Think Your Market Is Global? Then Global Consumer Regulators Likely Are Watching Your Business

April 14, 2017

Advances in internet technologies, global social media platforms, and inventory order management and shipping delivery systems have revolutionized our businesses.  They also have opened shopping-at-home and catalog sales markets most retailers never would have considered as recently as 20 years ago due to marketing limitations and/or logistics constraints. Your business may have started small and local, or you may have targeted global consumers from the outset, but whichever your approach, you now may have customers in many in different countries. You should be aware of the growing collaboration among the consumer watchdogs in many countries, because those regulators may well be aware of your business through consumer complaints. 

I've written before about the U.S. Federal Trade Commission (FTC) and its ability to educate and assist consumers in protecting their rights and complaining about business practices consumers believe are harmful or misleading. The U.S. may have among the most robust consumer protection frameworks around the world, and the U.S. definitively has the most developed plaintiffs' litigation system, including consumer class actions. However, businesses should not underestimate the consumer protection frameworks of many other countries. Moreover, countries are cooperating to develop standards, to share information and to protect consumers globally.

Your production and sales operations, your customer service workforce and your compliance/risk personnel should be aware of the governmental consumer protection architecture and regulations available to your customers in each country to which you market and sell your goods and services.

FTC's Mission Beyond US Borders:

FTC indicates on its website that "it works with more than 100 foregoing competition and consumer protection authorities around the world, and cooperates with foreign authorities on enforcement and policy matters through formal and informal agreements. The FTC relies on four principal tools: 

(1) information sharing

(2) investigative assistance 

(3) cross-border jurisdictional authority, and 

(4) enforcement relationships.

See: www.ftc.gov/policy/international/international-consumer-protection

Global Consumer Protection Collaboration

There are a variety of consumer protection groups in which the FTC participates:

  • Organization for Economic Cooperation and Development (OED)
  • International Consumer Protection and Enforcement Network (ICPEN)
  • London Action Plan
  • Asia-Pacfic Economic Cooperation (APEC) Forum. 

This does not include numerous other groups targeting data protection and privacy rights specifically. 

econsumer.gov: "Report international scams online"

This project sponsored by ICPEN is supported by the U.S. FTC. In addition, regulators in more than 35 countries are supporting this effort. As the tag line reveals, its purpose is to allow consumers worldwide to report cross-border consumer harm to a centralized systems database. Enforcement agencies within each participating country can access the complaint data and can coordinate with peers to take investigatory and enforcement action. 

Much like the U.S. FTC website's consumer section, econsumer.gov has sections developed to consumers and consumer experts. The Consumer education and assistance tabs include information regarding:

  • lodging a complaint - "Do you have a cross-border scam?"
  • shopping online
  • avoiding scams
  • Who can help you?
  • What ICPEN does for you (such as international internet sweeps, and fraud prevention month)

The econsumer.gov site also enables the submission of complaints. When a consumer submits a complaint, the complaint description information is submitted to the FTC's Consumer Sentinel database. Thereafter, the consumer's data (including personal contact information) is available to certified government law enforcement and regulatory agencies in participating countries. In turn, those agencies can undertake further investigation including regulatory or enforcement actions. The agencies also may analyze aggregated data trends for public use and consumer education.

Among the most interesting aspects to the econsumer.gov site in my view is the "What Else You Can Do" tab, https://econsumer.gov/en/ContactMerchant#crnt

The site specifically suggests to consumers using social media to address complaints: "Many companies have people that monitor posts and complaints about their product and service on social medial pages. Your post will be most effective if you use a reasonable tone and explain the problem clearly. To avoid negative perceptions, the company may respond quickly to your complaint."

Who's Complaining about Whom and Where?

Moreover, ICPEN offers information including complaint trends. For example. ICPEN publishes its top products or services for econsumer.gov complaints. For 2016, more than 70% of the consumer complaints involved shopping-at-home or catalog sales. More than 7,500 complaints were lodged involving catalogs and on-line shopping. None of the other topics tracked reached beyond 600 complaints in volume. But for clarity, they include: travel/vacations, unsolicited email, imposters (either as government or as business), internet information and gaming, prizes/sweepstakes/ lotteries, prizes, telemarketing practices, and overseas employment.

The highest volumes of complaints in 2016 were received from citizens in the following countries:

  • S. with more than 5000 complaints
  • France and Australia, each with over 1000 complaints 
  • India with more than 800 complaints
  • Other countries with complaint volumes exceeding 100 were UK, Canada, Mexico, Spain, Belgium and Chile  

It's likely that as consumers in these countries and elsewhere become increasingly aware of these tools, the complaint volumes will increase annually. Of the top ten countries by volume, US consumers accounted for well more than 50% of the complaints for 2016.

Of critical importance for this audience, however, is the country location of the businesses involved.  You may want to believe your US-based business is not in the cross-hares -- that instead it's "bad actors" around the globe. The unfortunate fact, however, is that the U.S. leads this list with 3200 complaints in 2016. That is nearly as many complaints as the next two countries combined (China with 2300 and the UK with more than 1000). For 2016, the US-based companies had more than 30% of the top ten volume.  

What Should Your Business Do?

(1)Stay aware of developing consumer standards in the U.S., as well as those countries where you offer your products and services.

(2) Analyze your exposure to regulators and legal claims from outside the U.S. If you have particularly high concentrations of customers in one or two other countries, consider a deeper understanding of the rules of those countries, analyze whether by sending your products in to those countries you are subject to the jurisdiction of the country and its regulatory and legal system. If so, consider building relationships with regulators there, to the extent it makes sense given your business operations and footprint (and other legal considerations).

(3) Consider carefully how to address customer complaints received from customers outside the U.S., both directly and through social media channels. And develop policies and procedures to ensure such complaints are addressed properly. This may help avoid costly litigation and class actions.

(4) Evaluate whether you might establish special customer queues or inquiry response units for product sales and complaints volumes stemming from certain countries or regions which may require additional high-touch or attention.  

(5) Continue to monitor publications and available on-line information about global consumer complaints from econsumer.gov, ICPEN or other resources.

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