With growing consumer concerns regarding online transactions, the Philippines may soon pass the Internet Transactions Act (“ITA), a bill aimed at safeguarding consumer rights and data privacy and promoting fair advertising practices in the country.
The proposed measure will cover business-to-business and business-to-consumer internet transactions, including internet retail of consumer goods and non-financial services, online travel services, digital media, digital financial services, and online delivery, but not consumer-to-consumer transactions. While the bill defines consumer-to-consumer transactions as one-off, petty, or occasional low-value transactions, it did not provide a specific threshold for this amount.
Among the salient provisions of the ITA is the creation of the eCommerce Bureau under the Department of Trade and Industry (DTI). The eCommerce Bureau will serve as a central authority that will oversee transactions, regulate fair advertising practices, and serve as a virtual one-stop shop to address consumer complaints and protect consumers data privacy concerns.
The ITA requires all individuals engaged in e-commerce to register either as a sole proprietorship, a one-person corporation, a partnership, a corporation, a cooperative. Failure to do so subjects said individual to a fine equivalent to 100% of the amount of goods offered or sold in addition to the confiscation of such goods.
Interestingly, the ITA also provides that a non-resident of the Philippines who engages in e-commerce by marketing goods or services that are accessible in the Philippines may not evade legal liability in the Philippines on the ground of non-residency and shall therefore be subject to the same obligations and liabilities arising from any transaction as those who are authorized to engage in eCommerce in the Philippines. Thus, under the current bills, foreign entities who are not registered or duly licensed by the SEC but are engaged in e-commerce business in the Philippines, including maintaining active websites which generate sufficient business over the internet from Philippines consumers will also be required to register with the SEC pursuant to the ITA. Related to this, the DTI also suggests that those who “purposely avails of the Philippine market without establishing any real or legal presence in the Philippines should notify the eCommerce Bureau…”
The ITA aims to build trust between online sellers and consumers by placing mechanisms to safeguard merchants and consumers as they transact online such as the eCommerce Philippine Trustmark. In addition, it also promulgates a Code of Conduct for all businesses engaged in e-commerce and imposes a set of obligations on e-commerce platform operators and merchants under pain of criminal prosecution.
One point where proponents of the ITA vary is its imposition of liability upon the e-commerce platform with the online merchant. Both versions of the bills pending in the Senate impose joint and solidary liability to the ecommerce platforms in certain situations, but the DTI proposes to make it a “limited liability” instead so as not to discourage eCommerce platform operators from doing business in the country.
Undoubtedly, the ITA represents a positive step forward for the continued expansion of eCommerce in the Philippines. Nevertheless, Congress must exercise caution to guarantee the protection of the interests of all stakeholders, encompassing e-commerce platforms, merchants, and courier services, while also avoiding the potential pitfall of excessive regulation, which could have the opposite effect.