U.S. Outperforms China in Online Consumer Protection Satisfaction

WASHINGTON— U.S.-based online marketplaces offer superior consumer protections compared to Chinese-based platforms which fail to meet consumer expectations, according to a new report from the Center for Data Innovation. The report evaluates consumer protection measures among popular online marketplaces in the U.S., including AliExpress, Amazon, DHGate, eBay, Etsy, Houzz, Meta Platforms, Newegg, Temu, Walmart, and Wayfair.

“As people do more of their shopping in online marketplaces, we’ve entered a new era for consumer protection laws and practices,” said Policy Analyst Becca Trate, who authored the report. “State product liability laws generally don’t apply when you buy a defective product through an online marketplace, because they are just intermediaries. But it turns out accountability is good for business. So, one of the ways online marketplaces compete against each another is by offering better protections for buyers and sellers on their platforms. The implications of all this for policymakers are that we need a national liability standard, and regulators should encourage voluntary best practices without being overly prescriptive.”

The report finds that most marketplaces prioritize consumer satisfaction with policies addressing issues like damaged goods, ensuring easy refunds and returns. U.S.-based platforms stand out for their effective complaint resolution and higher customer ratings, in stark contrast to lower-rated Chinese counterparts that struggle to meet consumer expectations.

To enhance consumer protection in online marketplaces, the report recommends the following actions for policymakers:

• Congress should establish a national strict liability standard based on the American Legislative Exchange Council’s model product liability act.
• State lawmakers and judicial bodies should tailor liability rules for different types of online marketplaces, considering their roles in handling defective products, such as storage and direct shipment.
• The Federal Trade Commission (FTC) should develop voluntary best practices for buyer protection policies, including refunds for defective or damaged goods, and effective recall notifications.
• Expand data-sharing between retailers and government consumer protection agencies through the Retailer Reporting Program to improve oversight of dangerous products and recalls.

Trate concludes, “Most platforms have strong buyer protection programs that provide more security to consumers and offer some kind of guarantee. But more can be done to ensure safety for Americans shopping online…These steps would create a stronger, safer marketplace for all Americans.”

Read the report here.

Contact: Nicole Hinojosa, [email protected]