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  • Writer's pictureErika Ly

Roundtable Summary - 1+1=3: When Consumer Protection and Digital Rights Converge

Introduction


The consumer protection movement has a long history of advocating for changes in products and services, and the terms and conditions that govern their use, in the public interest. Increasingly, their mission has had to engage with digital goods and transactions, and the new types of fraud, scams, and harms that they enable. Equally, digital rights advocates have played a key role in centring end-user rights and freedoms while challenging power and information asymmetries in the tech sector.

The combination of digital transformation initiatives and the COVID-19 pandemic has accelerated this trend, as commercial transactions, welfare programs and social interactions have moved online. In parallel, governments have had to contend with the consequences, and seek to address it through a set of legal and regulatory tools, with a focus on competition, data protection, cybersecurity and disinformation. What can consumer protection and the consumer rights movement add to a space dominated by tech policy and digital rights organizations? How can the two work in tandem to amplify their impact?

Our key speakers for the panel featured: Prabhat Agarwal, Head of Unit “Digital Services and Platforms, European Commission” (co-draftsman of the DSA and DMA package); Helani Galpaya, Executive Director, LIRNEAsia; Youkyung Huh, Executive Director, Consumers Korea; and, Helena Leurent, Director General, Consumers International. This summary captures key themes, ideas, and policy recommendations made during the event. A transcript and video recording is available here.


 

Roundup

Consumers International


There is a long history of advocacy with Consumers International representing consumers for over 60 years around the world. While they have focused on a range of different topics from food, finance and mobility, there are new experiences and issues emerging in the digital space and in online marketplaces that Consumers International are starting to address. The priorities for Consumers International are: “sustainable consumption, digital rights, and what consumer protection and empowerment means so that we get to a marketplace that is safe, fair, sustainable, and has a better sense of equality.” At the core of these are two issues: (1) How to lay a long-term foundation for data governance for the future and (2), addressing the consumer harms that arise from deceptive design and features such as ‘deceptive design’ or ‘personalized pricing’ that may increase and exacerbate inequality.


As a global organization, Consumers International is well placed to address the impact of online transformation for consumers. There are a number of tools that consumer advocates bring to the table. As Helena Leurent mentions:

Those start with sort of real understanding of the consumer experience on the ground, from a lay person's perspective, and being able to put that into context, thinking about that from the experience of different segments of consumers.

In addition, there is the benefit of consumer advocates having a form of statutory engagement in their country. Leurent mentions panel, for example, the Consumer Council of Zimbabwe who were brought in to assist the drafting of the Consumer Protection Act which came into force in 2019: “So you've got an organization that can both be in touch directly with consumers around the country, and is sharing that perspective, with government with business on how to make things better in a very real time way.” Not only are consumer organizations able to represent customers in action, they are able to do so based on consumer protection principles.


European Commission


In 2020, the European Commission passed the Digital Services Act (DSA) and the Digital Markets Act (DMA), both aimed at regulating online platforms. Prabhat Argarwal also emphasized the role of the European Union to legislate and harmonize these laws on a regional level amongst member states:

[W]e saw this in the area of platform regulation, becoming a very strong concern that many governments inside the European Union felt that user protections were not strong enough, there's a lot of illegal goods or content on platforms, and also the transparency accountability framework around these platforms wasn't really advanced enough. So these are a couple of motivations, that led us to, to legislate.

A second driver for legislation was the clear evidence from the work of the European Commission on the impact assessments regarding the level of protections and consumer protection and empowerment, which were seen as not being sufficient relative to the problems that were encountered. This centered on providing consumers and users a ‘greater sense of choice’ regarding how individuals interact with content and their choice of engagement with online platforms. For example, the complex terms and conditions as well as the difficulty of accessing and modifying data and privacy settings. In addition to introducting provisions on dark patterns, another element was to provide representative consumer organizations with a new legislative mechanism to take legal action on behalf of consumers and collective interest. Finally, both the DSA and DMA introduce an update accountability and transparency framework which includes provisions for expert researchers to carry out inquiries on the types of harm derived from platforms and to gain deeper understanding of technical mechanics behind such platforms.


