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RESOURCE GUIDE OF DISTANCE SELLING CODES OF CONDUCT/ETHICS IN ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT NATIONS

EXECUTIVE SUMMARY



This report was undertaken by the U.S. delegation to the Committee on Consumer Policy of the Organization for Economic Cooperation and Development (OECD). Information about the voluntary direct marketing and selling codes of conduct and the legal environment in the OECD member nations was provided by delegates to the Committee on Consumer Policy. The full report is expected to be completed during the spring of 1996. Requests for information about this report should be directed to the Office of Consumer Affairs at the address below.

The report examines voluntary direct marketing and selling codes of conduct/ethics from 16 countries in the OECD and three international organizations. They include voluntary codes from Australia, Belgium, Canada, Finland, France, Germany, Ireland, Japan, Mexico, the Netherlands, New Zealand, Norway, Portugal, Switzerland, the United Kingdom, and the United States. The four international codes examined include the European Mail Order Traders Association, the European Union, International Chamber of Commerce, and World Federation of Direct Selling Associations.

Responses to the Committee on Consumer Policy questionnaire on the legal environment and effectiveness of the voluntary codes were received from Austria, Belgium, Denmark, Finland, France, Japan, Mexico, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.

There are no voluntary codes for distant selling in Austria, Denmark, and Turkey.

The effectiveness of the codes, in general, varies. For example, Mexico cited the need for effective surveillance systems and application of sanctions to members who violate the codes as well as better publicity concerning the existence of the codes. However, Mexico also cited the effectiveness of the Direct Selling Association codes. The Netherlands considered the codes effective, especially since consumers can bring a complaint to the association. In Sweden, the National Board for Consumer Complaint provides a cost effective way to handle disputes between buyers and sellers; self-regulation for door-to-door selling has worked well. The United Kingdom stated that industry and the Office of Fair Trading prefer voluntary codes because of their flexibility and ease of amendment to deal with changing circumstances. Several responses mentioned a general movement to more self-regulation and less formal regulation.

Sanctions against businesses who violate a voluntary code vary from pressure to improve business practices up to expulsion from the association. The lack of effective sanctions were mentioned by several countries. For example, the U.K. stated that this is the major disadvantage of voluntary self-regulation since codes only apply to members. If sanctions are too severe the marginal operators will leave the association rather than submit to enforcement. Associations that can deny violators access to media will be most effective. Statutory enforcement is needed to support voluntary codes.

Several countries stated that consumer awareness of the codes is low. Both the codes effectiveness and sanctions would become more effective with increased consumer awareness and involvement of consumer associations. Spain also mentioned that greater consumer participation would improve the effectiveness of the voluntary codes and reduce doubts about the impartiality of the administration of the codes.

The eighteen codes of conduct/ethics have many common areas but also differences that make each unique.

The Offer: This area has the greatest commonality including clarity and accuracy, identification of the seller, parental/guardian approval before selling to a minor, "cooling-off" periods, and guidelines for sweepstakes, guarantees, negative option selling and free/bonus items.

Fulfillment: Only delivery time limits are mentioned in a majority of the codes.

Credit and Debt Collection: Only one item, "terms must be disclosed," is mentioned in six of eighteen codes.

Product Safety: Seven codes require that safety warnings be distributed with the product.

Telemarketing: Common guidelines include respect for privacy, identification of the seller and the reason for the call, and calling during reasonable hours. Germany and New Zealand have separate telemarketing codes; the U.K. includes a detailed appendix in its code.

Use of Files and Name Lists: Granting requests for removal from lists is the most common guideline in this area. Restrictions on the sale of data and guidelines concerning its collection are also included.

Miscellaneous: This category points out the variety found in the codes. Of 34 items in this category, ten were found in only one code. Examples include the requirement to establish a system for handling complaints, the guarantee of customer satisfaction and guidelines for advertisements offering courses and degrees.



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