APAC e-commerce laws lack SMB, C2C coverage

The legal landscape around e-commerce is quickly evolving to meet the industry's growth, but industry watchers want legislation to govern not just bigger market players but when consumers shop at smaller online retail sites too. This will help level the playing field and spur greater growth in online retailing, they say.

Koh See Khiang, senior associate for information technology and communications at law firm Baker & McKenzie.Wong & Leow, said with the rapid expansion of e-commerce, laws regulating online transactions have expanded in Asia albeit at differing pace depending on the specific market.

For instance, Singapore's Electronic Transaction Act was enacted to legitimize the use of contracts concluded electronically, he noted. Personal data protection laws are also being introduced, with Malaysia, Philippines and Singapore examples of Asia-Pacific markets developing or have developed such legislation as these are essential to building trust and fostering a conducive environment for e-commerce activities, Koh added.

Then there are markets which have some sort of consumer protection laws but are including online activities into account. China, for one, proposed a first draft amendment to its consumer rights law last month which would grant online shoppers a seven-day period to return their purchases and get a refund.

Extend laws to SMBs, C2C transactions

That said, Koh reckons that there are still areas where existing laws can be finetuned. One particular area is for laws protecting consumers who shop on smaller online retailers such as blogshops as these merchants are likely to be more at risk given the lack of IT support.

Conversely, consumers who purchase from well-known retailers and those with brick-and-mortar outlets would need less protection since these vendors would have better refund and return policies, he added.

Daniel Latev, global head of retailing research at Euromonitor, agreed. He said if laws were extended to smaller online retailers, these businesses can benefit not only from higher consumer confidence but also from the leveled playing field.

If consumers have seven days to return unwanted or faulty goods from any Web retailer, they can experiment shopping at smaller merchants, Latev added.

Asia-based online store Zalora, which has a 30-day refund policy, told ZDNet the policy helped its business become "as customer-centric as possible" and lowered the risk its customers take for online shopping.

"Many local online stores such as Singapore's blogshops do not offer refund policies so this helps us stand out," a company spokesperson said.

He added that for e-commerce to develop further in Southeast Asia, e-commerce laws need to protect consumers more than online retailers.

"This would help make people more comfortable with online shopping, bridge the trust gap, and educate consumers. Enforcing the highest standards for all e-commerce players would be something that would benefit the e-commerce ecosystem," the spokesperson said.

Another online marketplace operator, Qoo10, said there is currently a notable lack of regulations governing consumer-to-consumer (C2C) transactions, which should be addressed. In order to mitigate this, it has encouraged buyers and sellers to reach sales agreements privately. Only if there is a dispute would its customer service team investigate the matter and provide a resolution, it said.

A Qoo10 spokesperson added: "Before Qoo10 rebranded from Gmarket, the refund policy was formulated from Gmarket's procedures. But since the company's [rebranding], the policies became increasingly localized to best manage the buyer-and-seller expectations and needs."

Legal flexibility needed

Koh pointed out that in enacting e-commerce laws, its scope must be carefully crafted to take into account all forms of distance selling, and not just the purchase of goods and services via the Internet.

"Asian consumers are likely to be purchasing goods and services from their mobile phones and there may be other scenarios that should be covered such as the purchase [made] by mail order or even from an Internet-enabled smart TV or refrigerator," he explained.

The lawyer added the seven-day cooling off period proposed in China is a useful safeguard for consumers, but it should work hand-in-hand with other measures to maximize protection for consumers. For example, Web retailers should be made to provide clear and accurate information especially where specifications or pictorial representations of goods are concerned, he noted.

The law should also be drafted in a way to allow some flexibility in implementation so smaller online businesses are not "unduly prejudiced" or unnecessarily saddled with higher operating costs, Koh said.

If consumers, for example, are entitled to return the goods within the cooling period, the law can seek to strike the right balance by making consumers liable for the cost of shipping goods back to the retailer where there is no misrepresentation or other unfair trade practice involved, he suggested.