Trust me, I'm a Trustmark
Background Development Before Trustmarks
India’s e-commerce sector is showing exponential growth; revenue from this sector is increasing at a rate of 51%, making it the highest growth rate in the world. It is stated that India would potentially be the second-largest e-commerce market in the world by 2034.[i] The aforementioned data indicates immense potential in terms of development and revenue. However, the e-commerce sector, in order to grow at the said rate, will undeniably require an adequate regulation policy by the government. It must also be kept in mind that security and privacy concerns are important factors affecting the e-commerce sector.[ii] The breach of adequate security standards discourages the consumers from entering into transactions online, hence affecting the industry, and this is a major threat to the predicted growth of Indian e-commerce.[iii]Consumer concerns must be addressed and trust on online portals needs to be increased in order to meet the potential growth rate.[iv]
Trust, according to Mayers and Davis,[v] ‘refers to willingness of a party to be vulnerable to the actions of another, irrespective of the ability to control the other party.’ The above definition indicates that there exists some degree of risk that the person trusting is willing to take. Such willingness must be portrayed by both the buyer and the seller in order to ensure the growth of the e-commerce sector. Presently, consumers and sellers are skeptical of the transaction, and in order to cater to this problem, private organisations interested in the working of the e-commerce sectors have started developing trustmarks. Trustmarks refer to an electronic commerce badge/image or logo that indicates that the website is trustworthy.[vi]
What are Trustmarks?
Trustmarks are defined as third-party certifications that are used in order to reduce information asymmetry in the online market.[vii] Just as in the offline market certification marks are provided for goods and services that comply with the required standards of quality, the trustmarks perform the same function as is served by trustmarks in the offline market by providing certification about factors such as security and privacy, fair dealings, and maintaining good business practices. However, unlike ISI, BSI, Eco mark and other certification marks, the trustmark is provided by private organisations and not by government or statutory bodies. Trustmarks are provided by Trustmark Organisations (TMO). These are independent trusted third parties that provide trustmarks to companies.[viii]
The main reason trustmarks were introduced was to give information to consumers about online businesses, their privacy and security policies and about other factors that would potentially affect online transactions. Before trustmarks, consumers did not have third-party information about online business, hence creating uncertainties and making it difficult for consumers to transact with them. These uncertainties mainly affected smaller businesses and start-ups, which, unlike bigger firms like Amazon, Flipkart etc, are required to build their repute faster in order to be able to compete in the market. The three uncertainties that discourage consumers while transacting online are the missing identity of the seller, the missing personal character and inscrutable context.[ix] Trustmarks play an important role in improving the trust e-consumers have on online businesses and in clarifying consumer’s doubts about the seller’ credibility. They help generate reliance on the online business practice of the seller.[x] This is mainly done by generating online security and by increasing the consumer’s confidence in the identity of the seller. Trustmarks perform the function of giving information about the following factors to the consumer.
Advantages of Trustmarks
There are essentially three main benefits of trustmarks, these are:
1. Security and Privacy
As mentioned above, one of the main concerns of consumers when they transact online is that of security and privacy;[xi] TMOs, while certifying the online business, look into all of these factors and ensure that facilities such as encryption, non-disclosure policy etc. are maintained. An example of one such TMO is TRUSTe, which certifies that the online seller is adhering to the regulatory standards of privacy and security.
2. Standardized Assurance – Guarantee
Trustmarks are a form of third-party assurance. They provide credibility to the claim of the online business. Hence, in a way, trustmarks act as guarantees for the credibility of the website mainly because the very reason the consumer entered into a contract with the online portal was because the TMO ensured the transaction would be safe and in accordance with best business practices. Hence, they act as valid forms of guarantee[xii] and facilitate e-commerce, as information from an independent third-party is often heavily relied upon by consumers while entering into transactions.[xiii]
3. Information Asymmetry Curbed and Reduced Search Cost
Further, trustmarks ensure that the information asymmetry that the consumer faces while transacting online is reduced. Often, the consumer has very little knowledge or information about the online seller, because the portal on which the transaction takes place creates a virtual cover, the consumer cannot see or touch the products that they wish to buy, neither do they have information about the real existence of the seller. Trustmarks often provide this information to buyers, for example, Webtrader certifies the physical existence and best business practices of the company.
