E-consumer protection: a comparative analysis of EU and US consumer protection on the Internet

ABSTRACT

The United States has developed a series of tests that evaluate a defendant’s contact with a state to determine if jurisdiction is proper. Recently, courts have applied these tests to Internet disputes. In contrast, rules of extraterritorial jurisdiction among countries of the European Union can be found in the Brussels Convention. (1) This Convention was written before the Internet was even imagined

Part I of this note begins by comparing and contrasting the procedures used in the European Union and in the United States for establishing jurisdiction in classic consumer transactions. While varying greatly in procedure, both systems seemingly favor the jurisdiction of the consumer’s residence. It then goes on to show how the American system of jurisprudence was adapted to the Internet. In contrast, the rigid statutory regime of the EU, necessitated by varying domestic laws of its member states, was ill equipped to deal with jurisdictional questions stemming from Internet transactions. This note then explains why the EU’s new Brussels Regulation gives U.S. e-tailers a significant advantage over their European counterparts with respect to consumer transactions.

Part II offers a critical analysis of the EU’s new Regulation. It posits that the Commission’s decision to change certain aspects of the original Brussels Convention regarding consumer transactions will ultimately have a chilling effect on Europe’s nascent business-to-consumer Internet economy.

Part III provides a basic analysis of current consumer protection laws in the United States and European Union with respect to Internet transactions. (5) This section argues that e-consumers in the European Union, not withstanding the new Regulation, enjoy a significantly higher degree of protection than their American counterparts and, consequently, the new Regulation is unnecessary.

I. JURISDICTION

The European Union and the United States use significantly different models to determine the proper forum between parties from diverse jurisdictions. The limits of extraterritorial jurisdiction in the United States were developed over the last fifty years through a series of cases, culminating in a flexible, fact-specific test that was easily applied to the Internet. In contrast, Member-States of the European Union base extraterritorial jurisdiction, with respect to citizens of other Member-States, on the Brussels Convention. Because the Convention delineates the contours of European extraterritorial reach in explicit terms, EU governments have found it difficult to apply to Internet transactions.

A. Classical Analysis

1. United States

The United States, in contrast to the European Union, does not use a “mechanical” test that defines the competent jurisdiction every time a contract is entered into between parties of diverse jurisdictions. (6) Rather, a “realistic approach” is applied, which takes into consideration the “negotiations, contemplated future consequences, the terms of the contract, and the course of dealing between the parties.” (7)

There are two basic requirements U.S. courts must consider before exercising jurisdiction over a non-resident. First, the jurisdictional claim must be consistent with the forum-state’s long arm statute. (8) Second, the long arm statute must comport with the due process requirement of the Constitution. (9)

Generally, for a court to have jurisdiction, the resident’s contacts with the forum state must be such that the “maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'” (10) Also, the defendant should have such a degree of “minimum contact” with the forum that he might expect the necessity of litigating there. (11) “Minimum contacts” are usually established if the defendant “purposefully availed” himself of the laws of the forum seeking jurisdiction by doing business within it. (12) The “purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of `random,’ `fortuitous,’ or `attenuated’ contacts.” (13) However, a defendant need not have physically entered a forum in order to be subject to its jurisdictional reach. (14)

2. European Union

Unlike the American states, each country within the EU may have significantly different standards for finding jurisdiction over a non-resident. For example, Germany’s Law of Civil Procedure allows for jurisdiction over a non-resident defendant based solely on assets located in the forum. (15) The French Civil Code is even more overbearing on non-residents, allowing national courts to hear nearly any case where the plaintiff is French. (16) Moreover, a French defendant can insist on being sued in his own country and, provided he has not consented to foreign jurisdiction, French courts will not enforce a judgment against him. (17) As a result of these varying standards, European Community (18) countries (“Member States” or “Contracting States”) decided to unify their laws of jurisdiction in order to broaden the protection of their citizens against extraterritorial reach. (19) The 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (“Brussels Convention”) sets forth the principles of jurisdiction. (20) Notably, and in contrast to the new Regulation discussed below, this piece of legislation was not codified directly into Member States statutory schemes. Rather, as a convention, Member States were required to enact laws that gave effect to the objectives of the Convention. (21)

According to the Brussels Convention, persons domiciled (22) in a Member State may be sued in the courts of another Member State. (23) In commercial contracts the plaintiff normally sues in the “place of performance of the obligation in question.” (24) “[I]n matters relating to tort, [jurisdiction is proper] in the courts for the place where the harmful event occurred

Consumer contracts have significantly different rules of jurisdiction. According to Article 13 of the Brussels Convention, any contract between a consumer and a business for goods or services the purpose of which is outside of a consumer’s normal trade or profession qualifies as a consumer contract if it is:

1. [F]or the sale of goods on installment credit terms

2. a contract for a loan repayable by instalments,[sic] or for any other form of credit, made to finance the sale of goods

3. any other contract for the supply of goods or a contract for the supply of services, and

a) in the State of the consumer’s domicile the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising

b) the consumer took in that State the steps necessary for the conclusion of the contract. (27)

If a contract qualifies under Article 13, the consumer may bring an action in his domicile or that of the supplier. (28) Conversely, the supplier may only bring an action in the consumer’s domicile. (29) This limitation affects non-EU entities that have branch offices in the European Union as well. (30)

3. Comparison

While the rules of jurisdiction in the United States and in the European Union are significantly different, the results are similar with respect to consumer purchases. Generally, EU and U.S. courts favor the consumer’s forum.

The differences between the two systems are obvious. With respect to consumer contracts under the Brussels Convention, there is a great deal of emphasis upon the consumer’s side of transaction. (31) In contrast, American courts under the “minimum contacts” analysis, look to the actions of the supplier. (32) Moreover, the Brussels Convention sets forth a well-defined standard that leaves little room for debate

The Brussels Convention limits the ability of consumers to bring a supplier into a foreign forum. Any consumer wishing to litigate a contract in his own domicile must have executed the contract after having received a specific advertisement or invitation from the supplier. (36) Thus, at the outset it would seem that European consumers might not have the distinct advantage previously alluded to. When one applies the “minimum contacts” analysis to a typical consumer transaction, the effective similarity of the two systems becomes even more apparent.

Under the American analysis, the act of sending goods into the consumer’s forum will likely trigger the requisite “minimum contacts.” Moreover, a U.S. consumer who buys goods or services as the result of a direct marketing scheme would not be amenable to a suit in the supplier’s forum. (37) In essence, such a transaction would not constitute the requisite minimum contacts or comport with “traditional notions of fair play and substantial justice.” (38) Thus, one finds that with respect to consumer transactions, the “minimum contacts” analysis and the Brussels Convention favor consumer forums to a similar degree.

B. Internet Analysis

Because the rules of jurisdiction in the United States are significantly more flexible than the Brussels Convention, American courts adapted them to the cyber environment relatively quickly. In contrast, the European Union has found it necessary to pass new legislation to account for electronic commerce. The following part begins by analyzing the American and European responses to the jurisdictional dilemma presented by the Internet. It then goes on to show how the new European Regulation, in contrast to the current Convention, diverges significantly from the American model in both process and result.

