Regulation of online retail selling

Published March 27, 2021, 6:00 AM

by Atty. Vic Dimagiba

I was invited as a resource person in the Joint Foreign Chambers (JFC) Country Investment Climate Series on Governance of Digital Data & Communications.  The Session for Part 2: Regulation of Online Retail Selling took place on 25 March 2021, Thursday, 2 to 4 p m via ZOOM.

The principal information I shared was the development of international standards about easily understood terms and conditions of online contracts and maintaining trust and access in digital commerce.

The proposed standards   work for improving consumer understanding of online Terms and Conditions and supporting responsible business practice. Shopping online poses increased consumer risk since an online “ spontaneous “ decision creates  more  opportunities for mistakes,  takes away the opportunity to inspect items ,normally requires  payment in advance , and creates that “ detached “ feeling  from the  amount of money spent.

I discussed that consumer laws vary between countries and cross border issues may not be protected by the national law. Therefore, understanding the online terms and conditions is essential so that consumers across the world understand their rights and obligations.  Statistics show that it takes 39 minutes to read the Air BnB terms and conditions (T&Cs) or 75 days to read a year’s worth of online T&Cs. Statistics also reveal that less than 10% of online shoppers read the T&Cs. Therefore, if only to protect themselves, consumers must be encouraged to make it a habit to read the T&Cs and a responsible  regulator will encourage the seller to promote and facilitate this habit.

Some of the effective techniques to improve consumer understanding of the T&Cs of online contracts use displaying terms as FAQs,   use of icons  to illustrate key terms,  show customers terms within a scrollable  text box instead of requiring  a click to view them,  provide information in short chunks, and use illustrations and comics.

To increase the opening of the T&Cs, standards will prompt consumers how long will it take him to read the T&Cs  and to inform the consumers the last opportunity to make a decision.

The regulator  can also use guide icons that will show whether the item can be returned to the store, the number of days to return a defective product and where to receive a refund .

The proposed standards was subject to vote last March 3, 2021 and publication by April 2024 under the ISO COPOLCO organization.

Second, there are two (2) major barriers to e–commerce.  Access and lack of trust. The consumer experience of shopping online is affected by numerous local factors such as internet, payment system, state of consumer protection, unclear and confusing business practices, and  outright scams and cybercrime including the lack of redress.

I shared information on the existence of ISO PNS 20488:2020 on principles of online reviews and requirements for their collection, moderation and publication.  The standards shall apply to any organization that publishes consumer reviews including suppliers of products and services that collect reviews from their own customers, a 3rd party contracted by the supplier, and an independent 3rd party. It gives recommendations in order to increase consumer trust in online review, increases the protection of suppliers against exploitation and mischief, and improves the purchase decisions of consumers and the quality of products and services provided by organizations. Online review sites offer consumers the chance to give feedback about their experience of using sites.

In the Philippines, there are 3rd party verification start-ups but the question is how do they authenticate. We should avoid  trap  of solicited market reviews. There should be a professional and 3rd party e–commerce site that provides impartial reviews  of an online site. I would like to note that e-commerce growth was 33% in 2020. The Philippines has 53% increase in the use of shopping apps last year. The need for a reliable review site is urgent.

Lastly, the Philippines is one of the eighty six ( 86 ) members of the Joint States Initiative (JSI) negotiation group under the WTO umbrella where consumer protection is one of the thematic issues under trust and electronic commerce.

The negotiating text includes protection of consumers from misleading, fraudulent and deceptive commercial activities such as false claims as to quantities, price, and suitability for purpose, quantity or origin of goods and services, advertising goods without intention to supply, failure of delivery and charging financial accounts without authorizations. Consumer redress mechanism as well as fair business practices are included in the negotiating text.

The regulation of online retail selling needs a well informed consumers, open and quick  access, borderless transactions  and building trust  .

Atty. Vic Dimagiba is President   of Laban Konsyumer Inc.

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