Christian Daniel P.

Villanueva MBA-JD/ 10787070

Consumer issues in the e-commerce industry in the Philippines

Even though Filipino consumers are aware of the risk of the possibility of being deceived over the Internet, there are still a number who engage in online purchasing and eventually end up being aggrieved. In June 2012, the National Bureau of Investigation has received several complaints from consumers who have been conned by a certain groupbuying site, whose office closed down and the owne rs whereabouts are unknown without resolving the problem with its customers (Mukamo, 2012). The Department of Trade has also recently warned the public due to rising complaints over group-buying sites. Online forums like

pinoymoneytalk and a number of blogs that post about experiences of online consumers have noticed an increase in the number of irate customers (Cuevas-Miel, 2012).

Problems that are being faced by consumers online are not very different from those that are experienced in offline transactions but it may considered that online consumers have special needs, such as the issue of privacy (Huffman, 2004). Also consumers purchasing from the brick and mortar stores have the opportunity to inspect the items and to see for themselves the trustworthiness of the seller, as well as the product. On the other hand, in online transactions, consumers are forced to proceed on faith, knowing very little about the product or the seller, to whom they are entrusting a variety of information, including credit information (Huffman, 2004).

Huffman (2004) also presented usual consumer issues that deserve protection, such as information deficiencies; after sales difficulties; fraud and unethical conduct; problems with privacy issues; making payment over the Internet (Huffman, 2004).

According to a short survey conducted by the writer among 102 consumers in Metro Manila, the three most common consumer issues in the e-commerce industry in the Philippines are deceptive representation, security in online payment transactions, and data privacy.

The survey results showed that 88 participants check the Internet first before purchasing, while 73 out of these 88 (83%) participants actually purchased items online. For the purpose of this paper, these 73 participants represent the online consumers. Trust and security issues and the preference of actually seeing the items are the main reasons why 29 of the total participants have not purchased online.

Significantly, 55 of the 73 online consumers do not generally feel secure in making purchases online. Some have indicated the fear of being deceived is always there.

Seventy percent have experienced smooth transactions in online purchasing, while the rest has already had a bad experience, five of whom have stated that they have experienced it more than once. The most common problems they had encountered are the misleading promotions in group-buying sites, followed by security in online payment and the risk of data privacy loss.

1. Deceptive representation

Sometimes, online stores post advertisements or statements that tend to mislead consumers, especially in group-buying sites nowadays. Consumers rely on these representations in buying certain products online, as they are not able to personally check them. For instance, they would state that there is a difference in price between the regular prices in malls and their promotional prices, but in reality, no such savings existed or that only a portion of the stated savings is true.

2. Security in online payment transactions

Filipino consumers still have this apprehension that online purchases still lack the necessary guarantee in their payment transactions that pulls them back from engaging in the e-commerce industry in the country. While they use the Internet to check out goods and other items, they still prefer to meet sellers offline and pay cash personally. While most Filipinos already own credit cards and debit cards, there are still those who are not comfortable using them in online purchases.

3. Data privacy

When purchasing online, particular personal information are required to complete the purchase, such as the complete address for delivery, cell phone or landline numbers for contact and credit card information for payment. Most Filipino consumers are hesitant to

provide such information online as privacy on the Internet posts greater risk. Such information, when not properly kept may be easily used to commit fraud.

Conclusion and Recommendation

Generally, Filipino online consumers feel unsecured in engaging in online purchasing transactions. Thus, to help turn offline retail sales into online retail sales in the Philippines, this negative feeling must be avoided. One way of doing this is to assure consumer protection through legislation enacted by the government.

The Philippines is rich with good laws that are aimed to provide consumer protection, such as the Consumer Act and the recently enacted Cybercrime Prevention Act. Regrettably, the majority of Filipino

consumers are not aware of these laws and this lack of knowledge pulls down their confidence in engaging in online transactions. Thus, having awareness of these laws will create a more trusting environment for ecommerce to flourish in the country, which in turn will influence Filipino consumers to feel more comfortable in transacting online and persuade them to be more involved.

The issues of online consumers in e-commerce are actually addressed by laws that have already been in place even before the emergence of e-commerce in the country. But still, there is still lack of trust in e-commerce transactions. Since the Philippines has significantly enacted a number of adequate laws that provide consumer protection, the problem might therefore lie in the implementation of these laws to give consumers better protection in this more complex marketplace. Hence, the establishment of a clearer mechanism for an effective implementation of the consumer laws in the country is highly recommended. The

emergence of e-commerce created the need for a framework that will

provide consumers with effective protection.

Nonetheless, it is not

enough that Congress enacts laws to address issues surrounding online consumers. implemented. Problems usually arise when the law is not properly

Furthermore, to help e-commerce flourish in the country, the government needs to create a trustworthy environment to give Filipino consumers the confidence and trust to transact online. The use of trustmarks, as well as https or a padlock sign when entering ones personal information and payment details, and others, such as partnerships with a reliable logistics service provider, are helpful mechanisms in this certain aspect. A joint effort between the government and the private sector may also help.

Equally, while direct government regulation may sometimes be necessary, it is more often not the best solution to consumer protection problems. The government may enhance online consumer protection through more comprehensive consumer education, advocacy programs, and awareness raising activities. In this regard, consumers must not only rely on the government to provide them protection. They must also do their own part in taking a caveat emptor stance. They also need to be meticulous and vigilant when transacting online. Likewise, consumers need to learn to read the fine print, ask questions, do research, investigate and ask others.

Reference: Mukamo. (2012, June 6). CleverBuy (cleverbuy.com.ph) closes amid scam complaints. Retrieved December 17, 2012, from Mukamo Filipino

Blog and Forum: http://www.mukamo.com/cleverbuy-cleverbuy-com-phcloses-amid-scam-complaints/

Cuevas-Miel, L. (2012, July 16). Complaints mounting on group-buying sites, DTI warns public. Retrieved December 17, 2012, from InterAksyon: http://www.interaksyon.com/business/37589/complaints-

mounting-on-group-buying-sites-dti-warns-public

Huffman, H. (2004). Consumer Protection in E-Commerce. Cape Town.