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FTC using forum to mull e-commerce regulation

Federal regulators will take a closer look at software warranties and refund policies for downloads to make sure customers are getting what they're paying for.

WASHINGTON--Federal regulators plan to take a closer look at software warranties and refund policies for downloads to make sure customers are getting what they're paying for.

The Federal Trade Commission will hold a two-day public forum here Thursday and Friday to determine whether existing laws governing traditional retail sales should be extended to software, as well as intangible products such as Internet downloads or online services.

The FTC said in its agenda that the mission of the forum is "to facilitate discussion of how government, private industry and consumer advocates can work together to ensure that consumers receive adequate information when shopping for software and other computer information, products and services."

Some speakers planning to attend the forum hail from the software and services industry, while most are law professors and other lawyers addressing warranty and intellectual property law. Surprisingly, there are few if any consumer advocates scheduled to appear at the forum, according to the agenda.

Although the FTC wants to bring to light that consumers might not be properly educated to the specifics and limits of software warranties, many software dealers and their representatives say there just hasn?t been enough consumer complaints to justify any government action.

"We don't see this as a groundswell of complaint," said Digital Commerce Coalition (DCC) executive director Daniel Duncan. The DCC was formed in March to promote e-commerce and lists among its high-profile members America Online, Intel, IBM, Microsoft, Novell and Symantec, as well as several trade associations.

Existing warranty law shouldn't be applied to "intangible products like computer software or services," Duncan said.

Government representatives still worry, however, that some purchase agreements make it difficult for consumers to return software, or even get a refund for certain Net services.

Much of the FTC's focus for the panel is on "shrink-wrap" warranties for software purchases and their online counterparts, called "click-wraps." Click-wraps refer to when a consumer clicks on an icon to agree to licensing terms for a certain product or service, before downloading.

Yet critics say current laws and guidelines should cover existing concerns. Although most consumer protection laws vary from state to state, the DCC says that the adoption of uniform laws should resolve most customer complaint issues.

These laws, known as the Uniform Computer Information Transaction Act, are designed to unify commercial laws governing the licensing of everything from software to stock quotes. So far, UCITA has been implemented in Maryland and Virginia, although the state has delayed putting the law into effect for one year.

Business Software Alliance (BSA) chief executive Robert Holleyman said the proposed state laws bring "a greater level of uniformity" to e-commerce. BSA is a member of the DCC.

Included in UCITA is a provision that requires a full refund or replacement on any software returns, something Holleyman said does not exist in current law.

"We hope (the FTC) will find UCITA such a good general law that they won't feel it needs much change," Duncan said.