IGF 2021 WS #123 Trust Me, I am a Seller: Regulating Online Business Accounts

Time
Thursday, 9th December, 2021 (10:15 UTC) - Thursday, 9th December, 2021 (11:45 UTC)
Room
Conference Room 7

Organizer 1: Kathrin Morasch, Youth IGF Germany / Better Internet for Kids
Organizer 2: Elnur Karimov, Internet Society Youth Special Interest Group (Youth Observatory)
Organizer 3: Nazakat Bayramova, Young Lawyers Network
Organizer 4: Narmin Abilova, Young Lawyers Network

Speaker 1: Azad Mammadli, Civil Society, Eastern European Group
Speaker 2: Yawri Carr , Civil Society, Latin American and Caribbean Group (GRULAC)
Speaker 3: Shradha Pandey, Technical Community, Asia-Pacific Group
Speaker 4: Kathrin Morasch, Civil Society, Western European and Others Group (WEOG)

Additional Speakers

Prof. Dr. Christian Kastrop, Staatssekretär im Bundesministerium der Justiz und für Verbraucherschutz, Western European Regional Group

Moderator

Narmin Abilova, Civil Society, Western European and Others Group (WEOG)

Online Moderator

Nazakat Bayramova, Civil Society, Eastern European Group

Rapporteur

Elnur Karimov, Civil Society, Eastern European Group

Format

Round Table - Circle - 90 Min

Policy Question(s)

Regulation, competition and innovation: How could regulatory and self-regulatory frameworks help foster more competitive Internet-related markets, a larger diversity of business models, and more innovation? How to enable equitable access to data, marketplaces or infrastructures for fostering competition and innovation on the Internet?
Protecting consumer rights: What regulatory approaches are/could be effective in upholding consumer rights, offering adequate remedies for rights violations, and eliminating unfair and deceptive practices from the part of Internet companies?

Additional Policy Questions Information: 1) How must the online business accounts on social media be regulated in emerging digital markets to ensure their reliability, prevent tax evasion, and protect consumers from fraud? 2) What technical or legal measures have been or must be taken by social media companies and/or governments respectively to ensure smooth operation of online business accounts without prejudice to personal data protection? 3) What legal or other remedies are and must be available to compensate the damage to consumers by fake business accounts?

The COVID-19 pandemic has seemingly accelerated the online trade, and those who could not leave their homes, therefore, were dependent on online shopping benefitted from this trend. Online shopping is not, however, limited to large shopping websites like Amazon, or Alibaba. Recently, business accounts mostly administered by individual entrepreneurs and small companies on Instagram, Facebook, and other social media have expanded their business during the pandemic. Cheaper prices, faster communication and delivery, and expected reliability have made online business accounts such a favorable shopping destination.

Still, online business accounts have not always been trustworthy; they can be fake and commit fraud against consumers. Those fake accounts may not maybe insult people on the internet but sell products to the customers who may trust a large number of followers or the “blue-tick” verified symbols assigned by the social media platforms. Individuals can engage in fraudulent activities through social media accounts in a variety of ways. For example, the provision of various services usually requires the transfer of service fees to their accounts, but in the end, fraudsters do not provide any services, close their accounts or simply block the customer. Also, people who do business through social networks provide customers with low-quality goods or services but then do not react to the customer's complaint, refusing to improve the quality of service. At the same time, both customers and government agencies have difficulty in finding and prosecuting those who have fake accounts.

Since governments must and do take measures to protect consumers’ interests in traditional and digital markets, the session aims to discuss the emerging regulation for consumer protection targeting online business accounts. The regulations can vary from tax or tolls to or verifiability of the digital seller through the private sector. In case of fraud that has already taken place, the question is whether the social media platform can be held liable or to what extent they must cooperate with state bodies to provide remedies to the consumer who suffered from the fraud. Also, the social media platforms may employ certain regulations to prevent fake business accounts and ensure their business identity by collecting personal information or conducting regular check-ups. Still, the regulations by social media platforms may raise the issue of the personal information allowed to collect from business accounts. In other words, there is a human-rights dimension of the topic. The session organizers aim to put human rights at the center of any proposed regulation and discuss which personal information must be collected from online business accounts to be in line with the right of privacy but also ensure verifiable seller profiles. At this point, the session meets the demand of the IGF to address the main focus areas of economic and social inclusion and human rights too.

These are the main questions that the session aims to address in a multi-stakeholder environment. For clarity, the session organizers aim to focus online business accounts on social media only and interpret the regulations as legal and technical ones.

SDGs

8.3
8.6
9.1
9.3
17.16
17.17

Targets: In a simple term, the session is about regulating the digital market - entrepreneurship. Most of the time, such online business accounts belong to small or medium enterprises and individuals who pay taxes and do their business. Since the session organizers believe that any regulation targeting online business accounts, such as for protecting consumers from fraud, must be development-oriented not destructive, this goal is in line with SDG number 8.3. Also, it is not a secret that those small enterprises are small start-ups by mostly young people who create their business and self-employ. Supporting such activities eventually reduces the number of unemployed youth that served the SDG number 8.6. In addition, the session is going to focus on the access of small enterprises to market opportunities and financial resources through emerging regulations that can only be possible by inclusive infrastructure employed by the governments. This is in line with SDG numbers 9.1 and 9.3. Of course, the session encourages the multi-stakeholder approach to the regulations on online business accounts regardless of their location. Believing that every successful regulation passes through a multi-stakeholder discussion, the session comes closer to the SDGs number 17.16 and 17.17.

