Consumer Protection of eCommerce and Online Business

Although online shopping in the USA and other developed countries is a common practice, but to Malaysians this can be very challenging. The frequent stories of online shopping scams had deterred many from trying to shop online.

Consumer Protection (Electronic Trade Transactions) Regulations 2012

Some of these online shopping scams involved international syndicates that operate their business using local companies' names. This affected the reputation and credibility of genuine Malaysian companies that tried very hard to break into the online market.

Malaysia’s central bank, Bank Negara Malaysia, recently reported a drop of nearly 50% in reported online scams from 1,321 cases last year to 714 cases in the first quarter of 2013.

Despite the drop, this does not stop the Ministry of Domestic Trade, Co-operatives and Consumerism from implementing new acts to minimize online fraudsters.

Based on report from the Ministry, the online business volume will increase to RM5 billion or US$1.61 billion in 2014 and it is, therefore, crucial to put in place measures to protect the consumers.

Hence, the introduction of Consumer Protection (Electronic Trade Transactions) Regulations 2012.

You can read the full text of this regulation for both the Bahasa Malaysia and English version. Scroll down after the BM version to read English version.

I have however, summarized the requirements which are as follows:

What You Need to Do as an eCommerce Operator

To comply with the 2012 Regulations, all online business operators are to do the following three items:

1. Provide Full Disclosure of Information

To provide the following information on your website or online marketplace:

  • Your name or name of the company or name of the business that operates the online
  • business Company or business registration number, if applicable
  • Contact address (email, telephone and address of the person or company)
  • Description of the goods or services provided
  • Give full price of the goods or services. This must include shipping cost, tax and other cost that you intend to charge the buyer
  • Method of payment
  • Your terms and conditions for the sale
  • The estimated time of delivery for goods purchased which must include estimated time for all shipping options that you have offered, if any.

2. Rectify Errors & Provide Receipt

The online business operators must:

  • Allow buyer to rectify any errors prior to confirmation of any purchase
  • Issue acknowledgment receipt for the sale transaction, without any undue delay

3. Maintenance of Record

If you are an online marketplace operator that sells third party goods or services, then you must take steps to keep and maintain the following information of your third party suppliers, for at least two years:

  • Name of supplier
  • Telephone number of supplier
  • Address of the supplier
  • Avenues for Aggrieved Online Shoppers

If someone had an unsatisfactory online shopping experience, he or she can do the following:

  • Call Ministry of Domestic Trade, Co-Operatives and Consumerism at 1800886800 or file the complaint at their complaint website
  • Call the Royal Malaysia Police department for Commercial Crime Investigation at 603-20319999 or 603-22663333 or visit their website
  • Call Cyber999 Help Center at 1300882999 or file a complaint directly at their website. However, this help center is dedicated to issues relating to computer security incidents
  • You can also refer to an article on 'Commercial Fraud in Malaysia - What to do?" here

 

Failure to Comply to the Consumer Protection (Electronic Trade Transactions) Regulations 2012

If you, as an online business operator, fails to comply with the above 2012 Regulations, then you are deemed to have committed an offence. If you provide false or misleading information, you also commit an offence.

Punishment and penalty that will be imposed are:

  • Fine of up to RM50,000 (US$15,600) or imprisonment up to three years or both
  • If you commit the offence again, you will be fine up to RM100,000 (US$31,250) or imprisonment up to five years or both.

If a company commits this offence, then the penalties are higher and are as follows:

  • Fine of up to RM100,000 (US$31,250)
  • For subsequent offence, the company will be fine of up to RM200,000 (US$62,500)

If after the conviction, you continue to commit the offence, then in addition to the above penalties, you or the company will be fine an additional RM1,000 (US$312) for each day for which the offence continues.

The aggrieved consumer can also file a claim with the Tribunal for Consumer Complaints. If this civil remedy is successful, then you or the company will pay another penalty as imposed by this Tribunal.

Changes to the Consumer Protection Act

Although 1995 was considered the start of Internet age for Malaysia, Malaysians started to build momentum on online shopping only in 1998.

More Malaysian business portals were developed and setting up online business became popular. To protect online shoppers, the Ministry amended the Consumer Protection Act in 2007, to include electronic trading.

However, the act does not impose strict rules and regulations to operators of online businesses. This has resulted in some unscrupulous operators taking advantage of the situation and had tricked some consumers who shopped online.

This 2012 amendment to the Regulation hence, imposes certain requirements on online business operators in order to provide better protection to online consumers.

Who Are Affected by this New Act?

This new act will affect you if:

You operate a website that sells or provide services online either through your own online store or blog-site

You sell or provide services through an online marketplace such as eBay, Amazon.com, Groupon, Mudah, Lelong, Zalora, Lazada, etc.