Basic Legal Compliance for Online Businesses
Basic Legal Compliance for Online Businesses

Basic Legal Compliance for Online Businesses

Introduction

If you are thinking of venturing into online businesses, be it setting up a website as online product seller or service provider, or tapping a into an online marketplace (where your goods or services are marketed by third parties), there are some basic requirements under Consumer Protection (Electronic Trade Transactions) Regulations 2012 (“2012 Regulations”) to be complied with.

The 2012 Regulations made under Section 150 of the Consumer Protection Act 1999 had since coming into operation back in 1st July 2013. It is no doubt aimed to protect consumers who like the convenience of online shopping or services.

The Law

The 2012 Regulations is not at all difficult to be complied with.

It basically only imposes the obligations on the online business owners to disclose via their website or in the online marketplace the information as follows:-

(a) the name of person who operates the business, or the name of the business or the company;

(b) the registration number of the business or the company;

(c) the e-mail address and the telephone number, or address of the person who operates the business;

(d) a description of the characteristics of goods or service;

(e) the full price of the goods or services including transportation, taxes and any other costs;

(f) the method of payment;

(g) the terms and conditions, of the sale or services; and

(h) the estimated time of delivery of the goods or services to the buyer

In addition, online business owners must also:-

(a) provide the appropriate means to enable the buyer to rectify any errors prior to the confirmation of the order made by the buyer; and

(b) shall acknowledge receipt of the order to the buyer without undue delay.

Specific Provision Applicable to Online Marketplace Operator

Online marketplace operator means the person who provides the online marketplace.

Despite the online marketplace operator do not have the obligation to disclose of information like those of the online business owners, they must, however, take steps to maintain a record of the names, telephone numbers, and address of the person who supplies goods or services in their marketplace for a period of 2 years, as provided in Regulation 5 of the 2012 Regulations.

This can be done by properly drawn up the terms of use of their marketplace so that its users or the online sellers were aware of the terms and conditions before engaging the online marketplace. Likewise, operators’ interest are also protected against defiant users of their platform should such terms and conditions are clear at the outset.

Failing to Comply

Any person who discloses false or misleading information; or who fails to disclose information in accordance to the 2012 Regulations commits an offence and can be liable to:-

  • a fine up to RM50,000 or to imprisonment up to three years or both upon conviction,
  • and for a second or subsequent offence the person will be liable to a fine up to RM100,000 or to imprisonment up to five years or both.

Any aggrieved online consumers that has experienced displeasing online shopping experience may lodge a complain to the Ministry of Domestic Trade Co-operatives and Consumerism at their complaint website.

https://eaduan.kpdnhep.gov.my

Comply in Order to Achieve More with Less 

It cannot be gainsaid that online businesses were started with the purpose to achieve more with less.

Therefore, it is necessary to ensure the basic legal compliance in order to ensure that this will not be the stumbling stone in future.

About the Author: 

This article is written by Chia Swee Yik, Partner of this Firm (+6016 2148 218, chia@chialee.com.my) (assisted by paralegal, Samantha Hah Kai Di) who has provided practical advice to many online business owners.

Feel free to contact them if you have any queries.

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