Consumers using online retail marketplaces such as eBay and Amazon “have little effective choice in the amount of data they share”, according to the latest report of the Australian Competition & Consumer Commission (ACCC) Digital Platform Services Inquiry.
Consumers may benefit from personalisation and recommendations in these marketplaces based on their data, but many are in the dark about how much personal information these companies collect and share for other purposes.
We believe consumers should be given more information about, and control over, how online marketplaces collect and use their data.
The report reiterates the ACCC’s earlier calls for amendments to the Australian Consumer Law to address unfair data terms and practices. It also points out that the government is considering proposals for major changes to privacy law.
However, none of these proposals is likely to come into effect in the near future. In the meantime, we should also consider whether practices such as obtaining information about users from third-party data brokers are fully compliant with existing privacy law.
Why did the ACCC examine online marketplaces?
The ACCC examined competition and consumer issues associated with “general online retail marketplaces” as part of its five-year Digital Platform Services Inquiry.
These marketplaces facilitate transactions between third-party sellers and consumers on a common platform. They do not include retailers that don’t operate marketplaces, such as Kmart, or platforms such as Gumtree that carry classified ads but don’t allow transactions.
The ACCC report focuses on the four largest online marketplaces in Australia: Amazon Australia, Catch, eBay Australia and Kogan. In 2020–21, these four carried sales totalling $8.4 billion.
Online marketplaces such as Amazon, eBay, Catch and Kogan facilitate transactions between third-party buyers and sellers. Photo: Shutterstock
According to the report, eBay has the largest sales of these companies. Amazon Australia is the second-largest and the fastest-growing, with an 87 per cent increase in sales over the past two years.
The ACCC examined:
- the state of competition in the relevant markets
- issues facing sellers who depend on selling their products through these marketplaces
- consumer issues including concerns about personal information collection, use and sharing.
Consumers don’t 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 align with consumer preferences”.
The Commission pointed to surveys about Australian consumer attitudes to privacy which indicate:
- 94 per cent did not feel comfortable with how digital platforms including online marketplaces collect their personal information
- 92 per cent agreed that companies should only collect information they need for providing their product or service
- 60 per cent considered it very or somewhat unacceptable for their online behaviour to be monitored for targeted ads and offers.
However, the four online marketplaces analysed:
- do not proactively present privacy terms to consumers “throughout the purchasing journey”
- may allow advertisers or other third parties to place tracking cookies on users’ devices
- do not clearly identify how consumers can opt out of cookies while still using the marketplace.
Some of the marketplaces also obtain extra data about individuals from third-party data brokers or advertisers.
The harms from increased tracking and profiling of consumers 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 must not actually care that much about privacy if they keep using these companies, but the choice is not so simple.
The ACCC notes the 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 that agreeing to the company using your data to fill your order, for example, may be bundled together with agreeing for the company to use your data for its separate advertising business.
Further, as my research has shown, there is so little competition on privacy between these marketplaces that consumers can’t just find a better offer. The ACCC agrees:
While consumers in Australia can choose between a number of online marketplaces, the common approaches and practices of the major online marketplaces to data collection and use mean that consumers have little effective choice in the amount of data they share.
Consumers also seem unable to require these companies to delete their data. The situation is quite different from conventional retail interactions where a consumer can select “unsubscribe” or walk out of a store.
Does our privacy law currently permit all these practices?
The ACCC has reiterated its earlier calls to amend the Australian Consumer Law to prohibit unfair practices and make unfair contract terms illegal. (At present unfair contract terms are just void, or unenforceable.)
The report also points out that the government is considering proposals for major changes to privacy law, but these changes are uncertain and may take more than a year to come into effect.
In the meantime, we should look more closely at the practices of these marketplaces under current privacy law.
For example, under the federal Privacy Act the four marketplaces
must collect personal information about an individual only from the individual unless … it is unreasonable or impracticable to do so.
We don’t know the full detail of what’s collected, but demographic information might include our age range, income, or family details.
How is it “unreasonable or impracticable” to obtain information about our demographics and interests directly from us? Consumers could ask online marketplaces this question, and complain to the Office of the Australian Information Commissioner if there is no reasonable answer.