1. Internet Jurisdiction: U.S. Response

One might assume that because the Internet crosses jurisdictional boundaries and may be accessed from any location, defendants should foresee the possibility of being haled into any jurisdiction. (39) However, the majority view in the United States holds that personal jurisdiction arising out of a claim based on Internet related activity is only proper when the non-resident does something more than post a non-interactive website. (40)

In Zippo Manufacturing Co. v. Zippo Dot Com, Inc., (41) a trademark infringement suit related to a junior’s appropriation of a senior’s name for its website, a Pennsylvania district court found jurisdiction proper though the California resident did not have physical presence in the forum. (42) The Zippo court enumerated three different levels of commercial Internet activity that might make a web operator amenable to personal jurisdiction in a forum other than his own:

1) the defendant sells products or services into the forum jurisdiction or is otherwise actively doing business on the Internet,

2) the defendant maintains interactive web pages where users in the forum can exchange information with the host computer, and

3) the defendant merely maintains a “passive website” that simply provides information or advertisements.

In the first two, jurisdiction is likely to be found

In contrast, the 9th Circuit in Cybersell v. Cybersell, (44) found that a passive site was not enough to subject a defendant to Arizona jurisdiction because there was no other commercial activity with the forum state. (45) Several recent cases have followed the Zippo-Cybersell rationale. (46)

Currently, there is only one published opinion at the federal circuit level concerning personal jurisdiction when the parties were engaged in electronic commerce. (47) In CompuServe Inc. v. Patterson, (48) the defendant, a Texas resident, transmitted various kinds of software to CompuServe’s Ohio system that could be downloaded for a fee, and conducted all of his marketing and advertising through CompuServe’s system. (49) When CompuServe began selling other software that Patterson felt infringed on his copyright, he demanded $100,000 in damages. (50) The Ohio district court denied CompuServe’s request for a declaratory judgment citing a lack of jurisdiction. (51) On appeal, the Sixth Circuit reversed the district court and found jurisdiction based on purposeful availment. (52)

While the foregoing analysis focuses on websites, at least one court has noted the importance of an electronic contract executed via the web in finding personal jurisdiction. (53) In short, when an electronic retailer sends an item or enters a contract, whether through traditional mail or through electronic means, he avails himself of the laws of destination-state and personal jurisdiction is proper. Thus, absent a binding forum selection clause to the contrary, U.S. e-consumers may seek redress against e-tailers within their own jurisdiction.

2. Internet Jurisdiction: The European Response

Upon examination, the inability of the Brussels Convention to deal with e-consumer transactions is apparent. For example, does a website constitute a specific advertisement? (54) Similarly, how can one be sure that an electronic contract is concluded in the domicile of a consumer? (55) In the United States, questions of minimum contacts were answered through analogy. (56) Because of the rigid nature of the Union’s jurisdictional rules, the legislature was forced to reevaluate the Brussels Convention to account for new methods of commerce. In December 1997, the Council of the European Union formed an ad hoc group, made up of members from the various signatory countries and the EU Commission, to replace the Brussels convention with a Regulation that would take into consideration new forms of electronic commerce. (57) On July 14, 1999, after a series of tortured legislative and public hearings, the Commission formally adopted a proposal for the new Regulation. (58) The Council attempted to amend the proposed Regulation to afford European e-tailers greater flexibility in determining the proper forum to hear disputes, however, the Commission rejected the amendments and the Council ultimately adopted the Regulation as originally proposed. (59) The newly adopted Regulation, commonly referred to as Brussels II, will come into force on March 1, 2002. (60) In contrast to the current Brussels Convention, the new Regulation is directly binding upon member states. (61)

In Brussels II, jurisdiction over consumer contracts is addressed in articles 15-17. (62) According to the Commission, article 13 of the original Brussels Convention (“Brussels I”), which defined consumer transactions, (63) was modified to offer consumers better protection. (64) Under Brussels I, a consumer contract must be preceded by a specific advertisement or invitation and must have been executed in the consumer’s domicile. (65) However, the new Regulation does not require the consumer (66) to complete the contract in her state of domicile for the special consumer forum rules to apply:

[I]n all other cases, [where] the contract has been concluded with a person

who pursues commercial or professional activities in the Member State of

the consumer’s domicile or, by any means, directs such activities to that

Member State or to several States including that Member State, and the

contract falls within the scope of such activities. (67)

According to the Commission, the requirement that a contract must be executed in the consumer’s state of domicile was deleted because the physical location of a consumer entering a contract via an interactive website is difficult or impossible to ascertain. (68) Thus, under Brussels II, a French consumer who, while traveling in Italy, places an order with a German e-tailer may avail himself of either French or German jurisdiction. (69) This would not have been possible under Brussels I because the consumer would not have taken the steps necessary to conclude the contract in his domicile. (70) As in Brussels I, Brussels II retains the limitation that the supplier can only bring an action in the consumer’s state of domicile. (71) In essence, the new convention assumes that the supplier has taken the steps necessary to link the transaction to the consumer’s state by directing his activity towards it. (72) Importantly, the language in Brussels II, which states that where a supplier “pursues commercial activities … in the Member State of the consumer’s domicile, or by any means, directs such activities … [,]” (73) was designed to clarify that contracts concluded via an interactive website fall within the confines of article 15, provided that the other requirements are also met. (74) Thus, virtually every consumer in the EU who contracts over the Internet will have the privilege of litigating in his own state.

What of it? Is this so different than the situation in the United States? As previously stated, a supplier who contracts with a consumer and sends goods into her state of residence would, in all likelihood, have established the requisite minimum contacts for jurisdiction. However, one distinguishing facet of American consumer contract law gives American e-tailers a unique advantage over their European counterparts — forum selection clauses.

C. Forum Selection

The United States and the European Union have significantly different laws regarding the enforceability of forum selection clauses in consumer contracts. Generally, there are two kinds of forum selection clauses: 1) permissive clauses that allow one party to be brought into the forum of another party

The Court in Carnival was aware that the cruise line’s international character increased the likelihood and expense of being haled into court outside of the United States and, therefore, necessitated the forum selection clause. (83) Arguably, the international nature of the Internet militates towards a similar conclusion. Indeed, as we shall see, a number of industry analysts put forth such an argument before Brussels II was passed. European e-tailers who operate internationally within the Union will be forced to deal with similar costs, and, consequently, will prefer to include forum selection clauses in consumer contracts. (84)

D. Internet Jurisdiction Compared

Thus, when one compares the United States’ and the European Union’s systems several differences are apparent in the consumer context. First, with respect to consumer contracts for goods or services in the United States, the focus is on the actions of the supplier. (85) When the supplier ships goods or provides services within another State’s jurisdiction, absent an enforceable forum selection clause, he becomes amenable to suit within that jurisdiction. (86) In contrast, the focus of Brussels II is on the status of the consumer. (87) If a purchaser is determined to be a consumer and the transaction occurs or is initiated on the Internet, the jurisdiction of the consumer’s domicile will apply. (88)

II. BRUSSELS II CRITICIZED

European consumer advocates argue that the protections afforded under Brussels II will provide a substantial benefit both to consumers and to the overall growth of the electronic market in the Union. (89) However, one may argue just as easily that Brussels II will actually impede the growth of European e-commerce and will have a negative impact on consumers. Its impact will be two-fold. First, because e-tailers will incur additional costs in litigation, they will be forced to pass those costs on to consumers. Second, many small businesses that might benefit from the Internet will refuse to market their products in other member states to avoid the possibility of such litigation costs. (90) Thus, competition will be reduced and prices will rise. In essence, Brussels II may stunt Europe’s nascent e-economy.

