Williams C. Iheme*
*LLB, LLM, SJD and Associate Professor of Law at Jindal Global Law School (India). The author can be contacted through email: wciheme@jgu.edu.in; williamsiheme@gmail.com.
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The Treaty Examiner, Issue 3 (June 2020), pp. 80-88.
Introduction: COVID-19 as a Big Entry Point of Consumer Vulnerability around the Globe
When the World Health Organization launched the Vision 2020 in 1999 on the Right to Sight, it was hardly imagined that a more devastating disease, the COVID-19, would ravage the world exactly two decades after, and crumble a significant portion of the assets of households and businesses, which has triggered an increased rate of global poverty (1). Being poorer implicates a lot of other unfortunate situations, such as an amplified inability to afford nutritious food, shelter, medical care, education, security, etc., and all these harshly expose individuals to the risk of shorter lifespans (2). Given the increasing rate of poverty around the globe, one of the expected outcomes from the pandemic is the higher rate of vulnerability of consumers (3) in the hands of businesses seeking unfair means to resuscitate themselves (4). The rest of this article tries to concisely reimagine the worsened fate of consumers during and after the COVID-19 pandemic, and the way forward.
The Changing Landscape for Businesses and the Obnoxious Effects on Consumers
The global responses towards curtailing the wide spread of the COVID-19 pandemic are largely uniform, and converge around lockdown of society and social distancing policies. During the lockdown period which restricted human physical interactions, the world witnessed a surge in the use of online services as the safer means to procure food, entertainment and even health advice. This prevalent use entailed that those who previously were unable to use digital services due to lack of the required skills, were forced within short notice to patronize essential services through online platforms (5). For instance, due to the social distancing policies, Amazon and other e-commerce companies stopped accepting ‘Pay on Delivery’ and required buyers to make online payments in advance (6).
Similarly, due to the lockdown, it became highly difficult in some places to visit the ATMs for cash withdrawal and for onward use in grocery stores (7). And this seriously complicated the lives of vulnerable consumers who did not have credit or debit cards prior to the lockdown, and consequently had to be forced to use digital means to apply and procure payment cards from their banks. Likewise, social media networks and internet entertainment providers like Netflix, witnessed a surge in user registrations. Yet, these novelties arguably worsened the experiences of vulnerable consumers whose data would likely be misused by the data controllers or exploited by online fraudsters (8).
As one of the effects of the pandemic, some banks in many parts of the world have closed some of their brick-and-mortar branches in order to reduce running costs (9). They appeal to their consumers to resort more to digital financial services. This appeal erroneously presupposes that all of these customers are sufficiently educated to safely use these digital services without falling into the destructive snares of online scammers (10). Also, even though financial technology companies (FinTechs) were already operating long before January 2020, the pandemic situation has enabled them to gain a better foothold and attention from around the globe as efficient mediums to carry out certain digital financial services, like payment of utility bills, cross-border transfer of money, and even obtaining short term loans (11) without passing through the usual credit assessment protocols undertaken in the traditional banking system (12).
It should be recalled that the pandemic has cost governments around the globe huge sums of money to combat the disease, and a significant portion of the funds invested in the fight was donated by corporations (13). This seeming act of benevolence has boldly inscribed the donors’ names in the good books of their governments and society, and would likely create a partial license for them to overreach their powers while trying to recoup the donations from society (14). Unfortunately, even though some of these corporate donations are usually permitted to be written off in taxes (15), following the shareholder primacy philosophy, these donations will indirectly be recuperated from consumers through corporate abuses like sale or exploitation of consumers’ personal data, cartel formation, higher cost for goods and services, and sale of shrouded products through deceptive and aggressive marketing (16). Since the pandemic is not over yet, and governments will need money from time to time to fight it, the donor-corporations exploiting consumers henceforth are unlikely to be challenged, let alone punished for their wrongdoing by their governments.
