HOW CONSUMERS ARE MISLED AND ENTICED OVER THE INTERNETTO: Australian Treasury Expert Group on E-commerce "Building Consumer Sovereignty in Electronic Commerce: Review Australian Best Practice Model for Business" FROM: Stephen GOULD Electronic Information Management Consultant PURPOSE This is a submission to the Australian Treasury "Building Consumer Sovereignty in Electronic Commerce: Review Australian Best Practice Model for Business" It illustrates a real issues that occurs every day on the Internet whereby consumers are not only misled but enticed to give their credit card details over the phone. This submission comprises: A Issues 1 Problems with legal jurisdiction 2 Mis-representation and redress for mis-representation 3 Credit card details over the phone 4 Fulfilling the contract 5 Public confidence in the Legal System B Recommendations C About the author People are invited to provide their comments to email@example.com A ISSUES a The issues that need to be considered are: 1 Problems with legal jurisdiction 2 Mis-representation and redress for mis-representation 3 Credit card details over the phone 4 Fulfilling the Contract 5 Public confidence in the Legal System B I regularly receive e-mails inviting me to register for a free holiday eg "From: "Florida Draw"firstname.lastname@example.org Subject: Holiday Draw - Orlando, Florida Send reply to: "Florida Draw"email@example.com Date sent: 03 Nov 2003 09:35:14 -0500 Sign-up for the FREE Holiday Giveaway Draw You must register to be eligible for the draw. Fill out this form to register and you may be eligible for our monthly draw. http://www.freeholidaygiveaways.com/ 5 days and 4 nights in Orlando, Florida 6 days and 5 nights in Ft. Lauderdale, Florida PLUS S7 day unlimited Car Rental PLUS 2 Tickets to Universal Studios or to Disney World You must register to be eligible for the draw. Fill out this form at http://www.freeholidaygiveaways.com/ and we'll do the rest. No more offers? Send us a note at: firstname.lastname@example.org?subject=remove Free Holiday Giveaways ©2003" c I completed the form on the web-page d About 14 days later I received a telephone call from Brian in the USA to my mobile saying: 1 I had won a holiday for 4 people for only US $ 839 (AU$ 1,300) instead of US $ 4,000 (AU$ 7,000) and describing the holiday in detail. 2 I had to pay for the holiday that day 3 He needed to take my credit card details over the phone e Brian said the tickets and the details would be sent to me by FedEx however I need to give them my Credit Card details for payment $ 1,300.00 there and then so that the documents could be sent. f Brian said I could not use a PO Box but had to give them my street address. g I explained to Brian that I did not give my credit card details out to anybody on the phone but would register the details on a secure web-site if he gave me the Web address. h Brian said I had to pay that day or lose the trip. He gave me a web address to check the company. The company was a Travel Agency called "All Seasons Travel". http://www.aseasonstravel.com/ i I followed the "10 thing to check before Shopping on the Internet" but it does not cater for International offers j I e-mailed the Managing Director that day to say that I wished to pay, provided they would give a secure web-site to register payment details. "13:32 Fri 10 Oct 2003 REF: TTAACAN1 Sydney Australia Time Y/R: Brian TO: The Managing Director cc Goldsmiths Lawyers ALL SEASONS TRAVEL & RESPORTS Dear Sir I e-mail to say that I would like to pay by credit card for the Holiday Trip that Brian informed me this morning that I had won. However as I said to Brian I would not give my credit card details over the phone but would provide the numbers on a secured web site or by e-mail. BACKGROUND I received two telephone calls from "Brian" this morning to say I had won a trip for 4 people at a very special price US $ 849 US or Au$ 1,300 which included: 1 7 days in Florida at the Rattisson Hotel 2 2 days at Universal Studios 3 5 day cruise around the Caribbean Brian informed that this holiday trip could be taken at any time within the next 18 months. Brian then informed me that they would be sending the tickets and other details to my home address not a post office box address by FedEx. Hence he required my home address which I gave to him. As I had to finish off a report for a meeting in 15 minutes when he called I asked for his telephone number and asked him to call me back in 1 hr. The number he gave me was 0011-1-770-352-0442 which is the number on your web site. He said I could check out that he was genuine by looking at your web-site http://aseasonstravel.com At around 10:30 Fri 10 Oct 2003 Brian called again to say that the trip was worth over US $ 4,000 but I couldhave the holiday for 4 people for US $ 849.00 or Au$ 1300.00 However he had to have my credit card confirmation before he could send the tickets out. I explained to him that that I would not give my credit card details out over the telephone. Brian said I had to pay by today Fri 10 Oct 2003 to accept the special holiday price NEXT STEPS Please advise the secure Web site where I can register my payment details Thank you Stephen GOULD 0403-492-849 PO Box 517 NEUTRAL BAY JUNCTION NSW 20689 AUSTRALIA j I received confirmation that I could pay by telephone or e-mail but they did not have a secure web-page for registration on the internet. k The issue then arose that if I paid, how would I know that the holiday would still be there in 18 months. l My lawyer could not advise on the legal position with regard to: "Please advise: 1 If it is a free Holiday Draw why do I have to pay $ 1,300.00 to a Travel Agency for the Registration pack ? 