Bangladesh's e-commerce sector has seen a lot of turbulence in the last couple of months following findings of a Bangladesh Bank inspection that unearthed a massive asset-liability mismatch of Evaly. The number of complaints against rogue platforms also surged. Now, the commerce ministry plans to frame a new law to regulate the budding industry. Legal experts and consumers welcome the move while e-commerce platforms oppose it. The Daily Star's Mahmudul Hasan writes  

Consumers, experts back new law

Although industry people do not want a new law or regulatory agency, some legal experts and a consumer rights body said those were necessary to oversee the industry now plagued with scams and controversies and protect the interests of stakeholders, including merchants.  

"A group is advocating that it is possible to regulate e-commerce keeping the existing National Digital Commerce Policy-2018 in place or amending it," said Mohammad Golam Sarwar, an assistant professor of law at the University of Dhaka.

"However I think there should be a separate act to address the current situation in the sector," he added.

The rules in the digital commerce policy have no binding effect and no enforceability, and if anyone violates the directions, they will not be punished. Even a recently issued guideline under the policy has no legal remedy.

So in the context of Bangladesh, it is challenging to implement a policy that cannot ensure punishment for violations.

Secondly, a comprehensive law contains a proper objective and a new law would address the nature and dynamics of the e-commerce sector.

And to achieve the objective, it is important to have an administrative mechanism and a judicial mechanism, which is not possible without an act.

"Some say amending the consumer protection act is the solution. But we have to remember that the Directorate of National Consumer Rights Protection's pecuniary jurisdiction is very meagre," Sarwar said.

Besides, it is not clear how many sections of the "The Consumer Rights Protection Act, 2009" will have to be amended and if the amendments do come about, there is no guarantee that it can address the constantly changing dimensions of e-commerce fraudulence.

"Without a separate act it is not possible to regulate a fluid and complex sector. A comprehensive law has a proper objective and focus. There is an e-commerce cell in the commerce ministry but it has no legal authority," he added.

With the new act, the cell should be authorised and then it can take action based on complaints against e-commerce platforms -- which is called an administrative mechanism.

"The most important thing will be the creation of the judicial mechanism. A huge amount of money has been defrauded, but we have to find the remedy with the penal code 1860 and breach of contract act 1872," Sarwar said.

Otherwise, it is not possible to ensure justice for the victims.

"We have to think forward. With the growth, there is insecurity, inequality and possibility of collapse like Evaly. To address these issues, a new act is important," he added.

Echoing the same, Ghulam Rahman, president of the Consumers Association of Bangladesh, said a comprehensive law for the e-commerce sector is highly required to safeguard the interests of consumers.

There are a number of provisions in the existing laws to protect consumers but most people are unaware of these measures.

So, formulating a separate law for the e-commerce sector would help inform consumers about how to protect themselves, he added.

Sayeda Anju, a professor of law at the University of Rajshahi, also stressed on the importance of a new judicial mechanism to protect customers and merchants from future fraud.

"For the remedy in existing laws, it's very necessary to establish a judicial e-business wing under the Digital Security Act, 2018, because our cyber judges are busy with other cases," she said.

Customers can sue e-commerce platforms as the act considers any fraudulence committed using any digital or electronic medium to be an offence.

"Besides, business related cases should be dealt with promptly and there is no arrangement of training for judges on business-related judicial processes. But, there are separate judicial mechanisms for e-commerce," Anju added.

She went on to say that a new law was crucial to prevent potential fraud in e-commerce since a guideline or policy cannot be an alternative to law.

The government also wants to regulate the sector as digital commerce businesses have some distinct characteristics compared to traditional ways of doing business, Anju said.

Forming a special law and introducing a regulatory authority is crucial to ward off future e-commerce frauds, said Hafizur Rahman, an additional secretary to the commerce ministry.

"We should require an agency that would work promptly and immediately to address irregularities in the e-commerce sector. I believe the government is working to take initiatives to regulate e-commerce in the future," he said.

"One issue is framing a special law and another issue is introducing one authority since we know that many laws may disrupt or create problems for e-commerce," he added.

Rahman also said that stringent laws will not help the local e-commerce sector flourish smoothly.

"Our target is to keep the system simple and easy so that every entity and entrepreneur can join e-commerce," Rahman said.

But the law and authority should be operational so that scams and fraudulent activities cannot go ahead.

There are some laws such as the consumers' rights protection act, digital security act and penal code which are applicable to e-commerce.

"But I believe those laws that apply to our brick-and-mortar businesses are not adequate for e-commerce entities as they have some unique aspects in working on an online system, Rahman added.

What India is doing

India too has been facing widespread fraudulence involving e-commerce in recent years.

It prompted its government to formulate a Consumer Protection (E-Commerce) Rules, 2020 under the consumer protection act to thwart dubious trade practices and protect consumers' interests and rights in e-commerce.