Before the new Regulation was adopted, cyber companies voiced concerns about the negative impact it would have on e-commerce within the Union. (91) The European Commission held hearings on “Electronic Commerce: Jurisdiction and Applicable Law” in November 1999. (92) The hearings addressed two basic questions: “Which court has jurisdiction to hear the dispute?” and “Which law will apply to determine the rules applicable to that dispute?” (93) The majority of criticism focused on three major issues: 1) the costs of litigation in relation to the damages typically stemming from consumer contract disputes

A. Litigation Costs for Most Consumer Disputes are Prohibitive

The cost of litigating a consumer contract in a traditional court is prohibitive in relation to the amount of damages typically incurred by each party. (95) In fact, studies have shown that Brussels I does not work in transactions of less than two thousand Euros (96) and that many lawyers will advise their clients not to sue for amounts less than fifty thousand Euros. (97) Moreover, a consumer suing in her own country will often be required to hire two attorneys: one to litigate the matter and another to enforce the judgment in the supplier’s domicile. (98) A consumer might more effectively obtain a judgment in the supplier’s domicile by hiring a foreign attorney. (99) Ultimately, any extra litigation expenses borne by suppliers will eventually be passed on to consumer in the form of higher prices. (100)

There are several possible alternatives to help both consumers and suppliers avoid the prohibitive costs of litigation. One of the most often suggested is to develop a system of arbitration. (101) Most of the arbitration could take place through the Internet and would certainly increase consumer access to redress and lessen the amount of time involved. (102) In fact, the Committee on Legal Affairs and the Internal Market, at the request of the Parliament, suggested amending the new Regulation to allow contracting parties to agree to arbitration. (103) However, the Commission refused the amendment. (104) In addition, a pan-European trust-mark system could be developed. (105) Suppliers who subscribe to the system would agree to submit all disputes to independent arbitrators, (106) thus affording consumers the opportunity to make informed decisions concerning their purchases based on their legal rights. Finally, one should not forget that technology could be employed to help the consumers. “For example, electronic agents and other artificial Bots — resident software programs — can be programmed by consumers to identify the country, laws, protections, standards and remedial options that the consumer may seek while shopping on the Internet.” (107)

B. Misperception as to the Nature of E-Consumer Transactions Led to an Overbroad Drafting of Brussels II.

As previously stated, Article 13 of Brussels I is a special rule that applies to contracts when a supplier specifically directs advertising towards a consumer who completes the contract within his domicile. (108) Under these circumstances, the consumer may choose to derogate from the general rule which calls for the matter to be heard in the country of origin and may select his own forum. (109) The recital accompanying the Commission’s proposal made it clear that consumer contracts entered into via an interactive website should trigger the special rules under the current Convention. (110) Several factors make the application of the special consumer rules improper for e-commerce transactions. Thus, article 15 of Brussels II simply codifies a fundamental error. (111)

First, the idea that a contract entered via a website constitutes a specific invitation or directed advertisement under the current Convention is flawed. For example, under Brussels I, if a German consumer were to respond to an advertisement placed by a French supplier in a German newspaper article 13 would apply. (112) In contrast, the special rules would not apply to a contract made in response to an advertisement in an international newspaper like the Financial Times. (113) As Mike Pullen, a leading opponent of Brussels II points out, the above situation “is analogous to that of a company placing a website on the Internet.” (114)

Upon comprehensively labeling a contract concluded via an interactive website as activity directed toward a member state, the Commission also failed to recognize the mechanical reality of such sites and the different ways in which consumers might find their way onto them. Under Brussels I, not all consumer contracts were subject to the special jurisdictional rules. (115) Rather, the requirement that the contract be preceded by a specific invitation by the supplier was established because a consumer would likely believe that her country’s laws applied to the contract under these circumstances. (116) This is not the case with all consumer contracts entered into via the web.

In general, there are two different ways a consumer may find his way onto a company’s website: by clicking on a banner ad or hyperlink, or by entering information onto a search engine and clicking on the results. In the former, one might assume that a supplier has actively directed his advertising toward a member state. In this scenario, if one assumes that the banner ad or hyperlink was directed at a domestic web page in the consumer’s domicile, then it would be analogous to an advertisement in a local newspaper. If, however, the consumer found his way onto a website not specifically aimed at his domicile, either by first clicking on a website generated in another country which provides the hyperlink or by using a search engine, the analogy fails. In this case, the consumer should not assume that the laws of his domicile apply because, in contrast to the above scenario, he actively pursued the contract with a foreign supplier.

Finally, the consumer is the only party to the contract that may actually know the other’s location. Because of the transparency laws already required for long distance contracting in the EU, (117) the consumer is aware of the supplier’s location. In contrast, because many transactions, including the delivery of goods such as software and music, occur entirely over the web, suppliers cannot always be sure of the consumer’s location. Thus, the burden of choosing’ whether to be subject to the jurisdiction of another state should be on the consumer who has the necessary information and can make an informed choice.

C. Brussels II is Indefinite

The final criticism of Brussels II is that it lacks definitiveness and will likely require judicial interpretation and further consideration by the Parliament. One European Justice Minister went so far as to “describe[] the [R]egulation as `a lawyers’ charter,’ because it creates so much uncertainty.” (118) Despite the Commission’s statements to the contrary, Brussels II does little to inform e-suppliers who will have jurisdiction to hear disputes. (119) Courts will likely be left to determine which websites have solicited clients in other countries. (120) In fact, members of Parliament memorialized their own uncertainty by stating that the Commission should report on the effectiveness of Brussels II no later than five years after its implementation. (121) In sum, Brussels II, though born out of lofty goals, will do little to instill consumer confidence. On the contrary, it will instill a lack of confidence on the part of certain European e-tailers and the e-economy in general.

III. CURRENT E-CONSUMER PROTECTION

As was referred to earlier, there is a substantial amount of consumer regulation within the EU that prevents suppliers from taking advantage of consumers in other countries. The remaining part of this article will briefly show that the degree of e-consumer protection in the EU is much more advanced than it is in the United States. As a result, the new Regulation is unnecessary.

A. U.S. Consumer Protection

The United States, in contrast to the European Union, has not enacted a great deal of new legislation to protect consumers who contract or buy goods via the Internet. Rather, the Federal Trade Commission (“FTC”) and various state agencies apply traditional laws to the Internet. (122) The FTC has implemented a three pronged strategy aimed at protecting e-consumers: aggressive enforcement of existing regulations, consumer education, and business education. (123) Thus far, this strategy is aimed at traditional fraud conducted in the cyber context. (124) While the effectiveness of this policy in protecting consumers is debatable, it certainly has engendered a growth environment for the Internet.

1. Advertising Regulation

The FTC has the power granted by statute (125) to prohibit unfair methods of competition, (126) unfair acts or practices, (127) deceptive acts or practices, (128) and false advertising. (129) Unfair acts or advertising are those which: 1) cause or are likely to cause substantial consumer injury

2. Uniform Codes, State and Federal Laws

The Uniform Computer Information Transactions Act (134) (“UCITA”) was approved and recommended for state adoption by the National Conference of Commissioners on Uniform State Laws in July 1999. However, as of the date of this Note’s publication, it had only been adopted in Maryland and Virginia and its future remains unclear. (135) Until a uniform electronic commerce law becomes widely promulgated, consumers may look to the Uniform Commercial Code in its present form for a degree of protection. U.C.C. [subsection] 2-204 and 2-206 do not require formal rules for offer and acceptance. Thus, parties may contract entirely over the Internet. (136) While a review of the U.C.C. is beyond the scope of this article, the reader should be aware that the Statute of Frauds (137) and the parole evidence rule (138) are applicable to Internet sales. (139) However, the protection afforded consumers with respect to warranties merits further consideration.