New Age Banking and Social Media: Issues of Applicable Law and Dispute Resolution Forums for Consumers
The 21st century made internet use quite prevalent, and this became the entry point for other digital services in the area of banking, e-commerce, health, education, social media, etc. Before the 21st century, cross-border commercial transactions were largely undertaken by business to business (B2B), or businesses and merchants, whereby the latter acts in the course of business with the aid of sufficient knowledge and experience. In other words, cross-border transactions involving a consumer and a corporation are a recent phenomenon, and this perhaps, explains why much of the rule on private international law developed around B2B transactions; consumers were hardly in the picture of public or private international law.
B2B transactions or with a merchant acting in the course of trade imply an arms-length relationship, with the likely possibility that the merchant could afford a professional advice regarding their rights and obligations in a given transaction. However, today, and especially since the pandemic, the rate at which consumers transact across the globe in the purchase of goods and services has increased (17); yet there is not much clarity on the regulatory legal framework at the global level in respect of dispute resolution. Consumer protection law which used to principally focus on issues arising from sale of unhealthy foods and drugs, now lags behind in the wake of the 21st century because it continues to largely imagine consumers from the lens of physical boundary, even when these consumers are using their smartphones and computers to transact digitally in trans-continental markets (18).
FinTechs, Cross-border Financial Services and Dispute Resolution with Consumers
In relation to finance, a typical case would be the rising use of FinTech borderless account services (19). For instance, TransferWise (20) offers cross-border bank accounts that are digitally operated, with the possibility that a consumer anywhere in the world can easily own and operate a UK local bank account, or accounts in other foreign currencies, without ever setting foot or owning a physical address in the UK or those other countries; these waived requirements by FinTechs, are compulsory when opening an account with a traditional bank in the UK and around the globe.
TransferWise is registered and solely regulated by the Financial Conduct Authority, UK, with English law and courts respectively applying and having jurisdiction in the event a dispute arises between it and its 7 million customers coming from more than 60 countries (21). While it is agreeable that FinTech digital financial services have generally enhanced consumers’ banking experience, it remains a disadvantage from a consumer lens that a FinTecchs’ foreign location makes it generally unaffordable for them sue the FinTech’s in its home country. This defeats the almighty promise of law chiseled in the ubi jus ibi remedium (22). Instead, dissatisfied consumers resort to self-help remedies like writing angry emails and negative reviews on social media, which is less effective compared to court action. This situation has generally emboldened FinTechs to exploit vulnerable consumers.
Social Media, Cross-border Services and Dispute Resolution with Consumers
The dawn of the 21st century witnessed a surge in the emergence of social media networks, and an increased rate of connection of people from around the globe. No doubt, the ease of connection, coupled with the possibility to ‘like’ and ‘share’ information on social media platforms brought a partial solution to the old economic problem of ‘market failure’ in that sellers could easily find buyers, and people could locate more pieces of information for consumption. However, this also created a number of problems for social media consumers, ranging from misuse of personal data for targeted and aggressive marketing by service providers (23), theft of personal data by online hackers, to the uncontrolled circulation of fake information aiming to misinform and negatively influence the choices of consumers (24).
Since social media have become mainstream, there is truly no real choice of abstinence simply because their lengthy, standard form agreements presented on a take-it-or-leave-it basis during registration are unconscionable (25). Yet, social media user agreements typically contain the facts that foreign forum and law (the law and courts where the social media service providers are registered or headquartered) will govern any disputes that arise between them and consumers. User agreements also indicate that the service provider is merely a platform for sharing information and therefore not liable to third parties for a user’s misuse of the platform rules (26). Similarly, users are forced to agree that they will only share materials in which they have copyrights, or have license to use, and have by signing the user agreement, consented to grant same license to the service provider to use the materials without any duty to account for profit (27). These ‘forcibly’ acquired rights put the social media service provider in a great comfort zone to exploit and monetarily profit from users’ copyright works while shielding themselves from any resultant liabilities.
