An economy that thrives on consumerism mustn’t leave consumers to fend for themselves when things go awry. A regulatory vacuum currently exists regarding consumer protection in the e-commerce space. The first part of the subject line, published in this space on September 20, tried to highlight the potential scale and nature of problems that consumers face while transacting in the digital space. Today, let’s dive into what the contours of a consumer protection regime should look like in the digital domain.
Since late last year, an E-commerce Policy Framework has reportedly been in the works, under an E-commerce Policy Board led by the Ministry of Commerce, with ministries of Finance and IT among its members. So far, there has not been known tangible result of the effort. It is also unclear whether the Board will formulate guidelines on consumer protection, too. This scenario puts in peril what legal minds refer to as the online consumers’ right to be informed, right to choose, right to safety, and right to redress.
Last week, the Competition Commission of Pakistan (CCP) organised a multi-stakeholder conference on consumer protection issues in e-commerce. It was a much-needed intervention, given the regulatory ambiguity on the subject in Pakistan. Stakeholders were represented from the relevant ministries, legal profession and the private sector.
At the CCP moot, BR Research was also given the opportunity to give its input on the subject. Based on its background interactions, BR Research has four main suggestions for the policymakers.
One, Pakistan must have a holistic approach to consumer protection in the digital space, which has so much more to it besides online shopping. Some of those segments can be seen in the illustration. While online shopping relates more to functionality (the product), segments in the sharing economy are heavy on human interaction with total strangers. This aspect must not be overlooked. Also in terms of market size, besides online shopping, online cab-hailing apps have also been growing tremendously in Pakistan.
Two, the consumer protection regime has to be comprehensive vis-à-vis the scope of issues it can address. It is, of course, critical to have robust internal (firm-level) and external (ADR; regulator-level) complaint reporting, resolution, and redress mechanisms. But comprehensive oversight means also looking at other critical consumer issues like data privacy and security, effective information disclosures, product safety, payment protection, business and marketing practices, protection of children, etc.
Three, old ways of resolving consumer complaints won’t fly in the fast-paced digital economy. The existing consumer protection regime is too reactive and slow to adapt. Since 1995, all the four provinces and the Islamabad Capital Territory have enacted their own Consumer Protection Act. But the consumer courts – a small number of them present only in Punjab and KP – have apparently remained under-resourced by the executive and under-attended by the judiciary. Consumers feel discouraged to report their issues because they don’t expect to get a remedy within a reasonable period of time.
Therefore, it becomes important – and this is the final recommendation of this piece, in the hope that debate continues on this issue – to avoid dispersion of regulatory responsibility. Policymakers must think about giving one regulatory body the oversight mandate over digital economy. Such a body must issue code of conduct, which should be binding on all digital intermediaries. It must have a national jurisdiction and quasi-judicial authority to take swift, precedent-setting decisions. The scope of its oversight has to be vast, including pre-purchase, purchase, and post-purchase process of online goods and services.
To build user trust in the digital space, it is important to have the consumers’ back. If user trust is indeed critical, then having a pro-consumer stance in the digital space is actually pro-growth.
Of course, the digital intermediaries need to be facilitated in areas such as taxation and trade to help them grow even more. Bottom-line is that the digital economy is in its early stages in Pakistan.
The legislature, the judiciary and the executive have an opportunity to set a positive direction for this promising sector to avoid the anti-consumer fate that plagues many other sectors of the economy.
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