Some of the act's provisions are very beneficial to customers.

This includes a mandatory appointment of a consumer grievance redress officer and a nodal contact person or an alternative senior appointed official with contact details.

Two other sections are for acknowledging buyers' grievances within 48 hours of receipt with a ticket number and resolving complaints a month from receipt of the complaint.

As widespread cheating and unfair trade practices in the e-commerce ecosystem continued during the pandemic, the government in June proposed a series of amendments to the rules, including a ban on mis-selling and fraudulent flash sales on e-commerce platforms.

Appointment of a chief compliance officer and resident grievance officer was also made mandatory and misleading customers by manipulating search results was banned.

If a government agency seeks information for detection and investigation and prosecution of offences under any law, the platforms will be bound to provide information by 72 hours, said the proposed amendment.

"To protect the interests of consumers, prevent their exploitation and encourage free and fair competition in the market, the government of India is sharing a draft of the proposed amendments," said the official release.

"The proposed amendments aim to bring transparency in the e-commerce platforms and further strengthen the regulatory regime to curb the prevalent unfair trade practices," it added.

The government has proposed that e-commerce entities ensure registration number and invoice of orders are displayed prominently on its platform for its users in a clear and accessible manner, reports the Times of India.

Besides, it has proposed "ranking" for goods and services offered on the platforms while ensuring that the ranking parameters do not discriminate against domestic goods and sellers. 

New law, regulatory body would impede growth

Say industry people

A new law with numerous provisions will thwart the expansion of e-commerce in Bangladesh, according to industry operators.

Instead, ensuring proper enforcement of existing laws and introducing strong fraud control measures are adequate to ensure healthy growth and discipline in the sector, which registered an average annual growth rate of about 50 per cent in the last five years.

Entrepreneurs of e-commerce demanded strengthening the Directorate of National Consumer Rights Protection (DNCRP) and Bangladesh Competition Commission to monitor and facilitate growth of e-commerce.

They also urged for proper vigilance from Bangladesh Bank, Bangladesh Financial Intelligence Unit (BFIU) and the commerce ministry.

"If these institutions and related laws are properly implemented, the government will be able to contain fraud in the future," said AKM Fahim Mashroor, chief executive officer of bdjobs.com and ajkerdeal.com.

The DNCRP is the prime resort for customers to get remedies for any issues but it has not taken any stern action against fraudulent platforms, especially when it comes to Evaly, which has over 8,000 complaints filed against it, he added.

These views come in the wake of a string of e-commerce scams unfolding over the last couple of months amidst an outcry from customers over digital commerce companies not providing refunds for failing to deliver products.

Merchants are also complaining of non-payment of dues by e-commerce firms.

According to industry insiders and analysts, none of the government agencies responsible for overseeing the activities of e-commerce platforms are playing their roles properly to ensure safe and disciplined growth in the digital marketplace.

And now, the recovery of at least Tk 3,000 crore from Evaly, E-orange and Dhamaka has become uncertain.

"Had the right enforcement of laws occurred, we would not have seen such a corrupt situation in the e-commerce sector," said Tanjib-ul Alam, head of the chamber at Tanjib Alam & Associates.

Waseem Alim, chief executive of chaldal.com, an online grocery shop, said added regulations and regulatory bodies would increase the cost of doing business for e-commerce companies.

"I do not think that added regulations and regulatory agencies will solve the problems as we already face a lot of scrutiny," he added.

Alim went on to say that he does not see any reason why e-commerce companies should endure more regulations than regular businesses.

"Online business should not be made more difficult than offline business and all the rules applicable for regular commerce should also be applicable for us," he said.

Instances of fraudulence take place in various other sectors, including banking and real estate.

"So, is the formulation of a separate law to prevent fraud in those sectors also required?" Alim asked.

However, an official of another well-known e-commerce firm said a specific law for digital commerce would be helpful for the sector.

Mohammad Sahab Uddin, vice president of the e-Commerce Association of Bangladesh (e-CAB), said they were against any new law or regulatory body as the existing laws were enough to ensure consumer protection.

Meanwhile, payment system providers said there should be a centralised registration and rating system for all e-commerce sites.

"In this system, there should be a list of enlisted and banned e-commerce sites. The regulatory authorities concerned should take necessary initiatives regarding the introduction of such a system," said Iftekhar Alam Ishaque, deputy chief technical officer at SSL Wireless.

Before onboarding any e-commerce site, the payment gateways can check the firm's status through this system, he said.

A top executive of an e-commerce company, on condition of anonymity, said government vigilance should be intensified to prevent fraudulent activities related to digital transactions.

Otherwise, fraudsters will come up with other innovative ideas and their promotion will be camouflaged, he added.

"This will spread to small towns and villages, even at the community level, to avert the policymaker. So a watchdog from the government is a must," said Mashroor of ajkerdeal.com.