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Lazada asks Senate to soften bill’s liability clause

By Alyssa Nicole O. Tan, Reporter

LAZADA E-Services Philippines, Inc. on Thursday asked senators to temper the language of a bill that seeks to regulate online transactions, saying making e-commerce platforms like it and Shopee accountable to buyers could make sellers less responsible for product defects.

“It dramatically lessens the seller’s responsibility and therefore emboldens potential wrongdoers as they will hide behind the platform and therefore will also discourage enforcers from pursuing the actual violator,” Lazada Chief Executive Officer Raymond Alimurung told a Senate hearing.

“This also creates an unnecessary differentiation between online and offline [sellers] because today, the malls are not solidary liable for the violations of its tenants,” he added.

Senator Maria Imelda “Imee” R. Marcos, who heads the economic affairs committee, asked if a compromise had been found on the liability issue.

Mr. Alimurung noted that under the House of Representatives version of the bill, the provisions included a subsidiary liability and a solidary liability under a specific set of circumstances, particularly involving damage or loss to customer and awarding of civil damages.

“It’s a very specific scope on the liability as opposed to a blanket approach,” he said.

Under several Senate bills on a proposed Internet Transactions Act, “an e-marketplace or e-commerce digital platform shall be solidarily liable with its listed online merchant, after due notice and hearing,” if it fails to provide mechanisms to resolve disputes, or take measures to prevent the sale of illegal products.

“The other concern we have other than lessening seller responsibility… is that it will potentially create an unlimited liability on platforms, which will significantly increase platform costs that will then be passed on to the MSMEs (micro, small and medium enterprises) and the consumers,” Mr. Alimurung said.

He noted that despite due diligence on their part, a seller could still do something illegal before the platform could find out.

While there are mechanisms in place, such as artificial intelligence algorithms that track sellers and take down patterns of behavior that are considered anti-consumer and fraudulent, it is not entirely preventable, he added.

At the hearing, the Department of Trade and Industry (DTI) asked senators to remove a clause that tasks it to regulate online transactions.

“We see the need for an online business registry, a trust mark and a little bit of clarification on the regulatory jurisdiction of DTI over digital platforms,” Assistant Secretary Mary Jean T. Pacheco said.

“DTI respects the mandates of other agencies,” she said, adding that it is better to let these exercise their own regulatory functions. These include the Philippine central bank and the Information and Agriculture departments.

DTI could come in, in case the agencies fail to exercise their jurisdiction on time.

Under the bill, the DTI is expected to exercise primary regulatory jurisdiction over e-marketplaces, e-retailers, online merchants and other digital platforms that sell or allow the sale or exchange of goods, services or digital products.

Trade Undersecretary Ruth B. Castelo sought the swift passage of the bill, which she said would complement the Consumer Act.

“This is going to be a big help in consumer protection, especially the creation of an online business registry… that will contain information on the sellers engaged in e-commerce and internet retail, making it easier for us to take action on [complaints],” she added.

She said DTI often has to seek the help of police on cyber-crime because they don’t find a trace of the seller after a transaction is completed.

“The take-down powers of the DTI secretary are also very important so that we can immediately take action if we know there is a violation committed by any merchant or platform,” Ms. Castelo said.

Ms. Pacheco also pleaded with senators to allot P40 million under next year’s national budget for the enforcement of the e-commerce road map that will include web seminars, training and digital skill projects.

The Trade department’s proposed budget for next year was cut by 10% to The proposed 2023 budget of the DTI has dropped by 10% to P22.196 billion.

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