The U.C.C. recognizes both express warranties and implied warranties of merchantability. (140) The remedies for both include rejection, revocation, refund and damages. (141) In addition, under the Magnuson-Moss Consumer Warranty Act, certain aspects of consumer warranties must be disclosed.

The U.C.C. specifies that any “affirmation, promise, description, or sample” may create an express warranty. (142) To be enforceable, the warranty must be more than the seller’s opinion or “puffery,” but rather, part of the “basis for the bargain.” (143) A good faith belief as to the veracity of a statement is not a defense for the seller. (144) An implied warranty of merchantability means that the goods must at least be “fit for the ordinary purpose for which they are to be used.” (145) In essence, a seller who is in the business of supplying the particular goods (146) is guaranteeing that they be free of defects regardless of good faith. (147)

In addition to the U.C.C., the Magnason-Moss Federal Trade Commission Improvement Act (148) authorizes the FTC to promulgate rules concerning the terms and disclosure of implied and express warranties. For consumer goods over $15, the Act requires that any warranties be available before purchase on request. (149) The Act also covers informal dispute resolution processes and the limitation that such clauses cannot be binding on consumers. (150)

In addition to these federal regulations, “many States have initiated law enforcement actions concerning online fraud.” (151) They do not, however, diverge from federal regulations. Instead, most state laws broadly prohibit unfair and deceptive trade practices, (152) and further define some of the terms used in federal acts. Though subtle differences in states’ approaches to the enforcement of these prohibitions exist, (153) they are largely consistent with FTC in the cyber context because of the aggressive stance the Federal Government has taken in enforcing existing anti-fraud legislation.

Because of the state and federal regulations, the Federal Government has not found it necessary to significantly alter current legislation. As will be shown below, the current state of European consumer regulation affords more protection than that available to U.S. consumers. Therefore, the proposed changes to the Brussels Convention are unwarranted.

B. EU Consumer Protection

As stated previously, there are a number of EU regulations and proposals aimed at protecting consumers. When considered in unison, these directives and proposals offer a substantial amount of consumer protection that does away with the need for the preferential treatment provided to consumers in Brussels II. For ease of exposition, the applicability of various directives, regulations, and proposals are presented in the following stages of contract formation and execution: 1) Commercial Communications/Advertising Promotion

1. Commercial Communications/Advertising Promotion

The EU, like the U.S., prohibits misleading advertising. (155) The Directive on Misleading Advertising encompasses electronic advertising. (156) It provides that advertisers may be required to prove claims made in their advertising. (157) The only requirement for a cause of action under the Directive is that the advertising is likely to “affect [consumers’] economic behavior or … injure a competitor.” (158)

Recently the European Council and Parliament adopted the Directive on Electronic Commerce. (159) The Directive compliments existing advertising and commercial communication regulation with the following rules that apply specifically to a cyber context:

1) The commercial nature of a communication must be discernable

2) The person on whose behalf the communication is made must be identifiable

3) Promotional offers and their terms must be clear

4) With respect to unsolicited commercial e-mail, the recipient must be able to identify it as such. (160)

2. Information provided before the conclusion of a contract

E-tailers are required to give significantly more information than traditional suppliers are before entering into a contract because of the consumer’s lack of knowledge vis-a-vis face to face transactions. (161) The Directive on the Protection of Consumers with Regard to Distance Contracts (162) (“Distance Directive”) states that the supplier must provide the consumer with information concerning: 1) the seller’s identity, 2) the goods and services on offer, and 3) the contract and its obligations. (163)

The Distance Directive requires that the supplier furnish the consumer with his name in good time before the conclusion of a contract. (164) In the case of contracts requiring payment in advance, the seller’s address must also be furnished. Information concerning the goods or services offered should include:

– the main characteristics of the goods or services[

– the price.., including all taxes … [

– [any] delivery costs …[

– [additional] costs of … communication[

– the period for which the offer or the price remains valid[

– [and] … the minimum duration of … contract[s] … to be performed permanently or recurrently[.] (165)

Finally, the EU requires that the consumer be supplied with a substantial amount of information concerning contract and obligations that arise under it before conclusion. (166) For example, the Distance Directive specifies that the consumer must have a complete understanding of means of payment, delivery or performance of the contract and the “existence of a right of withdrawal.” (167) In addition, “the consumer must receive written confirmation … [of the information provided] in good time during the performance of the contract, and at the latest at the time of delivery.” (168) The consumer must also be provided with written information regarding the geographical address where he may send complaints, the existence of after-sales service and guarantees and the conditions for cancellation of long term or indefinite contracts. (169)

3. Conclusion of the Contract and Contractual Obligations

The Directive on Unfair Terms in Consumer Contracts (170) (“Directive on Unfair Terms”), though adopted before the current wave of e-commerce, is also applicable to electronic transactions. (171) The definition of “consumer” is virtually the same as that found in the Brussels Convention. (172) As the title of the Directive implies, a consumer will not be bound by unfair contract terms if he did not individually negotiate those terms. (173) According to the Directive, “a term is unfair if, `contrary to the requirements of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.'” (174) Furthermore, in the event that a term is unclear, it is interpreted in favor of the consumer. (175) Although the Directive on Unfair Terms is generally not applicable to terms defining the subject matter and price of a contract, a clause in German that a French consumer did not fully understand would likely be deemed unfair. (176)

The Distance Directive also requires that consumers have a period to withdraw of not less then seven working days following the conclusion of a contract. (177) In the event that a consumer withdraws during this period, no penalty will be assessed, except for the direct cost of returning the goods. (178) Finally, any money the consumer pays in advance must be refunded within 30 days. (179)

4. Payment

Currently, there is no specific consumer protection legislation concerning payment for electronic transactions. (180) However, there are relevant provisions in existing legislation. The Distance Directive provides that if a consumer’s credit card has been used fraudulently, he should be able to cancel payment or have the sums returned. (181) The European Commission also recommended that when a loss or theft of an electronic payment occurs, a consumer’s liability should be limited to 150 Euro, unless the consumer acted negligently or fraudulently. (182)

5. Guarantees

The EU is currently in the process of harmonizing national legislation concerning the rights of consumers with respect to the quality of goods purchased in the “electronic marketplace.” (183) The Proposal for a European Parliament and Council Directive on the Sale of Consumer Goods and Associated Guarantees (184) (“Consumer Goods Directive”) is a parallel to the Directive on Unfair Terms. (185) While the latter has been characterized as dealing with the “small print,” the former “regulates the `substance’ of the consumer contracts.” (186) In essence, the seller must ensure that the goods or services are in conformity with the contract: they must (1) “comply with the description given by the seller

At a minimum, under the Consumer Goods Directive, contractual guarantees are legally enforceable under the national legislation of each Member State, and must be set out in “plain intelligible language.” (190) However, guarantees cannot provide fewer rights than the national legislation. (191) In case of nonconformity, a consumer may request recission, repair, reduction in price, or replacement. (192)

