Consumer Protection in the New High-Tech, Global Marketplace to competition, lower prices and a proliferation of new products and services.^2 The Internet, with almost no barriers to entry, may create the most highly competitive marketplace of all.43 TOWARD A NEW CONSUMER PROTECTION AGENDA Working Together Emerging consumer protection issues call for creative law enforcement approaches that do not unnecessarily restrict legitimate business practices, that promote the free flow of information, and that encourage the development of new technologies." To strike the right balance, it will be important to continue the kind of dialogue that took place at the FTC's fall hearings, and for all interested groups-industry, government, consumer groups, and academics — to work together to find solutions." Recent cooperative efforts in tackling pay-per-call fraud and telemarketing fraud can serve as useful models for solving the new problems identified during the hearings.“ The Role for Law Enforcement Officials Law enforcement agencies at federal, state, and local levels must continue to focus on fraud and deception in all forums. Enforcement resources should not be too narrowly focused on the new technologies; rather, they must be spread broadly to catch and deter the most serious wrongdoers wherever they work." The FTC must maintain an active enforcement presence in the area of deceptive advertising -in both the print and electronic media—to assure that current standards are maintained." In addition to its role as a vigilant law enforcement agent, the government should encourage self-regulation by the private sector.” Industry's Part 49 The private sector can address many of the concerns consumers have about the new technologies. It has the "know how" to find solutions that work without unduly burdening their operations. For example, industry can continue to develop Consumer Protection in the New High-Tech, Global Marketplace technological solutions that allow consumers to block receipt of certain kinds of information and let them know who is calling." Private groups may be able to develop pro-competitive certification standards that help assure consumers of a seller's adherence to consumer protection principles; they also may be able to devise ways to resolve disputes using the new technologies." Self-regulation offers flexibility in solving problems. It provides an opportunity to proceed slowly in difficult areas like privacy; to build a consensus about norms of behavior for an industry; and to experiment with different approaches.52 Further, self-regulation is in the business community's best interest because consumers will use only the new technologies in which they have confidence."3 Without self-regulation in the pay-per-call technology, for example, scam artists gained the upper hand early on and nearly ruined the medium for legitimate use." In short, if consumers see cyberspace as "Dodge City," they will stay away from it.55 Finally, self-regulation can ease the burdens on law enforcement agencies. If industry is effective in promoting general levels of consumer protection, government agencies can focus their resources on fraud and deception." However, it must be remembered that self-regulation can be uneven." It generally needs a strong law enforcement presence, and constant renewal and modification to meet the challenges of a rapidly changing marketplace." Consumer and Business Education Consumer education fuels enlightened decision-making. This critical, albeit expensive, element of the consumer protection agenda should come from a variety of sources - industry, consumer groups, schools, and government agencies — working independently but cooperatively." For government, a good place to start is right at home. Government agencies Consumer Protection in the New High-Tech, Global Marketplace must become more savvy about the new technologies and the consumer protection problems associated with them. In addition, they must learn how to use the 60 technologies to disseminate their messages more effectively. On the Internet, for example, it is possible to deliver consumer education messages in real time — that is, just as a consumer is about to make a purchase. This could be a giant step forward from traditional printed brochures and public service announcements.61 At a time when consumers are being bombarded with information, getting messages through can be difficult." And in some areas, such as telemarketing fraud, consumer education messages must change how people behave“ — a daunting task. In the end, even the best consumer education cannot be effective by itself. Self-Help The new interactive technologies will offer interesting opportunities for consumer self-help. But consumers need to be educated and encouraged — and the technologies need to be developed — before any self-help measures can flourish.64 NEXT STEPS What's ahead? Government, industry, educators, and consumer groups are not yet sure, but none of them wants to be left behind. They are entering the emerging marketplace with cautious optimism. They are looking forward to more and better information, bigger markets, increased competition, and new opportunities for partnerships. Yet they are fully aware of the risks: new versions of fraud and deception, a world-wide stage for scam artists, and less privacy — at a time when there are fewer human and financial resources to address them. Consumer Protection in the New High-Tech, Global Marketplace TECHNOLOGIES ON THE MOVE Many experts predict that the telephone, the television, and the Internet will evolve, converge, and take on a new look. The familiar media still will be around, but may evolve into nearly unrecognizable tools that will energize the marketplace in new ways. THE TELEPHONE The expansion of the telephone from just a simple medium for personal conversation into a global platform for commerce is a key technological development in the new marketplace. Now a medium for digital as well as verbal communication, the telephone is an important vehicle for buying and selling entertainment, information, and other products and services. For example, consumers now can listen to and order compact discs and other recorded music simply by calling an 800 number.65 Indeed, the telephone infrastructure supports a large and still growing segment of the U.S. economy. The fact that it relies on the old-fashioned advantages of telephony — ease of use, affordability, security, and reliability — is particularly noteworthy." It is no surprise that the telephone is nearly ubiquitous. Consumers like it' because it is familiar, easy to use, convenient, inexpensive, reliable, secure, and private;67 marketers like it because it offers one-to-one personal communication that can be tailored to consumer interests and concerns. 68 Since the 1970s, advances in telephone technology have spurred the use of the telephone as a marketing tool." Digital technologies are reconfiguring old copper telephone lines to carry huge volumes of information at extremely high speeds.70 Telephone wires already are carrying full motion video." Commercial transactions are taking place over these same wires using new “smart card" Page 11 Consumer Protection in the New High-Tech, Global Marketplace The Telemarketing Industry Forty or 50 years ago, when telephone commerce was new, consumers generally were so pleased to hear from a telemarketer that he had to work to conclude the calls." Today, however, many consumers regard the high volume of telephone solicitations as an irritation and an invasion of privacy. Concurrent advances in database and telephone technology fostered the growth of an enormous telephone marketing industry." Indeed, telemarketing is the lifeblood of many companies. At least one major long distance company says its sophisticated telemarketing sales program is responsible for its rapid expansion." 76 In addition to being a boon for business, telemarketing offers consumers convenience the chance to buy a wide range of goods and services from their homes. However, some telemarketers warn of a danger of "over fishing" their market." If a negative image of telemarketing gets lodged in the public mind, consumers may stop responding to telemarketing solicitations. Support may grow for the same kinds of strict telemarketing laws and regulations that some foreign governments have." The Pay-Per-Call Industry The pay-per-call industry uses 900-number technology to market entertainment and information services." Once considered a business with enormous potential, the pay-per-call industry has yet to meet expectations, largely because it was tainted early on by scam artists who adopted the technology in large numbers. Increasingly, however, the legitimate pay-per-call industry is offering business-to-business and business-to-consumer services, and major corporations are turning to pay-per-call services to replace toll-free 800 number operations. 80 Like their counterparts in the telemarketing business, pay-per-call industry representatives rank convenience as one of their industry's top benefits for Page 12 |