Who do you trust? Establishing e-commerce codes of practice

The launch of Trust UK by DTI Minister Patricia Hewitt was heralded by a tremendous media fanfare. But how valuable are online...

The launch of Trust UK by DTI Minister Patricia Hewitt was heralded by a tremendous media fanfare. But how valuable are online codes of practice?

"Big boys" back TrustUK

TrustUK is the newer of the two emerging UK standards for ensuring fair and responsible codea of practice for online traders, although it does have the more prestigious names behind it. The two main parts of TrustUK are the Consumer Association (CA) and the Alliance for Electronic Business (AEB). The alliance itself has several illustrious members including the CBI, CSSA and the DMA as well as e-centre UK and the Federation of the Electronics Industry. Added to these consumer and business associations are the DTI and trading standards organisations.

At the launch of TrustUK earlier this month, the Minister of State at the DTI, Patricia Hewitt MP, offered an endorsing sound bite: "The message to consumers shopping online is simple: if you want to shop safely, look for the TrustUK hallmark." Hewitt also chastised those sceptical of TrustUK. "We shouldn't be rubbishing TrustUK but instead offering it our support", she remarked.

Accreditation criteria

The basis of the TrustUK offering centres around 11 pages of accreditation criteria, conditions with which TrustUK sites or those of affiliated bodies need to comply in order to earn the logo and associated "trusted status". TrustUK does not directly approve web sites but instead approves other organisations' online codes of practice. For example, if your company is a member of the Direct Marketing Association (DMA), then by following the DMA online code of practice, you are effectively approved for TrustUK status, as the DMA code of practice has been accredited by TrustUK. The accreditation process is essentially a self-certification form on are posed such questions as, "Are your online advertisements legal, decent, honest and truthful?" In addition, there is a process of "fulfilment timing [the period in which the company must deliver its goods or services], which, unless the parties have agreed otherwise, must be within a maximum of 30 days from the day following that on which the consumer placed the order." These accreditation criteria have been written with some skill, paying consideration to the intricacies of the Internet as well as covering factors such as cookies, the Data Protection Act and WAP (Wireless Application Protocol).

TrustUK is likely to attract a large number of online e-commerce subscribers considering that the Consumer Association's earlier accreditation scheme, Which? Web Trader, has attracted 1,000 members since its launch. Combined with the 800 members of the DMA, it provides an already powerful group of supporters.

TrustUK is tough, but ABTA carries a bigger stick

Another big participant in TrustUK is ABTA (Association of British Travel Agents) whose members make up 90% of all the travel agencies in the UK. Their own rules require ABTA members to provide a bond based on the size of their business (in excess of £50,000). The ABTA code of conduct is much stricter than that of TrustUK and it also provides independent arbitration for consumer disputes. Sean Tipton, a spokesman for ABTA, agreed that the rules for ABTA were stricter then those of TrustUK but whether TrustUK should adopt ABTA policies was for, "The government to decide upon". The rules for ABTA members who use online commerce have also been clarified to take account of the Web.

However, this gives rise to a paradox. A TrustUK certified code of practice issuer which has online travel agents as members does not have to be a member of ABTA, but ABTA members automatically gain TrustUK status. This could lead to confusion as to the level of protection available to the consumer in the event of a travel site not being able to fulfil its financial obligations. The situation could arise where two different code of practice regulators (ABTA and ATOL for example), are both TrustUK affiliates. Both would be allowed to use the TrustUK logo but offer different levels of protection for consumers.

The main government body dealing with consumer complaints is the Trading Standards Office (TSO), an agency that is still underfunded and not familiar with many of the issues surrounding online purchases. In fact getting any action from the TSO is perceived by many as a lengthy process even without the complexities of the Internet.

TrustUK is a new concept but government backing will help to raise its profile and assuage the fear of potential online customers. The real test will be if any of these TrustUK-certified companies generate a large number of complaints and TrustUK is forced into action against them.

Clicksure parts company with TrustUK

TrustUK guidelines bear an uncanny similarity to another accreditation system, that of Clicksure. Clicksure applied to become a TrustUK code owner but has since pulled out, apparently due to differences with TrustUK policies. Clicksure claims to have offered a great deal of assistance in hammering out a workable set of standards when TrustUK was setting up. One of the contentions between the two organisations is that every Clicksure client would have to display a TrustUK logo.

ClickSure believes that this may in fact hinder some of their overseas clients. Another problem topic is that of inspection. According to Clicksure, TrustUK claims that, "...the TrustUK Hallmark is to show you that the e-trader operates to the requirements of an accredited code of practice." Clicksure takes issue with this claiming that it is untrue: "There is no evidence of implementation checked prior to receiving approval from the code [of practice] owner. The criteria are UK-centric and do not address global trading issues."