Until 2017, much of the contract regime that governed the relationship of consumers and social media service providers rested exclusively on the freedom of contract doctrine (pacta sunt servanda), which enabled courts to enforce forum selection and applicable law clauses whenever a consumer sued in their home country in breach of a forum selection agreement. However, the Supreme Court of Canada’s decision in Douez v Facebook (28) (2017) upheld the view that a consumer can sue a social media service provider in her home country irrespective of any forum selection clause to the contrary. The European Union’s regulatory framework in this regard is similar to the decision in Douez (29), and it is important that other countries adopt this legal reasoning, as an important measure towards curtailing the increasing rate of exploitation of consumers by social media giants who constantly escape reproach through forum selection and applicable law agreements.
The Way Forward: The Heightened Need for Education
Tailor-made Consumer Education
Two types of education are advocated here, which imagine the short and long terms solutions to consumer vulnerability. First, consumer regulatory bodies must appreciate the nexus between the pandemic and the increased use of digital services on the one hand, and the increased exploitation of consumers online, on the other hand (30). Therefore, in the short term, consumer regulatory bodies must design bespoke training for vulnerable consumers which must aim to empower them towards using digital financial services, safely. This is more urgent in developing countries where the literacy rate is lower and where the inability to use digital financial services safely will lead to more possession of cash, which will consequently increase the rate of cash-motivated offences, like armed robbery and assassination (31). Similarly, keeping large amount of cash at home because the consumers are afraid of being scammed online will affect the recovery rate of the already battered economies, since any cash at home is considered to be outside the economy and cannot be lent by banks to those who desire to do business and create jobs.
Deeming ‘Basic Education’ as a Positive Right
Secondly, in many countries, especially in the developing ones, basic education is not yet considered a positive right, but as a non-justiciable right a government should aspire to provide for its citizenry. The governments of these developing countries argue that they are not able to afford the resources to educate every citizen at the basic level. Yet, they ironically expend enormous financial resources in hiring foreign expertise to carry out services in mining, construction, health, education, etc., due to lack of indigenous manpower. In the 21st century whereby the world has become globalized and converges more around the internet, where consumers in developing countries regularly patronize goods and services in developed markets, as well as consume a myriad of fake information surging through their cell phones, the need to deem basic education or higher as a positive right for every citizen has become very urgent as a more sustainable remedy for consumer vulnerability (32).
Conclusion: Or the Need for a Digital Consumer Court with Global Acceptance
The COVID-19 pandemic has significantly reshaped human interactions and gravitated the world more towards the internet. The global legal order should also reflect this change. In the case of consumers, given the increased online interactions between consumers and corporations located outside the former’s home country, the need to adopt the legal reasoning in the Douez case as the mainstream legal order has become highly necessary in order to enable consumers sue corporations in disregard of any forum selection agreements. Alternatively, or in addition, the world legal order needs to consider the possibility of erecting an online consumer court with global acceptance, to handle disputes arising from online transactions between consumers and corporations.
PIE DE IMPRENTA: Juan Pablo Hernández (editor-in-chief), Guatemala, 17 June 2020.
Endnotes
1. The Economist, ‘COVID-19 is Undoing Years of Progress in Curbing Global Poverty’ The Economist (23 May 2020) < https://www.economist.com/international/2020/05/23/COVID-19-is-undoing-years-of-progress-in-curbing-global-poverty> accessed 10 June 2020.
2. James Liang ‘Coronavirus Epidemic Has Implications for Life Expectancy’ Inter Press Service (14 June 2020) <http://www.ipsnews.net/2020/02/coronavirus-epidemic-implications-life-expectancy/> accessed 9 June 2020.
3. I adopt the European Commission’s definition of ‘vulnerable consumer’. ‘A consumer, who, as a result of socio-demographic characteristics, behavioral characteristics, personal situation, or market environment: • Is at higher risk of experiencing negative outcomes in the market; • Has limited ability to maximize his/her well-being; • Has difficulty in obtaining or assimilating information; • Is less able to buy, choose or access suitable products; or • Is more susceptible to certain marketing practices.’ Vera Jourova, ‘Understanding Consumer Vulnerability in The EU’s Key Markets’ European Commission’ (February 2016) <https://ec.europa.eu/info/sites/info/files/consumer-vulnerability-factsheet_en.pdf> accessed 10 June 2020.
