Lessons learned: Considerations for a Digital Platforms Ombudsman scheme

Presenter:?Cynthia Gebert, Ombudsman

Event:?Communications Day Policy Forum

Date and time:?Wednesday 14th June 2023, 12.00pm

Duration:?20 mins

Media enquiries:?TIO Media Team on 0437 548 540 or via email

I acknowledge the Traditional Owners of Country throughout Australia, and recognise their enduring connection to land, water, culture and community.

I pay my respects to Elders past and present for they hold the memories, the traditions, the culture, and the hopes of First Nations People.

Sovereignty has never been ceded, this always was and always will be, Aboriginal land.

Digital platforms have irrevocably embedded themselves into our pockets, our homes, and our workplaces.?

And while our lives have been made easier by digital platforms, the protection for consumers and avenues to resolve complaints have not kept pace.?

Many years ago, the telecommunications sector was in the same place.?

When we consider the Digital Platforms framework, we should look to the telecommunications sector for lessons learned and the challenges that remain today.?

On the first of December 1993, the world’s first Telecommunications Industry Ombudsman scheme opened its doors.

The purpose of the Scheme at the time, was to enable complaints and disputes between consumers of telecommunications services and licensed carriers to be settled by mediation or arbitration –?

or what we refer to today as dispute resolution.?

For those of you that have done the math,

and I know there are some clever minds in this room that have,

this year, on December 1, the TIO will turn 30 years old.

That’s a long time spent helping consumers remain connected to essential phone and internet services.?

It’s years of experience feeding data and insights back to the telco sector to help improve their products and services,?

And its 30 years of delivering insights and reporting to regulators and governments of the day to help fortify the industry so it can adapt and change with technological advancement and community expectations.?

Complaint volumes and the capacity and capability of our office has shifted and changed to reflect the telco landscape.?We no longer operate in the world of families and flat mates fighting over access to phonelines and dial up internet. My teenager won’t even talk on the phone – not sure he knows that was its original purpose!?

The 1997 advent of the internet as a household service,?

the 2001 collapse of OneTel, one of Australia’s largest telcos of the time.

the 2010 failure of the Vodafone network,?

the 2015 to 2019 problems with the roll out of the National Broadband Network,?

the 2022 Optus data breach,

and now more recently, the significant improvement in the complaint handling of the big telco retailers.?

We have handled complaints from a peak of nearly 198,000 in 2010 to roughly 70,000 in last financial year.?

We have the systems and processes capable of flexing up and down in response to customer expectations,?

And we have proven time and again we can adapt, change and scale to suit the volatility and rapid developments of the telco market.?

Our track record demonstrates the TIO is well placed to continue to support customers with their needs in a changing communications environment.?

And so, we have put up our hand to lead a world-first Digital Platforms Ombudsman, or DPO scheme.?

To ensure trust and confidence in an environment where there is increased reliance on digital platforms to conduct so many aspects of our life,?

it is reasonable to ensure that people can rely on accessible, timely, and accountable complaint processes.

Today we have the opportunity to learn from the gaps in telco regulation and the lessons hard learnt through experience, and build a robust DPO scheme,?

a scheme supported by a regulatory framework with enforceable consumer protections, that has the agility to absorb what may come tomorrow.?

As the government and the ACCC look to the future of digital platforms regulation, there is a lot that can be learnt from the telco sector.?

Both are sectors that have transformed the way we live at a greater pace than could have been imagined by policy makers.

The privatisation of the telco sector,

The invention of the smart phone,?

the commencement of Facebook,

In just 30 years, so much change, and so quickly.

How do we create a DPO scheme that caters for the needs of consumers and the digital platforms??

What does a robust scheme need to be fit for purpose?

We can look to the current state of the telco sector as a guiding principle.?

What’s working?

What needs to change?

And who does what, when and how so we can simplify the complaints process for all parties in the consumer protections supply chain.?

Internal dispute resolution framework is a precursor to EDR

So what’s working well in telco from the TIO’s perspective??

The basic fundamentals of the TIO scheme.

This is effective internal dispute resolution as a first step, followed by external dispute resolution,?

when the problem can’t be solved by the telco and the consumer.?

This is a well-established and time-tested complaint handling framework, further strengthened in 2018 with the addition of the Complaints Handling Standard.?

This direct regulation provides robust consumer protections and creates positive outcomes for telcos,?

as seen in the significant reduction in complaints in the period following the introduction of the Complaint Handling Standard.?

