This page considers areas of online activity that are
of particular consumer and regulator concern, including
auctions, internet service providers, spam and adult content.
It covers -
service and other connectivity providers
content - quality of service, billing and other problems
names and resource identification
scams - the 'Nigerian' 419 scam, lotteries and other
offers of instant riches
to the unwary - health cures, psychics, digital urban
legends and hate speech
Consumer concerns regarding the net are an extension of
traditional disquiets about communication, services and
business practices. They are qualitatively and quantitatively
different because consumer expectations and government
responses have not always kept pace with fraudulent activity
and because some offences occur across jurisdictions or
involve a degree of anonymity.
Misleading and more obviously improper online practices
payment in advance for tangibles or services that will
not be provided
goods or services that are of a lower quality than those
failing to supply the requested goods and services
customers to "buy something they do not really
want through oppressive marketing techniques"
using an invented or appropriated identity in order
to perpetrate a fraud.
we have suggested elsewhere in this guide, the indifferent
- or merely slow - government response to particular consumer
concerns (and variation across jurisdictions) appears
- particularly in regimes such as Australia where overall
funding for consumer protection agencies has been substantially
reduced over the past two decades
lack of expertise
internet service and other connectivity providers
Two areas of consumer unhappiness are relations with internet
service providers (ISPs)
and relations with other connectivity providers, such
as mobile phone operators.
One reason for that unhappiness is the ruthlessness of
competition among ISPs and phone companies, particularly
in locations such as Australia
where there are several hundred ISPs (many of which are
financially marginal). Some operators have made undertakings
that they cannot keep, for example overloading infrastructure
in an echo of overbooking by airlines or outsourcing help
desks to low wage/skill locations. Others have used promotional
material that is deceptive and used agreements that to
many people are often unintelligible or meaningless, because
for example they have been copied word for word - and
typo for typo - from a US model.
Unhappiness is exacerbated by inappropriate consumer expectations
- perusal of laments on the Whirlpool
broadband forum suggests that many participants have little
sense of industry economics and assume "all you can
eat ... for free" business models are sustainable
- and the absence of agreed industry terminology, standards
or service level agreements.
In 2004 the Australian Telecommunications Industry Ombudsman
(TIO), the chief industry self-regulatory body, indicated
that complaints about the connection of internet services
increased by 158% to 1,340 (of which broadband accounted
for 82%). We note that is a small fraction of the several
million consumers, although some potential complainants
may not be aware of the TIO.
The TIO commented
that the complexity of wholesale and retail relationships
in ADSL services is at the core of the broadband complaints,
requesting the ACA (now ACMA) to consider directing broadband
providers to develop an industry code. Notions of independent
assessment of internet service quality have been contentious
and were tacitly abandoned by the ACA in 2002.
In July 2005 Consumer Affairs Victoria more usefully started
inquiries into the advertising practices of ISPs, in particular
use of the word "unlimited" to describe broadband
services. It found many ISPs were promoting offers of
"unlimited broadband downloads" although in
fact download limits applied so that users were restricted
to speeds similar to the slower dial-up services once
a limit was reached. ISPs contacted by the government
agency included Telstra BigPond, TPG, OptusNet, Netspace,
WestNet and People Telecom.
Bundling of services - typically plans that include landline,
mobile phone and internet - appears to be generating increasing
angst, with consumers claiming that they (and vendor staff/agents)
cannot understand what was offered.
Others have noted
what are claimed to be substantial anomalies in billing
and heavy-handed action to recover supposed debts (highlighted
by ACCC warnings
to a Baycorp subsidiary over putative Telstra consumer
That is an echo of past problems with Telstra
- evident in federal parliament hearings into the 1990s
'Casualties of Testra' (COTs) cases - and sustained contemporary
criticism of Telstra service quality, consistent with
underfunding of maintenance, staff reductions and a move
to 'rebalancing' Telstra charges (cutting individual call
charges but increasing line rental charges by around 300%).
spam and telemarketing
As we have noted in discussing spam
- and more particularly the Australian and New Zealand
- for some consumers the dominant concern regarding the
net is a daily flood of electronic junk mail. It is mirrored
by spam SMS (aka speam)
and by unsolicited voice calls. Such telemarketing is
likely to increase with uptake of VOIP
(many analysts forecast a plague of spIT alongside traditional spam), 24/7 database-driven automated dialling and the
proliferation of offshore callcentres.
Electronic direct marketing is a function of the ease
with which large scale contact lists can be developed
or acquired and the low cost of spraypainting a population
with largely unwanted messages.
Regulators have had some success in crimping junk sent
by or for entities within their particular jurisdiction.
They are hampered, however, by the willingness of sufficient
consumers to respond to offers and by origination of messages
from other jurisdictions, often from ephemeral domains
or using forged email addresses. Consumer concerns about
voice messaging have been unevenly recognised through
national do-not-call registers,
which often feature substantial exclusions and which by
their nature will not restrict calls for overseas entities.
auctions and other retailing
Concerns regarding adult
content have taken three forms.
The first is unwanted access to that content, whether
through spam or through abuse of expectations about domain
names (eg a porn site operator employing a domain name
that previously identified non-adult content or a name
that is a mis-spelt version of an address that is likely
to be encountered by someone who is not looking for erotica).
