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					Pocket shopping
International consumer experiences of buying goods and services
on their mobile phones
Marzena Kisielowska-Lipman
December 2009
Pocket shopping



Contents

About Consumer Focus                                                                   03
Executive summary                                                                      03
     Key research findings                                                             04
     Recommendations                                                                   15

Mobile commerce                                                                        17
What we did                                                                            19
What we found                                                                          23




Acknowledgments
This report is a result of an international project on mobile commerce led by Consumer Focus.
Consumer Focus would like to express our gratitude to the following consumer organisations for
their work and advice during the project:
European Consumers Organisations (BEUC), Belgium
Public Interest Advocacy Centre, Canada
The Danish Consumer Council (Forbrugerrådet), Denmark
Federation of German Consumer Organisations (VZBV), Germany
NCOS (Nippon Consumer Voice for Better Standards), Japan
Consumers Korea, South Korea
National Consumer Council, Norway
Slovenian Consumers Association, Slovenia
Organisation of Consumers and Users (OCU), Spain
American Council on Consumer Interests (ACCI), United States




consumerfocus.org.uk                            02                              Pocket shopping
 About Consumer Focus

 C   onsumer Focus is a statutory body that champions the needs of consumers across
     England, Wales, and Scotland and, for postal services, Northern Ireland.

 We operate across the whole of the economy, persuading businesses and public services to put
 consumers at the heart of what they do. Our public services work seeks to improve provision
 by promoting high quality engagement in design and delivery of services. Consumer Focus has
 the power to take action where markets are failing consumers and to ensure a fair deal for all
 – especially the vulnerable and disadvantaged. We want to see consumers central to business
 and Government decision-making, and we work at the European level, too, to make sure
 consumers’ needs are heard in Brussels. We don’t just draw attention to problems – we use a
 strong evidence base and work with a range of organisations to champion creative solutions that
 improve consumers’ lives.




 Executive Summary

 M     obile commerce (m-commerce) is a business model that allows consumers to purchase
       goods and services using a mobile phone. Mobile Premium Rate Services (PRS) such as
 ringtones, screen savers and games currently dominate m-commerce transactions. However,
 there is increasing access to Internet-enabled mobile phones with advanced processing
 capabilities that facilitate the transmission of vast amounts of data. This has the potential to
 generate the expansion of mobile use into the electronic commerce world.

 Mobile commerce has the potential to offer consumers the benefit of reaching goods and
 services anywhere and at any time, where mobile services are available, using a pocket size
 handset. However, it also poses risks that have to be addressed to ensure consumer protection
 in the new market.

 This report is based on the findings of an international comparative mystery shopping study that
 aimed to assess real life shopping experiences of mobile phone users and identify good and
 bad practices. The study was carried out by researchers from consumer organisations in 11
 countries between July and September 2009. In total, researchers purchased 112 goods and
 services using mobile phones.

 The findings reveal the need to increase market choice and competition, enhance innovation to
 overcome technical impediments, and improve business practices and consumer protection in
 m-commerce.




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 Key research findings
 The development of third generation (3G) mobile phones, featuring broadband, promises to
 expand online shopping markets to mobile phone users. In many countries increasing numbers
 of subscribers use mobile phones, not only for telecommunication purposes, but also for
 accessing the Internet, shopping, searching for information, social networking and making
 payments. We were eager to examine how this new commercial platform works for consumers.
 We carried out a mystery shopping survey and bought products with the use of mobile phones in
 11 countries.

 We found a mixed shopping experience as many researchers struggled to find retailers selling
 suitable products other than mobile Premium Rate Services (PRS), and suffered technical
 impediments, difficulties in obtaining information and processing their payments. In many
 instances these barriers had to be overcome before successful orders could be placed.

 Our research demonstrates that for consumers to engage and benefit from this emerging
 shopping platform there must be technological improvements, wider choice and access to
 products, better business practices and better consumer protection.

 Technical constraints
 We found that the technical limitations of mobile phones, such as a small screen size,
 limited storage capacity and low processing power restricted access to certain products and
 information. Such issues also prolonged transaction times. More technologically advanced
 mobiles, such as smart phones, enhanced consumers’ shopping experience. Also, poor
 quality of network coverage, ‘not spots’ and slow broadband speeds impacted on the shopping
 experience and resulted in disruptions to the transaction process. The ability to access important
 information related to the purchase was also compromised.

 Choice
 Our survey indicates that when it comes to choice the mobile commerce market is still in its
 infancy. Generally speaking, four types of product were available to purchase with a mobile
 handset:

 z    mobile PRS

 z    e-tickets

 z    digital content (other than mobile PRS)

 z    physical goods

 However, the degree of choice and access varied. We found that mobile PRS dominated the
 market with a selection of products directed at a young consumer profile. Products from other
 categories were difficult to purchase due to technological impediments such as insufficient
 memory capacity to process secure registration or payment, lack of inter-operability and a
 restrictive selection of software and equipment.




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 Information disclosure
 We found that availability of information during the shopping process was limited in comparison
 with other markets. While the technical impediments of mobile phones, such as the small
 screen size and limited memory or storage capacity, played a role in restricting access to full
 information relevant to the transaction, practices of some mobile vendors also impacted on
 information provision. For example, 26 per cent of vendors required the registration of personal
 data before obtaining information about a product (see figures 1a and 1b). The geographical
 location of a vendor was difficult to identify for 13 per cent of researchers.




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 Particular problems occurred in relation to inaccurate or misleading descriptions of products on
 a subscription. This resulted in unwanted subscriptions in 40 per cent of mobile PRS cases and
 33 per cent of other digital content (figures 2a and 2b).


                        Figure 2a. Mobile commerce cross-country survey 2009
                                If you experienced problems, what were they? (results by country)

                             100%              100%     100%               100%              100%        100%
           100%

           90%

           80%

           70%
                     63%
           60%
                                                                                             50%
           50%

           40%     38%


           30%

           20%
                  13%
           10%

            0%
                  Total    Germany Slovenia Belgium   Great     Norway Denmark Japan         Spain      USA     Korea   Canada
                                                      Britain

                  Incorrect item delivered    Defective item         Unwanted subscription           Other        Not stated




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 The survey results also indicate insufficient information disclosure on costs. For example, only
 62 per cent of vendors and 40 per cent of mobile PRS providers provided full transaction costs
 (figures 3a and 3b).




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 The research raises concerns over vendors’ policies on the use of the Wireless Application
 Protocol (WAP) that may restrict access to information but is offered to consumers as a trade-
 off for convenience, with consumers not necessarily being aware of the risks. For example, in
 64 per cent of redirections to WAP pages vendors failed to inform researchers about potential
 restrictions in information disclosure and advised how to access full information.

 Complaint handling and redress
 Researchers struggled to identify lines of responsibility and accountability in contract chains.
 Our survey shows that 46 per cent of vendors did not provide information about who would take
 responsibility for handling consumer claims in case of a dispute, and 71 per cent failed to inform
 shoppers on applicable dispute resolution procedures, including alternative dispute resolutions
 (ADRs) (figures 4a and 4b).




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           4b. Mobile commerce cross-country survey 2009
    FigureFig 4b. Mobile commerce cross-country survey 2009
               Did the vendor provide information on any dispute resolution? (results by product name)
Did the vendor provide information on any dispute resolution? (results by product name)

                                                             Total    Mobile    E-ticket    Other     Physical
                                                             (112)   PRS (42)     (24)      Digital     (25)
                                                                                           content
                                                                                             (21)

                 Yes, dispute resolution policy was          20%      12%        17%        14%        40%
                 provided as part of general terms and
                 conditions

                 Yes, and the vendor provided complete       13%      10%        13%        10%        24%
                 information on dispute resolution policy

                 Yes, and the vendor provided basic          1%        2%         0%         0%         0%
                 information with advice on how to
                 access complete information on dispute
                 resolution policy

                 Yes, and the information was accessible     13%       7%         4%        10%        32%
                 at all times

                 Yes, and the information was clear and      9%        7%         0%         5%        24%
                 easy to understand

                 Yes, the information on dispute             1%        2%         0%         0%         0%
                 resolution policy was provided but it did
                 not address my questions

                 Yes, but the information was difficult to   1%        0%         0%         0%         4%
                 find

                 Yes, but the information was not            1%        2%         0%         0%         0%
                 accessible at all times

                 Yes, but the information was difficult to   0%        0%         0%         0%         0%
                 understand

                 Other                                       7%        2%        13%         5%        12%

                 No                                          71%      81%        75%        71%        48%

                 Not stated                                  3%        0%         0%        10%         4%




        Mobile security
        Incidents of theft, fraud and unauthorised payments are frequent in mobile commerce, and
        consumers in most cases bear liability for potential financial loss. It is important that consumers
        are informed and advised about potential risks and preventative measures. Yet 91 per cent
        of vendors did not give information on the protection measures available against mobile loss
        and misuse, or advice on what to do in the event of a mobile loss (figures 5a, 5b, 6a and 6b
        overleaf).