6. Dispute Settlement

Because of the relatively high costs of court proceedings in relation to the economic value of a typical consumer dispute, the Commission claims to place an emphasis on alternative forms of dispute resolution, such as arbitration. Interestingly, the Commission declined to institute any such policy with respect to Internet disputes in Brussels II despite the Council’s recommendation. (193) Despite this fact, the basic principles of any kind of dispute resolution system are set forth in the Commission Recommendation on the Principles Applicable to the Bodies Responsible for Out of Court Settlement of Consumer Disputes. (194) Suffice to say they require dispute resolution bodies to operate effectively and without bias towards any party. (195)

In cases where a supplier in another Member State infringes consumers’ rights, consumer interest groups may resort to the Directive on Injunctions for the Protection of Consumers’ Interests. (196) This Directive’s purpose is to harmonize national consumer protection legislation by codifying the specific instances in which qualified advocacy groups may bring forth cross-border injunction actions. (197) In addition, the Directive helps individual consumers overcome the legal and financial obstacles they face before the courts of other Member States. (198)

Thus, citizens of the EU have a comprehensive set of regulations that protect their rights. Though some differences in standards remain, the EU, as evidenced by the preceding proposals, is working toward the unification of certain consumer guarantees. Certainly, EU citizens can depend on a level of protection similar to that of the United States. The goal of the EU is to achieve a level of integration among Member States’ laws that is comparable to that of state and federal law in the United States. (199)

IV. CONCLUSION

Looking at the entire EU Internet framework in the proper context, one realizes that Brussels I, in conjunction with current legislation aimed at protecting consumers, would enable e-suppliers of all sizes to enter into the market. In light of this fact, the Commission’s argument that consumers are in need of additional protection is fundamentally flawed. Consumers are actually empowered by the Internet. They can choose what businesses to contract with and in which countries. They might even take advantage of regulations outside of their own domiciles that are more amiable than their own. The negative consequences of applying the rules of a consumer’s domicile significantly outweigh any concomitant benefit he may derive. Therefore, the Commission should not consider a web advertisement a specific invitation to buy. Rather, by clicking on a website, a consumer should be deemed to have ventured outside of his jurisdiction. Moreover, the Commission’s decision to change Article 13 of the current Brussels Convention to allow a consumer the choice of forums without a supplier first directly soliciting consumers will likely cause confusion in the coming years. E-tailers will now be forced to expressly exclude consumers in certain countries from accessing and taking advantage of their websites. The countries of the European Union joined their economies in order to compete in the 21st century. Brussels II may prohibit EU member states from competing in the cyber environment.

(1.) 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, Nov. 29, 1996, 1998 O.J. (C 27) 1.

(2.) Council Regulation 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, 2000 O.J. (L 12) 1, 1-23.

(3.) Paul Meller, Buyers Gain Online Rights In Europe, N.Y. TIMES, Dec. 1, 2000, at W1.

(4.) See discussion infra Part I.B.2.

(5.) This note will not discuss consumer privacy issues.

(6.) See David Bender, Choice of Law and Choice of Forum, in THE UTICA REVOLUTION: THE NEW E-COMMERCE MODEL FOR SOFTWARE AND DATABASE LICENSING, at 429, 454 (PLI Patents, Copyrights, Trademarks, and Literary Prop. Course, Handbook Series No. 600, Apr.-May 2000).

(7.) Id. at 454-55 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 47879 (1985)).

(8.) Dale M. Cendali, Personal Jurisdiction and the Internet, in THIRD ANNUAL INTERNET LAW INSTITUTE, at 79, 81 (PLI Patents, Copyrights, Trademarks, and Literary Prop. Course, Handbook Series No. 564, 1999).

(9.) Id.

(10.) Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). In making this determination courts consider:

the burden on the defendant, … the forum state’s interest in adjudicating

the dispute the plaintiff’s interest in obtaining convenient and effective

relief, … the interstate judicial system’s interest in obtaining the most

efficient resolution of controversies, and the shared interest of the

several states in furthering fundamental substantive social policies.

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980) (citations omitted).

(11.) World-Wide Volkswagen, 444 U.S. at 297 (“conduct and connection with the forum [should be] such that he should reasonably anticipate being haled into court there”).

(12.) See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984).

(13.) Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).

(14.) Id. at 476.

(15.) [section] 23 ZPO.

(16.) C. CIV. art. 14.

(17.) Id. art. 15.

(18.) GEORGE A. BERMAN ET AL., CASES AND MATERIALS ON EUROPEAN COMMUNITY LAW 3-19 (1993 & Supp. 1995). What we know as the European Community was originally called the European Economic Community. Id. It is the result of a number of successive treaties whose goals were to achieve a degree of economic and political stability following WWII. Id. The European Economic Community was established under the 1958 Treaty of Rome and was replaced by the Maastricht Treaty in 1992. Id. The European Union is the collective name for the institutions addressed in the Maastricht Treaty. Id. There are four major Community institutions. Three of them — the Council, the Commission and the European Parliament — share the political tasks of legislating and administering Community Law. Id. at 50. The Council is the primary legislative body dealing with matters such as external trade policies and international agreements. Id. However, its legislative power is limited because the Commission has the exclusive power to initiate legislation. Id. The Parliament is the representative body of the member-states’ populations and has gained more legislative power in recent years. Id. at 66.

(19.) 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, Nov. 29, 1996, 1998 O.J. (C 27) 1 [hereinafter Brussels Convention or Brussels I]. Member States “[a]nxious to strengthen in the Community the legal protection of persons therein established … that it is necessary for this purpose to determine the international jurisdiction of their courts….” Id. at 3 pmbl.

(20.) See generally id.

(21.) See Sven C. Oehme, An Overview of the European Union, its Legal Structure and its New Currency, N.J. LAW., Feb. 1999, at 9, 11 (1999).

(22.) The Brussels Convention states that the determination of whether a party is domiciled in the Contracting State is based on the laws of the state hearing the matter. Brussels Convention, supra note 19, art. 52. National laws also determine the seat of a company or other legal jurisdiction, which for the purposes of the convention is the company’s domicile. Id. art. 53.

(23.) Id. art. 5.

(24.) Id. art. 5(1).

(25.) Id. art. 5(3).

(26.) Id. art. 6(1).

(27.) Id. art. 13 (emphasis added). For example, an installment contract for the sale of a tool between one company and another would not qualify. Case 150/77, Bertrand v. Ott, 1978 E.C.R. 1431.

(28.) Brussels Convention, supra note 19, art. 14.

(29.) Id.

(30.) Id. art. 13.

Where a consumer enters into a contract with a party who is not domiciled in a Contracting State but has a branch, agency or other establishment in one of the Contracting States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State.

(31.) See supra note 27 and accompanying text.

(32.) See discussion supra Part I.A. 1.

(33.) See supra notes 28-29 and accompanying text.

(34.) See supra notes 6-14 and accompanying text.

(35.) See discussion infra Part I.C.

(36.) Brussels Convention, supra note 19, art. 13.

(37.) See e.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)

(38.) Pres-Kap, Inc. v. System One, Direct Access, Inc., 636 So. 2d 1351, 1353 (Fla. Dist. Ct. App. 1994) (citing Int’l Shoe v. Washington, 326 U.S. 310, 316 (1945)).

(39.) See Dan L. Bourk, Jurisdiction in a World Without Borders, 1 VA. J.L. & TECH. 3 (1997).