Notably, the design of the DSA was intended to avoid a framing that is focused on ‘consumers’ but of ‘users’. As Agarwal mentions, this is intentional:

In a daily journey of a normal person, you act not only as a consumer in the traditional European sense of consumer protection, where you buy a good and you have certain rights relative to buying a good, but actually [through] your user journey…you have many different personas…we prefer to kind of speak about a user and not necessarily a consumer, thinking that the notion of a user is broader than at least in legal terms, than that of a consumer.

Ultimately, both the DSA and DMA collectively seeks] to better empower users and consumers through more meaningful information. It is to empower regulators and the European Commission with wide ranging powers for accountability, as well as consumer protection and other representative bodies to have greater legal standing in European courts to protect consumers, and finally to offer a range of protections for consumers.


South and Southeast Asia

In addition to providing a European overview of the regulatory landscape, the panel also discussed perspectives from South Asia and Southeast Asia. Heleni Galpaya, sees that the difference between a user and consumer is a particularly important distinction given that purchasing behaviors are different in this region: “the first thing people do and the most predominant people think people do is to use platforms for price comparison, not for the actual purchase.” Based on a large scale survey from Sri Lanka undertaken by LIRNEAsia of over 10,000 sample survey responses, trust is a significant reason that consumers do not use online platforms or marketplaces:

[i]f you buy it from your corner shop or a regular shop that you go to ability to get redressal if you don't get the good or if it's a bad good, then that's there in the way people have been purchasing. But they're not sure how to deal with this when the distance is large [and online] and the seller is not a person that you can go talk to…

Galpaya also mentions a number of reasons that people select for not using platforms which include reasons such as: ‘‘I cannot be certain of the quality of the good’, ‘Someone I know has had a negative experience’, ‘I do not want to give my personal information’; and ‘I'm not comfortable giving my financial information to a platform, in order to finish the transaction’.

These reasons are notwithstanding the legitimacy of the platforms themselves however, Galpaya also discussed scams and the practice and popularity of of ad-clicking in South Asia:

“So that you know if you generate 1000 clicks, you get $1 on a YouTube video…we've talked to people who work for a year to earn let's say 100 or $1,000 by clicking and in the end turns out it was a scam or they are not going to get paid. And there is no recourse…If the buyer doesn't pay, there is less recourse.”

While consumer protection legislation may be appropriate in the European context, it may apply less to other regions with emerging markets. This is due to behavioral differences in consumer behavior, the ability to access resources to take legal action, as well as the ability to enforce or police. Despite legislative pathways to access action, “consumer protection authorities have low resources and low capacity”. Instead, a telecom regulator might be more appropriate for digital markets rather than a Consumer Protection authority in South Asia and Southeast Asia.


Korea


In Korea, there is a high level of internet penetration. This is due to two major platforms: Kakao Talk, a messaging platform with 97% of the nation’s population which includes elementary schoolchildren to adults; and, Naver, which is the most widely used search engine that exceeds the use of Google in popularity as a search engine. Not only do these two platforms provide messaging or search services, there are a number of additional services that permeate all digital life such as e-commerce, ride-sharing, financial service, news and media and entertainment, social networks, blogs and messaging boards as well.

Uniquely in the Korean context, participation and sign-up to these online platforms is inextricably linked to personal identity. Korean legislation requires that each person resident in Korea requires a ‘resident registration number’ which enables an individual to obtain a mobile number and mobile phone, in turn this is then used to sign up for Kakao or Naver. As Youkyung Huh observes:

What happens with this high penetration of these platforms and the use of government mandatory use of this resident registration number is that consumers are hyper connected.