Description:

This session aims to discuss an emerging regulation in a new issue of the modern world - social media business accounts. Starting from the reliability of online business accounts to the remedies available to consumers in cases of fraud on social media, as well as the prevention of tax evasion by businesses using these business accounts, this session is going to guide the ongoing discussions at the national level on how to regulate the digital markets with due respect to human rights.

The main focus of the session is the social media platforms, therefore, regarding the emerging regulations, the main actors are governments, social media platforms, and consumers. The session is going to approach this issue from a multi-stakeholder perspective to hear all interested parties. While discussing especially the personal information collected by the social media platforms to ensure the verifiability of online business accounts, the session will stick to the human-rights approach and fulfill the request of the IGF this year to cover the main focus areas of economic and social inclusion and human rights. The parties of the session include:

The government which gives an insight on what considerations are important when it comes to the enactment and enforcement of emerging regulations on the online business accounts today; Private sector which represents the interests of the online businessmen or the social media and the impact of the regulations on their business, including personal information concerns; A civil society that stands for the consumers’ interests and raise the human-rights concerns of the emerging regulations; and Academia critically analyzes the emerging regulations to look for the best possible approach to the regulations that treat online business accounts from a comparative perspective.

The session is going to be a panel discussion for 90 minutes where both online and onsite participants will also play a key role in the discussion by asking questions and making comments throughout the session.

Expected Outcomes

The session is going to draw the borders of the problem of online business accounts on social media triggered by the COVID-19 pandemic. It aims to produce initial guidance and set certain principles, such as the respect for the privacy of online entrepreneurs, equal treatment of all accounts in content moderation, etc. which can later be incorporated in local advocacy by the civil society in front of the government.

Apart from raising awareness of the general public about the emerging issue, the session organizers are going to attempt a more practical step; organizing a remote event with the government representatives from the countries of the speakers, namely, Germany, Costa-Rica, India, and Azerbaijan, and introduce the session outcomes. This event will help deliver the session discussion and outcomes directly to the stakeholders who are supposed to regulate. The session organizers will try to keep the participants of this event limited, however, the interaction with some of the participants is not exempted.

The session’s onsite participants will be encouraged to share the round table with the organizing team and speakers and ask and comment in the allocated time for Q/A. The moderator will be in charge of selecting the questions and listening to them and forwarding them to one or two of the speakers based on their expertise. The onsite participants who do not sit at the round table will, of course, also be able to ask and comment during the session. Regarding the online interaction, the online moderator will be in charge of the participants via chat by regularly interacting with them. The online moderator, during the session, will keep the chat active by highlighting the statements by the speakers and letting the participants comment or ask questions. In other words, the online moderator will act as a reporter of the session discussion in the chat by short statements which will help the participants who do not have a stable internet connection to hear what is going on properly or who do not get some of the statements clearly. There will also be constant communication between the online and onsite moderators to address the questions and comments. The organizers will use the IGF’s own platform for online interaction and the main platform for the meeting, and the online moderator will be in charge of both.

Online Participation

Usage of IGF Official Tool.

Key Takeaways (* deadline 2 hours after session)

There is an urgent need for the external regulation of online business accounts, however, accompanied by the self-regulation by social media companies. The consumer organizations can play an intermediary role between states and social media companies. Still, the legislative regulation must not be the only solution, and the education of consumers against fraudulent actions on the Internet is another important angle.

The models like in the European Commission or Australia can be followed but some countries may need a more tailored protection regime, such as considering the liability of social media companies or service providers. The alternatives like pro-ethical design in the regulation and tax issues need further discussion.

Call to Action (* deadline 2 hours after session)

Make sure that the external regulation is accompanied by self-regulation within the social media and the education of the consumers executed via public authorities and NGOs. Consider the alternative tailored approaches like pro-ethical design in the regulation.

Regulate online business accounts on the social media, however, with the consultation with the stakeholders like local and international consumer organizations and private companies.

Session Report (* deadline Monday 20 December) - click on the ? symbol for instructions

As planned, the session organized by the Young Lawyers Network Azerbaijan opened with the moderator's short introduction of the topic and esteemed speakers with various geographical and academic/practical backgrounds who meet in their shared background in Law. This report will divide the discussions based on the Policy Questions as executed in the session.

PQ 1: How must the online business accounts on social media be regulated in emerging digital markets to ensure their reliability, prevent tax evasion, and protect consumers from fraud?