The Ombudsman model adopted by the TIO and other industry-based schemes (in Australia and globally) has operated successfully for over thirty years.?

In that time, government and independent reviews have consistently endorsed the model as being in the best interests of consumers.?

But it has been proven that the Ombudsman model is most effective when internal dispute resolution processes are mandatory and regulated.?

And what is the current state of internal dispute resolution in the digital platforms space today??

Internal dispute resolution for complaints about digital platforms includes automated responses and decision-making algorithms supported by self-help tools and community forums.?

We also understand that digital platforms have resources for complaint handling outside these methods,

but these options are not easily accessible or visible to the average user.??

In most cases, there are no formalised accessible dispute resolution pathways to help achieve a resolution to a complaint where the digital platforms’ IDR has failed.?

And where IDR does not resolve a complaint, users have moved to crowd sourcing for help and advice.?

Dissatisfied users turn to chat rooms and message boards and other public online forums where people vent their frustration and try to help each other or find workarounds.?

We had a consumer contact us, they were locked out of their digital platform account, which they use to run their business.?

The consumer experienced difficulties with two-factor authentication and had not received a response from the digital platform.?

They described their experience as being caught in an endless loop.?

One of the three pillars of the United Nations' Guiding Principles on Business and Human Rights is the right of an aggrieved person to a mechanism to make a complaint and have it resolved.?

Automated internal dispute resolution systems as the only method of complaint resolution may not fully satisfy this requirement.

As in the telco sector, digital platforms providers and their consumers can benefit from mandatory internal dispute resolution standards as recommended by the ACCC’s inquiry.?

Already, consumers come to us about digital platform providers because they have been unable to get help directly from the digital platform, and don’t know where to go or what to do next.?

Mandatory internal dispute resolution standards would provide consumers with the ability to escalate a matter to a human representative.

I recommend that digital platforms get started today on improving their internal dispute resolution processes.?

This is a first step towards adequate consumer protections and the introduction of a fit for purpose regulatory framework.?

Ensure consumer protections and the regulatory framework are in place

The second step to ensuring a robust scheme is legislative backing.?

The industry-based ombudsman model is most effective when it is backed by fit for purpose consumer protections through direct regulation,?

and is supported by a regulator with strong enforcement and compliance powers.??

If we look to the telco world, the gaps in telco regulation signpost where further consumer protections are needed, and where the regulatory framework can be improved.?

Currently, the telco sector follows a co-regulatory model for consumer protections –?

we have the regulator, the Australian Communications and Media Authority, who is responsible for a broad range of functions outlined in the Telecommunications Act.

And we have an industry-made code, the Telecommunications Consumer Protections Code, which is created and reviewed by the peak industry body, Communications Alliance, but signed off by the ACMA.

Since the beginning of the consumer protections framework and the design of the current co-regulatory model, the telecommunications market has changed significantly.?

But despite this, we have not seen regulation keep pace with the rate of change.?

Through complaints to my office, we see that it is vulnerable consumers who are impacted the most by inadequate consumer protections.

We see complaints where consumers experiencing vulnerability are impacted by poor selling practices,?

a lack of proactive and early support for consumers experiencing payment difficulties,?

and a lack of choice around payment methods.

Consumer protections should be decided and made by government and regulators rather than by industry representatives through industry codes, because direct regulation can:

• be drafted and finalised by the regulator in less time than the industry body drafts and finalises codes
• come from an independent perspective that is more appropriate for key consumer protections
• be more easily, directly, and quickly enforced by the regulator.

We have an opportunity to do things right with a digital platforms scheme from the beginning, rather than trying to retrofit rules later down the track.?

We have seen how direct regulation creates better outcomes for telcos and consumers,?

And this should be the case for a digital platforms framework.?

In the telco space, we also want enforceable direct regulation because this would empower the ACMA to enforce the rules in a clearer way.

Currently, if the ACMA needs to take enforcement action, they first must direct the telco to comply with the industry-made TCP Code.?

If the telco does not comply with the direction, the ACMA can then seek a court order requiring the telco to pay a financial penalty.

If the industry was directly regulated by the ACMA, they would be able to take decisive action, and keep telcos to account, in a much more efficient and direct way.

Digital platforms need enforceable direct regulation, made by government, and strong consumer protections.

The ACCC has called for new consumer laws for digital platforms, to work alongside Australia’s existing competition laws.

