Project Summaries 2010-2011 - Public Interest Advocacy Centre (PIAC)
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1. A Virtual Fortune: Consumer Protection for Banking and Consumer Fraud in Virtual Worlds
Virtual worlds, also known as massive multi-player online role playing games (MMORPG), have been increasingly intertwined with real world money over the past few years. Many financial institutions have announced plans to open virtual branches – a move that combines the known risks of internet banking with the risks of virtual identity and data theft. As consumers invest real time and money into virtual world, rights to virtual property will be no less important to many in the virtual world than in the real world.
This project will study virtual worlds with developed virtual economies based on real-world currency, such as Second Life, There, Entropia Universe, EVE Online, Sony Online Entertainment and World of Warcraft.
This study aims to examine consumer protection in virtual worlds that have well developed economies linked to real currency, with a focus on what consumer protection mechanisms are in place, such as disclosures, consumer complaint mechanisms and redress where consumers are financially defrauded by virtual institutions. As well, an examination of consumer fraud issues in virtual worlds will be conducted, such as avatar identity theft, advance fee loans, virtual investments, phishing, credit in virtual currency and virtual real estate fraud.
This research seeks to sketch out the appropriate level of consumer protection needed in virtual worlds – a new endeavour that will have an impact on the several hundred thousand (and future millions) of Canadians that interact with virtual worlds everyday, such as protections against financial and other forms of consumer fraud in virtual worlds.
At present, Canada's Office of the Privacy Commissioner (OPC) has established a set of voluntary guidelines to inform those who have suffered from data breaches. So far, major banks, insurers, telcos and other large businesses have claimed to disclose breaches, but it is unknown if other organizations (especially small and medium-sized enterprises) are reaching even the levels of disclosure of major retailers and service providers.
This project will study Canadians' attitudes towards data breaches and their desired response in terms of notification of the breach, recompense for the breach and likely actions when they are notified of a breach. Currently the debate on breach notification in Canada lacks consumer perspective.
The study will identify the key issues such as: breach notification threshold (e.g. "risk"), timing, manner of notification, to whom notification is made, who should notify, and remedies for a breach. It is expected that a recommendation as to the possible scope and content of a breach notification law for Canada - which respects as much as possible the desires and concerns of the Canadians whose privacy is breached - will result in a model which is superior to the present top-down consideration of breaches thus far.
The project will update the work of CIPPIC in proposing data breach notification legal frameworks by incorporating consumer views into the analysis. The project should dovetail with OPC efforts to prepare for a data breach notification position in advance of the 2011 Personal Information Protection and Electronic Documents Act (PIPEDA) review. The project may add some needed context to the various legislative efforts to introduce breach notification at the provincial level.
Short codes are add-on services to short messaging service (SMS) text messages. Some of these short codes can cost consumers a premium to receive their messages, known as “mobile premium services” which consumers might unknowingly subscribe to in order to play an online contest or win prizes. There are many informative, entertaining and fun services consumers can buy by sending a SMS or text message to a short code using their wireless device. For example, consumers can buy jokes, horoscopes, get online quiz results and participate in contests. However, recent media attention has focused on consumer complaints with these mobile premium services, suggesting that consumers are misled by advertisements for these services and do not understand that these services are by subscription and differ from regular incoming SMS messages. Consumers are upset about the charges seen on their wireless bills for these premium mobile services and have had difficulty unsubscribing from receiving premium text messages. A recent application by l’Union des consommateurs to the Canadian Radio-television and Telecommunications Commission (CRTC) did not succeed in finding regulatory guidance for these services in Canada.
A major focus of this project will be on how these mobile premium services are advertised to consumers, how these services are explained to consumers when consumers subscribe to them, supply standards in the provision of mobile premium services, and how consumers can unsubscribe and opt out of mobile premium services. Furthermore, the consumer experience of complaint resolution and disputing these charges will be examined.
The project results will provide further clarity on the issue of mobile premium services for consumers, building on the CRTC application by l’Union des consommateurs. This research should be of interest to the CRTC and also to the Commissioner for Complaints of Telecommunications Services (CCTS) in determining whether consumer complaints are handled in an appropriate manner.
With the growth of e-commerce comes not only the potential for an overall increase in the number of product purchases online but also an overall increase in the number of product returns. E-commerce can complicate the product return process for consumers. Additionally, a number of e-commerce merchants have invested in the front-end operations to establish an internet presence and gain sales, but may have paid comparatively little attention to service and back-end operations. Analysts have said that e-commerce sites have not done enough to instill consumer confidence in their return policies as are already established in brick-and-mortar traditional merchants, and online shopping sites have been slow to put in place effective systems for refunds, returns and exchanges. In Canada, consumer protection for the purchase of goods is generally provided by provincial consumer protection laws. However, consumer e-commerce transactions are increasingly dealing with cross border jurisdictions and in Canada, federal guidance has traditionally been given to consumer protection in e-commerce transactions under the federal trade and commerce power.
This project examines consumers' growing use of e-commerce to order real world goods via online methods and the problems consumers may encounter when they want to return a product. As more and more commerce in tangible goods moves online and relies upon shipping goods direct to the consumer as opposed to the consumer shopping at a retail outlet, new and old problems arise. This project seeks to identify problems in online orders of real world goods, focusing on limitations and restrictions in return policies and shipping problems from the consumer's perspective. As well, the study will attempt to identify possible problems and gaps for returns of online purchases using mobile devices, as mobile commerce will be the next step of e-commerce.
The project will result in a report with recommendations for best practices for online merchants in dealing with consumer concerns with returns of physical goods.
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