2 If I pay $ 1,300.00 where do I stand if I do not receive any documentation by FedEx as promised 3 where do I stand with confirmation that the holiday bookings with the Hotel and Cruise ship will be there is 12 months or 18 months" B RECOMMENDATIONS The recommendations that the Expert Group are asked to consider are: a That the Legal Jurisdiction for all cases involving overseas transactions is where the payment is made either by the credit card issuing location, direct credit bank location or bank location b That all international companies that wish to offer goods or services to the Australian consumer have to register their organisations contact details on say an "International Traders Register" perhaps operated by Austrade c Another organisation should provide an Electronic Notary service to ensure that the e-business process is completed. The concept of an Electronic Notary was proposed by the legal workshop during the TEDIS Conference in Brussels in June 1989. d Perhaps the Electronic Notary can provide the redress mechanism by providing a public service for consumers with the list of organisations that have misrepresented offers or not fulfilled obligations. e In the event of disputes the following electronic legal process is proposed: 1 panels of 3, 5 or 7 e-Business experts for each Industry to decide outcomes of disputes. 2 That the Panel then have a draw to decide which member will act as an Inquisitional Expert to deduce where the blame lies in a dispute 3 The Inquisitional Expert provides a report with recommendations to the rest of the panel within a clearly defined timescale 4 The Panel review the report and recommendations and either support or revise the recommendations or seek further information This legal process is proposed to provide: 1 A speedy dispute resolution process 2 A process that is not protracted by legal argument 3 Is not hampered by law based on Precedent argument NB: Inquisitional or Inquisitorial Law is the legal system in most European Countries including France, Germany and Italy. In these countries a Notary is appointed to find out the facts before making a recommendation on the Judgment. In American, British and Australian law the legal system is based on precedent with lawyers preparing documents to brief barristers who then make their submissions to a Judge who decides the outcome. In Dec 2002 the New South Wales Law was changed so that Civil cases are no longer heard by Juries only by Judges C ABOUT THE AUTHOR Stephen GOULD is an Electronic Information Interchange [EII] Consultant. He is the Partner - EII Projects for the Halisa International Network. He worked for Burroughs Computers for 10 years from 1973 - 1982. He held a number of management positions in Burroughs including UK Area Sales manager, UK Branch Manager, UK National Sales Manager Financial Services. His final position at Burroughs was Director Office Automation Australia in 1982. At that time Daniel PETRE who is on the Panel of Experts was starting his career at Burroughs. In Nov 1982 Stephen GOULD formed his own Office Automation Consultancy. Between 1985-1988 he was the head of a research team into Rational Universal Business Automation Code [RUBAC] In Sep 1987 the Yankee Group compiled a report "EDI in Australia" for the Australian Government In that report the Yankee Group concluded that the RUBAC Information Management Methodology was "way beyond EDI" Between 1987-1991 the Author attended 10 Electronic Date Interchange [EDI] conferences around the world including the one week invitation only TEDIS conference in Brussels in Jun 1989. In 1990 he was commissioned by the British Standards Institute [BSI] to provide review the BSI Committee Structure and provide recommendations on how to reduce the production of 14,000,000 sheets of committee reports each year He spent two years in Europe from 1991-1993 working with: 1 a number of UK Small Business Associations advising them on a United Nations Industrial Development Organisation [UNIDO] project for SMEs to implement EDI. 2 The European Aerospace Association [AECMA] on how to distribute information electronically between the stakeholders of a number ACEMA projects like the Eurofighter project 3 The UK Institution of Electrical Engineers [IEE] on ways for 105,000 members to receive electronic information and attend 400 events a year In 1993 he returned to Australia to implement Electronic Committee Management [ECM] in a joint venture with the Australian Information Technology Association [AITS] based on the projects carried out with BSI, AECMA and IEE In 1994 he was invited by a number of consultants that had formed the Open Interchange Consortium [OIC] to develop the electronic infrastructure for an Electronic Association In 1995/96 the Author was a member of the Formation Management Committee of the OIC In 1999 he was the architect of the OIC Y2K Resource Asset Management Program [OICY2KRAMP] which was a Y2K Management Due Diligence process for Small & Medium size Enterprises [SMEs]. OICY2KRAMP was awarded 1st prize in the "IT for SME" category of the prestigious Global Bangemann Challenge. The King of Sweden presented the trophy to the OICY2KRAMP project manager Guy BLOMBERG in June 1999 at Stockholm Townhall. In 2000 Stephen GOULD was the architect for the OIC electronic Tender Information Management Service [TIMS] He has given a number of presentations and papers on E-business for Small and Medium size Enterprises including: 1 1995 - OIC - Significance of SMEs for Electronic Commerce 2 1999 - OIC - submission to Treasury on e-Commerce Best Practice 3 2001 - Aus Workflow Management Coalition - Making your e-Business Work During 2001 and 2002 he represented the OIC on Australian ebXML Committee for XML Standards Further details on the Author's background with e-Business can be reviewed on his CV Web site.