Electronic commerce is giving the Commerce Commission many new enforcement issues to solve, but the scams and misrepresentations appear to be much the same as those made via traditional media.
Commission Chairman Dr Alan Bollard said at the Electronic Consumer Conference in Wellington today that the great speed of electronic communication and its ability to spread messages widely are the main concerns for the Commission.
The false claims about prices, misleading descriptions of goods and services, phoney endorsements, taking money but not delivering goods or services, pyramid selling schemes and the other problems occurring have all happened before.
What the Internet, 0800 and 0900 numbers, and other electronic media used for commerce are doing is allowing these problems to spread through a whole country and internationally very quickly.
The key to the Commission's enforcement of these areas is the Fair Trading Act. It prohibits misleading and deceptive conduct, and false or misleading claims. The Act is written deliberately to focus on claims and conduct so that all communication - spoken, written, visual and electronic - is covered.
The Commission uses warnings, settlements and court action to enforce the Act. Courts can impose fines of up to $100,000 and a wide range of injunctions and orders.
There are difficulties with court action against businesses that have no physical presence in New Zealand, just electronic addresses.
However, the Act does allow for action against overseas based businesses. Taking action against a business with only an electronic address in New Zealand may be similar to taking action against an overseas business that placed newspaper advertisements here.
As well as direct action against the business making the claims, the Commission has several other ways of approaching electronic commerce.
One involves an element of self-regulation. For example, the Commission can advise an Internet service provider that one of its clients is, in the Commission's view, breaching the Act.
The Commission already has a similar relationship with the Newspaper Publishers' Association. Acting on their Association's advice, newspapers have refused to publish, or have withdrawn, advertisements the Commission was concerned about.
Another option is taking civil action against a broadcaster to stop it broadcasting advertising that breaches the Act. Publishers have a defence under the Act. If they accept an advertisement in good faith they cannot face court action. The same defence is not likely to apply to broadcasters. Electronic media, including the Internet and telephone services are considered to be broadcasters under the Act. The Commission, or anyone else, can take court action against them.
The third option is for the Commission to make increasing use of new technology itself to improve international links and speed up gathering and distribution of information.
Already, the Commission has links with overseas counterparts, particularly in Australia, and it puts significant resources into raising awareness and acceptance of the Act among New Zealand businesses and surveillance of advertising.
It is developing a web site and considering how it could use other electronic media. Faster, easier communication - both nationally and internationally - and speedier processing of data will allow the Commission to respond more quickly.
Copies of Dr Bollard's speech are available from the Commission's Wellington office.
Media contact:Communications Officer Vincent Cholewa
