  Solutions
-  Recommendations
-  Implications
2
Ownership
of
these
issues
is
fragmented
and
crowded….
Who does what?
CEOP
SOCA
PCeU
Police
forces (43)
IWF
Home
Office
NFRC
TSS /
TSI/
LACORS
Getsafe
online
Consumer
bodies
Sectoral
regulators
HMRC
FSA
Nominet
Banks/
APACS
BERR
ASA
Business /
trade bodies
ISPs /
ISPA
DCMS
Rights
Agency
IPO
ICO
OFCOM
3
Who does what?
Police
Organised
crime
OFT/TSS
Misleading selling
Theft/deception
Traditional Scams
rely on consumer’s
desperation or
inexperience
Scam tickets
Deception – hard to tell
genuine from fake trader
Using
technology to
confuse or
pressurise
consumers
Inflating bids
Phishing, 419s,
fake prize
notifications
Miracle cures
Fake solicitors
Bogus
investment
opportunities
Fraudulent use of
card details
Unfair trading
Concealed contract
terms
Poor customer
care
Slow delivery,
Selling tickets or
slow refunds,
services in
site crashing,
breach of
inefficiency
Fake
contract
endorsement or
Misleading
reviews
pricing
Non-existent
clubs
Goods which
don’t arrive
Scareware,
Malware
Pretending to be
the OFT
ICO
Charing for
services
available
elsewhere for
free
Bogus or poor
quality study
courses
Privacy
concerns
Spam
Carry
scams,
malware
and viruses
Consumer
data
protection
Exploiting biases
in advertising
and pricing
Behavioural advertising, targeted pricing
Posing as a
consumer
Card on file –
unauthorised
charges
“Free” trial –
unwanted
subscriptions
Aggressive threat
to sue reviewers
Failing to give
give refunds after
cancellation
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How you look at it…
●  Bogus ticket sites
-  Law enforcement: ban the resale of tickets and ticket
touts
-  Competition: what about the benefits of a resale ticket
market?
●  Unlawful downloads
-  Law enforcement: protect copyright
-  Consumer: what about the rights of the consumer?
●  Behavioural advertising
-  Privacy enforcers: make it opt-in
-  Competition: make it opt-out
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Work in Progress: sorting out the
boundaries… and the kit
Level
Low
complexity
Low/med
complexity
Med
complexity
High
complexity
Skills required
• Check website compliance
• Basic evidence gathering
• Domain name/IP address owners search
• Anonymous test purchases/browsing
•
•
TSS
Notice and take down
Search and seizure
• Anonymous test purchases/browsing
• Standard forensic intelligence gathering
• Video /screen capture software
• Liaising with overseas enforcers
• Complex forensic intelligence gathering
• Analysis of rapidly evolving sites
• Sniffer/debugger software
• Tools to analyse imaged data
e.g. to recover deleted data/crack encryption
TSS or
Regional
Hub
OFT
/ Police
6
Capacity building
●  Sale of electronic goods
-
-
Non-delivery of software etc
Part 8 Undertaking to give refunds to
consumers
●  World Cup Tickets
-
-
-
Sites not authorised to supply tickets –so
risk of fraud
8 sites taken down
6 sites amended, with undertakings given
●  Swineflu cures
-
-
UK affiliate marketing fake medicine
Trader undertook to stop, and took down
sites
●  Fake solicitor site
-
-
-
Not registered with SRA
Hosted in Germany
Take down request acted on at
once
●  Various payment card fraud
sites
-
-
-
Offering directory or criminal
record searches
Hosted in USA
Sites taken down
●  Supercarehotel
-
-
-
Non-existent hotel in London –clearly
illegal
Hosted in USA
Very simple take down request acted on
at once
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Cases in progress
●  ID theft case
-  Non delivery followed by stealing of credit card details
-  Sophisticated attempts to hide identity
●  Ticket sales
●  Free trial followed by subscriptions
●  Non-functioning products
●  Dodgy training courses
●  Review sites
●  And lots more…
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No
improvement
in
consumers’
fears…
No improvement in general trust
For
those
internet
users
who
had
not
bought
online
in
the
last
12
months,
the
reasons
they
gave
were:
Nov‐06
Jan‐09
Don't
trust
the
internet
for
shopping
24%
30%
There's
no
need
27%
26%
Like
to
see
goods
before
I
buy
them
26%
25%
Worried
about
personal
security
17%
20%
‐
15%
5%
3%
‐
3%
8%
3%
‐
1%
2%
1%
‐
‐
No
one
in
the
premises
to
receive
the
goods
when
delivered
2%
‐
Other
2%
17%
Don't
trust
online
companies
that
sell
online
Don't
have
a
bank
account/credit
card
Other
people
shop
online
on
my
behalf
Want
to
see
goods/try
on
etc
Don't
know
my
rights
when
buying
online
Had
a
bad
experience
previously
Online
retailers
won't
generally
deliver
to
my
area
Source: OFT research
Base count: 86 (Nov 06); 231 (Jan 09)
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For
internet
shoppers,
security
and
privacy
Security and privacy remain the
remain
the
big
fears…
big fears…
10
Market study:
Online Targeting of Advertising and
Prices
11
Possible concerns
Fear info is
misused
Dislike cookies
being placed
on own
computer
Dislike
receiving
targeted ads
•  Fundamental objections to data collection
•  More of a perception (hard to conceive how
data collected for behavioural advertising
could be misused unless combined with
other personal information)
•  Felt akin to trespassing (possibly caused by
misunderstanding of technology)
•  Shared computers leading to potentially
embarrassing adverts
Harms decrease with greater
transparency and control
Harm rises with sensitivity of data and
time that data is kept
Per se dislike
of monitoring
•  Inappropriate adverts seen by children (e.g.
alcohol)
May lead to decreased trust in the on-line market
12
13
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Solutions…
●  Market-based solutions
-
-
-
Technical solutions
Reputational concerns
Competition
●  Self-regulation
●
-  IAB Good Practice Principles
Regulation
-  Information Commissioner’s Office
-
•
•
Data Protection Act
Privacy Regulations
Overlap and not
mutually exclusive
Consumer Protection Regulations
15
Key findings
●  Online behavioural advertising
-  Main objection surrounds privacy concern and misuse of data but
on the whole consumers ambivalent
-  However, transparency and control key to reduce consumer
concerns
-  Possible to exercise control but not comprehensively and
consumers unaware
●  Targeted prices
-
-
-
-
Strong consumer opposition to targeted prices
Vouchers and discounts are the only common practice at the moment
and these do not raise concerns
However other practices technically feasible but not commercially viable
now
Possibility that trust in the internet may be undermined is the key
concern
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Recommendations
● Focus on supporting and improving selfregulation for the moment – but will keep a
watching brief on the market
● Establish MoU with ICO to ensure overlap
does not mean enforcement falls between
the gaps
17
Implications
●  OFT believes that Consumer Protection Regulations apply
-
-
-
CPRs may be breached if consumers alter transactional decision due to
misinformation/lack of information
OFT believes online activity can be a transactional decision (e.g.
decision to visit a website)
BUT not clear consumers would change their behaviour because of
online behavioural advertising as practice currently stands
●  CPRs are principle based regulation – apply depending on the
harm to the consumer in the transaction
-
But they are not privacy rules, the harm has to be in the transaction
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Related market study
●  Advertising of Prices
-  Considering impact of 7 pricing practices on
consumers
•  Drip pricing, reference pricing, bait pricing, use of “free”,
complex pricing, time limited offers, price comparison sites
•  Price comparison sites
-  Relevant for the “transactional decision” test in CPRs
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Thank you
Heather.clayton@oft.gsi.gov.uk
020 72118826
Internet.enforcement@oft.gsi.gov.uk
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