       consumerfocus.org.uk                                           09                               Pocket shopping
consumerfocus.org.uk   10   Pocket shopping
                   Figure 6a. Mobile commerce cross-country survey 2009
                         Did the vendor provide you with information on how to protect your mobile
                                        from loss and misuse? (results by country)
          100%
                  4%
                                                                                                            10%
           90%              17%                                                                       20%

           80%

           70%
                                                                                   70%
           60%
                                                                             90%
           50%   92%                100%    100%        100%    100%                       100%                         100%
                                                                                                            90%
           40%              83%                                                                       80%

           30%

           20%
                                                                                   30%
           10%
                                                                             10%
            0%    4%

                 Total    Germany Slovenia Belgium   Great     Norway Denmark Japan        Spain      USA   Korea    Canada
                                                     Britain

                                  Not stated                             No                           Yes




                   Figure 6b. Mobile commerce cross-country survey 2009
                       Did the vendor provide you with information on how to to protect your mobile
                                 from loss and misuse? (results by type of product name)
          100%
                          4%                   5%                                                              4%
                                                                                           10%
           90%

           80%

           70%

           60%

           50%                                                         96%                 81%
                          92%                  93%                                                             96%

           40%

           30%

           20%

           10%
                                                                                           10%
            0%            4%                   2%                      4%

                         Total             Mobile PRS             E-ticket         Other Digital Content     Physical


                                  Not stated                             No                          Yes



 Payment
 We tested three available methods of mobile payment:

 z    payment charged to a mobile subscription

 z    payment through a wired and wireless IC chip card (eg, Moneta payment)

 z    credit and debit cards



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 We found that mobile payments charged to a subscription and IC chip card payments were easy
 to process, though we noted security risks concerning protection from unauthorised payment.
 Credit card payments, on the other hand, were difficult to process and restricted to more
 advanced mobile phones that supported secure connection software.

 Our research indicated problems with the payment process in the area of order confirmation.
 In many cases researchers were not given an opportunity to confirm the intended purchase,
 correct any errors, retain information or withdraw from the purchase. For example, 36 per cent
 of mobile PRS and 29 per cent of other digital downloads did not allow researchers to review
 orders (figures 7a and 7b).




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 Privacy
 Although the majority of vendors complied with data protection regulations and provided
 information on privacy policies, we are concerned that existing regulations may be insufficient to
 protect consumers. For example, as mentioned earlier, 26 per cent of vendors made information
 available only after personal data was provided (figure 1a and 1b). Our study also confirms the
 drive for collecting personal data for advertising purposes. For example, 20 per cent of vendors
 requested consent in order to contact shoppers for advertising purposes.

 Advertising
 Our research found encouraging results on unsolicited advertising. In the majority of cases (77
 per cent), shoppers were not targeted with any form of advertising. In cases where advertising
 material was sent (11 per cent), it allowed shoppers to unsubscribe, for example, by using an
 ‘opt out box’ (31 per cent) or ‘opt in’ box (8 per cent), as opposed to leaving recipients with no
 choice (8 per cent).

 Protection of children
 The research indicates limited protection of young mobile users from over consumption. Our
 research found that in 76 per cent of cases mobile payment transactions had no age restrictions
 attached. We found that mobile content marketed to youth was within easy reach of adult related
 content.

 Deliveries
 Overall, 86 per cent of purchases resulted in successful deliveries. Products that belonged to
 the physical goods category (96 per cent), mobile PRS (90 per cent) and e-tickets 83 per cent
 (figures 8a and 8b) performed better in comparison to other digital content, which registered only
 67 per cent of successful deliveries. Typical delivery problems were classified by researchers as
 unwanted subscriptions, defective products and incorrect billing. These were mainly associated
 with PRS and other digital content. This is an area that needs addressing as existing regulation
 provides consumers with limited right to redress and few remedies for undelivered or defective
 digital content.




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 Returns
 Our research shows that in the majority of cases vendors complied with distance selling
 regulations on returns, as researchers were able to return goods and obtain a refund for goods
 in the physical product category.




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 Recommendations
 M-commerce is predicted to become a mainstream trading platform, as technological
 innovations turn mobile phones into small computers enabling access not only to
 telecommunication services but also to online information, entertainment, shopping, banking and
 more. It is essential, at this early stage of m-commerce development, to address consumers’
 concerns in order to increase confidence and facilitate growth.

 Our practical research identified problems faced by consumers engaging in mobile transactions.
 Some of these were highlighted earlier in the OECD Guidance for Addressing Emerging
 Consumer Protection and Empowerment Issues in Mobile Commerce1. The Guidance proposed
 practical measures to improve consumer protection in the areas of access to information,
 security, redress and protection of minors from access to harmful and adult content, over
 consumption and location based data2. We found that many mobile vendors do not comply with
 the guidance. We also identified further gaps in the existing consumer protection that require
 strengthened legislation and self-regulatory frameworks.

 We recommend that Governments should:

 z    Assess the relevance of existing regulations in relation to the new emerging problems in
      mobile commerce that include:

 z    restrictive access and limited net neutrality of software and equipment

      -       limited right to redress and remedies for faulty or undelivered digital content
      -       limited protection against damaged caused by unauthorised mobile use, and security
              and privacy breaches
      -       limited protection of children from over-consumption and access to illegal and
              harmful content

 z    Put effective systems in place, backed by appropriate sanctions, to improve enforcement
      of the current regulations to give mobile phone shoppers adequate protection.

 z    Encourage the mobile industry to develop best practice and self-regulatory standards.




 1        OECD Policy Guidance for Addressing Emerging Consumer Protection and Empowerment Issues in
          Mobile Commerce, OECD Ministerial Meeting on the Future of the Internet Economy, Seoul, Korea, 17-18
          June 2008.
 2        OECD Policy Guidance for Addressing Emerging Consumer Protection and Empowerment Issues in
          Mobile Commerce, OECD Ministerial Meeting on the Future of the Internet Economy, Seoul, Korea, 17-18
          June 2008.


consumerfocus.org.uk                                    15                                   Pocket shopping
 We also encourage the mobile industry to improve compliance with the existing legal
 frameworks, and develop best practices and self-regulatory programmes that will guarantee
 consumers:



 z    Clear and transparent information about products, costs, and terms and conditions
      delivered to consumers on the small mobile screen or by alternative methods

 z    Protection from unauthorised transactions, such as unwanted subscriptions, where
      required disclosures have not been made

 z    Confirmation processes that facilitate informed and deliberate consent to the purchase,
      and provide a record of the transaction

 z    Secure payment that protects consumers against external and internal abuse of
      consumers’ financial information and unauthorised purchases

 z    Access to complaint handling facilities that ensure consumers are provided with a clear
      complaints policy that outlines who takes responsibility in the event of a claim. There
      should also be targets for responding to communications, and contact details

 z    Access to low-cost and simple dispute resolution schemes if a complaint cannot be
      resolved successfully with a mobile provider

 z    Data protection that shields consumers from unauthorised use of personal information
      given during the transaction process

 z    Protection of minors from over consumption and access to adult content

 z    Protection against unsolicited advertising and spam

 In addition, we recommend more cooperation between government authorities, businesses and
 consumer organisations to educate consumers about their rights and how to protect themselves
 when shopping with the use of a mobile phone.




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 Mobile commerce

 T   he convergence of operating platforms, development of smarter mobile phones and the
     increasing number of mobile phone users accelerates development of m-commerce.
 According to the OECD figures, between 1997 and 2005 the number of mobile subscribers grew
 on average by 24 per cent a year3. Currently the m-commerce market is dominated by mobile
 PRS such as ringtones, screen savers and online games. However, increasingly mobile phone
 subscribers use phones to access news services, including transport information, sport and
 weather. They are also used to access location specific information based on location tracking
 technology.

 Mobile commerce offers consumers greater choice of products and convenience of mobility, as
 well as the flexibility of ordering goods and services at any time and from any location. However,
 the new commercial platform also poses risks that need to be addressed.

 The TACD Resolution on Mobile Commerce highlighted risks that included unauthorised
 purchases, marketing to children, inadequate disclosure of information, deceptive solicitation
 for products and services, security of financial information, illegal activities ranging from child
 pornography to gambling, and privacy and discrimination issues4.

 The TACD report, which was based on the mobile commerce attitude survey carried out in 2006,
 identified problems with inaccurate or misleading information on costs, and terms and conditions.
 It also highlighted issues with overall product description, especially relating to products offered
 on a subscription with recurring charges. In addition, survey respondents reported problems over
 abuse of personal information collected by a mobile vendor during the transaction, as well as
 unsolicited advertising, incorrect billing and redress5.

