unctad.org | Trust as vital for e-commerce as internet connection, UN meeting hears
Trust as vital for e-commerce as internet connection, UN meeting hears
17 April 2018
E-commerce
Digital economy could face rougher waters unless trust is restored in online platforms, Consumers International head Amanda Long tells E-Commerce Week.


Electronic commerce has been booming over the years, but a growing lack of trust among online shoppers threatens to slow growth, and Consumers International director Amanda Long warned of “signs of trouble”, at UNCTAD’s E-commerce Week in Geneva.

Global online retail sales continued to grow in 2017, reaching $2.29 trillion. But more than two thirds of consumers are now worried that their payments online are unsafe.

In fact, a new survey of internet users shows that a lack of trust is the key reason for people choose not to shop online.

The results show that although half the world’s population is still offline, getting more people connected is not enough to ensure e-commerce’s continued success.

“It shows clearly that the drive to increase access and participation must be matched by a concerted drive to increase trust,” Ms. Long told an E-Commerce Week event on the role of businesses in protecting consumers online.

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“A confident and trusting demand side is central to the success of not just e-commerce but actually the whole digital economy,” she added, saying this was why the organization chose “making digital markets fairer” as the theme for last month’s World Consumer Rights Day, held every year on 15 March.

Vital but not enough

Revelations about how social media platforms have used personal data has hit people’s trust in all things digital, including online transactions.

“Consumers are often left in the dark when it comes to how their data is collected, stored and shared,” Ms. Long said.

“Many countries, especially developing countries, don’t have laws or regulations concerning data protection and privacy, thus leaving consumers completely unprotected in the face of breaches of privacy,” she added.

In fact, around 60 developing countries currently lack legislation to protect privacy online.

But data privacy is just the tip of the iceberg of underlying concerns that affect online consumer trust.

And according to Teresa Moreira, who leads UNCTAD’s work on consumer protection, “In the digital economy setting, regulation and law enforcement, although vital, are not enough to protect consumers.”

Trust also hinges on establishing good online business practices, Ms. Moreira said during the meeting, held at the Palais des Nations, the UN’s European headquarters.

Shark practices

Ms. Long said that stories of online shopping scams – of neighbors not receiving what they ordered or getting something completely different – steer potential customers away from digital marketplaces.

Payment fraud also chips away at consumer confidence, and hackers are finding more sophisticated methods to steal bank account details.

But many of the issues that hurt online trust are the result of how legal online companies conduct business, engaging in unfair or misleading procedures that Ms. Long called “shark practices”.

“Online retailers can and do make fake reviews that encourage consumers to buy goods and services,” she said, citing 16 cases that consumer protection agencies brought against online businesses during the previous two years.

Drip pricing

A popular technique to mislead customers is referred to as “drip pricing”, the practice of advertising a headline price at the start of the customer’s online shopping trip that ends up being much higher at the end of the purchase process, once hidden costs are added.

Such a scheme often includes extra delivery costs. So much so that having clear information about delivery charges has become a top concern for customers, according to a 2016 online survey done by the international post corporation, in which about 24,000 consumers in 26 countries took part.

“Virtually everyone who was in that conversation said that clear information about delivery charges before purchase was actually the most important aspect of delivery when shopping online, ahead of a host of other things, including whether delivery was free or the ability to choose a payment method,” Ms. Long said.

And when things go wrong, consumers want to know they can get it sorted out quickly and hassle-free. Too often this is not the case when buying goods or services online.

“Identifying which part of the e-commerce chain is responsible – is it the platform, the retailer, the payment provider, the fulfilment service? – is really hard, let alone trying to work out which jurisdiction it sits in if it’s a cross-border transaction,” Ms. Long said.


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