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The EU Consumer Rights Directive and Online Shopping

Published on October 21, 2011
Tags: Web Site Law, Internet Communication

Back in June, the EU Parliament passed something called the Consumer Rights Directive. This Directive has since been approved by a meeting of EU ministers and has now become law. Nations have got two years to comply with this new legislation – but what exactly is it?

As the name of it suggests, the Consumer Rights Directive is aimed at protecting consumer rights. It isn’t exclusive to online consumer activities, but this is one of the areas where it is set to have an impact. One of the main points of the directive is to stop websites from ‘pre-ticking’ boxes on online order forms, on the grounds that this can often lead to consumers signing up to things that they didn’t know they were signing up to. Web designers should take note, as there may be an obligation in the client-supplier relationship for the designer to give best advice on such matters.

One well-used example of this is company newsletters: you buy a product from an ecommerce website, but fail to notice the pre-ticked box agreeing to sign up to the online newsletter and future updates about the company and its products. Subsequently, you get inundated with advertising material you never wanted. Some pre-ticked boxes can even cost consumers money. The example given by the European Commission is the way the travel insurance box or an option for car rental will sometimes automatically be pre-ticked when customers are purchasing airline tickets.

Now all of this is going to have to stop, as pre-ticking boxes on order forms has been banned. Another aspect of the legislation is that it stops customers from being liable for charges they weren’t properly informed about when they made a purchase. They also get a fourteen day ‘cooling off’ period on purchases during which they can withdraw from their contract if they wish.

This isn’t the only thing the EU have done recently to try and protect consumers’ rights: the Privacy and Communications Directive does something similar in relation to internet advertising and online cookies, requiring users to give their consent before certain cookies can be used to stop sites from collecting so much information about them.

This brings us back to the eternal struggle between the rights of the consumer and the need for businesses to survive. It also brings us on to issues of implementation, something that is causing a bit of a headache in relation to the Privacy and Communications Directive, as countries have interpreted the legislation differently. But national interpretations and philosophical arguments aside, what does all of this mean for ecommerce websites? Will they be penalised by these recent EU directives?

On the one hand, you could argue that they are being penalised as the Privacy Directive makes collecting useful data more of a burden and the CRD stops them from taking action that may have bought in more business or helped them to get their message out to a larger number of people. However, protecting consumer rights is important and so these directives are largely positive. It also helps to make websites more honest as consumers will now have to specifically state whether or not they would like extra services rather than ending up with them regardless – something that the customers are sure to appreciate.

For example, in a recent press release, the EU details ten benefits of the new Consumer Rights Directive. The first of these benefits is that customers will be protected against ‘cost traps’ that trick them into paying for services online that ought to be free. Another benefit is that hidden charges and costs are not allowed, and consumers will have to confirm to say they understand the price they are being charged. This suggests that the only sites that will be losing out are those that probably shouldn’t be in business anyway.

Also, ecommerce is an area that is growing strongly, bucking the trend as many other areas of the economy continue to struggle. It doesn’t seem likely that these directives will stop this growth: after all, they strengthen the rights of the consumer, so if anything, they will help ecommerce even though online businesses might not like everything within the directives.

This is especially true in the UK. Figures from the IMRG tell us that the UK is the leading e-retail economy in Europe: if sales for 2011 stay on track, they’ll be worth €81billion by the end of the year.  Ecommerce is also growing at a rate of 18% per annum and more than 1 billion packages are shipped out across the UK as a result every year. It seems safe to say that a couple of Directives from the EU aren’t going to stop the online shopping juggernaut.

By Chelsey Evans

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Internet Cookies and the EU Privacy and Communications Directive

Published on August 12, 2011
Tags: Web Site Law, Internet Security, Internet Communication

There has long been tension between the need to protect consumers’ privacy on the web and businesses’ desire to grow their online operations in any way they can. One of the things that have led to some of the most heated debates is internet cookies. There has been growing concern among some consumers, for instance, that they are effectively being stalked on the internet. This can be seen in the way a product you might have looked at on one website suddenly appears in adverts on subsequent websites that you visit.

This is the result of internet cookies and, while some cookies are relatively harmless and can in fact be useful (such as by remembering your preferences and log in details), some are not so welcome. As a result, the European Union introduced a new regulation called the Privacy and Communications Directive. The aim of the Directive was to put more guidance in place so that websites know how much information they can collect on their visitors without having to ask their permission.

The Directive is also sometimes known as the ‘cookie law’ and it was due to be implemented by governments by May 2011. At the time of writing, hardly any of them had done so. Only the governments of the UK, Denmark and Estonia had taken any steps to bring the Privacy and Communications Directive into law, and Denmark has since put its draft laws on the back burner.

