Web Sites Don't Disclose Contract Terms

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The Federal Trade Commission, Washington, released the results from an International Web Survey last week that found that most Web sites do not provide refund policies, cancellation terms and warranty information for consumers, but most provide general business information.


The survey was initiated by the FTC to determine whether domestic and foreign companies are disclosing important information to consumers. 200 Web sites in 18 countries were surveyed and randomly selected from a sample of 2,200 URLs provided by Dun & Bradstreet, New York.


FTC chairman Robert Pitofsky -- speaking at the FTC's two-day workshop on the Global Electronic Marketplace in Washington, where the results were presented -- touted the importance of disclosing contract-related information to consumers today.


He said the lack of personal contact between buyer and seller and the geographic dispersion of sellers can create unprecedented opportunities for consumer fraud and deception.


"American and foreign producers -- large and small -- can enter international markets almost effortlessly [today] and consumers will have far wider access to desirable products," said Pitofsky. "But what if the products don't arrive, or the wrong product is delivered, or somehow the advertising, marketing or sale by the seller is inconsistent with the laws of the consumer's country? And does the consumer have to bring an action in the foreign country if the product or service never arrives or is not what was ordered? "


Pitofsky said that if these and other issues are not effectively addressed, they can undermine the full development of global competition itself.


"How do we monitor the Internet and deal with cross-border fraud? This is a daily challenge for this agency; we have brought over 80 cases involving Internet fraud to date," he said.


In general, the survey looked at what types of protections consumers need online, such as disclosures, as well as how the FTC can secure those protections.


Findings from the survey include:


* 9 percent (4 U.S. sites and 7 non-U.S. sites) of the sites that allowed consumers to buy goods online provided cancellation terms


* 26 percent of the sites (16 U.S. sites and 15 non-U.S. sites) provided refund policies.


* 38 percent of the sites (nine U.S. sites and 37 non-U.S. sites) disclosed the applicable currency.


* 29 percent of the U.S. Web sites explicitly stated the country of origin (vs. 79 percent of non-U.S. companies).


* 21 percent of the U.S. Web sites noted any geographic restriction on sales and only 11 percent disclosed the applicable currency.


According to the FTC, the survey will provide important information to the Commission as it examines what types of disclosures and information online merchants give to consumers.
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