Online commerce requires additional safeguards against scams
This time of year, Filipinos are probably thinking about holiday shopping. And as more and more purchases are made online, it seems appropriate to review the safeguards against digital fraud. Not only do they threaten to ruin Christmas in the short term, but they can also hamper the development of the Philippine digital economy.
According to reports, the Covid-19 pandemic has accelerated the digitization of economies around the world. This is also the case in the Philippines, despite their slow Internet connection and poor telecommunications infrastructure. The faster pace of digitization here was corroborated at a forum hosted by this newspaper, where the Truck Management Association reported an increase in commercial vehicle sales this year, attributed to growth in consumer online shopping.
Most Filipinos find online shopping useful and convenient. CONTRIBUTED PHOTO
Unfortunately, criminals are also turning to digital. Earlier in March, government statements warned of cybercrime. A statement cited an investigation by TransUnion, a US company that has an office in the Philippines, where it claims to be the first full-scale private credit bureau.
A TransUnion survey showed that 44% of the roughly 40,000 websites and applications surveyed had been targeted by digital fraud. TransUnion’s website offers an update, saying that digital fraud attempts fell 59.4% in the second quarter of this year, compared to the same period in 2020. But some industries have reported a sharp increase in digital fraud attempts, including gaming, 51.4%, and recreation and travel, 198.5 percent.
Revise and update
Policymakers should review the e-commerce law, officially known as the Republic Act 8792. So much has happened since it was passed in 2000.
At the time, this was forward-looking legislation that would launch a digital commerce revolution. Unfortunately, its provisions on consumer protection appear insufficient.
The section on consumer protection has simply adopted the guarantees provided by an even older law, Republic Law 7394 or the “Consumer Law”. Its passage in 1992 was only a year before the World Wide Web was made available to the public.
Both laws need to be reviewed and updated to address loopholes exploited by unscrupulous people. The private sector should also do more to protect the interests of its clients.
For example, online shopping platforms allow merchants to use fictitious profiles. The anonymity of traders acts as a barrier against consumers, who might want to complain about wrongdoing to the authorities. Online shopping platforms allow consumers to file complaints and comments on their websites, but they should allow the public to seek legal recourse against shady traders when warranted.
This problem is related to cell phones, the device that most Filipinos use to access everything online. Cell phone users are familiar with spam messages, offering get-rich-quick opportunities and other racketeering.
Incidentally, we hope that the authorities have sufficient safeguards to protect personal data shared in contact tracing systems, both online and offline. Of course, there are plenty of other ways for crooks to gain access to personal data, much of which is shared on social media.
Certainly, some initiatives to fight digital fraud have been suggested.
A SIM card registry would be a good start.
Another would be to force online shopping platforms to follow KYC or Know Your Customer practices, especially for merchants selling on their websites. These shopping sites should also invest more in tools that prevent counterfeit products from accessing their platforms. While online shopping platforms cannot be stricter, lawmakers and regulators should add measures to force them to adopt the safeguards necessary to better protect consumers.
We understand how some online shopping platforms may have been eager to enroll merchants in their system, as it attracts more visitors to their websites. However, they must realize that their brand suffers when consumers are cheated or disappointed.
Getting fooled not only ruins Christmas, but also dampens the outlook for 2022 and beyond. The Department of Information and Communication Technology website says the transition to the digital economy could lessen the impact of the pandemic. The digital economy has the potential to increase the economic value of 5,000 billion pesetas by 2030, or about 27% of this year’s gross domestic product.
Good policies will help realize this potential. But outdated laws and lax policies can be rather disappointing.