ClickSure claims that the mandatory inclusion of the TrustUK logo all its customers' sites would add "no value" and lead to "confusion" for customers operating overseas. Phil Hendey, Clicksure's Head of Marketing, corporate stance is robust. "There are sites currently listed under the Direct Marketing Association (a TrustUK code owner) which would not pass Clicksure standards. If we had been associated with TrustUK, our standard would already have been diluted", he said.

The question of cost is an interesting one. Clicksure is a private limited company, started with investment from its founder, Christopher Upton and several VC companies. Clicksure use a three-stage method of issuing accreditation which consists of online web site inspection, physically visiting the companies' premises to examine business practices (1 out of every 10 customers) and an ongoing monitoring policy. This accreditation process costs up to $8,000 dollars for the first two years with a residual charge of $4,000 per year for continuing accreditation.

In situations where a company does not have a web site or back-end processes capable of meeting accreditation, Clicksure can either offer advice or recommend an independent consultant who can bring these businesses in line with the required standards.

Clicksure also has its critics. Critics have claimed that because they are a commercial company, impartiality may be affected, particularly when it comes to chasing up smaller complaints with their large-fee paying customers. Also, critics are seeing their split from TrustUK as both a "publicity stunt" and "financially motivated", due to the fact that as a free scheme, TrustUK (including the Consumer Association's Which? Web Trader) would ultimately affect their fee-paying business model.

Chris Hendey dismisses these claims. "As a company, it is our goal to make sure that our clients are both technically and ethically able to deal with e-commerce correctly", he says. Hendey agrees that bonded schemes like ABTA's "play an important part", but observes that prevention is much better than cure. "We will not sacrifice our reputation by weakening our accreditation process by joining TrustUK," he adds.

Joining the band wagon

With the publicity surrounding TrustUK, other vendors are also pitching comment into the debate. Dermot Hill, managing director of another rival scheme, Trust-On-Line comments,"We agree that consumers need assurance to shop online, but as this scheme is UK based, it is too narrow to protect global Internet users. If governments in different countries try to regulate the Internet, it would mean a confusing mismatch of laws across different nations."

"Governments should not be involved in solving consumer disputes in a free market economy. We feel it is important that complaints are dealt with quickly and efficiently by a body that has real experience of the Internet, rather than an outside body with no real knowledge of the Internet which may over-regulate," he adds.

Hill's comments are interesting but like those of the ABTA spokesman, may be slightly misguided. TrustUK has been tarred with the "government approved" brush, but the very core of Trust UK is the Consumer Association, which is far from being a government pawn. The misconception surrounding TrustUK is likely to evaporate as more codes of practice start to gather under its umbrella. In fact German online retailer, Trustedshops.com has approached TrustUK for membership. This is even before the EU produces its own e-commerce guidelines (based on those of TrustUK). Timetabled for the end of November.

What does this means for the Internet shopper?

The number of such organisations, either government-endorsed or private, is likely to grow. The problem is recourse with the e-trader if things to go wrong. Buying any item from a bricks and mortar shop always gives you the option to complain in person. But as a customer in the UK buying a book from a server based in Hungary run by a US company via a French distributor, the responsibility for dealing with your problem is easily passed between pillar and post.

The only truly global players within this area are the credit card companies like Visa and MasterCard, who have been very careful to distance themselves from these schemes. Why? The biggest reason is liability - they do not want to be Internet police or have to pick up the bill every time a customer has a problem with goods or services bought online. Both TrustUK and ClickSure are currently in discussions with the credit card companies. However, if past form is a good indication as to the outcome of these discussions, the credit card companies will agree in principle. However, it is unlikely that these credit companies will offer the means to sanction rogue traders who persistently fail to deliver proper customer service. The ultimate action that Visa or Mastercard can apply is to remove credit-processing facilities from companies that continually fail to comply with codes of practice. Losing the ability to process credit card transactions is the kiss of death for any e-trader and as such gives the credit card companies the "big stick" to keep order in the new global market place.

For the consumer and business, schemes like TrustUK or ClickSure do not provide the whole answer. However, with these schemes you can gain some level of confidence as to the validity of the trader. Finding the good e-traders will still be from word of mouth and by reputation. Reputations are built by offering a good experience to customers over a period of time and not by the inclusion of an accreditation seal, no matter who is behind the accreditation process.

Will Garside

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