 There are also emerging issues related to remedies and redress for defective or undelivered
 mobile content and mobile payments. Under existing regulations consumers have limited rights
 to remedies and redress for defective mobile content products despite the fact that increasingly
 consumers experience problems with downloading digital content.

 Mobile payment is another area where consumers have limited protection and are liable for
 potential loss due to unauthorised mobile use. Unlike credit card users, mobile phone subscribers
 are not compensated by mobile providers for loss caused by unauthorised use of a mobile phone
 (Annex 1)6.

 Some of the consumer concerns in relation to m-commerce were acknowledged by OECD.
 In 2008 OECD Directorate for Science, Technology and Industry Committee for Information,
 Computer and Communication Policy released guidance that suggested measures to policy
 bodies, law makers and businesses on how to counteract m-commerce challenges related to7:


 3      OECD Communications Outlook 2007, OECD, Paris, p.98.
 4      TACD Resolution on Mobile Commerce, August 2005.
 5      TACD Report on the July 2006 Mobile Commerce Survey, 2006.
 6      For example in majority of countries participating in the project consumers are granted limited protection, and
        only the Danish legislation equalises a status of a mobile SIM card to a credit card and grants the same
        protection.
 7      OECD Policy Guidance for Addressing Emerging Consumer Protection and Empowerment Issues in Mobile
        Commerce, OECD Ministerial Meeting on the Future of the Internet Economy, Seoul, Korea,
        17-18 June 2008.

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 z     limited information disclosure due to technical constraints of mobile phones

 z     protection of children and minors from commercial exploitation such as over-consumption,
       marketing and access to adult related content

 z     risks for abuse from unauthorised use; security and privacy breaches

 The policy recommendations were based on the OECD Guidelines for Consumer Protection in
 the Context of Electronic Commerce, which were adopted in 1999 to encourage good practice
 in e-commerce B2C transactions cross-border in areas such as advertising and marketing
 practices, online information disclosure, confirmation process, payment, privacy, dispute
 resolution and redress.

 The Guidelines are currently under review. Therefore there is an opportunity to assess what
 areas of the Guidelines could be built upon or improved to protect mobile phone users, mitigate
 risks and increase consumers’ confidence in mobile commerce.

 There are also initiatives carried out at EU level that will affect mobile commerce through
 newly proposed legislation and improved enforcement actions. In November this year an
 agreement on the Telecom Package was reached8. The reform will benefit consumers with
 stronger protection of their rights, better choice and enhanced competition between telecom
 operators. It will also make the mobile networks more reliable and secure9. Also, the proposal
 of the Consumer Rights Directive is likely to impact on consumer rights for some m-commerce
 transactions. The Data Protection Directive is under review and research is being undertaken
 on consumer rights for digital content. The Commission has also investigated the issue of mis-
 selling mobile content that led to either a closure or correction of 70 per cent of websites selling
 mobile content10.

 This practical research adds a consumer voice to the debate on how existing and newly
 proposed regulations respond to risks encountered by a growing number of mobile users. What
 role can governments play in enhancing consumer protection in mobile commerce? And what
 specific areas of commercial practice need to be improved by business?




 8      http://ec.europa.eu/information_society/policy/ecomm/tomorrow/index_en.htm
 9      http://ec.europa.eu/news/science/071113_1_en.htm
 10     http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/1725&format=HTML&aged=0amp;&
        language=EN&guiLanguage=en


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 What we did

 Research method

 T  he mobile commerce market is steadily growing and we decided to examine this new
    commercial platform and test the experiences of people using mobile phones for purchasing
 purposes across borders.

 The research aimed to:

 z    assess consumer experience with m-shopping

 z    identify potential problems consumers may face when using mobile phones for shopping

 z    outline areas of good and bad practice

 We applied a mystery shopping technique in order to give us an objective measure of consumer
 experience. Researchers from consumer organisations (Table 1) based in 11 countries were
 asked to purchase 10 items from the recommended shopping list over a mobile phone.

 Researchers were familiar with mobile technology and used mobiles for communication
 purposes, but only a few purchased mobile PRS products. All researchers had experience of
 online shopping via their PC.

 Overall we placed orders for 112 products between July and September 2009. As mobile
 commerce is relatively new we focused our research on domestic purchases, but we did not
 restrain project partners from cross-border shopping in order to replicate consumers’ shopping
 behaviour as much as possible. Out of 112 orders placed, 10 were cross-border purchases. In
 the case of 14 orders, researchers were unable to identify the geographical location of vendors.

 The project was developed and coordinated by Consumer Focus. The research method was
 based on similar online shopping studies carried out by Consumers International in 1999 and
 200111. Project participants were consulted on the questionnaire survey and its results.

 Participating countries
 The countries represented in the project have a relatively highly developed mobile market,
 with a growing number of a third generation (3G) mobile phone subscribers, increasingly using
 mobile phones not only for telecommunication purposes, but also to access online services and
 goods. Some countries represented in the project, such as Japan and Korea, are leading the
 way in the worldwide m-commerce market. The country selection enabled us to gain an insight
 into an international overview on m-commerce trends and facilitate cross-country comparisons
 from a consumer perspective.




 11     Consumers@shopping, An international comparative study of electronic commerce, Consumers
        International 1999; Should I buy? Shopping online 2001: An international comparative study of electronic
        commerce, Consumers International 2001.


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 Participating countries/organisations:

  Country          Organisations
  Belgium          European Consumers Organisations (BEUC)
  Canada           Public Interest Advocacy Centre
  Denmark          The Danish Consumer Council (Forbrugerrådet)
  Germany          Federation of German Consumer Organisations (VZBV)
  Japan            NCOS (Nippon Consumer Voice for Better Standards)
  South Korea      Consumers Korea
  Norway           National Consumer Council
  Slovenia         Slovenian Consumers Association
  Spain            Organisation of Consumers And Users (OCU)
  UK               Consumer Focus
  USA              American Council on Consumer Interests (ACCI)

 Mobile phone phones and network providers
 The survey was carried out with the use of 3G mobile phones, which varied in terms of
 technical specification and browsers installed. We were interested to examine to what extent
 technological factors determined by the equipment influenced the purchasing process. We also
 recorded the names of mobile network providers and those services we used during the survey.

 Shopping list
 The shopping list included goods and services available to purchase over mobile phones, which
 were categorised as:

 z    Mobile Premium Rate Services (mobile PRS)

 z    E-tickets

 z    Digital content other than mobile PRS

 z    Physical goods

 We aimed to compare consumer experience in each of the categories through the prism
 of factors important to consumers such as choice, convenience, availability of information,
 payment security and delivery.

 Researchers were not asked to shop for exactly the same products because we were interested
 in the evaluation of choice. Our research did not look into price comparisons.

 Researchers were asked to shop for mainstream products in each category and were given a
 recommended sample list of products:

 z    Mobile PRS: screen saver, ringtone, game, information service (news service, traffic news,
      weather, horoscope)

 z    E-ticket: a ticket for transport, concert, cinema, theatre

 z    Digital content other than mobile PRS: music download and E-book

 z    Physical goods: a book, CD or DVD




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 The researchers were asked to place 10 successful orders with at least two belonging to
 each category. The majority of organisations placed 10 orders, with the exception for Slovene
 Consumers Organisation (Slovenia) which purchased 12 items and Public Interest Advocacy
 Centre (Canada) which bought five.

 Selection of vendors
 Only content providers and sites directed at consumers were eligible for the purpose of the
 study. When determining the choice of vendors, researchers were instructed to make a selection
 in a manner that attempted to replicate how consumers normally shop using mobiles. We did
 not encourage researchers to choose little known sites or sites with a poor reputation. However,
 as some of the researchers struggled to find suitable products and retailers, in some cases
 researchers placed orders from sites that were not well known to them.

 In order to select vendors, researchers used methods typically applied by consumers that
 included:

 z    Search engines

 z    Advertisements

 z    Recommendations from friends or elsewhere

 Assessing mobile vendors
 To assess mobile vendors and online sites we used criteria developed by the OECD Guidelines
 for Consumer Protection in the context of e-commerce12 and Consumers International online
 shopping studies13. The survey tested the following areas:

 z    transparency and accessibility of information disclosure about the product, the price and
      the business

 z    advertising and marketing practices

 z    collection of payment to include payment methods and security

 z    collection of personal information about consumers

 z    information on dispute resolution and redress

 z    information about consumers’ rights, obligations and risks involved in mobile shopping

 For digital mobile PRS, content and e-tickets the survey consisted of two questionnaires:




 12     OECD Guidelines for Consumer Protection in the context of e-commerce, 1999.
 13     Consumers@shopping, An international comparative study of electronic commerce, Consumers
        International 1999; Should I buy? Shopping online 2001: An international comparative study of electronic
        commerce, Consumers International 2001.