In the UK, things are quite a bit better, with fairly comprehensive guidelines being given out – but firms still have a year to comply with the new ruling. This means that the ‘third party cookies’, which are thought to be causing a lot of the problems faced by consumers, can still often be found and tailored advertising online still abounds.

Here’s how it works. Say, for instance, that you look on a website for a new power tool. You don’t buy it, but the internet cookies register that you have looked at the product and were interested in it. You leave the website and spend some more time browsing, when you suddenly notice that something keeps happening: adverts for the power tool you were looking at earlier – and perhaps similar products - keep popping up on websites. The aim of businesses, of course, is to try and persuade you to click on one of those adverts and then make a purchase. The concern for web users, naturally, is the extent of the information companies are apparently able to collect on them.

This is what the EU Directive is supposed to help solve, by dividing internet cookies into two groups: those cookies that are ‘strictly necessary’ for services to operate and those that aren’t, which would require users to give their consent before they could be used. As you might expect, many people working in the European marketing industry do not like the Directive as it confuses what they are and aren’t allowed to do.

One thing that has caused confusion is over what the Directive actually requires websites and businesses to do: are they supposed to actively alert users whenever a cookie is placed on their machine, or is it enough to simply make them aware of their security options within their browser, thus leaving it up to the user to alter their security settings if they so wish? Part of this issue arises because the EU’s definition of ‘strictly necessary’ is very narrow, to the point where a cookie that remembers what language you typically view websites in would be likely to fall outside the ‘strictly necessary’ category.

This makes it harder to comply with the law. If you were to assume that the requirement of the directive was that notification had to be given of all cookies outside the ‘strictly necessary’ group, this could potentially lead to a high volume of pop up alerts asking for users to give their permission to continue. This leads to another problem: a lot of browsers block pop ups as a matter of course, and even if they don’t, the vast majority of web users loath them.

However, there is still the problem of users being concerned about their online privacy. There’s also the issue of how the Directive, if fully implemented, would affect businesses: many rely on cookies to work out the extent of their return on investments and believe that tailored advertising actually enhances the user experience. All of this means that companies are now faced with trying to explain to customers the value of using third party cookies.

Even more confusing is the fact that different EU governments are determining the Directive in different ways, so while some countries propose that web users should actively give their consent to individual cookies, others are much more general. Perhaps then, once thing is clear: while a stab at a coordinated effort has been made in order to reassure web users that their privacy is protected, more action and more coordination is still needed to make sure there is a workable policy and that it won’t harm ecommerce in the process. With 27 countries in the EU that all need to be working together, it seems as this could be one that’s set to continue for a good while yet.

By Chelsey Evans

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The eG8 Summit - The Internet: Accelerating Growth

Published on May 27, 2011
Tags: Web Site Law, Internet Communication

You are no doubt familiar with the G8, the group of rich nations that meet every once in a while to discuss potent world issues and try to come up with solutions to global problems. They’re meeting again this week and it’s fair to say they’ve got a lot to talk about: from the global economy to the current wave of revolutions taking place and the aid promises they made a few years ago, there’s plenty on the agenda. Perhaps that’s why a notable related event hasn’t had quite as much media coverage as it might otherwise have done.

That event is the eG8 forum, a kind of bolt-on to the main G8 summit that was designed to look at the issues posed by the internet and the role it plays in an increasingly interconnected world. It was opened on Tuesday 24th May in Paris by President Sarkozy and was set up as a two-day event, with some of the biggest players invited. From the big names such as Mark Zuckerberg (founder of Facebook) and Eric Schmidt (Google’s executive chairman) to other players in the information and communication industries, the people attending the forum are some of the most influential in the world when it comes to the internet.

The eG8 looked at the issue of ‘The Internet: Accelerating Growth’ and it’s fair to say it has opened up something of a debate. President Sarkozy used the opportunity to argue for increased internet regulations, suggesting that as the World Wide Web is a global phenomenon, it needs global rules. He made the argument that while the internet offers opportunities for ideas to be heard like never before, the internet should never be a replacement for democracy.

In his opening speech to the eG8, he said: "Total transparency has to be balanced by individual liberty. Do not forget that every anonymous internet user comes from a society and has a life."

The speech was timely: if you live in the UK, there is no way you can failed to have noticed the current furore surrounding superinjunctions and, in particular, the fact that most current injunctions apply mainly to the big broadcasters and newspapers with online forums such as Twitter either not being included or being badly policed when it comes to enforcing those privacy injunctions. This has allowed particular cases to be ‘broken’ through Twitter (we’re not naming any names to be on the safe side) and now high court judges are asking the social networking site for the details of users who have allegedly broken injunctions.