4. OECD, ‘Protecting Online Consumers During the COVID-19 Crisis’ OECD Policy Responses to COVID-19 (28 April 2020) < http://www.oecd.org/coronavirus/policy-responses/protecting-online-consumers-during-the-COVID-19-crisis-2ce7353c/> accessed 9 June 2020.
5. Ibid.
6. Sanded Soni, ‘Forget Paying Cash for Your Amazon Order amid Lockdown as E-commerce Company Suspends COD Option’ Financial Express (26 March 2020) < https://www.financialexpress.com/industry/sme/forget-paying-cash-for-your-amazon-order-amid-lockdown-as-e-commerce-company-suspends-cod-option/1910060/> accessed 14 June 2020.
7. Sandeep Phukan, ‘Government Attempts Damage Control as ATMs Run Dry’ The Hindu (18 April 2018) < https://www.thehindu.com/business/Economy/government-attempts-damage-control-as-atms-run-dry/article23577729.ece> accessed 8 June 2020.
8. Riju Mehta, ‘Coronavirus Online Scams: How to Protect Your Data and Device’ The Economic Times (30 March 2020) < https://economictimes.indiatimes.com/wealth/save/coronavirus-online-scams-how-to-protect-your-data-and-device/articleshow/74862378.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst> accessed 10 June 2020.
9. Manojit Saha, ‘India Coronavirus Lockdown; Finance Ministry Pulls Up Banks on Shut Branches’ The Hindu (28 March 2020) < https://www.thehindu.com/business/Economy/india-coronavirus-lockdown-finance-ministry-pulls-up-banks-on-shut-branches/article31187332.ece>; Anna Hrushka, ‘U.S. Bank Branch Closures could accelerate amid Pandemic’ Banking Drive (29 May 2020) < https://www.bankingdive.com/news/us-bank-branch-closures-coronavirus/578860/>; Mark Rendell, ‘Canada’s Big Banks to limit Hours, reduce Branches amid Spread of Coronavirus’ The Globe and Mail (17 March 2020) < https://www.theglobeandmail.com/business/article-canadas-big-banks-to-limit-hours-reduce-branches-in-wake-of-spread/> accessed 7 June 2020.
10. David Medine, ‘Financial Scams Rise as Coronavirus Hits Developing Countries’ CGAP (19 April 2020) < https://www.cgap.org/blog/financial-scams-rise-coronavirus-hits-developing-countries> accessed 9 June 2020.
11. Nicholas Megaw, et al, ‘Pandemic hands Fintech Lenders a Chance to prove Their Worth’ Financial Times (21 April 2020) < https://www.ft.com/content/dcdd3016-797f-4d02-9d54-95a5b10cc2cd> accessed 10 June 2020.
12. Ibid.
13. Katie Clift and Alexander Court, ‘How Are Companies Responding to the Coronavirus Crisis?’ World Economic Forum (23 March 2020) < https://www.weforum.org/agenda/2020/03/how-are-companies-responding-to-the-coronavirus-crisis-d15bed6137/> accessed 9 June 2020.
14. Sharon Lerner, ‘Big Pharma Prepares to Profit from the Coronavirus’ The Intercept (14 March 2020) < https://theintercept.com/2020/03/13/big-pharma-drug-pricing-coronavirus-profits/> accessed 9 June 2020.
15. Guarav Noronha, ‘Companies Can Fulfil CSR Obligations by Donating to PM Cares: Corporate Affairs Ministry’ The Economic Times (30 March 2020) < https://economictimes.indiatimes.com/news/economy/policy/companies-can-donate-csr-funds-to-pm-cares-corporate-affairs-ministry/articleshow/74871857.cms> accessed 14 June 2020.
