People Without Computers Must Be Protected

According to a recent Commerce Department report entitle Falling Through the Net, 74% of U.S. households still do not have access to the Internet.  Yet, the House-passed electronic commerce bill, HR1714,  as well as the Wyden draft, would allow the following scenarios to take place:

·                    An elderly woman is visited at home by a home improvement salesman who talks her into taking out a home equity loan to pay for an overpriced home improvement.  The salesman gets the woman to sign for the loan on a laptop computer, and to agree to receive all notices and disclosures on line.  However, the woman has no home computer and no knowledge of how or where she can access a computer.  She might even be home bound or disabled.  Today, consumer laws give the woman a chance to review the documents, or get help to review them, and cancel the loan within a certain period of time.  Under the House bill, the woman would be effectively deprived of these rights, and could lose her home without any recourse.

·                    A consumer walks into a car dealership to buy a car.  As is often typical, the salesman uses high pressure sales tactics.  The salesman pressures the consumer to read the sales contract on the computer screen.  The consumer signs the contract electronically, and, as the House bill allows, leaves the lot without a copy of the signed contract.  After the consumer leaves, the salesman changes the terms of the contract by, for example, increasing the interest rate or not giving the consumer credit for the trade-in.  The consumer later objects, but has absolutely no basis on which to contest the electronic contract.

·                    A consumer agrees to receive notices regarding his health insurance on-line.  The consumer runs into a financial problem, and has to drop his Internet service or his computer breaks.  In the meantime, the insurance company changes the terms of coverage  and notifies all policy holders.  The consumer never gets his notice, and fails to choose another provider.  In the meantime, one of his children falls sick; he takes the child to the doctor, just to find that his insurance will no longer cover the charges incurred through that doctor.

Numerous consumer groups, the FTC, the Federal Reserve Board staff, organized labor, states attorneys general, and others have objected to HR1714  because it would allow these abuses to occur. These scenarios would also be possible under the Wyden compromise proposal.

Instead, they advocate allowing electronic disclosures only when the transaction is done on-line; if consummated in person, future notices can be provided electronically with the consumer’s electronic consent.  Later, non-routine electronic notices, such as changes in mortgage servicers, or notice of a change in terms on an insurance policy, should require a response from the consumer or use technology that shows a consumer read the information.

These rules will allow e-commerce to grow aggressively in an environment that maintains basic consumer protections.