(40.) Bender, supra note 6, at 455. A minority view holds that personal jurisdiction is proper where there is a potential that residents within the forum might access a site to buy goods. See, e.g., Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (D. Conn. 1996).

(41.) 952 F. Supp. 1119 (W.D. Pa. 1997).

(42.) Id. at 1121, 1126-27.

(43.) Michael Traynor, Personal Jurisdiction and the Internet: 1999 and Looking Ahead, in THIRD ANNUAL INTERNET LAW INSTITUTE, at 109, 116 (PLI Patents, Copyrights, Trademarks, and Literary Prop. Course, Handbook Series No. 564, 1999).

(44.) 130 F.3d 414 (9th Cir. 1997).

(45.) Id. at 419-21.

(46.) Traynor, supra note 43, at 116-17 (citing Millenium Enterprises, Inc. v. Millenium Music, LP, 33 F. Supp 2d. 907, 913-923 (D. Or. 1999)

(47.) GEORGE B. DELTA and JEFFERY H. MATSUDA, LAW OF THE INTERNET [section] 3.03 [A] (1998) (Hereinafter LAW OF THE INTERNET).

(48.) 89 F.3d 1257 (6th Cir. 1996).

(49.) Id. at 1261.

(50.) Id. at 1266.

(51.) Id. at 1259-60.

(52.)Id. at 1266-67. The court found purposeful availment based on the following three-part test:

1) The defendant must purposefully avail himself of the privilege of acting or causing a consequence in the forum state,

2) the cause of action must arise from the defendant’s activities in the forum state, and

3) the acts or the consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over him reasonable.

LAW OF THE INTERNET, supra note 47, [section] 3.03 (citing CompuServe, F.3d at 1263).

(53.) Hall v. LaRonde, 66 Cal. Rptr. 2d 399, 400 (Cal. Ct. App. 1997) (“use of electronic mail and the telephone by a party in another state may establish sufficient minimum contacts with California to support personal jurisdiction”).

(54.) See Brussels Convention, supra note 19, art. 13.

(55.) See id.

(56.) See discussion infra Part II.B. 1.

(57.) Proposal for Council Regulation Concerning the Jurisdiction and the Recognition of Judgments in Civil and Commercial Matters, COM(99)348 final at 7 [hereinafter Commission Proposal].

(58.) Commission Adopts Draft Regulation on Jurisdiction, Recognition and Enforcement of Judgments in Civil and Commercial Matters, July 14, 1999, IP/99/510 available at http://www.lex.unict.it/cde/documenti/vari/98_99/giurisdiz14_07_99.htm. The new Regulation can be found at Council Regulation 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, 2000 O.J. (L 12) 1, 1-23 [hereinafter Brussels II or New Regulation].

(59.) Compare Amended Proposal for a Council Regulation on Jurisdiction and the Regulation and Enforcement of Judgments in Civil and Commercial Matters, COM(2000)689 final at 1 [hereinafter Amended Proposal] with Brussels II, supra note 58.

(60.) Brussels II, supra note 58.

(61.) Oehme, supra note 21, at 11.

(62.) Brussels II, supra note 58, art. 15.

(63.) Brussels Convention, supra note 19, art. 13.

(64.) Commission Proposal, supra note 57.

(65.) Brussels Convention, supra note 19, art. 13(3).

(66.) The Regulation defines a consumer as someone entering into a contract the purpose for which is outside of his trade or profession. Brussels II, supra note 58, art. 15(1).

(67.) Id. art. 15(1)(c). Compare id. art. 15(1), with Brussels Convention, supra note 19, art. 13(3).

(68.) Commission Proposal, supra note 57.

(69.) Brussels II, supra note, 58 art. 16(1) (“A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled.”).

(70.) Brussels Convention, supra note 19, art. 13(3).

(71.) Brussels Convention, supra note 19, art. 14, 1998

(72.) Commission Proposal, supra note 57.

(73.) Brussels II, supra note 58, art. 15(1).

(74.) Commission Proposal, supra note 57.

(75.) Bender, supra note 6, at 461-62.

(76.) Brussels Convention, supra note 19, art. 15

(77.) See generally M/S Bremmen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)

(78.) Achieving Legal and Business Order in Cyberspace: A Report on Jurisdiction Issues Created by the Internet, 55 Bus. LAW. 1801, 1860 (2000).

(79.) 499 U.S. 585 (1991).

(80.) Id. at 594-95.

(81.) 732 A.2d 528 (N.J. 1999)

(82.) Bender, supra note 6, at 465-66 citing Caspi, 732 A.2d at 530.

(83.) Carnival, 499 U.S. at 593-94.

(84.) In contrast, U.S. domestic e-tailers are not subject to the expenses associated with litigating in another country. Despite the use of forum selection clauses in most e-contracts, they do have certain limitations. For example, forum selection clauses are insufficient to establish personal jurisdiction over a consumer who refuses to pay. LAW OF THE INTERNET, supra note 47, [section] 3.04. In fact, a seller who intentionally sues a debtor in the wrong venue may be guilty of unfair trade practice. DEE PRIDGEN, CONSUMER PROTECTION AND THE LAW, [section] 3.04[4] (1989).

(85.) See discussion infra Part II.B.1.

(86.) See discussion infra Part II.B.1.

(87.) See Brussels II, supra note58, arts. 15-17.

(88.) See discussion infra Part II.B.2.

(89.) Paul Meller, Buyers Gain Online Rights In Europe, N.Y. TIMES, Dec. 1, 2000, at W1.

(90.) “For large companies it isn’t a problem, because they have offices and lawyers in all EU countries.” Paul Meller, European Justice Ministers Pass Stiff E-Commerce Law, InfoWorld.com (Dec. 1, 2000), at http://www2.infoworld.com/articles/hn/xm1/00/12/01/001201hncommerce.x…/pr intarticle.htm (on file with the Rutgers Computer and Technology Law Journal).

(91.) See generally, Hearing on Electronic Commerce: Jurisdiction and Applicable Law: Position Papers Submitted to the European Commission, at http://europa.eu.int/comm/scic/conferences/991104/contributions.doc (last visited Mar. 5, 2001)[hereinafter POSITION PAPERS].

(92.) Francis X. Rocca, The e-Key to Europe’s Single Market, THE WALL ST. J. EUR., Nov. 4, 1999, available at 1999 WL-WSJE 27643244.

(93.) Electronic Commerce.’ Legal Jurisdiction and Applicable Law, [paragraph] 2, at http://europa.eu.int/comm/justice_home/pdf/presentext_en.pdf (last visited Mar. 5, 2001). Currently, the EU is debating changes to the Convention on the Law Applicable to Contractual Obligations, 1998 O.J. (C 27/02) 34 [hereinafter Rome Convention], which determines the choice of law. Paul Meller, Proposed Law Stirs Concern on Europe E-Commerce, N.Y. TIMES, Feb. 8, 2001, at WI. While outside the scope of this note, the proposed Regulation (“Rome II”) may prove to be more controversial than Brussels II.

