• Rahmat Adrian

Safe Harbour Policy in E-Commerce to Protect Consumers and Business Actors

Updated: Aug 31

by Rahmat Adrian (rahmat.adrian@launcher.id) and Clara Viriya (clara.viriya@launcher.id)

As of today, more than 214 countries are affected, 7,630.000 people are infected and 424.000 deaths are reported due to the novel coronavirus disease 2019 (COVID-19). In the last three months government of most nations have undertaken immediate actions in response to curb the transmission of the virus, including the Government of the Republic of Indonesia. Numbers of policies had been imposed by the central and regional governments, from the widely known “PSBB” to the latest "New Normal" policies. These policies have drastically changed the norms of social interaction, the way people concern for their cleanliness and health, as well as how people choose to purchase their daily needs.

Bain & Company's in collaboration with Facebook reporting on Riding the Digital Wave: Capturing Southeast Asia's digital consumer in the Discovery Generation, the firms depicted that at least 44% of digital consumers in the region purchases daily products. Both predicted that this trend should remain despite the next normal or new normal situation. Additionally, at least 80% of digital consumers indicated that they will continue to buy more in the new normal.

Nonetheless, as of the first COVID-19 case in Indonesia was announced in public, there has been a surge of fraud cases occurring in e-commerce platforms. As a result of the sudden increase in demand for medical protective equipment (APD), surgical masks and hand sanitizers, many digital consumers had to experience being defrauded by the fraudulent merchants, such as, among others, the fraud case of used and defective surgical mask. Consequently, not only the consumers, yet, the marketplace providers were disadvantaged from such case. To some extent, the e-commerce platform's reputation might be at a level of risk.

In general, business actors operating an e-commerce business (“E-Commerce Provider”) are obliged to provide correct, clear, and factual information. According to the Article 13 (2) of Government Regulation No. 8 of 2019 on Trading through Electronic System (“GR 80”) that such information shall at least contain accurate information, congruence between the advertisement with the actual products, consumption appropriateness, legality, quality, price, and accessibility of the products. This also in line with the consumer rights as stated in the Law No. 8 of 1999 on Consumer Protection. In addition, e-commerce providers shall maintain, control and be responsible for any legal consequences in relation to the existence of illegal contents in their platform, unless otherwise, such business actors conduct immediate removal or deletion of the illegal contents. Under the elucidation of Article 22 (1) of GR 80 illegal content is defined as prohibited content or which in nature is against the law.

Notwithstanding, e-commerce platform using marketplace business model is a user-generated content platform, in which the user (in this case is the merchant) produces the content solely and have the access to publish and upload information in the marketplace platform. Digital merchants post any information in connection with the products they sell, interact with the consumers, and the prospective consumers may purchase the desired products via the platform. The e-commerce provider displays given information posted by the digital merchants and to some degree, such e-commerce provider may not have sufficient knowledge in connection with the actual products information provided by the merchants.

E-commerce platform provides ease of access for both the merchants and consumers to carry out online trading transactions through an electronic system. In addition to the convenience provided, the platform is yet vulnerable to the perversion of use by the fraudulent users who deliberately posting prohibited content and information. In order to maintain a sound climate for the e-commerce industry, the Ministry of Communication and Information Technology (MOCI) issued Circular Letter No. 5 of 2016 on the Limitations and Responsibilities of Platform Providers and Merchants in E-Commerce Using User-Generated Content Platforms (“Circular Letter”). The Circular Letter provides general guidelines to underpin safe harbour policy in the e-commerce sector. It emphasizes that Platform Providers (in this case, marketplace platform provider) are deemed Electronic System Provider pursuant to the Law No. 11 of 2008 on Electronic Information and Transactions (EIT). Platform Providers are obligated to be responsible for the operation of the electronic system (in this case, the e-commerce platform). However, such obligation may be exempted in the event of force majeure, errors and/or negligence on the side of the electronic system users. The Circular Letter mainly identifies types of prohibited contents into i) negative content, and ii) illegal content. The negative content includes, among others, restriction on a product containing inaccurate, fraud, or deception. Further, under letter C of the Circular Letter, the Platform Provider’s obligations and responsibilities are as follow:

  • Providing terms and conditions of the Platform that at least include: i) rights and obligations of the Merchant; ii) rights and obligations of the Platform Provider; and iii) provisions regarding the accountability of the uploaded content;

  • Providing a complaint reporting system concerning the prohibited content in the Platform;

  • Performing complaint handling concerning the prohibited content report;

  • Maintaining the due dates of deletion of every type prohibited contents;

  • Evaluating and monitoring merchant’s activities in the Platform;

  • Be compliant to the prevailing laws and regulations; and

  • Be liable of the system electronic management and content management in the Platform, unless otherwise is performed due to the error and/or negligence on the side of Merchant or User.

According to the letter D of the Circular Letter, Digital Merchant’s obligations and responsibilities are as follow:

  • Providing complete and accurate information in connection with the terms of the product offered;

  • Ensuring all uploaded materials, including but not limited to the products offered are not against the law;

  • Ensuring all posted contents are not subject to the prohibited contents;

  • Performing obligations according to the terms and conditions set out by the Platform Provider;

  • Be compliant with the prevailing laws and regulations.

  • Be liable for all uploaded contents or materials;

  • Be liable of the report of any complaint arose from the content uploaded; and

  • Be liable for any obligations according to the terms and conditions set out by the Platform Provider.

According to the Article 18 of GR 80, in the event on an adverse circumstance occur for consumers, consumers may submit complain report to the MOCI and the concerned e-commerce provider is deemed compulsory to settle the complaint report according to the laws and regulations. In order to prevent or to resolve issues concerning an illegal content, e-commerce provider is obliged to provide, as follow:

  • Terms of Use or License Agreement to the Users containing the usage terms according to the prevailing laws; and

  • Technology-Based Control System and/or Infrastructure to administer public complaints against illegal contents or misuse of their electronic system according to the prevailing laws.

LID Advisory is a publication prepared by Launcher.id. It is intended to inform in general topics covered only, and should not be treated as a legal advice or relied upon when making business activities or investment decisions. Should you have any inquiries on the matters contained in LID Advisory, or other comments generally, please contact us at contact@launcher.id.