Guidelines for online businesses
By Aziza Hannah Bacay on August 4,2022
TWO years into the Covid-19 pandemic, we have witnessed how consumers transitioned from being buyers from traditional brick-and-mortar businesses to online shoppers. Indeed, online transactions provide a more convenient means for consumers to avail of goods and services.
With this rise of online businesses, there also arises the need to regulate them in order to protect the rights and interests of consumers. In this regard, several government agencies — Department of Trade and Industry (DTI), Department of Agriculture, Department of Health, Department of Environment and Natural Resources, Intellectual Property Office of the Philippines and the National Privacy Commission — issued Joint Administrative Order (JAO) 22-01 dated March 4, 2022 (Guidelines for Online Businesses Reiterating the Laws and Regulations Applicable to Online Businesses and Consumers) providing guidelines for online businesses based on the existing laws and regulations and stating a non-exhaustive list of penalties in case of violations.
Obligations of online businesses
It is the obligation of online businesses to comply with all Philippine laws, rules and regulations and value consumer rights to the same extent as transactions made through traditional means.
Firstly, the JAO reminds online sellers about the laws and regulations providing protection to online consumers from hazards to health and safety. It also reiterates that online sellers are prohibited from conducting deceptive and/or unfair sales acts and practices provided under Republic Act (RA) 8923, or the “Intellectual Property Code of the Philippines.” These include false advertisements, misrepresentations, taking advantage of consumer’s conditions, among others.
Online businesses are also reminded that it’s their responsibility to comply with warranty provisions, labeling requirements and price tag placements under RA 7394, or the “Consumer Act of the Philippines,” and other relevant laws. Accordingly, the product listings in online platforms and marketplaces must display the price of the products or services, payment policies, delivery options, returns, refunds and exchange policies, and other details. If a seller communicates the price of its products to consumers through direct messaging, instead of public listing, then such act shall be considered a violation of the Price Tag Law (Article 81, Consumer Act of the Philippines).
If the goods are regulated items, then online businesses must exhibit the corresponding license number or permit as prescribed by the applicable government agencies. However, in no case shall the online seller be allowed to sell goods or services that are prohibited by law, such as counterfeit products, precious metals, artifacts and weapons.
Consumer information security is also enforced by applying the provisions of RA 10173, or the “Data Privacy Act,” to online businesses. For this, the JAO emphasizes that the personal information collected by online sellers, merchants or e-retailers shall be retained and processed only for legitimate purposes. It is also the online businesses’ responsibility to implement reasonable and appropriate security measures to ensure that data collected shall not be used for purposes other than what the consumer has consented to.
Liabilities of online sellers, e-commerce platforms or marketplace
Consistent with the Consumer Act of the Philippines, online businesses shall be held liable when the products supplied are defective and the manufacturer of the product cannot be properly identified. Furthermore, the sanctions under the Intellectual Property Code of the Philippines shall also be imposed if the online business is found to be engaged in selling counterfeit and/or pirated goods.
It is noteworthy that the JAO imposes additional obligations to e-commerce platforms or marketplace and treats them in the same manner as online sellers, merchants or e-commerce retailers, in terms of liabilities. As such, e-commerce platforms or marketplace have the duty to verify and ensure that the goods being sold in their respective platforms are authentic and not prohibited.
In case of prima facie violation of any pertinent laws or regulations committed in an online post by the online seller or merchant, e-retailer, e-commerce platform, e-marketplace and the like, the concerned government agency shall issue a notice giving the violator a maximum of three (3) days within which to take down the post. If the violator fails to take down the post within the period provided, then such act shall be taken as intentional and shall aggravate the offense charged.
Similarly, the JAO extends the liability to delivery platforms upon notice that they are carrying or delivering restricted, prohibited or infringing items.
In case of violations thereof, the online consumers have the remedy of filing their complaints to the DTI, through written or electronic means.
Senate Bill 2489, or the “Internet Transaction Act”
While the JAO consolidates the existing rules and regulations applicable to online businesses, it is still imperative that national legislation be enacted in view of the continuing growth of the digital economy. In fact, there is a proposed Senate Bill 2489, or the “Internet Transaction Act,” pending before the Congress. This proposed bill intends to promote the growth of e-commerce in the country and to ensure sustainable and fair-commerce market practices in the country.
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Aziza Hannah A. Bacay is an Associate of Mata-Perez, Tamayo & Francisco (MTF Counsel)