The Rome Convention sets forth the Union’s standards for the choice of law in contracts. See generally, Rome Convention, supra. A choice of law clause “expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case” allows contracting parties to agree on the applicable law regardless of the forum. See Rome Convention, supra, art. 3. If the choice of law in unascertainable, the Convention dictates that the laws of the habitual residence or principle place of business of the contract performer most closely associated with transaction will apply. See Rome Convention, supra, art. 4(2). However, in consumer contracts, which are defined by the same terms as in the Brussels Convention, the laws of a consumer’s habitual residence are afforded deference even if the contract specifies that the supplier’s laws apply. Rome Convention, supra, art. 5

Rome II, in contrast to the existing Convention, would provide a framework for determining liability for non-contractual cross-border disputes. See Meller, supra. With respect to consumer claims, the proposed law would likely provide that the laws of the consumers domicile should apply. See id. “By giving preference to the laws in the country of the consumer in cross-border disputes, Rome II would create `extreme legal uncertainty’ for anyone planning to do business over the Internet in Europe.” Id. (quoting Mike Pullen). That is because consumer protection laws in the EU vary greatly from country to country. For example, reverse auctions are illegal in Germany. Neal E. Boudette, In Europe, Surfing a Web of Red Tape: Even on Internet, Ancient Rules Inflate Prices, Block Path To `Borderless Commerce,’ WALL ST. J., Oct. 29, 1999, at B1, available at 1999 WL-WSJ 24919921.

(94.) See generally, POSITION PAPERS, supra note 91.

(95.) Mac Roberts Solicitors, Electronic Commerce: Jurisdiction and Applicable Law, in POSITION PAPERS, supra note 91, at 285, 287.

(96.) The Euro was introduced into the EU on January 1, 1999, and is currently being integrated into banking and other kinds of commercial transactions. Oehme, supra note 21, at 12. Euro notes will be issued on January 1, 2002

(97.) See Mike Pullen, Position Paper on the Proposal to Adopt the Amended Brussels Convention and the Draft Rome II Convention as EU Regulations Pursuant to Article 65 of the Amsterdam Treaty, in POSITION PAPERS, supra note 91 at 105, 114.

(98.) Id.

(99.) Id.

(100.) Group Vivendi, Answers to the Questionnaire on the Brussels and Rome Conventions, in POSITION PAPERS, supra note 91, at 215, 217. (101.) See generally, POSITION PAPERS, supra note 91.

(102.) Letter from Riccardo Nardi to European Commission (Oct. 8, 1999), in POSITION PAPERS, supra note 91, at 14, 15.

(103.) Committee on Legal Affairs and the Internal Market, Report on the Proposal for a Council Regulation on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters, EUR. PARE. DOC., art. 17a (A5-0253 Final) 21(2000) [hereinafter Wallace Report]. The amendment would have allowed suppliers to require consumers to submit to binding arbitration in the suppliers domicile. Id.

(104.) Amended Proposal, supra note 59, at [paragraph] 2.2.1.

(105.) Group Vivendi, in POSITION PAPERS, supra note 91, at 218. “In Britain and the Netherlands, the national consumer associations have started to issue Web certificates to reputable traders, and this idea is expected to spread in Europe.” Barry James, EU Looks for Ways to Protect Shoppers, INT’L HERALD TRIB., Dec. 2, 1999, available at 1999 WL 5115133.

(106.) Group Vivendi, in POSITION PAPERS, supra note 91, at 218.

(107.) Achieving Legal and Business Order in Cyberspace: A Report on Global Jurisdiction Issues Created by the Internet, supra note 78, at 1879.

(108.) Brussels Convention, supra note 19, art. 13.

(109.) Id. arts. 2-4.

(110.) Commission Proposal, supra note 57.

(111.) Brussels II, supra note 58, art. 15.

(112.) Pullen, in POSITION PAPERS, supra note 91, at 118.

(113.) Id.

(114.) Id.

(115.) See generally, Brussels Convention, supra note 19.

(116.) Group Vivendi, in POSITION PAPERS, supra note 91, at 218, 220.

(117.) See discussion of the Long Distance Contracting Directive, infra Part I.B.

(118.) Meller, European Justice Ministers Pass Stiff E-Commerce Law, supra note 90.

(119.) Victorya Hong, Brussels 1 [sic] Angers EC Businesses, TheStandard.com (Dec. 1, 2000), available at 2000 WL 31590459. The reader will notice that that new Regulation is sometimes incorrectly referred to as Brussels I by the media.

(120.) Id.

(121.) Id.

(122.) Jennifer v. Koester, FTC Applying Traditional Consumer Protection Rules to the Internet, MULTIMEDIA & WEB STRATEGIST, Apr. 1999. “The FTC has brought over 80 federal actions against 200 defendants alleging fraudulent practices online.” Alan Charles Raul, et al, Fighting Fraud in Cyberspace: Protecting Online Consumers and Investors, WALLSTREETLAWYER.COM: SECURITIES IN THE ELECTRONIC AGE (June 2, 1999) at http://www.sidley.com/cyberlaw/features/fighting.asp?.

(123.) Eileen Harrington, Federal Trade Commission on Consumer Protection in Cyberspace: Combating Fraud on the Internet, June 1998 (prepared statement before the Telecommunications, Trade and Consumer Protection Subcommittee of the House Committee on Commerce), at http://www.ftc.gov/os/1998/9806/test.623.htm (on file with the Rutgers Computer and Technology Law Journal). In addition to 15 U.S.C. [section] 45, the FTC is responsible for enforcing approximately 40 statutes aimed at protecting consumers: among them, the Truth in Lending Act, 15 U.S.C. [sections] 1666 et seq., the Fair Credit Reporting Act, 15 U.S.C. [section] 1681 and the Telemarketing Sales Rule, 16 C.F.R. Part 310. Id., n. 2.

(124.) Most FTC actions are against pyramid schemes, unsolicited E-mail (“spam”), online auctions, and the hijacking of modems to charge international call rates. Harrington, supra note 123.

(125.) 15 U.S.C. [section] 45 (West 1997).

(126.) [section] 45(a)(1).

(127.) Id.

(128.) Id.

(129.) Id. [section] 52.

(130.) In re Int’l Harvester Co., 104 F.T.C. 949, 1070 (1984) (letter dated Dec. 13, from the Commission to Senators Wendell Ford and John Danforth).

(131.) Letter to the Senate Committee on Commerce, Science and Transportation from James C. Miller, III, Chairman, FTC (Oct. 14, 1983) reprinted in George E. Rosden & Peter E. Rosden’s, THE LAW OF ADVERTISING, App. 18A at 18A-2-4. See also Cliffdale Associates, Inc., 103 F.T.C. 110, 174 (1984) (Policy Statement letter dated Oct. 14, from the Commission to Chairman John D. Dingell).

(132.) 15 U.S.C. [section] 52(a)(1).

(133.) Id.

(134.) UNIF. COMPUTER INFO. TRANSACTION ACT, at www.law.upenn.edu/bll/ulc/ucitaFina100.pdf (Sep. 29, 2000).

(135.) See Brian D. McDonald, The Uniform Computer Information Transactions Act, 16 Berkeley Tech. L.J. 461, 461 (2001). Without going into detail, it would seem that a lack of consumer protection is one of the main sticking points with respect to UCITA. See id. at 462. However, UCITA’s advocates claim that it actually expands the consumer protection. See, e.g., Raymond T. Nimmer, Series of Papers on UCITA Issues, in UNDERSTANDING ELECTRONIC CONTRACTING: UCITA, E-SIGNATURE, FEDERAL, STATE AND FOREIGN REGULATIONS, at 15, 24-25 (PLI Intell. Prop. Course, Handbook Series No. 649, 2001). For an interesting overview of the interplay between the American, United Nations’, and European proposed model laws governing computer based transactions, see Christopher Poggi, Electronic Commerce Legislation: An Analysis of European and American Approaches to Contract Formation, 41 VA J. INT’L L. 224 (2000).

