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Sponsor's
Message
Industry Insight
10 April 2002
READ IN THIS STORY:
The government wants to prevent a fool and his money being parted online. In doing so, through the Electronic Communications and Transactions Bill, it would do consumers more harm than good.
Is the Internet a dangerous place to do business?
The government thinks so. It wants to create a law which would go to extraordinary lengths to protect consumers in many online transactions, and in doing so may very well unintentionally isolate SA.
The Electronic Communications and Transactions Bill is a minefield of unintended consequence, but I have taken a special liking to its consumer protection provisions. They are to me a shining example of how good intentions can create bad law and proof that the Department of Communications desperately needs to headhunt some military wargamers to play “what if” with them.
At first glance it is great: e-commerce Web sites must provide detailed information about themselves and the products they are trying to flog. No more ripping off of defenceless consumers in faceless cyberspace.
Then the mechanics of recourse kick in. Consumers are granted the right to withdraw from any transaction without reason or penalty for a week after clicking the fateful “buy now” button. There are some very broad exceptions, but let's get back to those in a second.
Dangerous move
Maybe the idea is to encourage impulse buying on the Internet. Heaven knows the online economy could do with some ill-considered purchases. The alternative is that government is fighting misperception with legislation, which would seem like a dangerous thing to do.
So is the Internet a dangerous place to do business? Yes it is. Is it more dangerous than, say, downtown Johannesburg? Maybe marginally. But the Bill is not trying to protect buyers against fly-by-night Web sites that disappear as soon as the first hundred customers have shelled out – we have fraud legislation for that kind of thing anyway. Rather it is trying to reassure consumers that the big bad Internet wolf is really not hiding under the bed and they can rest easy now.
So you want to encourage people to buy online, and they have (largely unfounded) fears about doing so. I know this is a revolutionary idea, but an alternative could be to educate them about the actual dangers and point out what mechanisms exist to protect them.
Look at these provisions from the merchant's point of view. Seven days after you open your pretty Web site and start selling widgets the cancellations start streaming in. It seems your competition has started to undercut you and your loyal customers suddenly are not interested in doing business with you.
Put another way, what is the cost of a cancelled transaction, and if you are running an e-commerce site on paper-thin margins, can you afford it?
Exceptions to the rule
Back to those exceptions. Goods that decay or are personalised, services that have already been rendered and specific products, like software, are all excluded from the cooling-off period. This will matter not one whit once Amazon.com gets burned. At some point somebody in SA will send a book back to Amazon, probably with a snotty letter pointing out that the book was not great and he wants his money back and, oh yes, South African law claims jurisdiction over you, so cough up.
About 15 seconds after this is routed to the legal department, anyone entering a South African shipping address will be redirected to a Web page telling them exactly where to stick it. Within 24 hours you would be hard pressed to find an American site to take your money.
Amazon does not need the drop in the ocean that SA represents to it. It certainly does not need the grief and expense of handling even a few returned orders. It would be a simple business decision.
How does this serve consumers, who are still getting ripped off by fraudulent sites in the meanwhile? The one positive aspect is that it would prop up the currency by lowering imports, but that is reaching a bit.
Nor do I buy the argument that, though misguided, this is an attempt at protecting unsophisticated South Africans from themselves. Literacy is required to buy online, and if you can read you can make an informed buying decision. If it takes you seven days to realise that you could have gotten a better deal, tough cookies.
Consumer protection need not be at the expense of merchants. The only thing required from government to protect online buyers is to enforce existing fraud legislation online, as it should all law. Or maybe those “cyber inspectors” the ECT Bill also wants to create have better things to do, such as protecting us against the scourge of software piracy?
The government thinks so. It wants to create a law which would go to extraordinary lengths to protect consumers in many online transactions, and in doing so may very well unintentionally isolate SA.
Opting out
If it takes you seven days to realise that you could have gotten a better deal, tough cookies.
At first glance it is great: e-commerce Web sites must provide detailed information about themselves and the products they are trying to flog. No more ripping off of defenceless consumers in faceless cyberspace.
Then the mechanics of recourse kick in. Consumers are granted the right to withdraw from any transaction without reason or penalty for a week after clicking the fateful “buy now” button. There are some very broad exceptions, but let's get back to those in a second.
Dangerous move
Maybe the idea is to encourage impulse buying on the Internet. Heaven knows the online economy could do with some ill-considered purchases. The alternative is that government is fighting misperception with legislation, which would seem like a dangerous thing to do.
So is the Internet a dangerous place to do business? Yes it is. Is it more dangerous than, say, downtown Johannesburg? Maybe marginally. But the Bill is not trying to protect buyers against fly-by-night Web sites that disappear as soon as the first hundred customers have shelled out – we have fraud legislation for that kind of thing anyway. Rather it is trying to reassure consumers that the big bad Internet wolf is really not hiding under the bed and they can rest easy now.
So you want to encourage people to buy online, and they have (largely unfounded) fears about doing so. I know this is a revolutionary idea, but an alternative could be to educate them about the actual dangers and point out what mechanisms exist to protect them.
Look at these provisions from the merchant's point of view. Seven days after you open your pretty Web site and start selling widgets the cancellations start streaming in. It seems your competition has started to undercut you and your loyal customers suddenly are not interested in doing business with you.
Put another way, what is the cost of a cancelled transaction, and if you are running an e-commerce site on paper-thin margins, can you afford it?
Exceptions to the rule
Back to those exceptions. Goods that decay or are personalised, services that have already been rendered and specific products, like software, are all excluded from the cooling-off period. This will matter not one whit once Amazon.com gets burned. At some point somebody in SA will send a book back to Amazon, probably with a snotty letter pointing out that the book was not great and he wants his money back and, oh yes, South African law claims jurisdiction over you, so cough up.
About 15 seconds after this is routed to the legal department, anyone entering a South African shipping address will be redirected to a Web page telling them exactly where to stick it. Within 24 hours you would be hard pressed to find an American site to take your money.
Amazon does not need the drop in the ocean that SA represents to it. It certainly does not need the grief and expense of handling even a few returned orders. It would be a simple business decision.
How does this serve consumers, who are still getting ripped off by fraudulent sites in the meanwhile? The one positive aspect is that it would prop up the currency by lowering imports, but that is reaching a bit.
Nor do I buy the argument that, though misguided, this is an attempt at protecting unsophisticated South Africans from themselves. Literacy is required to buy online, and if you can read you can make an informed buying decision. If it takes you seven days to realise that you could have gotten a better deal, tough cookies.
Consumer protection need not be at the expense of merchants. The only thing required from government to protect online buyers is to enforce existing fraud legislation online, as it should all law. Or maybe those “cyber inspectors” the ECT Bill also wants to create have better things to do, such as protecting us against the scourge of software piracy?
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