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BARRIERS KEEP A LID ON ELECTRONIC COMMERCE

Optician James Scheifla has a stake in a battle that's breaking out over electronic commerce.

Companies that take orders via phone and Web are pounding at the door of the market for disposable contact lenses. But Scheifla, who sells lenses at Reis King eye care in Cheektowaga, thinks it's a bad idea to let them in.

"These Internet companies don't follow protocol for dispensing lenses -- it's best if a patient is rechecked once a year," he said. Left untreated, an infection or a bad fit can harm sight.

E-commerce won a round last week, when lens maker Bausch & Lomb settled a case with New York and 32 other states. But the settlement -- which increases the availability of lenses to online distributors -- is just one skirmish in a war against anti-competitive barriers, consumer advocates say.

While they complain about online tax breaks, many brick-and-mortar middlemen are ensconced in legal protections that block online competition, consumer advocates charge.

It's easy to buy a book or CD online, but goods from contacts lenses to California wine can be difficult or impossible to order in New York and other states. And other items such as automobiles can be ordered readily online -- but only from the same dealers who control existing sales outlets.

"The current heavy-handed restraints on distribution channels are a most inefficient approach to consumer protection . . .
and] deny consumers huge cost savings," said a report by the Consumer Federation of America in Washington, D.C.

The report is one of two recent studies that take aim at e-barriers. The consumer federation estimated that auto franchise laws add $1,500 to the cost of an average new car, while the Progressive Policy Institute in its report said barriers on e-commerce cost consumers $15 billion annually.

"The emergence of direct selling online promises to empower consumers through increased access to lower cost services," said Robert Atkinson, director of the institute's technology and new economy project in Washington, D.C.

But brick-and-mortar merchants aren't taking the criticism silently. Restrictions on cyber-sales often protect consumers from health scams and out-of-state rip-offs, they say.

"The dot-com shakeout serves as a telling reminder of just how relevant franchise laws -- with their built-in consumer protections -- are in the age of the Internet," the National Automobile Dealers Association said in a statement. More cars are recalled each year than are sold, giving the dealer network a key role in keeping highways safe, NADA said.

Nationwide, consumers face e-barriers on buying everything from insurance to distance learning, according to the Progressive Policy Institute.

In New York, one of the legal barriers being challenged are wine sales rules that critics call protectionist.

Consumers can buy wine online from New York wineries, but not from out-of-state makers, according to the state Liquor Authority. Makers must obtain an adult's signature for the product from a shipping company like UPS or FedEx.

Two wineries, Swedenberg in Virginia and Lucas in California, are challenging the rules in a lawsuit against the state. They charge that the state law violates constitutional protection for interstate commerce and free speech -- similar challenges are playing out in Texas and Illinois.

New York wine makers have mixed feelings about the restrictions, Wine & Grape Foundation Director James Trezise said. Most states retaliate by blocking direct sales from New York wineries, a result that leaves a bitter taste for some vintners. "There's truly a mix of opinions about whether (the restriction on sales) is good or bad," he said.

As for contacts, Bausch & Lomb agreed to sell to pharmacies and mail-order outlets as well as optometrists. It is the second major lens maker to open its sales channels, following a settlement by CIBA Vision in 1997.

But many New York consumers still can't buy replacement lenses online, according to Kevin McCallum, marketing vice president at 1-800 Contacts. The reason lies behind a Catch-22 for consumers, he said. Lens buyers in New York must provide a copy of their prescription when ordering disposable lenses. But under federal rules, their optician isn't required to give them a copy of the prescription.

The same group of states that sued Bausch & Lomb is asking the Federal Trade Commission to reverse the rule, requiring eye care professionals to release prescriptions for contact lenses. They already must release prescriptions for glasses under FTC rules.

"The whole contact lens process needs to be reviewed," McCallum said.

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