By Papawadee Tanodomdej, Senior Research Fellow, the International Institute for Trade and Development (ITD)
E-commerce has disrupted the way the retail industry works. It provides both opportunities and threats for businesses and consumers. Businesses are able to initiate a global distribution and face no constraints on shelf space, while consumers have a variety of products or service offers enabling them to buy products or services at a reasonable price. On the other hand, when buying online, consumers face the various risks such as unsecured online payments, product unsafety and inaccessible dispute settlement.
ASEAN realizes both the potential of e-commerce for its economic integration and the uncertainty that consumers encounter. ASEAN members, hence, agreed on the e-ASEAN Framework Agreement strengthening an ecosystem for e-commerce to thrive. One of its strategies includes the enhancement of consumer trust in online shopping.
It has been 17 years since the adoption of the e-ASEAN Framework Agreement in 2000. The e-consumer protection issue has been re-highlighted in the ASEAN Economic Community Blueprint 2025 by suggesting the harmonization of consumer rights and protection laws relating to e-commerce2. Each ASEAN member had to develop its own strategy to protect e-consumers in the era of online complexity, aiming at the promotion of cross-border e-commerce in ASEAN while holding consumer protection at the core.
This article examines the development of ASEAN e-consumer protection in Thailand and Malaysia, and presents the missing elements for achieving a practical e-consumer protection.
Origins of ASEAN e-consumer protection
ASEAN, unlike the European Union, applies its unique method in exercising its functions. The term “ASEAN way” refers to an informal decision-making consisting of compromise, consensus and consultation3. The ASEAN instruments usually have non-binding force except certain instruments relating to economic integration.
Since ASEAN attempts to liberalize its regional market, the ASEAN Economic Community (AEC) Blueprint 2015 stipulated 4 strategic goals for ASEAN to achieve by 2015: (a) a single market and production base, (b) a highly competitive economic region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy. Consumer protection was integrated as a core implementation under a highly competitive economic region. ASEAN members acknowledged that consumer protection could not be precluded in the measures taken to achieve its integration. Consequently, this AEC blueprint established the ASEAN Committee on Consumer Protection (ACCP) to serve as the focal point for the implementation and monitoring of consumer protection in ASEAN.
Since its inauguration in 2007, the ACCP has been endowed with a limited authority to tackle the cross-border consumer protection issues. Protection alerts initiated by the ACCP are utilized for informing the ASEAN consumers about unsafe or poor-quality products. The ACCP also strives to create a redress mechanism for cross-border consumers in ASEAN in 2015. However, until now the ACCP merely shares information on the consumer protection agencies in the ASEAN member states.
E-consumer protection has been concretely conceptualized in the e-ASEAN Framework Agreement in 2000. This agreement puts forward the improvement of the competitiveness of ASEAN’s ICT sector and ultimately the realization of e-ASEAN in both public and private sectors. In order to establish the practical e-ASEAN and to align with a people-centered approach, member states shall adopt e-commerce regulatory and legislative frameworks that create trust and confidence for consumers. To this end, at least four measures have to be undertaken: 1) expeditiously put into place national e-commerce laws and policies based on international norms; 2) adopt measures to protect intellectual property rights arising from e-commerce; 3) take measures to promote personal data protection and consumer privacy; and 4) encourage use of alternative dispute resolution mechanisms for online transactions.
It appears that the e-ASEAN Framework Agreement is aware of the significance to harmonize the e-commerce law among ASEAN members, while acknowledging the constraints in strengthening the scattered laws and regulations in each ASEAN country to be in the same standard. Moreover, the more ASEAN e-commerce is connected to the global e-commerce by operating under the international norms, the more possibilities there are for ASEAN e-commerce to flourish.