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 Questionnaire 1
 Placing the order

 z    information disclosure about the business, the product and the price

 z    terms and conditions (eg, rights to withdraw or cancel, policy on returns, dealing with
      problems of applicable law); information on product restrictions, eg, DRMs)

 z    privacy policies

 z    payment (security of transactions, age verification)



 Questionnaire 2
 Delivery

 z    information on despatch

 z    product delivery (eg, conditions in which goods arrived)

 z    information on communication with customer services in case there was a problem with
      delivery

 z    information on billing (eg, clarity of charges, additional charges)

 z    post-sale advertising practices



 Questionnaire 3
 Return

 For physical goods there was an additional questionnaire that scrutinised the following issues:

 z    return policies (eg, cooling off period)

 z    imposed restrictions

 z    the costs of returning goods

 z    payment refund




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 What we found

 Research results

 T  he observations made in this chapter draw on qualitative and quantitative analysis of 112
    questionnaires which recorded results of the shopping exercise and supporting information
 submitted by project partners.

 Mobile equipment
 In mobile commerce the technical specification of a handset determines to a large extent
 the shopping experience. We found that handsets with sophisticated software that offered
 better web browsing widen access and choice of products, improve the visibility of information
 provided on websites and reduce purchasing time. Also, handsets with bigger memory capacity
 enabled the installation of security software, thus broadening access to products that require
 credit card payment.

 Broadband coverage and speed
 Our research found that quality of network coverage and broadband speed is crucial to facilitate
 a mobile transaction. Poor quality of network coverage, ‘not-spots’ and slow broadband
 speed led to disruptions in the transaction process or restrictive access to information about
 products, terms and conditions, and other information. For example, in the UK the location of
 the buyer determined the level of information obtained from the same vendor. In some locations
 the researcher was able to obtain full information about the transaction, while in others the
 same vendor provided a link which referred the researcher to the Internet website where full
 information could be viewed. Disruptions to the network prolonged transaction time, therefore
 increasing purchase costs. Poor quality of network coverage can act as a powerful deterrent in
 preventing consumers from engaging in mobile commerce.

 Choice
 In a well developed and functioning market consumers should be able to select from a wide
 range of products and services offered at competitive prices with an assurance of satisfaction
 and quality. Mobile commerce has the potential to deliver ever greater choice to consumers with
 a ‘one click’ function.

 Yet the results indicate that a choice of goods and services accessible via mobile phones was
 limited in comparison to the internet or the ‘brick and mortar’ marketplace. The study found that
 although four types of product were available to purchase through a mobile handset, such as
 mobile Premium Rate Services, e-tickets, digital content (other than mobile PRS) and physical
 goods, the degree of choice and access varied between them.

 Mobile Premium Rate Services dominate the mobile market and the research reflected this trend
 as the majority of purchases were in the Mobile PRS category (figure 9a and 9b). Researchers
 found Mobile PRS easily accessible using relatively simple handsets, but some were
 disappointed about limited product choice. For example, the selection of e-books and music was
 poor. We found that the majority of Mobile PRS such as ringtones, games and screen savers
 were marketed at a young clientele, and would also appeal to children.




consumerfocus.org.uk                              23                              Pocket shopping
consumerfocus.org.uk   24   Pocket shopping
 We noted that these products were within easy reach of adult content, which raises concerns
 about the protection of young mobile users.

        ‘There were some difficulties with displaying and choosing the seat
          order. The seat order was not completely displayed on the mobile
      screen, therefore I could not choose from all available seats including
              their various price ranges. Luckily the price range I wanted to
                                                    purchase was displayed.’
                Recorded by a researcher from Slovenia buying a ticket for an exhibition

 The second category of products tested were e-tickets, including tickets for parking, transport
 and entertainment (cinema, theatre, and concert). Utilising SMS and MMS text messaging
 technology as a channel for e-ticket sales could benefit consumers, with the convenience of
 instant delivery. This would serve to satisfy the increasing demand for sustainable consumption
 by reducing paper usage.

 Yet the results of our shopping were disappointing, as many of the researchers found the
 process of buying e-tickets complex in comparison to internet shopping using a PC or other
 conventional methods. Among disadvantages listed by researchers were:

 z    the requirement of a printed ticket rather than utilising SMS/MMS text messaging systems

 z    restricted visibility due to a small screen when selecting a seat

 z    the inability to complete a registration process because the secure connection used by the
      vendor was not supported by mobile software



                ‘Payment seems to be the most troublesome part of ordering
              and avoided when tickets ordered online can be picked up with
         reservation numbers at several kiosks. Even though the vendor has
         e-tickets it is hard to order these to a mobile phone, as they have to
           be printed. The reservation code comes by email, but can also be
                                          viewed at the webpage after ordering.’
                                   Recorded by a researcher from Norway buying e-ticket

 As for mobile content other than PRS (ie, music downloads, e-books and software) we found
 it was accessible to view via online websites, but many researchers were prevented from
 purchasing by barriers that included:

 z    DRM restrictions and restrictive choice of software applications

 z    lack of interoperability of software and equipment

 z    insufficient capabilities of mobile software to process secure payment with a credit or debit
      card



consumerfocus.org.uk                              25                              Pocket shopping
 Difficulty in accessing digital content translated into problems with delivery because a high
 percentage of digital content was not delivered (14 per cent) in comparison to other product
 categories – see section on delivery (figures 8a and 8b).

          ‘It is also a paradox that it should be so hard to buy an mp3 to what
        is sold as an ‘mp3 phone’. One web site offering this had restrictions
               on who could actually buy mobile content straight to their mobile
         phones (had to have a certain mobile provider), while the rest would
        have to order them using the normal websites, and then transfer it to
                                                             their mobile phone.’
                                                        Recorded by a researcher from Norway


 The problem with limited interoperability of software and equipment reflects an overall
 phenomenon of segmentation and limited net neutrality that restricts access and choice of
 software applications in the online content market. Some researchers noted that vendors offered
 software at extra cost in order to enable to download a product they intended to purchase.



             ‘What made me really angry was the fact that the downloadable
           eBook had a special file format which I was only able to open with
          Adobe Digital Editions. After a bit of search in the internet I found a
          programme to convert the file format to something more usual. But
           when I tried to convert the file I got the error message that this file
         is being protected by DRM. On my mobile I couldn’t even install the
            programme to watch the eBook. A second mobile with a different
           browser didn’t even let me download the eBook from the vendor’s
                                                                            page.’
           Recorded by a researcher from Germany buying eBook (Digital content other
                                                                 than mobile PRS)

 Restrictive access to goods and services online via a mobile phone also poses questions over
 competition on the mobile market currently dominated by mobile PRS vendors. Is the access
 restrictive due to technical incapability that will be removed in the longer term by technological
 progress and innovations? Or is the access restricted deliberately by dominant mobile market
 stakeholders?



           ‘Difficulty of using a browser needed to enable Java; but didn’t say
                                      that also needed to support HTML tables’
                            Recorded by a researcher from Canada buying a movie ticket


consumerfocus.org.uk                               26                               Pocket shopping
 The physical product category included a book, CD and a DVD. Mobile broadband allowed
 researchers to view goods on offer over the internet. However, researchers struggled to buy
 some products due to technical restrictions of a mobile handset, such as a small screen that
 limited access to information about the product and the transaction, low processing capacity
 that restricted use of secure payment connection, or secure registration. Researchers who
 experienced online shopping via a PC found that the process of buying goods with a mobile
 phone took longer than a similar purchase would with the use of a PC. Many researchers also
 noted that in order to complete the transaction successfully they had to swap between a mobile
 and a PC.

 For m-commerce to take off and become mainstream, choice and access to the market need to
 be significantly widened by online digital content retailers.

 Information disclosure
 In the mobile environment, with the remoteness of a buyer, immediacy of the transaction and
 a complex chain of intermediaries, transparency and clarity of information are essential to
 guarantee informed purchase. Yet research results indicate problems with information disclosure
 in mobile commerce. Although information about the business, terms and conditions and contact
 details was provided (figures 10a, 10b, 11a and 11b), its access, transparency and clarity was
 restrained by factors attributed either to limitations of mobile technology, or the practices of
 mobile vendors.




consumerfocus.org.uk                            27                              Pocket shopping
consumerfocus.org.uk   28   Pocket shopping
 Technological constraints

 Wireless Application Protocol (WAP)


            In ‘Terms and Conditions’ process sent the link [...] for additional
         information (should be the PC website) but the link goes to another
              friendly website (WAP) and the information is also very limited.
                       Recorded by a researcher from Spain buying mobile PRS ring tone


 WAP is a secure specification that accommodates constraints of low memory capacity and
 small screens of mobile phones by compacting the internet pages which otherwise could not be
 accessible via mobiles or take longer to download. However, in our research WAP compromised
 access to information as the compacting process often restricted disclosure of full information
 placed on the internet site. Consumers redirected to WAP pages should be informed about
 any restrictions in information display and provided with full information by another method.
 Our survey found that 64 per cent of researchers who were redirected to WAP pages were
 not informed about potential risks. Moreover, those who were provided with a link to complete
 information could not access it on a mobile (figure 12).




consumerfocus.org.uk                            29                              Pocket shopping
             As indicated at the beginning of the questionnaire, although the
         vendor did not propose me to be redirected to a mobile webpage it
          was obviously the case. The content I saw was very different from
          the official retailer’s website. There were only some options and a
       link to the retailer’s website for a PC. Therefore I placed an order for
                                         a book on a mobile friendly web page.

