According to the latest report from the Australian Competition and Consumer Commission’s (ACCC) Digital Platform Services Inquiry, consumers using online retail marketplaces such as eBay and Amazon “have little effective choices about the amount of data they share”.
Consumers can benefit from personalization and recommendations in these marketplaces based on their data, but many are unaware of how much personal information these companies collect and share for other purposes.
ACCC President Gina Cass-Gottlieb said:
We believe that consumers should receive more information about how online marketplaces collect and use their data and that they should control its use.
The report reiterates the ACCC’s previous calls for Australian consumer law to be amended to address unfair data terms and practices. He also points out that the government is considering proposals for major changes to privacy law.
However, none of these proposals are likely to enter into force in the near future. In the meantime, we also need to consider whether practices such as obtaining user information from third-party data brokers fully comply with applicable privacy laws.
Why did the ACCC review online marketplaces?
The ACCC examined competition and consumer issues associated with “general online retail markets” as part of its five-year survey of digital platform services.
These marketplaces facilitate transactions between third-party sellers and consumers on a common platform. They do not include retailers that do not operate marketplaces, such as Kmart, or platforms such as Gumtree that serve classified ads but do not allow transactions.
The ACCC report focuses on Australia’s four largest online marketplaces: Amazon Australia, Catch, eBay Australia and Kogan. In 2020-21, these four had sales totaling $8.4 billion.
According to the report, eBay has the biggest sales of these companies. Amazon Australia is the second largest and fastest growing, with an 87% increase in sales over the past two years.
The ACCC reviewed:
- the state of competition in the markets concerned
- the problems faced by sellers who depend on selling their products on these marketplaces
- consumer issues, including concerns about the collection, use and sharing of personal information.
Consumers do not want their data used for other purposes
The ACCC expressed concern that in online marketplaces, “the extent of data collection, use and disclosure…often does not match consumer preferences.”
The Commission referred to surveys of Australian consumer attitudes towards privacy which indicate:
- 94% don’t feel comfortable with how digital platforms, including online marketplaces, collect their personal information
- 92% agreed that companies should only collect the information they need to deliver their product or service
- 60% considered it very or somewhat unacceptable for their online behavior to be monitored for targeted ads and offers.
Read more: How a simple rule change could limit spying on online retailers
However, the four online marketplaces analyzed:
- failing to proactively present privacy terms to consumers “throughout the purchase journey”
- may allow advertisers or other third parties to place tracking cookies on users’ devices
- do not clearly identify how consumers can disable cookies while continuing to use the marketplace.
Some marketplaces also obtain additional data about individuals from third-party data brokers or advertisers.
Harms of increased consumer tracking and profiling include decreased privacy; manipulation based on detailed profiling of traits and weaknesses; and discrimination or exclusion from opportunities.
Limited choices: you can’t just “walk out of a store”
Some might argue that consumers don’t really have to worry about privacy if they continue to use these companies, but the choice is not that simple.
The ACCC notes that relevant privacy terms are often spread across multiple web pages and offered on a “take it or leave it” basis.
The terms also use “bundled consents”. This means agreeing to the company using your data to fulfill your order, for example, can be grouped together with agreeing to the company using your data for its separate advertising business.
Moreover, as my research has shown, there is so little competition on privacy between these markets that consumers simply cannot find a better deal. The ACCC agrees:
While Australian consumers can choose between a number of online marketplaces, the common approaches and practices of major online marketplaces to data collection and use mean that consumers have little effective choice about amount of data they share.
Consumers also seem unable to demand that these companies delete their data. The situation is quite different from conventional retail interactions where a consumer can select “unsubscribe” or leave a store.
Does our privacy law currently allow all of these practices?
The ACCC reiterated its previous calls to amend Australia’s consumer law to outlaw unfair practices and make unfair contract terms illegal. (Right now, unfair contract terms are simply void or unenforceable.)
The report also highlights that the government is considering proposals for major changes to privacy law, but these changes are uncertain and could take more than a year to come into effect.
Read more: Proposed new privacy code promises tough rules and $10 million penalties for tech giants
In the meantime, we should take a closer look at the practices of these markets under current privacy law.
For example, under the federal Privacy Act, the four marketplaces
shall collect personal information about an individual only from the individual unless… it is unreasonable or impractical to do so.
However, some online marketplaces claim to collect information about consumer interests and demographics from “data providers” and other third parties.
We don’t know all the details of what is collected, but demographic information may include our age range, income, or family information.
Why is it “unreasonable or impractical” to obtain information about our demographics and interests directly from us? Consumers could pose this question to online marketplaces and complain to the Australian Information Commissioner’s Office if there is no reasonable answer.