This may include sector-specific protections around scams, harmful apps, fake reviews and unfair business practices.

We support the ACCC’s call.?

We’ve seen in other sectors how sector-specific regulation can complement existing laws,?

such as the Australian Consumer Law,

to protect consumers.?

And we’ve also learnt from the telco sector why key protections must be in enforceable direct regulation and not through voluntary industry codes.?

We need the government to provide legislative backing for a DPO so that we can help to rebuild trust and confidence between consumers and the digital platforms.

With strong internal dispute resolution processes,?

the right consumer protections in place,?

and legislative backing for a DPO, we can turn our minds to the practicalities of establishing a DPO scheme.?

The practicalities for how a DPO scheme would work and operate.

And the practicalities are who does what, when and how.

Clarity of jurisdiction at the TIO makes it easy for us to get on with the job of resolving disputes.?

It is vital that all parties with a role in the digital platforms consumer protection framework come together and establish who does what.?

We are well placed to help small businesses as well as individual consumers. We have received examples of small businesses who are impacted when they experience problems with a digital platform.

A small business owner told us they received fake reviews on a digital platform service. They asked the digital platform to remove these reviews, and turned to us for help when no action was taken by the digital platform.

Another small business owner told us they paid for advertising on a digital platform, but the ads were never run, and they could not make any progress with the internal complaint resolution process.?

A common issue we hear about in relation to problems with digital platforms is accessibility. That is, consumers cannot get help from a real person when things go wrong.?

The internal dispute resolution avenues are not in place for consumers to get a fair and reasonable outcome, so where can they go instead?

The complaints I’ve just outlined are very similar to problems we currently handle for telcos.?

The TIO can make assumptions about possible jurisdiction for a Digital Platforms Ombudsman based on complaints we already receive from consumers, including:?

• Account and data access and control,
• charges and billing,
• misrepresentations of small businesses,
• financial hardship,
• identity theft, hacking or impersonation, and
• privacy concerns or breaches.

We could also consider complaints about scams.?

Digital platforms provide an avenue for scams to be perpetrated against users of those platforms.?

The impact of scams can be devastating, particularly those who are most vulnerable.

A DPO could handle complaints involving detriment suffered through scams that are not adequately addressed by a digital platform.?

In handling complaints that involve scams perpetrated through telecommunication services, the TIO seeks to find a solution that addresses the detriment suffered as a result of the scam,?

such as retrieving a number appropriated by a scammer.?

Importantly, the TIO can evolve to handle any other complaints unique to digital platforms, as our track record evolving alongside the telco sector demonstrates.

And we could also undertake systemic investigations to improve provider practices and systems.

It is the primary role of an Ombudsman to make determinations based on what is fair and reasonable in the circumstances,

and this could include requiring the digital platform to take down scam content.?

However, the power to compel this action by enforcing the Ombudsman's determination should properly rest with the relevant regulator.?

The TIO has escalation pathways with the ACCC and the ACMA for the telco sector. This can be done for the DPO and relevant regulators too.

It is likely that the remit of the digital platform ombudsman would evolve over time.?

Should the TIO take on this function, all parties with a role in the digital platforms consumer protection framework should come together and establish jurisdiction.?

This is critical to ensuring consumers have somewhere to go to resolve their complaints.?

We cannot have consumers fall through the cracks during the process of seeking help.

In conclusion, digital platforms are converging with telecommunications services because these platforms rely on reliable telecommunications infrastructure and connectivity.?

There is a symbiosis that cannot be ignored.?

The absence of an independent Ombudsman scheme for digital platforms leaves a significant gap for consumers,?

And the gap we identify here is not simply words spoken at a conference.?

These are real problems experienced by real people.

It is critical that IDR processes are not just available but work for everyone.

This includes vulnerable and disadvantaged consumers who may not be able to navigate the modernised automated IDR systems that digital platforms tend to have in place.?

It is also critical that all consumers have access to justice where IDR fails.

To the Digital Platforms providers, I recommend getting started today on improving your internal dispute resolution processes.?

To the government, I say ensure adequate consumer protections and a regulatory framework are in place from the outset.

And to all parties with a role in the digital platforms consumer protection framework, I ask we come together and establish jurisdiction, so no consumer is left behind.?

We have the opportunity to create an excellent, fit for purpose Digital Platforms scheme from the outset.

And the TIO’s lessons learned over the past thirty years should be integral to realising the vision of a world-first Digital Platforms Ombudsman scheme.

ENDS