       On this one there was, for instance, no Customer Service/helpdesk.
          The terms and conditions were only available until the validation
             order... in these Terms and Conditions, the return and privacy
           policies were mentioned but without any solution to read on the
       mobile webpage. To check them, I had to go to the retailer’s website
                                                                    for PC.
                             Recorded by a researcher from Belgium buying a book




consumerfocus.org.uk                    30                          Pocket shopping
          WAP page has less info than web page where more information on
                   cancelling services, geographical address etc is stated.

                                Ordered using SMS and was sent to WAP site via
                                                   SMS with WAP information.
                    Recorded by a researcher from Norway buying mobile PRS ring tone


 Mobile screen size


         The process according to the order in general, but very complicated
                 as the website didn’t fit the mobile screen and kept jumping
                                                            forward and back.
                             Recorded by a researcher from Norway buying cinema ticket

 We found that a small mobile screen size was the key impediment to obtain full information
 about the product, the costs and attached terms and conditions. For example, the font size was
 either too small or did not fit the mobile screen. Often vendors provided a short version of terms
 and conditions with a link to a full version of the contract which could only be viewed via a PC.
 As a result the overall process of accessing information took much longer in comparison to
 online shopping with a PC. Researchers noted that in order to access full information they had
 to swap between a mobile and a PC. Consumers who rely on mobile broadband would not be
 able to obtain complete information.

        It was very hard to surf the vendor’s website with this mobile phone.
               The displayed website was very narrow and long. Sometimes I
           had to press the ‘down’ button for almost a minute or so just to get
             to the bottom of the page in order to continue the purchase. The
           information of the purchase was displayed in a really disorganised
                                                 way and was difficult to read.
                    Recorded by a researcher from Slovenia buying USB key and a book

 Limited processing capacity
 Memory size of a mobile handset also impacted on information disclosure. Simple mobile
 handsets with a low memory capacity restricted access to full information and referred to a
 short click-wrap message or contract agreement instead. For example, a researcher in the UK
 experienced differentials in contract length and terms and conditions provided by the same
 vendor, depending on the specification of the mobile phone used and its memory capacity.




consumerfocus.org.uk                              31                               Pocket shopping
 Businesses practices

 Chain of intermediaries in the transaction process
 In a typical mobile transaction a consumer is automatically directed through a chain of
 intermediaries often operating from different locations with different terms and conditions
 attached. For example, we found that buying a mobile PRS ringtone in many cases required
 going through a transaction with three vendors: a service provider, the supplier of the ring tone
 and a vendor who processed payment. Despite the fact that vendors in most cases provided
 information about the business, products and terms and conditions, many researchers found it
 difficult to identify lines of accountability and responsibility in the event of a complaint.

 In addition our findings indicate that as many as 13 per cent of researchers struggled to identify
 the geographical location of vendors and could not tell whether they were entering into a
 domestic or a cross-border transaction.



            Though the law was obeyed, it was not easy to understand for a
       consumer. It was difficult to grasp the necessary information because
        it was not collected in one place and the sentence was complicated.

                         Recorded by a researcher from Japan buying mobile PRS game



 Researchers also reported that some vendors included a requirement to register prior to
 obtaining information about a product. For example, our survey indicates that as many as 26 per
 cent of researchers were asked to register personal data in order to have access to information
 about a product they intended to buy (figures 1a and 1b). This figure was much higher for
 countries such as Korea (80 per cent), Germany (58 per cent) and USA (50 per cent).



                 Vendor asked to agree to Terms & Conditions but they were
             not provided on the page where information on the product was
        displayed. It referred to its Terms & Conditions placed on its website
                                                or contact 191 (free number).
                         So had to go to my PC to check Terms & Conditions.
                Recorded by a researcher from the UK purchasing mobile PRS ring tone

 Lack of clarity and transparency about products on a subscription was another area noted
 by researchers. We often found that information about the subscription was offered towards
 the end of the transaction process rather than at the initial stage, which would allow informed
 purchase, or was not provided at all. As a result, 40 per cent of mobile PRS purchases and 33
 per cent other digital content were described by researchers as unwanted subscriptions (figures
 2a and 2b).


consumerfocus.org.uk                              32                               Pocket shopping
          I ordered one mobile game and automatically was in a subscription
           with the vendor for three games software for 4.99 Euros per week.
          I had to send a text message to the vendor to end the subscription.

       Many vendors are using this method so you have to be careful not to
        be trapped in subscriptions because you have to pay the follow-up
                                                      costs to end them.
                      Recorded by a researcher from Germany buying mobile PRS game

 We also tested availability of information on delivery, for example, information on restrictions.
 The purchase of digital content requires software compatibility with a mobile phone. In the
 event a delivered content does not work due to technical reasons consumers have no right to
 compensation or redress. Therefore it is essential that consumers are informed about software
 and equipment requirements, and any restrictions attached prior to the purchase. Our research
 found that 70 per cent of vendors did not inform consumers about restrictions on deliveries
 (figures 13a and 13b). This is particularly important in the case of digital content that often has
 Digital Rights Management and other software restrictions attached. An additional 44 per cent
 did not provide information on what to do in case products are not delivered, are damaged,
 defective or are delivered as a result of an unwanted subscription (figures 14a and 14b).




consumerfocus.org.uk                               33                               Pocket shopping
consumerfocus.org.uk   34   Pocket shopping
          This site did not provide instructions on how to collect tickets to my
           mobile phone. I had to log onto the website on my desktop to find
                                                               this information.
                            Recorded by a researcher from the USA buying a concert ticket


 Complaint handling, dispute resolution and redress
 Access to low-cost, simple dispute resolution and fair remedies for unsatisfactory goods and
 services is key to building consumers’ trust in any commercial transaction. These imply easy
 access to a customer helpline, clarity in information about who would take responsibility in
 the event of a claim, and effective complaints’ and redress procedures. In mobile commerce,
 transactions that involve a chain of intermediaries such as network providers, developers and
 aggregators must include clarity and transparency of information, as well as contact details
 about providers. The need for easy and low-cost access to redress mechanisms in these chains
 is crucial to consumer trust. The OECD Policy Guidance for Addressing Emerging Consumer
 Protection and Empowerment Issues in Mobile Commerce suggests that mobile operators and
 vendors should be encouraged to establish effective mechanisms for dealing with consumer
 complaints and also provide consumers with clear information on who would be accountable in
 case of a claim14.


 14     OECD Policy Guidance for Addressing Emerging Consumer Protection and Empowerment Issues in
        Mobile Commerce, OECD Ministerial Meeting on the Future of the Internet Economy, Seoul, Korea, 17-18
        June 2008.


consumerfocus.org.uk                                  35                                   Pocket shopping
 In spite of this guidance, 46 per cent of vendors did not provide information about who would
 take responsibility for handling consumer claims in case of a dispute (figures 15a and 15b) and
 15 per cent failed to state customer’s helpline contact details (figures 16a and 16b).




consumerfocus.org.uk                             36                              Pocket shopping
 Our survey also found that 71 per cent of vendors failed to advise consumers on applicable
 dispute resolution, including alternative dispute resolution (ADR) procedures (figures 4a and
 4b). In the case of mobile PRS purchases the figure was 81 per cent and for physical goods it
 was 48 per cent. These results could be because consumer protection does not have redress or
 remedies for faulty digital content.



consumerfocus.org.uk                           37                             Pocket shopping
 Our research did, however, find some vendors voluntarily offering a service replacement caused
 by a technical error in the downloading process. The results of the survey from Korea, where the
 Act on Consumer Protection in Electronic Commerce (CPEC) obliges business to compensate
 consumers in case of non-delivery or incomplete download15, are encouraging. For example,
 more than 70 per cent of vendors from Korea provided information on dispute resolution and
 only 20 per cent failed (figures 4a and 4b).

        In the order confirmation, information on billing questions and who to
       contact was provided. However, information regarding who to contact
            regarding any downloading issues was not provided. ‘For product
          technical support please contact the developer of the products you
                             purchased’ is all the information that was given.
                        Recorded by a researcher from the USA buying mobile PRS game

 Privacy policies
 Mobile commerce vendors are able to collect information about consumption patterns of mobile
 phone users which they can use or sell to a third party for marketing purposes. Location tracking
 technologies enable companies to locate a mobile phone and target advertising to the location
 of a mobile phone user; for example, special offers in local shops and restaurants situated near
 a mobile user’s location.