Disadvantages of Trustmarks
The following are some of the drawbacks that trustmarks pose:
1. TMOs Repudiate their Liability
Even though the trustmarks play an important role in determining whether an online portal is reliable or not, they often adopt unreliable policies of liability, hence, denying any responsibility in case the online business breaches the trust certificate. The consumer hence is often left with no remedy because of this policy, which could be observed in the case of TRUSTe and Microsoft, where even though Microsoft was transmitting user information and, hence, breaching the standard provided by the trustmark, TRUSTe refused to withdraw the certificate even after it came to know of the violation.[xiv]
2. Credibility of the Trustmark Provider
Further, trustmark providers are not governmental or statutory bodies, they are private entities, and hence their independence is questionable.[xv] According to the EC report on trustmarks, most consumers did not trust trustmarks because they did not know the trustmarks criteria for awarding the said certification. Often the trustmarks gain their financial support from the very organisations that they provide a certification to, hence, there exists a conflict of interest.
3. Law Governing TMOs
In the above-mentioned case of Microsoft and TRUSTe, it was observed that TRUSTe breached its responsibility as a trustmark provider and violated the customer’s confidence in its mark. Often, the only liability that can be imposed in case the TMO violates its obligations is that of common law remedies, such as tort liability or contract liability.[xvi] There is no specific law governing the practice and service of trustmarks. This defeats the very purpose of the trustmark.
Conclusion and Author's Views
Trustmarks are undoubtedly required. the world wide web came into existence merely two decades back as a result, the online portal and the virtual world are still relatively new, and hence, still developing. The internet has brought with it immense opportunities for businesses, governments and individuals, however, in order to fully utilise its potential it is essential that there is some degree of regulation.
Currently, most individuals are skeptical of committing to online transactions, and this reluctance needs to be curbed. Trustmarks help in precisely that. Certain drawbacks exist in the framework of trustmarks mainly with respect to imposing liability and determining their independence. However, even after the existence of the aforementioned drawbacks, certain TMOs, such as Netscape, TRUSTe and BBBonline have gained repute and trust in the eyes of the consumer. Further, these private entities have adequate resources that allow them to determine the certification that must be given to online businesses. Therefore, private entities cannot be absolutely substituted by a government entity to provide for the trustmark, however, they must be regulated to ensure that the certification is provided on objective grounds.
It is required that the above-mentioned concerns be addressed and policy framework be introduced to regulate TMOs. Once regulated, the benefits of Trustmarks would outweigh the costs. Trustmarks are essential in acting as a lubricating factor ensuring surge in e-commerce transaction, and therefore, countries like India, which have a huge consumer base, must adopt trustmark practices. This would ensure consumer safety without compromising with the goal of increasing e-commerce transactions.
[ii]AssafaEndeshaw, The Legal significance of Trustmarks, vol. 10, Info. & Comm. tech. L. 204-206 (2001).
[iii]Increasing trust and confidence of consumers in the Information system, final report, Emperica and German Institute of Technological Research, (2007).
[iv] P. Balboni, Trustmarksine-commerce, T.M.C. ASSER PRESS, The Hague, Information Technology & Law series, 17 (2009).
[v]Roger C Mayers, James H Davis & David Schoomar, An Integrative model of Organisational trust, The Academy of management review, vol. 20, No. 3, 712 (1995).
[vi]Dr. Sandeep Nath Modi, Role of Trustmark in Ecommerce, International Journal for Innovations in Engineering Management and Technology (IJIEMT), Vol. 1 Issue 1, 35 (2016).
[vii]Supra note iv.
[viii] Yianna Danidou; Burkhard Schafer, Legal Environments for Digital Trust: Trustmarks, Trusted Computing and the Issue of Legal Liability, 7 J. Int’l Com. L. & Tech. 213, (2012).
[ix]Helen Nissenbaum, Securing trust online: wisdom or oxymoron?, Boston University Law Review, Vol. 81, No.3, 635-664 (2001).
[xi]Supra note 2.
[xii]Supra note 7, p.4.
[xiii]Dwane Hal Dean & Abhijit Biswas, Third-party organization endorsement of products: An advertising cue affecting consumer prepurchase evaluation of Goods and Services, Journal of Advertising; Winter 2001; 30, 4; ABI/INFORM 41.
[xiv]Supra note 4, p.30-33.
[xv]Can I trust the trustmark?, Trust mark reports 2013, European Consumer Centre’s Networkhttps://forbrukereuropa.no/wp-content/uploads/2017/02/Trust-mark-Report-2013.pdf
[xvi]Supra note 2, p.219.
By Sanah Javed, 3rd Year student at Christ (Deemed to be) University, Bangalore.