16. Anthony Diresta, et al, ‘The Impact of COVID-19 on Your Advertising and Marketing Campaigns’ Holland & Knight (20 April 2020) <https://www.hklaw.com/en/insights/publications/2020/04/the-impact-of-covid19-on-your-advertising-and-marketing-campaigns> accessed 14 June 2020.
17. GlobeNewswire, ‘COVID-19 Impact on e-Commerce & Online Payments, Worldwide, 2020 – Online Shopper Penetration Increases During the Pandemic’ Research and Markets (29 May 2020) < https://www.globenewswire.com/news-release/2020/05/29/2040716/0/en/COVID-19-Impact-on-e-Commerce-Online-Payments-Worldwide-2020-Online-Shopper-Penetration-Increases-During-the-Pandemic.html> accessed 14 June 2020.
18. Ibid.
19. Taina Pena, ‘TransferWise Launches the Borderless Account’ GlobeNewswire (23 May 2017) < https://www.globenewswire.com/news-release/2017/05/23/1115089/0/en/TransferWise-launches-the-Borderless-account.html> accessed 10 June 2020.
20. TransferWise, < https://transferwise.com/en>
21. Ibid.
22. As enunciated in Ashby v White (1703) 14 St Tr 695, 92 ER 126. See Oxford Reference, < https://www.oxfordreference.com/view/10.1093/oi/authority.20110803110448446> accessed 14 June 2020.
23. Andrew Blustein, ‘Twitter Admits to Misusing Personal Data for Advertising Purposes’ The Drum (8 October 2019) < https://www.thedrum.com/news/2019/10/08/twitter-admits-misusing-personal-data-advertising-purposes> accessed 10 June 2020.
24. Janna Anderson and Lee Rainie, ‘The Future of Truth and Misinformation Online’ Pew Research Center (19 October 2017) < https://www.pewresearch.org/internet/2017/10/19/the-future-of-truth-and-misinformation-online/> accessed 14 June 2020.
25. Anumakonda Jagadeesh, ‘The Impact of Social Media: Is it Irreplaceable?’ Wharton University of Pennsylvania (26 July 2019) < https://knowledge.wharton.upenn.edu/article/impact-of-social-media/> accessed 13 June 2020.
26. Adam Remsen, ‘A Lawyer Digs Into Instagram’s Terms of Use’ (7 December 2016) < https://petapixel.com/2016/12/07/lawyer-digs-instagrams-terms-use/> accessed 14 June 2020.
27. Hayleigh Bosher, ‘Key Issues Around Copyright and Social Media: Ownership, Infringement and Liability’ (2020) 15(2) Journal of Intellectual Property Law & Practice, 123, 124; Heather Ferris, Copyright Law and Social Media: Use the ‘Share’ Button’ Clear Voice (14 June 2013) < https://www.clearvoice.com/blog/copyright-law-social-media-use-the-share-button/> accessed 13 June 2020.
28. (2017) 1 SCR 751 < https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16700/index.do> accessed 15 June 2020.
29. Articles 18 and 19 REGULATION (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012. < https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:351:0001:0032:en:PDF> accessed 15 June 2020.
30. The Straitstimes, ‘Scammers Use Coronavirus to Trick Fearful South Africans’ The Straitstimes (17 March 2020) < https://www.straitstimes.com/world/africa/scammers-use-coronavirus-to-trick-fearful-south-africans> accessed 9 June 2020
31. Jemma Carr, ‘Robbers Disguised as Health Inspectors in full Coronavirus PPE steal £10,000 from South African Supermarket’ Mail Online (5 June 2020) < https://www.dailymail.co.uk/news/article-8391679/Robbers-disguised-health-inspectors-steal-10-000-South-African-supermarket.html> accessed 15 June 2020.
32. Adi Robertson, ‘How to Fight Lies, Tricks, and Chaos Online’ The Verge (3 December 2019) < https://www.theverge.com/21276897/fake-news-facebook-twitter-misinformation-lies-fact-check-how-to-internet-guide> accessed 14 June 2020.
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