MICHAEL GEIST
Thursday, April 19, 2001
As business and consumers continue to embrace the benefits of electronic commerce, governments are racing to enact legislation to ensure that existing legal rules don't hinder future growth.
Canada's Uniform Electronic Commerce Act, a model law passed in September 1999, has been adopted enthusiastically across the country.
The laws are intended to remove barriers to e-commerce transactions, their focus being to enhance legal certainty by enshrining the principle of electronic equivalence. This provides both business and consumers with assurances that on-line contracts will be as valid as their paper-based counterparts.
Until last month, however, Canadian e-commerce law had done little to actually provide additional legal protections that might encourage those reticent about buying on-line to give it a try. That changed on March 19, when three new Manitoba laws and regulations took effect.
The Electronic Commerce and Information, Consumer Protection Amendment and Manitoba Evidence Amendment Act; the Consumer Protection Act; and the Internet Agreements Regulation may sound complex, but the underlying goal of the new rules is actually simple. These regulations seek to provide Manitobans with significant new rights, remedies, and protections for retail purchases they make on-line.
Unlike the off-line environment, where consumers enter a store, inspect potential purchases, and judge for themselves the trustworthiness of a seller, the on-line world does not provide the same opportunity to use a "buyer's instinct." Rather, many consumers are forced to proceed on faith, knowing precious little about the seller to whom they are entrusting their credit card information.
Some consumers are understandably wary of entering into transactions without knowing who they are buying from. The new Manitoba rules assist consumers by requiring on-line sellers to disclose a wide range of information to prospective purchasers before entering into a transaction.
The disclosure requirements include basic information such as the seller's name, business address, and phone number as well as detailed descriptions of the goods being purchased, applicable warranties, shipping charges, delivery dates and refund policies. The rules also require the seller to disclose how they plan to protect the consumer's personal information. The information can be provided to the buyer through e-mail or posted on the seller's Web site so long as the buyer can access it prior to making a purchase. The customer has the right to cancel the transaction if the seller fails to comply with the disclosure requirements or fails to deliver the goods within 30 days of the specified delivery date.
One of the challenges in crafting an effective on-line consumer protection statute is ensuring the law can deliver what is promised. Skeptics might argue that if the seller cannot be trusted to provide the required information, they probably won't be providing consumers with refunds any time soon.
The new rules anticipate this problem by bringing credit card issuers into the equation. If the seller fails to issue a refund to the purchaser after they make a credit card purchase on-line and then use their legal right to cancel the transaction, the credit card issuer is now required by law to cancel or reverse the credit card charge including any associated interest charges.
If the seller fails to disclose the requisite information to the consumer or doesn't meet the delivery deadline, the consumer can turn to their credit card issuer who will be required to provide a refund. Moreover, sellers simply can't choose to ignore the new rules, since the law says they can't be avoided or limited by contract -- and failure to comply may result in fines or imprisonment.
While the new rules may provide greater protections for Manitoba consumers, what of Web sites and consumers in the rest of the country? The good news is that similar help may be on the way.
The Consumer Measures Committee, a federal-provincial-territorial body that works to develop harmonized consumer laws in Canada, recently released the Internet Sales Contract Harmonization Template, which will likely receive final approval in the spring.
The step toward increasing e-commerce protections reflects a maturation in the e-commerce law process. Canada is now ready to move beyond just removing barriers to e-commerce, to using the law to facilitate its future growth.
Michael Geist is a law professor at the University of Ottawa Law School and director of e-commerce law at the law firm Goodmans LLP.
mgeist@uottawa.ca