The second form involves misleading claims about what
is available on a commercial site or the quality of service.
As we discuss elsewhere on this site, many promotional
statements about what's available once you have paid for
access are exaggerations or outright lies. Figures about
the number of images on some sites, for example, are incorrect.
Supposedly new, unique or particularly thrilling content
may in fact be recycled or otherwise not live up to expectations.
Downloads of video and other content may be incomplete
or otherwise defective.
The third - and for many people most serious form - is
misuse of credit card numbers or other payment systems
that are used to gain access to commercial sites. It is
likely that consumers of online adult content tend to
underreport their unhappiness. However it is clear that
some are billed - often recurrently billed - for services
not received or even not requested. Details harvested
through a particular site may be illicitly passed to a
third party for the purpose of identity theft. Consumers
wishing to cancel a subscription may encounter difficulty
in getting a site operator - or an adult mobile content
provider - to respond to that request (for Australian
consumers most are located outside the government's jurisdiction)
and getting a credit card company to refund overbilled
domain names and resource identification
Domain names are a hot
spot because many people misunderstand domain name system
rules and the DNS industry.
Some people have accordingly expressed concern because
they believed that registration gave them 'ownership'
of a particular address in perpetuity, discovering to
their chagrin that failure to renew a name can result
in its reregistration by a competitor or a third party.
Others have simply assumed that registering a company
or having a business name automatically gave them a comprehensive
right to one or more domain names, a right that is of
course inconsistent with trademark
practice (where the same word can be used by different
owners for identification in different discrete trademark
Names are also a concern because of poor practice within
the domain name industry, perhaps unsurprising given the
newness of domain naming and the competitiveness of domain
name registrars in what is increasingly a low-margin commodity
Some people have discovered that registrars are unobliging
if the consumer wants to transfer to another registrar.
Even in Australia, where the auDA
regime has prevented many of the problems evident overseas,
there have been criticisms that some registrars have sought
to 'lock in' registrants and have responded slowly - if
at all - to domain name keys.
Others have questioned marketing practices, with naive
registrants for example misreading the fine print about
cut-rate domain name registration. Potential abuses include
low prices that are conditional on bulk buying (the registration
is only dirt cheap if you acquire 50 or 100 other names
within a specific period) or on hosting (eg the registration
is 'free' but the registrant must use a particular hosting
service, often at a premium price).
Some consumers, regulators and courts have expressed broader
concern about online resource identification. Such concerns
have included criticism of misleading metatags
- increasingly being dealt with through traditional restrictions
on passing off - and of placement in search
Email scams are arguably the bottom end of electronic
direct marketing. They are ones with which most of the
online population are familar but - whether through lack
of thought or greed - continue to snare victims every
In discussing the 'Nigerian'
or '419 scam' - an email version of traditional advance
payment frauds - we have noted the sheer implausibility
of some email-based frauds and why people will accept
an electronic offer that they would dismiss with derision
if made on paper or in person.
Consumer complaints include unhappiness about -
schemes - a grieving widow, daughter, dictator's son,
bank executive or trustee offers to share several million
dollars loot with you on the the condition that you
first provide some money for minor processing fees
schemes - you have won a lottery, it seems, irrespective
of not having entered the competition or the author
of the email knowing your real/full name/address. There
is only one catch ... you first need to pay a fee for
processing of a little paperwork. The scammer may even
use the name of a legitimate lottery and have an official-looking
- your donations are sought to succour starving children,
disaster victims, endangered species, political prisoners
... with payments being made online or even by cheque
to an address that is typically offshore. Pleas for
money may come from bogus organisations, with or without
a site that induces unwarranted confidence, or from
those who have nastily appropriated the name of a legitimate
For some people the net is an engine for identity crime,
a label that encompasses everything from phishing to 'joe
A multi-part discussion of historic and contemporary Identity
Fraud mechanisms, issues and legislation features elsewhere
on this site.
advice to the unwary
A final area of concern is use (and abuse) of information
online, whether in the form of websites or in online fora
such as chat rooms and newsgroups.
It is clear that consumers in many countries are making
increasing use of commercial, personal, government and
other sites for health or other guidances. Online publication,
as noted in discussion of the Wiki movement, is not equivalent
to quality. Several studies have indicated that much online
health information is misleading or indeed quite incorrect.
Many consumers, however, appear to lack a basic 'digital
literacy' that would allow an effective assessment
of such information.
Some consumers similarly appear to leave their skepticism
at the door when they enter online fora that feature stock
market or other financial data, when they encounter electronic
chain letters or offers from online
psychics, or visit sites offering investment tips
and financial services. Our advice has been sought about
too-good-to-be-true 'investment' schemes operated from
Vanuatu and other jurisdictions beyond the immediate reach
of the Australian Securities & Investments Commission
or the ACCC.
Such schemes are a contemporary version of past mail schemes
whose promotional literature was often intercepted by
postal staff when it came
across the border. That is much more difficult in an online
However, regulators have had some success in prosecuting
scammers who have some relationship with Australia and
as noted elsewhere
merely using an offshore agent does not magic away penalties
for spam or speam.