The online retailing industry has been challenged to think proactively and set up its own mechanisms to protect the consumers using its services.

"As with many new frontiers the pursuit of commerce has run ahead of legal and enforcement solutions, attracting 'bandit' and 'cowboy' elements which have created a genuine concern for consumers and ethical online retailers," Acting Australian Competition and Consumer Commission Chairman, Mr Allan Asher, told a Sydney conference today.

"The result can be apprehension or refusal by consumers to undertake transactions on-line even though they would prefer to do so - this imposes 'external' costs on legitimate market participants or potential participants."

Mr Asher called on the industry to set up a Consumers Issues Committee which could: liaise with consumer affairs agencies such as the ACCC; talk with relevant consumer/community groups; look at systematic problems from complaints data; study and research trends in comparable overseas markets/industries; and to do the above on a continuing basis to allow the industry to be proactive in preventing problems rather than reactive.

Establishing confidence in the integrity of online traders would be crucial to establishing mass acceptance of this form of commerce, he said.

"Ways must be found to 'vet' ethical operators or at least identify those that are bound by appropriate industry standards. It is in this regard that industry codes of conduct are very helpful."

Mr Asher said the development of the Internet Code of Conduct by the Internet Industry Association of Australia was 'very encouraging'. Such codes achieved speedy, flexible, cost effective and market sensitive solutions to many problems encountered by consumers and retailers. He hoped similar codes would be developed for the international on-line marketplace.

Mr Asher warned online sellers to consider their responsibilities very carefully.

"If players in the market think that by conducting commerce by electronic means they can circumvent consumer protection/fair trading laws - well, they may need to think again. There will be no regulatory voids ....The ACCC will be active in prosecuting firms who practice fraudulent and misleading conduct on online consumers.

"If such conduct is practised in Australia on consumers by overseas operations we have, and are developing further, strong networks with overseas agencies. We and they will deal strongly with sharp practices originating there or in Australia. The ACCC is turning its attention and resources toward these new and growing frontiers of commerce.

"It is my hope, however, that in protecting consumers and ethical online businesses and network operators that we will have a close and constructive relationship with the on-line industry in Australia and internationally. After all, it is in the industries' best interests to impose order and protect its consumers as much as it is our responsibility."