Apart from the e-ASEAN Framework Agreement, the conclusion of the ASEAN ICT Masterplans 2015 (2011-2015) and 2020 (2016-2020) are recognized as milestones for enhancing the e-consumer protection in ASEAN. In comparison, both plans emphasized the cooperation of ASEAN members in utilizing ICT for regional growth and expansion of commercial opportunities. The Masterplan 2020 gives priority to the development of the digital economy and a society in which people can access online technology equally and universally, and the development of secured digital markets and online communities. Hence, the recognition of online payments among business operators is one focal point. It also requires secured and convenient online payment methods for ASEAN consumers. This is deemed to lead to the proliferative advancement of electronic transaction and digital signature laws among ASEAN members.
Even though ASEAN members have agreed to accommodate e-consumer welfare through its instruments, there exists no legal enforcement mechanism pushing ASEAN members to implement the missions stipulated in both binding and non-binding instruments. Hence, the development of e-consumer protection in each ASEAN country is undertaken only if and when each ASEAN member sees economic opportunities in e-commerce. It is a challenge for ASEAN to assimilate countries with diverse development levels for a uniform e-consumer protection.
Progress of ASEAN Member States in harmonizing e-commerce laws for consumer protection
This article identifies the status of legal harmonization by examining the domestic laws related to e-consumer protection in Thailand and Malaysia as these ASEAN members possess a high market potential in e-commerce. Furthermore, it focuses on the rights of e-consumers regarding pre-purchase and redress.
As prescribed in the e-ASEAN Framework Agreement, international norms are the primary source for the development of e-consumer protection in ASEAN member states. In 2015, the General Assembly, in its resolution 70/186, considered that e-commerce has become increasingly relevant to consumers worldwide and accentuated that online consumers shall have the same protection as offline consumers.4 However, the first instrument in this area was the Guidelines for Consumer Protection in the Context of Electronic Commerce in 1999 launched by the Organization for Economic Cooperation and Development (OECD). The basic principles laid down in the Guideline included: 1) fair business and advertising marketing practices; 2) online disclosure about the business, goods or services and transaction; 3) personal data protection for consumers; 4) secured payment; 5) equitable dispute resolution and redress; and (6) education and awareness.
With the challenges arising from e-commerce and its continuous growth, the OECD has revised its Guidelines for Consumer Protection in the Context of Electronic Commerce in 2016 to extend its application to commercial practices through which businesses enable and facilitate consumer-to-consumer transactions. A business-to-consumer transaction requires the online presence of all traders, a payment method specification and the information for product delivery.
Regarding the pre-purchase phase, the OECD Guidelines advises that the businesses engaged in e-commerce are required to provide consumers with sufficient information about its products or services offered and its identification such as the geographical address, website, e-mail address and telephone number to enable consumers to contact businesses easily and to enable regulatory and law enforcement authorities to identify and locate them.
Moreover, the OECD recognizes that the impersonality of e-commerce is propitious to unfair commercial practices. The OECD Guidelines, then, recommend that information and advertising must be true and not mislead consumers. The advertised price shown in the e-commerce platform shall not misrepresent or hide the total cost of a good or service. In addition, businesses are advocated to offer consumers the possibility to withdraw from a confirmed transaction in appropriate circumstances.
In Thailand, e-consumer protection is enshrined in the general consumer protection laws such as the Consumer Protection Act 1979, the Unfair Contract Term Act 1997 and the Direct Sales and Direct Marketing Act 2002.
The Consumer Protection Act 1979 establishes that consumers have the distinct right to be informed during the pre-purchase phase. Consumers shall be informed about the quality, quantity, potency, purity, standard and price of goods or services so as to protect the consumers against unfair trade practices. Thailand also strongly recognizes the role of the Consumer Protection Board to provide protection and redress to consumers. The definition of “consumer” is stipulated in the Unfair Contract Term Act 1997. It covers the final consumer who acquires goods or services for domestic use and not for commercial use. It is relatively debatable whether the juristic person falls into the consumer definition.
The Direct Sales and Direct Marketing Act 2002 deals with advertising in direct marketing which has similar characteristics as e-commerce. This Act requires the e-commerce businesses to be registered and provide accurate information to avoid misleading advertising.