This also means that consumers are incredibly vulnerable to potential hacks, identity theft, privacy issues, data security issues and the like. The strength of online platforms is such that they “have this potential to collect information about the users because they're logged in in their everyday lives. And at the same time, the platforms are also providing ecommerce services, and they can exploit the information extracted from the users through various channels of e-commerce”. Consumers International in Korea has recognised that online privacy issues have converged with consumer protection issues as the very same platforms that provide services are so deeply embedded in the everyday lives of Koreans.

The legislative landscape in Korea has been focused on both ex-ante legislation. First, is the world’s first legislation targeted at prohibiting mandatory in-app payments by platforms to prevent large platform operators such as Google and Apple from dominating the application market to enforce specific payment methods on content providers. Second, are six legislative bills targeted at regulating online platforms. This includes a mandate for B2B transactions between platforms and marketplace sellers to enter into agreements on exposure rankings and transparency on how search engine algorithms work. Third are B2C e-commerce bills, with 18 in total being discussed, which include the requirement for online platforms to hold liability and responsibility from consumer damage occurring from online transactions.

The Korean Federal Trade Commission and Korean competition authority has been using existing Competition and Consumer Protection laws to impose enforcement action on platforms. Especially in order to drive change in platform terms and conditions on the basis that they are deemed unfair under existing consumer protection laws. A number of antitrust investigations and enforcement actions are also observed from the Korean context. This includes the 2021 fine on Google for the abuse of market dominance on android platforms as well as the 2020 case for Naver for the manipulation of search algorithms.


Defining users vs citizens vs consumers

The panel also discussed the importance of characterisation with regard to individual participation on online platforms. A key point made by Laurent was the loss of the ‘citizenry’ aspect in the use of the word ‘consumer’:

“we've allowed the word consumer to be defined as sort of infiltrated by consumerism, and it sort of lost their sense of citizen in the marketplace”.

Given that everyday lives are increasingly digital, there are also related issues with regard to sustainable consumption, as well as the “rights and responsibilities of a person as they act in the marketplace.

The importance of global collaboration

There is bridge building across actors and jurisdictions that needs to be done and many more grey areas to be addressed with systematic collaboration across silos needed, as Laurent mentions from the EU perspective:

There's a piece which is keeping an eye on the strengthening that collective action, I would argue, making sure that we're clear on some of the principles and things that we don't want to lose from the past, but also a leadership role to build on questions and with bridges between actors that just haven't been there and are therefore not fit for purpose.

Given the permanence of our digitally enabled lives, discussion on ex-ante and ex-post regulation remains key to the discussion, with the Digital Markets Act an example of ex-post regulations. The advantage ex-ante regulations of this is that it puts a uniform set of expectations on what companies may do with specificity and as Argarwal mentions, there are still ex-post enforcement of competition rules that continue to work in complementary fashion:


“what the DSA tries to do is sit in the triangle between protection, consumer protection and competition law and connect these dots”.

There is an acknowledgement that the issue of regulating platforms is a global problem, As Agarwal mentions while “there's a certain logical desire to coordinate amongst like minded jurisdictions who share similar values” but given that the DSA and DMA will have some global impact a “number of jurisdictions..are approaching us at the moment, which is very large, and we're interested in understanding better from, from how they can work together with us and how they can kind of maybe adjust some of the rules.” There is a recognition here that it is good to cooperate beyond jurisdictional boundaries, especially in cases or regions where there is a greater cost to compliance with the digital service sector in a given digital market. Nevertheless, global issues require global collaboration and more critical work needs to be done in this space.


Key inquiries, laws, regulations and legislation referred to:

  • Consumer Protection Act (Zimbabwe)

  • Digital Markets Act (EU)

  • Digital Service Act (EU)

  • Google v Naver (Korea)

  • Naver v Kakao (Korea)



 

Platform Futures, a project by Digital Asia Hub, convenes a network of academics and experts to create a space for dialogue on opportunities, challenges, and governance best practices across the Asia-Pacific region.



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