The whole issue feeds into the debate and privacy and the issue over what exactly counts as ‘the public interest’. There are arguments for and against introducing more regulations to the internet, but ‘the public interest’ and privacy are not the only issues raised by the internet and the discussions that were held at the eG8. They also looked at intellectual property, copyright and the protection of children online. In the ‘real’ world, these are all things that are governed by laws, made by governments and enforced by various agencies. On the internet, it’s much less clear cut. Arguments are made for ‘free speech’ over the rights of artists and others to be recognised for their intellectual content. Counterarguments are made that the digital age changes things, that we’re not operating on the same stage as 50, 20, 10 years ago.

It’s not easy to unpick. We’ve written elsewhere about the growing challenges posed by the internet and the minefield of deciding whether or not more regulations are necessary. One thing that does seem increasingly clear, however, is that any solution is going to need to be global or else it just won’t be practical. The internet exists largely outside borders and so to try and contain it within them doesn’t make a huge amount of practical sense.

The eG8 didn’t solve anything. It was more of a talking shop than anything else. It did, however stoke up the never-ending debate about what to do with the internet and all the issues it raises. Generally speaking, Europeans are said to be more in favour of regulating the internet than the Americans, perhaps reflecting the cultural and political traditions of their respective continents. Unless a proposal is generated that everyone can agree on, though, it seems unlikely that the division is going to be resolved any time soon.

By Chelsey Evans

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Digital Economy Act 2010: The Internet and the Creative Industries

Published on April 25, 2011
Tags: Web Site Law

A few days ago, Justice Kenneth Parker ruled against an appeal bought by internet service providers BT and TalkTalk over a case involving the Digital Economy Act 2010. The ISPs argued that the Act was incompatible with EU law as it, among other things, stipulated that people who download online content illegally can have their accounts suspended.

The Act has been controversial since it came in, but Justice Parker ruled in its favour and most components of it are now being implemented. The thinking behind this particular case is that illegal downloads – of music, films, TV shows, books and so on – damages the creative industries and violates rights relating to copyright and intellectual property. The ISPs tried to argue that web users have the right of free expression, but this was rejected in favour of protecting industries that have already been damaged by the extent of online privacy.

Without getting into a debate on net neutrality and whether web users' 'freedom of access to information’ is more important than the protection of creative content, this is arguably a growing problem with the internet. Lots of people download content illegally and expect to be able to obtain such information for free, which is a huge issue in creative circles. After all, creative content – no matter what it is – costs money to produce and so, especially when so many of these industries are already struggling, to then have so many people obtaining content for free through often less than legal means is massively damaging.

This issue is also highlighted by another recent case, this time involving Google. You may be aware that Google wants to create the world’s biggest online library and eBook store. The publishing industry has been dreading the possibility of this for quite some time: for a while, it seemed inevitable that Google would win the right to continue with pursuing this goal and the already struggling publishing industry would suffer even more. To a lot of people’s surprise, though, on 22nd March 2011, a US federal judge ruled against Google and announced that the Google Book Settlement would have given the company a ‘de facto monopoly’ and that it wouldn’t be allowed. 

One of the big issues here is copyright. Setting up such an online library would involve Google copying books that are still within copyright and therefore still owned by someone else. The Google Book Settlement also made it so that it was up to publishers to find out whether their books had been copied and raise it with Google, rather than the other way around, which was also considered to be a major issue with the proposals. It would also have given Google a stake in future proceeds, among other things, which would have created the ‘de facto monopoly’ that was ruled against by the US judge.

Google said that the purpose of the Book Settlement was to open up access to books that currently might not be available to everyone, including out of print books. The issue, though, is that when some books are out of print in some countries but not in others, and when some books are censored in some countries and not in others, it raises international issues that are the preserve of the government, not a private company. Needless to say, the publishing industry was relieved by the ruling of the judge, but Google is still estimated to be in possession of 12-15 million copied books, which, under current rulings, have been copied illegally.

Both of these examples show the conflict between the creative industries and the internet. They also show that, while when we think of online piracy and illegal downloading we immediately think of individual web users, they are not the only ones involved. The explosion of the internet and other digital platforms may have made it much easier for the creative industries to get their material out there and seen by more people, but it has also made it much more vulnerable to exploitation at all levels.

