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Country-of-origin rule

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Definition Edit

In e-commerce, the country-of-origin rule (also called the prescribed-by-seller rule) means that a cross-border transaction will be interpreted according to the laws, courts, and law enforcers in the seller's country or as prescribed in the contract.

Overview Edit

The country-of-origin/prescribed-by-seller rule addresses key concerns of businesses, most notably the need for a predictable regulatory environment and reduced compliance costs. In e-commerce, businesses do not always know the location of customers or the geographic areas they are reaching; the country-of-origin rule clarifies and limits the laws and courts that govern their online sales.

At the same time, the country-of-origin/prescribed-by-seller regime raises serious concerns from the consumer's perspective. It risks undermining consumer confidence in e-commerce by: (1) encouraging incentives for businesses to operate from &mdash or have transactions be governed by the laws of — jurisdictions with lax consumer protection laws, which would reduce consumer protections on a global scale; (2) frustrating the ability of law enforcement to protect its citizens; (3) impeding informed decision-making by consumers; (4) putting domestic companies at a competitive disadvantage; and (5) depriving consumers of meaningful access to judicial recourse.

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