Consumer Protection in Electronic Commerce

By: Sonny Zulhuda

In this post, I will be sharing with AIKOL (Law) students on the above topic in the Consumer Law Class. Happy to share the legal framework for consumer protection law in the context of electronic commerce. Several issues under the Electronic Commerce Act 2006 and the Personal Data Protection Act 2010 will also be discussed.

Before 2007, the main consumer protection law, i.e. Consumer Protection Act 1999 [Act 599] excluded electronic transactions. Exception is given if there is a specific prescription by the Minister. Therefore, any consumer claims based on the e-transaction or e-commerce activities would not be accommodated by the CPA protection. The example is in the following case:

Telekom Malaysia Bhd v Tribunal Tuntutan Pengguna & Anor [2007] 1 MLJ 626
Presided by Low Hop Bing J, HC (Melaka)

1. The applicant billed the second respondent for RM98 in relation to international calls said to be made by the second respondent to Papua New Guinea. The second respondent disputed the bill and filed a claim with the first respondent, the Consumer Claims Tribunal (‘the tribunal’) on the ground that the second respondent had not made the international calls, but had only used the internet service, and that an international call was generated by the internet service without his consent.
2. The tribunal found in favour of the second respondent on grounds of wire-tapping from an unidentified person who had made the international calls while the second respondent was surfing the internet and the second respondent’s computer was hacked. The applicant applied for judicial review of the tribunal’s award on the ground that the award was beyond the tribunal’s jurisdiction and therefore ultra vires.
3. The applicant submitted that the Consumer Protection Act 1999 (‘the CPA 1999’) does not apply to any trade transaction effected by electronic means unless otherwise prescribed by the Minister. They added that the service of telecommunications provided by the applicant involved electromagnetic waves to which the CPA 1999 had no application by virtue of s 2(2)(g) thereof, but came within the provisions of the Communications and Multimedia Act 1998 (‘the CMA 1998’).
4. The Court held that, while the CMA 1998 was clearly enacted to, inter alia, provide for consumer protection in the telecommunications industry, the CPA 1999 is not intended to apply to the hearing of a dispute arising from the same industry. The second respondent had elected the wrong forum to bring the dispute to the tribunal as it is outside the jurisdiction of the tribunal. The second respondent has a choice of suing in a civil court of law or
   alternatively lodge a complaint under s 188(1)(a) and (b) and s 190(1)(b) of the CMA 1998 for a resolution of the dispute and to get redress if any.

Communications and Multimedia Act 1998 [Act 588]

• s. 188(1): Any network facilities provider, network service provider, applications service provider or content applications service provider shall:
  (a) deal reasonably with consumers; and
  (b) adequately address consumer complaints.

• s. 190(1) CMA 1998: Consumer code prepared by a consumer forum or the Commission shall include model procedures for:
  (b) the handling of customer complaints and disputes including an inexpensive arbitration process other than a court, and procedures for the compensation of customers in case of a breach of a consumer code; and/or

The Amendment of the Consumer Protection Act in 2007 to cover E-commerce

However in 2007, the CPA 1999 was amended to delete that exemption on e-transaction. In the Parliament, the objective of the amendment was elaborated as follows;

Mr. Hoo Seong Chang, Penyata Rasmi Dewan Rakyat, 8 May 2007, No. 24, p. 71.

• “The main purpose of the Consumer Protection (Amendment) Bill 2007 is to protect consumers who conduct any trade transactions implemented electronically.
• Section 2(1) of the Consumer Protection Act 1999 relates to the application of the Act, where section 2(1) states that this Act shall apply in respect of all goods and services offered or supplied to one or more consumers by way of trade.
• However, at present, there are several exceptions in the Consumer Protection Act 1999 as stated under section 2(2) where this Act shall not apply… [Including] for any trade transaction carried out electronically, unless prescribed, other than by the minister.
• Mr. President, to ensure that the interests of consumers in this country continue to be guaranteed and consumer protection is continuously provided, it is proposed that section 2(2)(g) be repealed.
• With this repeal, all trade transactions carried out electronically shall be subject to the application under the Consumer Protection Act 1999.
• With this too, the interests of consumers will be guaranteed, and further enhance consumer confidence and trust to use the internet for their buying and selling affairs.”

Consumer Protection Act 1999 [Act 599] – Application

2. (1) Subject to subsection (2), this Act shall apply in respect of all goods and services that are offered or supplied to one or more consumers in trade including any trade transaction conducted through electronic means.

E-Contract and Website Terms

Quay Chew Soon JC in Dato’ Vijay Kumar Natarajan & Anor v Malaysia Airlines Bhd [2021] MLJU 407, High Court (KL) had the following observation:

• It is not in dispute that a contract for commercial transactions can be formed electronically and this includes any sale that is performed online. (See section 7 of the Electronic Commerce Act 2006).
• The terms of the contract of carriage between Plaintiffs and D in relation to the flight tickets were presented online via the Defendant’s website.
• Plaintiffs had agreed to them by clicking on “I understand and accept the Terms and Conditions of Carriage and Fare Conditions” button to indicate their acceptance when completing the purchase of the flight ticket.
• Plaintiffs purchased the flight tickets from Defendant’s website subject to the terms and conditions stated therein.
• The flight tickets are non-refundable tickets which were purchased at a promotional price. This was clearly stated in the Fare Conditions on Defendant’s website during Plaintiff’s purchase of the flight tickets.”

The Lecture Slides can be obtained here.