World Consumer Rights Day: It’s in the Ts & Cs

By Anthea Paelo, PhD

When did you last read the terms and conditions (Ts & Cs) of any digital product before clicking accept? Or review the Ts & Cs before taking up that digital loan or ordering a product off an e-commerce platform? If you are like most digital consumers, you accept the terms and conditions without reading them. As it is World Consumer Rights Day, it is a good time to consider Ts and Cs.

With rapid technological advances in the past decade, we are very much in the digital age. In East Africa, this has been more apparent in digital financial services led by mobile money. These new technologies have increased the convenience of transactions, increased efficiency in accessing financial services and been instrumental in facilitating trade and business.

However, the increased efficiency brought about by the digital economy has not kept up with consumer education on their rights and the risks of using digital financial services. For instance, consumers are increasingly becoming overindebted and falling prey to predatory money lenders due to the increased ease of access to digital credit. The quick access to credit over the phone has eliminated the requirement of a loan officer who might have, in normal circumstances, been able to explain to consumers the key terms and conditions of the loan they are getting, including the repayment periods and penalties.

Additionally, due to the unsecured nature of these loans the interest rates are often higher than what would typically be experienced from traditional financial service providers. While these high-interest rates may be specified in the terms and conditions presented to the consumer before they subscribe to the products, only a few read them, and if they do, even fewer comprehend them. This may be due to desperation for money. Still, it is important to acknowledge the role of opaque and lengthy terms and conditions in limiting consumers’ understanding of the details of the products they subscribe to.

In 2020, with support from Financial Sector Deepening Uganda, Uganda Communications Commission conducted a study on data transparency and consumer consent to understand how digital consumers engaged with the terms and conditions of digital services. A key finding from the study was that the Ts and Cs of digital service providers assessed in the market were filled with jargon that needed explanation. Additionally, these service providers did not adequately disclose information on fees or how the company would use the consumer’s data.

The study also employed an experiment in which one group of consumers was given terms and conditions from digital service providers in their typical format. The other group was provided with a summary of the terms and conditions that listed vital elements such as the price to be paid for the data and how the company would use their data. After that, the consumers were asked questions to check their understanding. As expected, those who received a summary of the terms and conditions had higher comprehension of the products.

The study’s key recommendation is essential for digital consumers as we observe consumer rights day this year. Digital service providers should provide consumers with a summarised version of the terms and conditions that customers can quickly

review. With the implementation of the General Data protection Regulation, websites have adopted a summarised version of a consent form for the use of consumer data. A similar approach can be adopted for digital financial services, including price information. The summary can be disseminated using USSD (such as *130#) technology to account for most digital consumers in Uganda who use feature phones.

Digital service providers benefit from consumers’ lack of understanding of their Ts and Cs, so a push from the regulator may be necessary to ensure implementation of the use of summarised Ts and Cs. In the meantime, before you take that loan, do you know the interest rate charged on the loan, the amount you will be expected to pay each month and the penalties of default? Read those terms and conditions.

Photo credit: Pch vector on Freepik

Anthea Paelo, PhD is FSD Uganda’s Intervention Manager, Business Environment

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