             No explicit authorisation. Implicit authorisation when you accept
           General Conditions.[...] also users that provide their personal data
           expressly consent that their data can be communicated for use by
                                                             2nd group entities.
                       Recorded by a researcher from Spain buying mobile PRS ring tone

 In our survey we were interested to find out privacy policies and measures implemented by
 mobile vendors and specifically find out whether vendors:

 z    provided information about privacy policies

 z    asked to agree to privacy policies

 z    indicated they would collect and store personal data collected during the transaction

 z    asked for consent for using personal information collected in the transaction for advertising
      purposes




 15     Mobile Commerce, OECD Directorate for Science, Technology and Industry Committee on Consumer Policy,
        16 January 2007, p24.


consumerfocus.org.uk                                 38                                   Pocket shopping
                                           Figure 17a. Mobile commerce cross-country survey 2009
                                           Did the vendor provide information about privacy practices? (results by country)

                                                           T otal   Germany   Slovenia   Belgium   Great     Norway   Denmark   Japan   Spain   USA    Korea   Canada
                                                           (112)      (12)      (12)       (11)    Britain    (11)      (10)     (10)    (10)   (10)    (10)     (5)




consumerfocus.org.uk
                                                                                                    (11)

                       Yes, any the information on         36%       75%       33%        45%      27%        18%      20%      40%     60%     10%    40%      0%
                       privacy policies was provided as
                       part of general terms and
                       conditions

                       Yes, and the vendor provided        29%       75%       33%        36%      18%        27%       0%      10%     20%     10%    60%     20%
                       complete information with privacy
                       terms and conditions

                       Yes, and the vendor provided         9%        0%        0%        0%        0%        0%        0%      40%     0%      20%    30%     20%
                       basic information with advice on
                       how to access complete
                       information on privacy terms and
                       conditions

                       Yes, and the information was        31%       75%       33%        45%      18%        18%       0%      70%     20%     10%    30%      0%
                       accessible at all times




39
                       Yes, but the information was         7%       25%        0%        18%       0%        0%        0%      10%     10%     0%     10%      0%
                       difficult to understand

                       Yes, but the information was         5%        8%        0%        0%        9%        0%       10%      10%     20%     0%     0%       0%
                       difficult to find

                       Yes, but the information was not     3%        0%        0%        0%        0%        9%        0%      10%     10%     0%     0%       0%
                       accessible at all times

                       Other                               16%        8%        0%        36%      55%        18%       0%      0%      20%     10%    10%     20%

                       No                                  30%        8%       67%        18%       0%        45%      80%      0%      20%     30%    20%     60%

                       Not stated                           6%       17%        0%        0%        0%        9%        0%      0%      0%      30%    10%      0%




Pocket shopping
         Figure 17b.        commerce cross-country survey 2009
  Figure 17b.vendorMobile commerce cross-country survey 2009
         Did the Mobile information about privacy practices?
                     provide
Did the vendor provide information about privacy practices? (results by product name)
            (results by product name)


                                                           Total    Mobile    E-ticket    Other     Physical
                                                           (112)   PRS (42)     (24)      Digital     (25)
                                                                                         content
                                                                                           (21)

               Yes, any the information on privacy         36%      26%        29%        57%        40%
               policies was provided as part of general
               terms and conditions

               Yes, and the vendor provided complete       29%      17%        33%        29%        48%
               information with privacy terms and
               conditions

               Yes, and the vendor provided basic          9%       12%        13%         5%         4%
               information with advice on how to
               access complete information on privacy
               terms and conditions

               Yes, and the information was accessible     31%      19%        21%        38%        56%
               at all times

               Yes, but the information was difficult to   7%        7%         0%         5%        16%
               understand

               Yes, but the information was difficult to   5%       10%         0%         5%         4%
               find

               Yes, but the information was not            3%        2%         4%         0%         4%
               accessible at all times

               Other                                       16%      12%        13%        14%        28%

               No                                          30%      43%        42%        14%        12%

               Not stated                                  6%        7%         4%        10%         4%




     Researchers found that the majority of vendors provided information about privacy policies
     either as part of general terms and conditions or disclosed them separately, though a substantial
     percentage failed to do so (30 per cent) (figures 17a and 17b). Also, the majority of vendors (63
     per cent) failed to ask researchers to agree to privacy terms and conditions. The survey results
     also demonstrate there is some concern about collecting personal information for advertising
     purposes. For example, 20 per cent of vendors asked researchers for consent to use personal
     information collected during the transaction for advertising purposes (figures 18a and 18b),
     though in limited cases (11 per cent) researchers were contacted for advertising purposes.




    consumerfocus.org.uk                                           40                                 Pocket shopping
                       Figure 18a. Mobile commerce cross-country survey 2009
            Did the vendor ask your consent to use information about your transaction and/ or your personal data in order to contact
                                             you for advertising purposes? (results by country)

          100%                              100%         100%                                       100%

           90%
                                                                                                                                    80%
           80%
                   70%                                                                                         70%        70%                70%
           70%                    67%
                                                                                                                                                                60%
           60%                                                           55%            55%

           50%                                                                     45%

           40%
                                                                                                            30%                                      30%
           30%                                                             27%
                                                                                                                              20%      20%                 20% 20%
           20%                   17% 17%                                18%         18%
                 14%
                                                                                         9%          10%                10%
           10%    6%        7%
                       6%
           0%
                   Total      Germany Slovenia Belgium                  Great       Norway Denmark Japan                 Spain      USA       Korea        Canada
                                                                        Britain
                 Yes, and it provided me with "opt in" option                                            Yes, and it provided me with "opt out" option
                 No                                                                                      Other
                 Not stated




                       Figure 18b. Mobile commerce cross-country survey 2009
           Did the vendor ask your consent to use information about your transaction and/ or your personal
                   data in order to contact you for advertising purposes? (results by product name)
          100%

           90%
                                                             79%                              79%
           80%
                              70%
           70%
                                                                                                                                                     64%

           60%

           50%                                                                                                           48%


           40%
                                                                                                                  29%
           30%
                                                                                                                                          20%
           20%
                   14%                                                            13%    13%                                  14%
                                                                        10%                                                                   12%
                                                                                                                                 10%
                                                                                                                                                                8%
           10%           6%         6% 7%          5%
                                                                   7%
                                                                                                                                                           4%
                                                        2%
                                                                                                    0%
           0%
                             Total                      Mobile PRS                        E-ticket             Other Digital Content               Physical

                                            Yes, and it provided me with "opt in" option
                                            Yes, and it provided me with "opt out" option
                                            No




consumerfocus.org.uk                                                                           41                                                               Pocket shopping
 Security policies
 In mobile commerce the risks of theft, fraud and unauthorised payment are high. According to
 the OECD Mobile commerce report, the problem of mobile theft is worldwide and predicted to
 rise16. Juniper Research reported that in the UK alone there are 10,000 mobile phones stolen
 every month17. In most of the countries represented in the project consumers have limited
 protection from the consequential loss of unauthorised mobile use and have to bear potential
 damage costs. Yet many consumers are confused about mobile phone theft and do not know
 who is liable for potential misuse. For example, according to studies of Harris Interactive
 commissioned by Consumer Focus, 46 per cent of survey respondents expected the network
 provider to pay call charges in the event of a mobile theft18.

        Unclear to whom debit card information was being sent and whether
                                         secure practices were being used.
               Recorded by a researcher from the USA purchasing mobile PRS ringtone

 Our survey examined whether vendors informed consumers about security practices and
 advised on potential security risks. Overall, our survey results indicated that 46 per cent of
 vendors did not provide information on security policies so researchers were unable to make
 informed decisions about whether to proceed with the transaction (figures 19a and 19b). These
 figures were much higher for mobile PRS (74 per cent).

 Mobile vendors scored poorly on prevention and education, with 92 per cent failing to provide
 information on how to prevent mobile loss and misuse (figures 5a and 5b) or on offering
 information on what to do in case a mobile is stolen (figures 6a and 6b).

 This is disappointing, as the OECD policy guidance on mobile commerce encourages the
 provision of such advice19.

       The process was straight forward, but I wish there was a mechanism
         of personal identification installed to protect my account in case an
                     unauthorised person gets my mobile and tries to use it.
                    Recorded by a researcher from the UK purchasing mobile PRS game

 Payment
 Payment using a mobile can take the form of a credit card payment, payment charged to a
 mobile subscription or an IC chip card payment (eg, Moneta payment). In our survey we tested
 all three payment methods.