(136.) LAW OF THE INTERNET, supra note 47, [section] 9.02[c], at 9-31.

(137.) Any contract for the sale of goods for $500 or more must have (1) a writing (2) sufficient to indicate that a contract was made (3) signed by the party against whom enforcement is sought and (4) containing a quantity tenn. U.C.C. [section] 2-201(1)(1998).

(138.) [section] 2-202.

(139.) LAW OF THE INTERNET, supra note 47, [section] 9 at 3-46.

(140.) U.C.C. [subsection] 2-313 to 2-314.

(141.) Id. [section] 2-711.

(142.) Id. [section] 2-313(2).

(143.) Id. [section] 2-313(1).

(144.) DEE PRIDGEN, supra note 84, [section] 13.0215], at 13-7.

(145.) U.C.C. [section] 2-314(2)(c).

(146.) Id. [section] 2-314(1).

(147.) Vlases v. Montgomery Ward & Co., 377 F.2d 846 (3d Cir. 1976).

(148.) 15 U.S.C. [subsection] 2301-312 (West 1997).

(149.) 16 C.F.R. pt. 702.3 (2000).

(150.) Id. pt. 703.

(151.) Letter to Donald S. Clark, Secretary Federal Trade Commission from Eliot Spitzer, New York Attorney General (Apr. 30, 1999), available at http://www.ftc.gov/bcp/icpw/comments/stateofnewyorketal.htm (last visited Mar. 6, 1999) (on file with the Rutgers Computer and Technology Law Journal).

(152.) DEE PRIGDEN, supra note84, [section] 3.01, at 3-3 to 4.

(153.) Id.

(154.) This order of exposition can be found in EUROPEAN COMM’N, US Perspectives on Consumer Protection in the Global Electronic Marketplace: Federal Trade Commission Notice Requesting Academic Papers and Public Comment, (Apr. 21, 1999) [paragraph] [paragraph] 13-59, available at http://europa.eu.int/comm/dg24/[hereinafter EU Consumer Protection Paper] (on file with the Rutgers Computer and Technology Law Journal).

(155.) Parliament and Council Directive 97/55/EC of 6 October 1997 Amending Directive 84/450/EEC Concerning Misleading Advertising so as to Include Comparative Advertising, 1997 O.J. (L 290) 18.

(156.) JOHN DICKIE, INTERNET AND ELECTRONIC COMMERCE LAW IN THE EUROPEAN UNION 70 (Hart) (1999). “[T]he making of a representation in any form in connection with a trade, business, craft or profession in order to promote the supply of goods or services, including immovable property, rights and obligations.” Council Directive 84/450/EEC, art. 2(1), 1984 O.J. (L 250) 17.

(157.) Council Directive, supra note 156, art. 6(a).

(158.) DICKIE, supra note 156, at 71.

(159.) Parliament and Council Directive 2000/31/EC of 8 June 2000 on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce in the Internal Market (Directive on Electronic Commerce), 2000 O.J. (L 178) 1.

(160.) EU Consumer Protection Paper, supra note 154, [paragraph] 17.

(161.) Id. [paragraph] 19.

(162.) Council and Parliament Directive 97/7, 1997 O.J. (L 144) 19 [hereinafter Distance Directive].

Distance contract means any contract concerning goods or services concluded between a supplier and a consumer under a distance sales or service-provision scheme run by the supplier, who, for the purpose of the contract, makes exclusive use of one or more means of distance communications up to including the moment at which the contract is concluded….

Id. art. 2(1) at 21.

(163.) EU Consumer Protection Paper, supra note 154, [paragraph] [paragraph] 24-36.

(164.) Id. [paragraph] 24

(165.) EU Consumer Protection Paper, supra note 154, [paragraph] 28.

(166.) Id. [paragraph] [paragraph] 32-37.

(167.) Id. [paragraph] 32.

(168.) Distance Directive, supra note 162, art. 5.

(169.) EU Consumer Protection Paper, supra note 154, [paragraph] 36.

(170.) Council Directive 93/13/EEC of 5 April 1993 on Unfair Terms in Consumer Contracts, 1993 O.J. (L 95) 29 [hereinafter Directive on Unfair Terms].

(171.) DICKIE, supra note 155, at 74.

(172.) Compare Brussels Convention, supra note 19, art. 13 with Distance Directive, supra note 162, art. 2(2).

(173.) EU Consumer Protection Paper, supra note 154, [paragraph] 39. Standardized preformulated contract terms are not individually negotiated. Id.

(174.) DICKIE, supra note 156, at 74, citing Directive on Unfair Terms, supra note 170, art. 3.(175.) Id.

(176.) Id. at 74-75.

(177.) Distance Directive, supra note 162, art. 6. There are a number of exceptions to this rule. For example, a consumer cannot withdraw from contracts for:

* the provision of services if performance has begun, with the consumer’s agreement, before the end of the seven working day period[

* the supply of goods and services the price of which is dependant on fluctuations in the financial market which cannot be controlled by the supplier[

* goods made to the consumer’s specifications or clearly personalized or which, by reason of their nature, cannot be returned or are liable to deteriorate or expire rapidly[

* audio or video recordings or computer software which were unsealed by the consumer….

(178.) Id. art. 6(2).

(179.) Id.

(180.) EU Consumer Protection Paper, supra note 154, [paragraph] 49.

(181.) Distance Directive, supra note 162, art. 8.

(182.) EU Consumer Protection Paper, supra note 154, [paragraph] 54 citing Commission Recommendation Concerning Transactions by Electronic Payment Instruments and in Particular the Relationship Between Issuer and Holder, 97/489 1997 O.J. (L 263) 52, 58).

(183.) DICKIE, supra note 156, at 78.

(184.) 1996 O.J. (C 307), at 8.

(185.) DICKIE, supra note 156, at 78.

(186.) Id. at 78-79.

(187.) EU Consumer Protection Paper, supra note 154, [paragraph] 57.

(188.) Id.

(189.) Id.

(190.) DICKIE, supra note 156, at 80.

(191.) EU Consumer Protection Paper, supra note 154, [paragraph] 57.

(192.) DICKIE, supra note 156, at 80.

(193.) See Wallace Report, supra note 103, at 10.

(194.) 1998 0.J. (L115) 31, 31-34.

(195.)EU Consumer Protection Paper, supra note 154, [paragraph] [paragraph] 62-70.

(196.)Parliament and Council Directive 98/27, 1998 O.J. (L 166) 51.

(197.)EU Consumer Protection Paper, supra note 154, [paragraph] [paragraph] 75-77

(198.) DICKIE, supra note 156, at 83.

(199.) EU Nations Plan Closer Legal Ties: Leaders at Summit Agree to Improve Police and Judicial Cooperation, THE SUNDAY STAR LEDGER, (Newark), Oct. 17, 1999, at 6.

Michael Cordera, “BA The American University of Paris. JD Candidate 2001 Rutgers School of Law — Newark. Mr. Cordera will be associated with Shearman & Sterling’s Intellectual Property Department in the fall of 2001.”