A lot of this is down to the freedom of the web. In many ways one of its biggest selling points, it also has the potential to create conflicts, especially when internet self-regulation is held in such high regard. It works to protect itself, which is admirable, but in doing so it poses real world problems that increasingly require action from governments and judiciaries.

The internet has, for a long time, been in something of a world of its own. Now it is coming to maturity, however, and as the above examples illustrate, it is starting to come to the fore in the real world and it’s posing issues that definitely need to be addressed sooner rather than later. Whatever your opinion of both these cases and your opinion more generally on online content, it seems safe to say that this issue isn’t going to go away any time soon.

By Chelsey Evans

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How Involved Should the Government be in the Internet?

Published on March 11, 2011
Tags: Web Site Law

One question that seems to come up from time to time is exactly how far governments should involve themselves in the Internet. Over 1.6 billion people across the world now have web access and this figure grows daily: control of the internet is, unsurprisingly, sought after by governments and businesses alike. One of the key selling points of the World Wide Web has always been its independence – an entity that transcends nations and unites communities across the world with relatively little interference from governments.

But is this a good thing? As with any question, there are at least two clearly defined sides to the debate.

One the one hand, governments have a duty to protect their citizens, across all platforms. It would be hard to find many people who disagree that Internet use ought to be restricted for people who pose a threat to others, be they terrorists, paedophiles, hackers or other malcontents. Some level of government-related oversight in this area is a good thing: in the manner of the police, it keeps the whole as safe for the majority as it possibly can while being tough on the criminals around the edges.

Also, the world is increasingly reliant on the Internet for services. As many companies move their operations online – and as government services themselves migrate to the Internet – there is a need for proper investment in infrastructure. This is needed on such a scale that it has to be coordinated by the government: in the UK, much of the broadband upgrade might be carried out by BT and Virgin Media and of course it’s in their commercial interests to do so, but without directives from the government, this project would be much harder. The EU requires that all citizens should have broadband access by 2013 and it’s hard to see how this would happen without involvement from the government.

The threat of cyber terrorism also warrants government intervention to shore up communication systems and ensure the country’s infrastructure could withstand an attack. The UK government is currently spending £650m on cyber security and the threat is considered to be as serious as terrorism. Government spending on such security is vital to maintain the free and open nature of the web. After all, the infrastructure has to come from somewhere.

From this, we can see the different areas where the government should be involved in the Internet – in terms of provision and security especially. But what about the other side of the debate? How much involvement is too much?

One of the main issues that come up on this side of the debate is the idea of the Internet ‘kill switch’. We’ve seen this recently during the Egyptian protests when people across the country suddenly found that they couldn’t get online. Other countries have their web use restricted and censored as a matter of course: when the Internet is supposed to be open to all users, why, the argument runs, should governments decide what information people should or should not be allowed to access?

There is, though, a much wider issue at stake and it’s been around at least since the late 1990s. In 1996, Bill Clinton – then the US President – developed a plan called the ‘Federal Intrusion Detection Network’. Had the plans gone ahead, it would have required major companies to run their Internet connections through the federal government, for ‘safety’ reasons. While you could argue that this was a shrewd plan to protect key industries in the event of a cyber attack, on the other side of the coin, it can be seen as government meddling gone too far and opens up political questions as well as security ones.

The ‘Fidnet’ plan didn’t go into practice, but now in the US, there is a bill going through Congress called the Cybersecurity and Internet Freedom Act of 2011. The Act makes provision so that in the event of a ‘cyber emergency’, the White House can issue directives to Internet companies with which they must ‘immediately comply’. That the regulations governing the Internet can change on such a whim raises the question of how much security is too much. The vague nature of a ‘cyber emergency’ also raises questions.

The backing for this Act comes from the (alleged) ability of cyber terrorists to shut down whole cities. This might be the case, but Fidnet never happened despite the same fears and yet they’ve never come to fruition. The biggest power cuts in the US happen because of tree branches and thunderstorms. 

There’s also already a whole host of Internet security provision in the US and across the world, largely developed as a response to growing terrorist threats and the growing reach of the World Wide Web. New Acts will arguably only create more regulations, placing further obligations on internet companies and slowing the pace of progress.

Perhaps this is a key point – the internet is still under development. It’s a project that isn’t finished yet and that’s the way it’s supposed to be. Of course, there is a need for governments to make provision for its progression through investment in both infrastructure and security. But until it’s got where it’s meant to be – wherever that is – it can seem a little hasty for governments and others who go to such efforts to try and control it. In some respects, the Internet is still a child, and it needs room to grow. Too much of the wrong kind of regulation risks hampering that.

By Chelsey Evans

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