 16     Mobile Commerce, OECD Directorate for Science, Technology and Industry Committee on Consumer Policy,
        16 January 2007, p23.
 17     Juniper Research, Mobile Data Protection, Newbury, United Kingdom, September 2006.
 18     Consumer Focus priorities in the mobile phone sector. A position paper and advocacy plan, October 2009.
 19     OECD Policy Guidance for Addressing Emerging Consumer Protection and Empowerment Issues in
        Mobile Commerce, OECD Ministerial Meeting on the Future of the Internet Economy, Seoul, Korea, 17-18
        June 2008.


consumerfocus.org.uk                                   42                                   Pocket shopping
                                           Figure 19a. Mobile commerce cross-country survey 2009
                               Did the vendor provide information about any security practices relevant to the transmission of
                                            data, especially data used in paying for goods? (results by country)
                                                            T otal   Germany   Slovenia   Belgium   Great     Norway   Denmark   Japan   Spain   USA    Korea   Canada
                                                            (112)      (12)      (12)       (11)    Britain    (11)      (10)     (10)    (10)   (10)    (10)     (5)




consumerfocus.org.uk
                                                                                                     (11)

                       Yes, information on security         29%       42%       25%        36%      27%        18%      10%      40%     20%     20%    70%      0%
                       practices was provided as part of
                       general terms and conditions

                       Yes, and the vendor provided         19%       42%       25%        0%       45%        18%       0%      0%      10%     10%    30%     20%
                       complete information on security
                       practices

                       Yes, and the vendor provided          3%        0%        0%        0%        0%        9%        0%      0%      10%     10%    0%       0%
                       basic information with advice on
                       how to access complete
                       information on security practices


                       Yes, and the information was         21%       50%       25%        27%       9%        18%       0%      30%     10%     10%    30%      0%
                       accessible at all times




43
                       Yes, and the information was clear   20%       50%       25%        27%       9%        45%       0%      0%      20%     10%    0%      20%
                       and easy to understand

                       Yes, the information on security      0%        0%        0%        0%        0%        0%        0%      0%      0%      0%     0%       0%
                       practices was provided but it did
                       not address my questions

                       Yes, but the information was          3%        8%        0%        0%        0%        0%        0%      10%     10%     0%     0%       0%
                       difficult to find

                       Yes, but the information was not      3%        0%        0%        9%        0%        9%        0%      0%      10%     0%     0%       0%
                       accessible at all times

                       Yes, but the information was          0%        0%        0%        0%        0%        0%        0%      0%      0%      0%     0%       0%
                       difficult to understand

                       Other                                15%       25%        0%        0%       45%        27%       0%      10%     20%     30%    0%       0%

                       No                                   46%       17%       75%        64%       9%        55%      90%      50%     50%     20%    20%     80%

                       Not stated                            4%       17%        0%        0%        0%        0%        0%      0%      0%      20%    10%      0%




Pocket shopping
             Did the Mobile commerce cross-country survey 2009
      Figure 19b. vendor Mobileinformation about any security practices relevant to
             Figure 19b.
                         provide
                                 commerce cross-country survey 2009

Did the vendor provide information about any security practices relevant to the transmission of
                 the transmission data, especially data used in paying for goods?
                 (results by product name)
          data, especially data used in paying for goods? (results by product name)
                                                               Total    Mobile    E-ticket    Other     Physical
                                                               (112)   PRS (42)     (24)      Digital     (25)
                                                                                             content
                                                                                               (21)

                   Yes, information on security practices      29%       2%        38%        48%        52%
                   was provided as part of general terms
                   and conditions

                   Yes, and the vendor provided complete       19%      10%         8%        19%        44%
                   information on security practices

                   Yes, and the vendor provided basic          3%        0%         0%         5%         8%
                   information with advice on how to
                   access complete information on security
                   practices

                   Yes, and the information was accessible     21%       5%        13%        24%        52%
                   at all times

                   Yes, and the information was clear and      20%       2%        17%        19%        52%
                   easy to understand

                   Yes, the information on security            0%        0%         0%         0%         0%
                   practices was provided but it did not
                   address my questions

                   Yes, but the information was difficult to   3%        2%         0%         0%         8%
                   find

                   Yes, but the information was not            3%        0%         8%         0%         4%
                   accessible at all times

                   Yes, but the information was difficult to   0%        0%         0%         0%         0%
                   understand

                   Other                                       15%      17%        21%        10%        12%

                   No                                          46%      74%        42%        29%        20%

                   Not stated                                  4%        5%         0%        10%         4%




     We found credit card payments difficult to process because many mobile handsets could not
     support the secure software connection used in processing credit card data. However, for
     mobile payments billed on a subscription we found limited authentication processes.




   consumerfocus.org.uk                                                44                                    Pocket shopping
 The only way to protect the phone against unauthorised use was the pin number which is
 generally used to lock the handset down.

 In the payment process we examined three important issues for consumers that included:

 z    clarity of the transaction’s costs

 z    opportunity to review the order

 z    protection against unauthorised payments in relation to under-aged users

 Clarity about cost is fundamental, as the delivery of mobile goods and services requires
 supporting infrastructure that often implies additional charges such as broadband, mobile PRS,
 carrying charges and others that consumers may not be aware of. Our survey found that only 62
 per cent of vendors stated all the transaction costs. Only 40 per cent of mobile PRS and 52 per
 cent of digital content provided full transaction costs, as opposed to the figure of 80 per cent for
 physical goods and e-tickets (figures 3a and 3b).

         Main complaint: Does not give full price until after credit card details
                                                                      are given.
                                    Recorded by a researcher from the USA buying a book

 Another essential part of the payment transaction is the ‘review stage’ that allows consumers
 to confirm the intended purchase, correct any errors, retain information and withdraw from the
 purchase if necessary. The review stage can also act as an effective deterrent against mis-
 selling; for example, unwanted subscriptions. However, our research indicates that a substantial
 percentage of mobile PRS (36 per cent) and digital download (other than mobile PRS; 29 per
 cent) providers did not allow researchers to review orders, as opposed to providers of e-tickets
 (4 per cent) and physical goods (8 per cent) that restricted the review stage (figures 7a and 7b).

        [...] I ordered [...] service via SMSs; I got an SMS where I could click
          to pick up my order. As I have gone directly to WAP sites first, I got
           no documentation on my order (might have been a problem if I did
                                                          not receive my order).
                     Recorded by a researcher from Norway buying mobile PRS ringtone

 In a mobile transaction susceptible to technical interruptions caused by broadband coverage
 or interoperability of equipment and software, consumers should be provided with information
 confirming the order. Yet our survey found that in 40 per cent of mobile PRS purchases
 researchers did not receive confirmation of the orders. Figures were lower for digital content
 (other than mobile PRS; 14 per cent), e-tickets (8 per cent) and physical goods (4 per cent)
 (figures 20a and 20b).




consumerfocus.org.uk                              45                                Pocket shopping
                        Figure 20a. Mobile commerce cross-country survey 2009
                 After submitting the order did you receive confirmation of your order? (results by country)

          100%

           90%
                                                                                                                                   80%                           80%
           80%

           70%
                                                                                                                                                60%
           60%    58%                   58%
                                                             55%
                                                                                        50%            50%
           50%                                45%      45%
                                                 45%                                          40%            40%                                      40%
           40%                                                                    36%
                                                                                                                             30%                           30%
           30% 25%                                                   27%    27%                                       30%
                                                                                                                30%
                                                                                   27%
                           17%        17%                                                                                20%                                           20% 20%
           20%                                                             18%
                                                                                                                                            10%
                                                                                                     10%                                   10%         10%
           10%          8% 17%                                  9%     9%                  10%                                  10%
                                  17%                                 9%

           0%
                 Germany Slovenia Belgium                       Great        Norway Denmark             Japan         Spain           USA            Korea       Canada
                                                                Britain
            Yes, I did receive SMS/ MMS                              Yes, I did receive confirmation by email               Yes, I did receive a voice message
            Yes, I did receive a phone call                          Yes, I did receive a letter in a regular mail          No
            Other                                                    Not stated




                     Figure 20b. Mobile commerce cross-country survey 2009
                                 After submitting the order did you receive confirmation of your order?
                                                    (results by type of product name)
          100%

           90%
                                                                                                                                                     80%
           80%

           70%

           60%
                                                                                    54%

           50%
                                                                   40%            38%
           40%       38%                            36%
                  30%                                                                                              29%
           30%                                                         26%                                   24%
                                 21% 19%                                                                                             19%       20%
           20%
                                                                                                      13%                      14%       14%                          12%
                                                          10%
           10%                                                                                   8%
                                            4%                                                                               5%                                  4%     4%
                                 1%                                         2%
           0%
                            Total                         Mobile PRS                      E-ticket            Other Digital Content                        Physical

            Yes, I did receive SMS/ MMS                              Yes, I did receive confirmation by email               Yes, I did receive a voice message
            Yes, I did receive a phone call                          Yes, I did receive a letter in a regular mail          No
            Other                                                    Not stated




consumerfocus.org.uk                                                                          46                                                                       Pocket shopping
            Due to lack of compatibility or lack of sufficient Java or certificate
        support I was not able to pay for my goods. I can only speculate that
       it was lack of java (or similar) support, but have heard several people
        having such payment problems on mobile phones. At the same time,
          such lack of interoperability might be a challenge for the take off for
                                                              mobile commerce.
                                                     Recorded by a researcher from Norway buying MP3

 We also looked into the issue of protection against unauthorised use, with particular regard
 to under-aged mobile users. As mentioned earlier we found that payments billed on a mobile
 subscription required a limited authentication process. We also examined whether mobile
 vendors applied age verification systems to prevent under-aged entry into commercial contracts.
 We found that in 76 per cent of mobile payment transactions no age verification systems were
 attached (figures 21a and 21b).



