Malaysian Regulation and Consumer Protection of eCommerce and Online Business
Consumer Protection (Electronic Trade Transactions) Regulations 2012
Although online shopping in the USA and other developed countries is a common practice, to Malaysians it can be very challenging. The frequent stories of online shopping scams deterred many from trying to shop online.
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, reported a drop of nearly 50% in reported online scams, from 1,321 cases in 2012 to 714 cases in the first quarter of 2013.
The drop in reported scams did not stop the Ministry of Domestic Trade, Co-operatives and Consumerism from implementing new acts to minimize online fraudsters.
Based on reports from the Ministry, the online business volume was expected to increase to RM5 billion or US$1.61 billion in 2014. It was, therefore, crucial to put in place measures to protect the consumers—hence the introduction of the Consumer Protection (Electronic Trade Transactions) Regulations 2012.
Changes to the Consumer Protection Act
Although 1995 was considered the start of the Internet age for Malaysia, Malaysians didn't start to build momentum for online shopping until 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 did not impose strict rules and regulations on operators of online businesses. This resulted in some unscrupulous operators taking advantage of the situation and tricking some consumers who shopped online.
The 2012 amendment to the Regulation imposed certain requirements on online business operators in order to provide better protection to online consumers.
Who Was Affected by the Act?
This new act primarily affected those who:
- Operate a website that sells or provides services online either through your own online store or blog.
- Sell or provide services through an online marketplace such as eBay, Amazon.com, Groupon, Mudah, Lelong, Zalora, Lazada, etc.
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 the English version.
I have summarized the requirements, which are as follows:
What eCommerce Operators Need to Do
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
- The 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 and Provide Receipt
The online business operators must:
- Allow the buyer to rectify any errors prior to confirmation of any purchase
- Issue an acknowledgment and 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 the 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 this article on "Commercial Fraud in Malaysia - What to do."
Failure to Comply With the Consumer Protection (Electronic Trade Transactions) Regulations 2012
If you, as an online business operator, fail 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.
The 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 fined 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 a 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 fined 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.
Asian Countries' Tendency to Do Online Shopping
Based on the study conducted by MasterCard between November and December 2012, China leads the Asian region as the country with the highest tendency to conduct online shopping, with 102 Index Points. The results for other Asian countries are as follows:
From the above table, Malaysians are still hesitant to do shopping online, but with better consumer protections, they might change their mind.
Hence, for a Malaysian online business operator, this will mean more business opportunities for you.
Are the 2012 Regulations Fair to eCommerce Operators?
Are you serious about doing business online?
Do you want more shoppers to visit and buy products from your website?
Are you willing to be transparent in your business transaction in order to gain trust from your website visitors?
Do you want them to come back and buy more from you?
Do you want them to recommend your website or your online business marketplace to their family members, friends, and strangers?
If you answer yes to all the above, then the 2012 Regulations are fair to both you as the online business operator and to online shoppers.
Boost Online Shopping Confidence
The requirements are not stringent and do not impose unnecessary burdens on you. It will create transparency and hence, trust to potential online shoppers if you provide all the information.
The 2012 Regulations also require you to give a full give description of goods and services that you are providing. These include price, method of payment, return of goods policy and other terms and conditions, and method and time of delivery. These will result in an increased confidence when buyers do online shopping at your website.
In case of dispute, loss or fraud suffered by online shoppers, they can also easily track down the business operators and file a complaint against them.
All these will boost consumers’ confidence when they shop online.
More Will Shop Online
Many consumers are still hesitant to shop online. With this 2012 Regulation in place, they may change their mind and this is good news to all online business operators.
So if you are an Online Marketplace Operator or Business Supplier, take steps now to comply with this new regulation.
It is a win-win situation to both the business operators and consumers.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Questions & Answers
Where do you find the consequences for the failure to comply with the Malaysian E-Commerce and Online Business Regulations? I don't see that under the Regulations themselves.
The current focus now is to register the businesses and regulations governing e-commerce that will eventually be introduced to protect both the consumer and business owners. Failure to register the business is covered in the Registration of Businesses Act of 1957.Helpful 3
What are the things that cannot be sold online in Malaysia?
Anything that is illegal and banned in the country.Helpful 5
© 2013 Mazlan