Consumer Watchdog Unveils Net Conduct Code

In an effort to promote public trust in Internet transactions, the Better Business Bureau (BBB) and BBBOnLine unveiled the BBB Code of Online Business Practices on Tuesday.

According to the BBB, the code is designed to guide ethical business-to-customer (B2C) conduct in domestic and international e-commerce transactions, and is already being used as a model in Europe and elsewhere.

“The Code provides standards that, when adopted by online merchants and advertisers, are expected to make a significant contribution toward effective self-regulation in the public interest,” said Calvin J. Collier, chair of the Council of Better Business Bureaus (CBBB). Collier is also senior vice president and general counsel for corporate affairs with Kraft Foods, Inc.

Addressing Consumer Concerns

A number of studies have shown that most consumers are worried about online security. For example, about three-fourths of the respondents to a recent AT&T survey about online shopping said that they are concerned about the security of their financial information to the point where it affects their decision to shop online.

Developing the online code of conduct took the BBB a year, during which time they received input from business, consumer and government representatives. The code of conduct has the support of both the U.S. Federal Trade Commission (FTC) and the European Union.

FTC Commissioner Mozelle W. Thompson said, “The Commission is active in providing baseline standards to protect consumers through law enforcement efforts and other activities. Accordingly, I welcome the BBB’s initiative to give businesses the tools to provide confidence to consumers shopping online.”

Echoed Gerard DeGraaf, Trade Counselor of the European Union’s United States Delegation, “We encourage the BBB system to build partnerships that will serve all of our countries by encouraging businesses everywhere to adopt principles consistent with the BBB Code of Online Business Practices.”

Desirable Standards

The BBB says that the guidelines do not mandate e-tailer behavior, but instead provide “desirable standards” for e-commerce. Although the code does provide goals for e-tailers, the BBB says that decisions about how those goals should be met are best left up to “to the online business that knows its business model best.”

The BBB Code of Online Business Practices is based on five principles:

  • Truthful and Accurate Communications.The code says that online advertisers should not engage in any deceptive or misleading behavior in the use of advertising, marketing or technology.
  • Disclosure. Under the code, online merchants are to disclose to their current and prospective customers relevant information about their business, products offered for sale, and the transaction.
  • Information Practices and Security. The code says that online advertisers should adopt practices that treat consumers information with care, post and adhere to a fair privacy policy, and respect consumers’ preferences regarding unsolicited e-mail.
  • Customer Satisfaction. The code also encourages e-tailers to work to ensure that customers are satisfied by taking steps to honor promises made to consumers, answering questions, and working to resolve complaints in a timely and responsive manner.
  • Protecting Children. The code says that online advertisers who target children under the age of 13 should take “special care to protect them” by recognizing their developing cognitive abilities.

Also contained within the code of conduct is advice about how e-tailers can best meet each of the five principles.

Industry Guidelines

The BBB’s new guidelines are designed to work with existing guidelines developed by other trade organizations, including the standards announced in June by the Electronic Commerce and Consumer Protection Group (ECCPG). The ECCGP is a working group comprised of representatives from seven major Internet and e-commerce companies, including America Online, AT&T, Dell Computer Corp., Microsoft, Network Solutions and Time Warner.

The industry guidelines call for full disclosure of all pertinent information relating to a transaction, security measures that are “consistent with current industry standards,” and notification to consumers of what information is being collected during a transaction.

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