                   Figure 21a. Mobile commerce cross-country survey 2009
                  Did the vendor apply age verification system prior to payment? (results by country)

           100%    4%
                                                                                   10%                10%
                  11%       17%
           90%                                                                                                       20%
                                            27%                  27%
           80%                                                                                               40%

           70%
                            42%
           60%                                         82%

           50%                      100%                                    100%   80%        100%
                  76%
                                                                 55%                                  90%
           40%                                                                                                       80%
                                            73%
           30%                                                                                               60%

           20%              42%

           10%                                         18%       18%
                  10%                                                              10%
            0%
                  Total   Germany Slovenia Belgium    Great     Norway Denmark Japan          Spain   USA   Korea   Canada
                                                      Britain

                           Not stated                   Do not know                      No                 Yes




consumerfocus.org.uk                                                   47                                             Pocket shopping
                     Figure 21b. Mobile commerce cross-country survey 2009
                  Did the vendor apply age verification system prior to payment? (results by product name)

           100%           4%
                                            10%                 13%                 10%                 8%
            90%           11%

            80%                                                                                         20%


            70%

            60%

            50%                                                 75%                 81%
                          76%               86%
                                                                                                        56%
            40%

            30%

            20%

            10%
                                                                13%                                     16%
                          10%                                                       10%
                                            5%
            0%
                         Total           Mobile PRS           E-ticket    Other Digital Content    Physical


                           Not stated                 Do not know              No                 Yes




              I had extreme difficulties with purchasing this item because the
          password sent by SMS on my mobile phone always came too late,
         so meanwhile the online purchase session already expired. I had to
          repeat this purchase several times until I finally succeeded and got
       the SMS with the password in the right time to continue the purchase
                                                             of the MP3 melody.
                                        Recorded by a researcher from Slovenia buying MP3 song

 An additional issue raised, in particular by a researcher in Spain, was the complex process of
 the overall mobile transaction that inflated the cost of products.




consumerfocus.org.uk                                            48                                            Pocket shopping
  This is the procedure:

  z     Send an SMS with the code product (1.5 Euros + TVA)

  z     You receive (free) an SMS asking the brand

  z     Send an SMS with the brand (1.5 Euros + TVA)

  z     You receive (free) an SMS asking for the mode

  z     Send an SMS with the model (without details) (1.5 Euros + TVA)

  z     You receive (free) SMS saying the model was wrong and suggesting several models

  z     Send an SMS with the model details (1.5 Euros + TVA)

  z     You receive an SMS (free) asking the telephone numbers

  z     Send an SMS with the phone number

  z     You receive SMS (free) with download link

  Total: 5 SMSx1.5 Euros + TVA = 10.44 Euros

                     Recorded by a researcher from Spain buying mobile PRS ringtone



 Post sale-advertising
 We were eager to examine the extent of unwanted advertising during the shopping exercise and
 set a benchmark of two weeks to record any form of advertising received once the transaction
 was completed. Our research found that in majority of cases (77 per cent) researchers were
 not targeted with any form of advertising (figures 22a and 22b). Those who received advertising
 material (11 per cent) were contacted by a vendor with whom the purchase was made (42 per
 cent) or a vendor that sells products similar to the purchase (4 per cent). Researchers recorded
 that the advertisements, in the majority of cases, had a built-in mechanism that allowed the user
 to unsubscribe from advertising material; for example, ‘opt out box’ (31 per cent) and ‘opt in box’
 (8 per cent) as opposed to leaving recipients with no choice (8 per cent).




consumerfocus.org.uk                              49                               Pocket shopping
                         Figure 22a. Mobile commerce cross-country survey 2009
             Within the two week period after placing your order did you receive any form of advertising sent
                                      to your mobile or email? (results by country)
            100%
                       13%                                        9%
                                  17%
            90%                                                                                                                               20%

            80%                                                             36%

            70%                                                                                                        60%

            60%                                                   64%                                                             80%
                                                       91%                              90%                  90%
            50%        77%        67%       100%                                                  100%

            40%                                                                                                                               80%

            30%                                                             64%
                                                                                                                       20%

            20%
                                                                  27%
            10%                   17%                                                                                  20%        20%
                       11%                              9%                              10%                  10%
             0%
                       Total   Germany Slovenia Belgium         Great     Norway Denmark Japan              Spain      USA       Korea     Canada
                                                                Britain
               Not stated                                                               No
               Yes, other                                                               Yes, and it included adult related language and images
               Yes, and it misled me to believe it was a personal message




                         Figure 22b. Mobile commerce cross-country survey 2009
             Within the two week period after placing your order did you receive any form of advertising sent
                                   to your mobile or email? (results by product name)
            100%
                                                         7%                       8%
                               13%                                                                                                   12%
            90%
                                                                                                            29%
            80%

            70%

            60%
                                                                                                                                     68%
            50%                                         83%
                               77%                                                83%

            40%                                                                                             67%

            30%

            20%

            10%                                                                                                                      20%
                               11%                      10%                       8%                        5%
             0%
                               Total                Mobile PRS                  E-ticket          Other Digital Content            Physical

                   Not stated                                                           No
                   Yes, other                                                           Yes, and it included adult related language and images
                   Yes, and it misled me to believe it was a personal message



 Delivery
 In e-commerce transactions a substantial number of consumer complaints are generated by
 problems with deliveries. We wanted to find out whether the overall e-commerce trend translates
 into mobile commerce and what type of delivery problems consumers face. Overall, 86 per cent
 of purchases resulted in successful deliveries. The highest score was recorded by the physical
 goods category (96 per cent), followed by mobile PRS (90 per cent) and e-tickets 83 per cent
 (figures 8a and 8b). Digital content (other than mobile PRS) registered only 67 per cent of
 successful deliveries.



consumerfocus.org.uk                                                              50                                                          Pocket shopping
 For orders that failed to arrive researchers received a notification that there had been a problem
 with processing the order.

 Typical problems included unwanted subscriptions, defective products and incorrect billing.
 These were mainly concerned with mobile PRS and other digital content. With regard to mobile
 PRS, 20 per cent of problems were due to defective items and 40 per cent with unwanted
 subscriptions. In the case of other digital content, 33 per cent involved unwanted subscriptions
 (figures 2a and 2b).

 Complaints over incorrect billing mainly concerned additional or unexpected charges and
 differing product prices to those indicated before the purchase was made.

 The majority of those who experienced delivery problems complained directly to a vendor or a
 network provider. In cases of complaints made against mobile PRS, the majority of researchers
 resolved the problem.

 Returning goods
 The last part of the shopping exercise was to cancel and return orders for physical items that
 consisted of a book, CD or a DVD. We aimed to examine:

 z    restrictions attached to returning the orders (if any)

 z    if the purchase cost was refunded

 z    how easy and convenient the process was

 We found that in the majority of cases researchers were able to cancel and return orders but
 only at their own expense. The returning process was simple. Researchers had to either contact
 the vendor to obtain an authorisation reference or the latter was not required (57 per cent). In
 57 per cent of cases researchers had to give a reason why they were returning the products,
 as opposed to 38 per cent of retailers who did not request this information. 13 per cent of
 purchases had restrictions attached that included time limits beyond which the purchase could
 not be returned, conditions such as ‘goods can only be returned if unopened’ and restrictions on
 certain products that could not be returned. In four per cent of cases there were no restrictions
 attached.

 The results indicate that the majority of vendors complied with the regulations regarding cooling
 off periods and restrictions on refunds. Despite the fact that many vendors asked researchers to
 state a reason for returning items, it did not prejudice the ability to make returns.

 It is worth noting that in only 67 per cent of purchases information about restrictions was given
 before placing the order. In 27 per cent of cases information about restrictions was found only
 when the order was confirmed, delivered (33 per cent) or upon contacting the vendor to obtain
 the return authorisation (13 per cent).

 In the majority of cases researchers were able to obtain a refund.




consumerfocus.org.uk                               51                              Pocket shopping
Pocket shopping
International consumer experiences of buying
goods and services on their mobile phones

Marzena Kisielowska-Lipman
www.consumerfocus.org.uk
Copyright: Consumer Focus
Published: December 2009




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