Azad Mammadli, a legal practitioner from Azerbaijan, asked the core question: regulation or no regulation of online business accounts? He explained the different views from ultra-liberals who support no regulation or at least self-regulation by the social media companies where the state intervention is zero. Regarding self-regulation, he concluded that although social media companies are more mature today by using "verified account badges" and other tools of their algorithms to detect possible fraudulent accounts, this does not always ensure trust. "Help/Support" pages are not always sophisticated enough but give general information for the users. Thus, the speaker was convinced that self-regulation must be accompanied by external regulation like the one of the EU's, the initiative of the New Consumer Deals (2018). The speaker concluded that the regime currently implemented in cases of hate speech or racist comments on social media, the regime that allows to appeal and even enforce rights can be tailored for the violation of online consumers' rights.

Regarding the liability of social media companies for the violations, it is quite jurisdiction-specific and gradually narrowed down by judicial institutions. Any solution taken by the governments must be applied jointly, not separately.

After Azad Mammadli, Kathrin Morasch, a legal clerk at the District Court in Germany, focused on the question from the perspective of what we understand from online business accounts. She quoted currently ongoing court cases in the Federal Court of Germany and raised concerns about the ambiguous line between the advertisement by companies and influencers on social media. She also pointed out the unclarity in the relationship between the Media Act in Germany and general terms of competition law, because the advertisement by social media influencers sometimes do not breach Media Act but, in principle, against the rules that prohibit unfair competition. Kathrin Morasch here disagreed with Azad Mammadli in the sense that self-regulation is not really working, so the need for solid rules. Kathrin Morasch concluded with the importance of the education of consumers, the point that later was elaborated on in the session.

PQ2: What technical or legal measures have been or must be taken by social media companies and/or governments respectively to ensure the smooth operation of online business accounts without prejudice to personal data protection?

Yawri Carr, a Master's at the Technische Universität München, started with expressing the general concern by the youth collected through the IGF Youth Summit Project 2021 that youth do not feel safe on social media. Speaking from the technical perspective to the question, she mentioned that it is important first to empower consumers to stand behind their interests. Concerned by the fact the agents participating in digital markets that include social media are less aware of the skills they need to communicate as buyers/sellers and the responsibilities they bear, the pre-established designs are not successful. As an alternative, a pro-ethical approach implemented through ethical codes can help users have a sense of ownership and a critical view of their choices.

Following Yawri Carr, Shradha Pandey, a Senior Law Student from India, commented on the legal measures that can be implemented, especially, from the viewpoint of India. Despite the positive economic impact of online business in the countries like India, Pakistan, and Sri Lanka, she was also concerned by the fact that the issues of privacy, misinformation are often overlooked on social media. However, she pointed out the issue of unreasonable pricing online that makes small businesses suffer, as a result, these small businesses cut down from the cost of data protection to compete with large businesses online where the breaches of privacy occur. Moreover, such cases are sadly overlooked by competition authorities due to their so-called trivial impact. She concluded with the best practices like Australia where the digital platforms are regularly audited by competition authorities and criticized the self-regulation because of its failure with data protection in India.

The discussion then turned to the direction of the legal transplants or best practices like the EU or Australia where the speakers and the audience discussed whether those practices are really "great". Especially, consumers over-regulated like in the EU may find those regulations irritating, if they think they are already self-aware about the issues they may face.

PQ3: What legal or other remedies are and must be available to compensate the damage to consumers by fake business accounts?

Azad Mammadli started with the need for a balance between not letting unlawful online business transactions go unnoticed and avoiding over-compensation inflicted upon social media companies. He again emphasized the expected success of self-regulation in the ideal world where social media companies themselves can force online business accounts to observe consumer protection. However, in the real world, this is not the case. He continued with the example of Authorized Push Payments in the United Kingdom which is one of the technical/legal solutions to compensate the consumers who are frauded online. He concluded with the importance of the cooperation between social media companies and state authorities with the intermediary role of international or local consumer organizations.

Kathrin Morasch mentioned in relation to PQ3 that here the problem is not the absence of the regulation for consumer protection, but, in fact, the identification of the person who committed the fraud. Here the regulations lack to a great extent. The liability of the platforms can be discussed here but it's not a straightforward solution.

Following these presentations, the session witnessed an interesting practical question from the floor coming from a parliamentarian from Tanzania who asked about the best practice to compensate consumers in cases of fraud by online business accounts, such as enhancing security online. Kathrin Morasch answered this question by recommending the education of consumers with peer-to-peer learning centres. Azad Mammadli added that having legislation similar to the European Union can be another solution.

The session continued with repeating emphases on the importance of consumer education that the speakers unanimously agreed on. The speakers also discussed the outdatedness of some laws in developing countries, especially, that do not differentiate or have specific laws on the digital markets at all, emphasizing the need for renewing those laws in line with the demands of the digital era.

The session finally touched on the issue of taxes to be paid by online business accounts or influencers, for example, where the tax must be paid by the influencers who reside and work in different countries. However, this issue popped up at the end of the discussion, therefore, needs further discussion. The relevance of the tax discussion was also confirmed by the audience, more precisely, a speaker from Hong Kong who also stressed the need for regulations by the platforms themselves.

The session moderator, Narmin Abilova concluded the session with key takeaways that have been reported on this page too.

Session Rapporteur: Elnur Karimov (LLD Student at Kyushu University, Japan)