Regarding the redress for affected consumers, the Liability for Damages Arising from Unsafe Products Act 2008 imposes strict liability for businesses to indemnify the affected consumer, whether or not the damages arise from the negligence or the intention of the business.
Malaysia has a general consumer legislation, the Consumer Protection Act 1999, to provide a minimum standard of consumer protection. Malaysia has realized various steps to increase the consumer’s confidence to shop and trade online. The amendment of the Consumer Protection Act in 2007 widened its scope to cover e-commerce transactions. In 2012, Malaysia also introduced Consumer Protection Regulations emphasizing the right to be informed of e-consumers. These laws and regulations do not specify what kind of information businesses must provide but prohibits businesses to supply misleading information related to the nature of goods or services; the characteristics of goods or services; the manufacturing process; the suitability of goods for a purpose; and the quantity of goods or services.
Another law which provides e-consumer protection is the Direct Sales and Anti-Pyramid Scheme Act (DSASA). It applies to direct offers of goods or services to consumer and also covers e-commerce transactions. The DSASA imposes the duty on businesses to provide the following information: name and registered number, address, telephone number, detail of a good or service, place and office hours for goods or services inspection, price of a good or service, delivery fee, and expected arrival time of a good.
The Consumer Protection Act renders negative rights to consumers against unfair trade practices, while the DSASA equips the e-consumer with positive rights requiring the businesses to indicate certain information on product and business identity.
In Malaysia, affected e-consumers are able to file complaints before the Tribunal of Consumer Claims (TCC) whose jurisdiction covers not only the breach of provisions in the Consumer Protection Act but also the breach of any other consumer rights.
The e-consumer protection in Malaysia and Thailand possesses a uniform feature during the pre-purchase. It requires the businesses to provide clear information about products or services and the businesses’ identity to e-consumers. The provisions related to misleading information and redress for affected e-consumers in Thailand and Malaysia are compatible with the OECD Guidelines.
Asymmetry of ASEAN e-consumer protection
Obtaining information enables the e-consumers to assert their rights during the pre-purchase phase. The idea of ASEAN to synchronize the different regulations of e-commerce is a stepping stone for the regional e-commerce growth. However, the cross-border e-commerce, apart from the rights to be informed and redress, still presents other challenges that ASEAN has not yet addressed, such as the conformity of products among ASEAN members and the hidden costs related to custom duties and currency conversion. The most crucial means to accomplish cross-border e-consumer protection is a regional redress mechanism. Up to date, there exist no instruments in ASEAN raising the issue of a harmonized choice of law in e-commerce cases or a mechanism offering cross-border enforcement for e-consumers. ASEAN members should equip the ASEAN Committee on Consumer Protection (ACCP) with the power to investigate, pursue, obtain and share relevant information and evidence on matters relating to cross-border commercial practices. At least, the ACCP should be able to cooperate with other ASEAN member states’ consumer protection agencies in order to enforce the rights of e-consumers.
1 This article is based on the research project on “Thailand’s Legal Preparation for the ASEAN Community” financed by the Secretariat of the House of Representatives. The views contained in this article do not necessarily represent those of the Secretariat, the Institute and its affiliates. Email: email@example.com
2 ASEAN Economic Community Blueprint 2025, para 53 “…ASEAN shall intensify cooperation on e-commerce building upon Article 5 of e-ASEAN Framework Agreement adopted by ASEAN Leaders in November 2000, with a view to develop an ASEAN Agreement on e-commerce to facilitate cross-border e-commerce transactions in ASEAN. These could include, but are not limited to, strategic measures such as putting in place the following:
Harmonised consumer rights and protection laws;…”.
3 Daniel Seah. ASEAN Charter. International and Comparative Law Quarterly 58.1 (Jan. 2009): 199.
4 Resolution adopted by the General Assembly on 22 December 2015, A/RES/70/186, para. 63.