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Ecommerce and Trust

The Ecommerce Forum South Africa was set up principally to work towards improving trust in ecommerce. Ecommerce has become increasingly important globally with some estimates suggesting that it is a US$25.3 trillion – and growing – market. According to a new white paper by the World Economic Forum (WEF), The Global Governance of Online Consumer Protection and E-commerce, here are 5 ways policymakers should increase trust in ecommerce.

  1. Create relevant online consumer protection rules

Many African countries do not have a legal framework for consumer protection,  but in the rest of the world only 52% have updated their consumer laws to cover online activities, according to the United Nations Conference on Trade and Development (UNCTAD) CyberLaw Tracker. For many African countries, laws are at the draft stage; there is nothing on the books, or no information is available.

  1. Personal data privacy laws

Many stakeholders consider rules on privacy to be part of the online consumer protection toolkit. According to UNCTAD, 58% of countries have rules in place while 21% do not, with no information on the rest. Research suggests that these measures play a role in boosting online trust. In a survey by KPMG of 18,000 online consumers in 50 countries, 41% of respondents wanted greater control of how their personal data was used, especially in North America, Europe and SA.

  1. Address variation in the rules

While online consumer protection rules usually cover all aspects of a BtoC relationship, including information asymmetry, unfair commercial practices, e-spam, contract terms, payment security, liability and returns, countries have different legal and self-regulatory approaches. Technological changes also raise new questions. For example, should an online e-platform be held accountable by the consumer for misleading actions by a third-party seller? Some countries have requirements for online e-platforms (such as Amazon, Alibaba, etc) to inform customers if they are buying from a 3rd party, although this is not always the case.

  1. Increase international cooperation on ecommerce

Going global and connecting to consumers in different countries remains a challenge for most e-merchants. Cross-border ecommerce activity accounted for just 7% of total online B2C sales in 2015. Many factors, from logistics to payments, have an impact. Perceptions that shopping abroad may be less secure and that remedies do not exist for when something goes wrong certainly is an aspect. The WEF paper calls for the reinforcing of international policy cooperation to raise online trust.

  1. Engage in international ecommerce talks

Countries have made efforts to align their approaches towards online consumer protection rules at the Organisation for Economic Co-operation and Development (OECD) and UNCTAD. An increasing number of preferential trade agreements (PTAs) aim to reinforce standards and ensure transparent approaches. Some encourage cooperation between online consumer protection agencies while others mandate putting privacy laws in place. In January 2019, 76 nations responsible for 90% of global trade committed to begin negotiations on the trade-related aspects of ecommerce. Although it is too early to tell the exact scope of these talks, proposals in the preparatory phase have included online consumer protection issues. These are mostly vague on content, but talks could move toward global trade rules, encouraging minimum legal frameworks and convergence on the principles driving regulation.

Whatever the outcome, it will be important to future-proof against rapid technological change. Aligning and scaling governance for developments around ‘smart contracts’ based on blockchain technologies, for example, may be a solution. It will also be important in the context of the global digital economy.

We need to be more conscious of the developments and leapfrogging which is happening in Africa today. For example, I came across this report that an estimated 525 million Africans went online in July – that means there are now more internet users on the Continent than in North America (327 million) and the Middle East (174 million) combined! .

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Alastair Tempest

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