According to the latest Australian Competition and Consumer Commission Digital Platform Services Inquiry report, consumers who use online retail marketplaces such as eBay and Amazon have “little effective choice in the amount of data they share.”
Based on their data, consumers can benefit from personalization and recommendations in these marketplaces. Still, many are left in the dark about how much personal information these companies collect and share for other purposes.
ACCC Chair Gina Cass-Gottlieb said:
We believe consumers should be given more information and control over how online marketplaces collect and use their data.
The report echoes the ACCC’s previous calls to change Australia’s consumer law to address unfair data and practices.
It also points out that the government is considering proposals for far-reaching changes to privacy legislation.
However, none of these proposals will come into effect soon.
In the meantime, we should also consider whether practices such as obtaining information about users from third-party data brokers fully comply with existing privacy laws.
Why did the ACCC investigate online marketplaces?
The ACCC explored competition and consumer issues related to “general online retail marketplaces” as part of its five-year investigation into digital platform services.
These marketplaces facilitate transactions between third-party sellers and consumers on a common platform. They do not include retailers that do not operate marketplaces, such as Kmart, or media, such as Gumtree, that offer classified ads but do not allow transactions.
The ACCC report focuses on Australia’s four largest online marketplaces: Amazon Australia, Catch, eBay Australia, and Kogan.
In 2020-21, these four had total revenues of $8.4 billion.
Online marketplaces like Amazon, eBay, Catch, and Kogan facilitate third-party buyer and seller transactions.
According to the report, eBay has the largest revenue of these companies.
Amazon Australia is the second largest and fastest growing, with sales up 87 percent in the past two years.
The ACCC investigated:
The state of competition in the relevant markets Problems faced by sellers who depend on selling their products through these marketplaces Consumer concerns include concerns about collecting, using, and sharing personal information.
Consumers do not want their data to be used for other purposes
The ACCC expressed concern that “the extent of data collection, use, and disclosure … often does not match consumer preferences” in online marketplaces”.
The committee pointed to surveys on Australian consumers’ attitudes to privacy, which show:
94 percent felt uncomfortable with how digital platforms, including online marketplaces, collect their personal information, 92 percent agreed that businesses should only collect information they need to deliver their product or service, and 60 percent felt strongly or somewhat unacceptable to monitor their online behavior for targeted advertisements and offers.
The four online marketplaces analyzed:
Do not proactively present privacy terms to consumers during the purchase process. Advertisers or third parties may place tracking cookies on users’ devices. Do not clearly state how consumers can opt out of cookies while using the marketplace.
Some marketplaces also obtain additional data about individuals from third-party data brokers or advertisers.
The downsides of increased consumer tracking and profiling include reduced privacy, manipulation based on detailed profiling of properties and weaknesses, and discrimination or exclusion of opportunity.
Limited choices: you can’t just ‘walk out of a store.’
Some might argue that consumers shouldn’t care much about privacy if they continue to use these companies, but the choice isn’t that simple.
The ACCC notes that the relevant privacy terms are often spread across multiple web pages and are provided on a “take it or leave it” basis.
The terms also use “bundled permissions”.
This means that agreeing to the company that uses your data to fulfill your order, for example, may be combined with conforming to the company to use your data for its separate advertising activities.
Furthermore, as my research has shown, there is so little competition for privacy between these marketplaces that consumers can’t just find a better offering.
The ACCC agrees:
While consumers in Australia have several online marketplaces to choose from, the common approaches and practices of the major online marketplaces for data collection and use mean that consumers have little effective choice in the amount of data they share.
Consumers also seem unable to compel these companies to delete their data.
The situation differs from conventional retail interactions, where consumers can “unsubscribe” or leave the store.
Does our privacy law currently allow all of these practices?
The ACCC has reiterated its previous calls to amend Australia’s consumer law to prohibit unfair practices and make unfair contract terms illegal. (At this point, unfair contract terms are simply void or unenforceable.)
The report also points out that the government is considering proposals for major changes to privacy legislation. Still, those changes are uncertain and could take more than a year to take meantime, we need to take a closer look at the practices of these marketplaces under current privacy laws.
For example, under the federal privacy law, the four marketplaces
may collect personal information about a person only from the person unless… it is unreasonable or impractical to do so.
However, some online marketplaces say they collect information about the interests and demographics of individual consumers from “data providers” and other third parties.
We don’t know the full details of what is collected, but demographic information may include our age range, income, or family information.
How is it “unreasonable or impractical” to obtain information about our demographics and interests directly from us?
Consumers could ask this question to online marketplaces and complain to the Office of the Australian Information Commissioner if there is no reasonable response.
Katharine Kemp, Senior Lecturer, Faculty of Law & Justice, UNSW, UNSW Sydney
This article is republished from The Conversation under a Creative Commons license. Read the original article.