In a catch-22 situation, Pakistan is all set to reap the dividends of the digital economy, but its consumer protection regulatory framework is insufficient, inefficient, ineffective and outdated, making it hard for consumers to trust the digital market.
This has been flagged by the first-ever E-Commerce Policy Framework released by the federal Ministry of Commerce by saying that as the success of an e-commerce model depends on consumer confidence, consumer protection is one of the core issues confronting its growth. In terms of efficiency and effectiveness, the legal framework for consumer protection has to be improved proportionately to the increase in the size of the e-commerce market.
In Pakistan, 159 million consumers using mobile phone and 68.24 million subscribers of fixed broadband are exposed to e-commerce.
The e-commerce framework is part of last year’s Digital Pakistan Policy of the Ministry of IT & Telecom. Other ministries such as agriculture, law and justice, interior, food security, and health have to come up with strategies to support the Digital Pakistan Policy.
The e-commerce framework was made public last month. However, its implementation seems to be a daunting task, given the fact that it aims at revamping the whole traditional trade system from top to bottom. And also that the digital marketplace is not restricted by national boundaries but is global.
An e-commerce transaction is the sale or purchase of goods or services conducted over computer networks by methods specifically designed to receive or place orders. E-commerce can be business to business (B2B), business to consumer (B2C), consumer to consumer (C2C), or peer to peer (P2P).
The Digital Economy Report 2019 of UNCTAD says that measuring the digital economy and related value creation and capture is fraught with difficulties. Firstly, there is no widely accepted definition of the digital economy. Second, reliable statistics on its key components and dimensions, especially in developing countries, are lacking.
The Pakistan policy vision is to create an enabling environment for the holistic growth of e-commerce across all sectors of the country while protecting the interests of consumers and sellers with particular focus on development and promotion of SMEs, for making Pakistan a significant player of the regional and global digital economy.
Globally there is a fast growing market of Internet of Things (IoT). IoT refers to the growing array of internet-connected devices such as sensors, meters, radio frequency identification (RFID) chips, and other gadgets that are embedded in various everyday objects enabling them to send and receive multiple kinds of data.
The Digital Economy Report records that the global IoT market is expected to grow tenfold, from $151 billion in 2018 to $1,567 billion by 2025, an average connected person in the world will interact with IoT devices nearly 4,900 times per day or the equivalent of one interaction every 18 seconds. This represents an exponential increase in comparison to 298 times per day in 2010 and 584 in 2015. Such rapid growth in the use of IoT will generate a further expansion of digital data.
Consumer International (CI), a global umbrella body of consumer organizations, is apprehensive that testing by consumer organizations has revealed dangerous weaknesses in a range of connected products, from children’s toys and connected watches to connected TVs and fitness trackers. Such vulnerabilities create a risk of exposing the device itself (eg, a connected home lock being disabled) and to personal data (eg, information being shared with unauthorized third parties).
Regarding e-retail, CI says that despite the benefits and convenience of online retail, many don’t trust it. Half of the people with internet access who choose not to shop online say it is because of a lack of trust. Trust in these platforms might be lost through unexpected and unwarranted costs, illegal and fraudulent scams or unfair, unclear, and confusing business practices.
To address this lack of trust, it is vital that authorities take action to prevent scams. But legislation alone will not solve these problems. Companies also need to take responsibility for how they sell to consumers. They must have clear terms and conditions, fair pricing, and good redress procedures, the CI warns.
Pakistan’s framework also recognizes the need to evolve digital consumer protection saying that existing consumer protection laws in Pakistan do not contain specific provisions for addressing concerns of consumers transacting in a digital environment.
In Pakistan, the first-ever consumer protection law was enacted in Islamabad in 1995. Later, Khyber Pakhtunkhwa, Balochistan, and Punjab followed suit in 1997, 2003, and 2005, respectively. Sindh passed its Consumer Protection Act in 2014 after an earlier ordinance lapsed.
However, the law cannot be fully implemented until the bureaucracy comes up with rules. Islamabad took 16 years to frame regulations that are still not enforced. Balochistan and Khyber Pakhtunkhwa are also without rules while a case is pending in the Sindh High Court about the enforcement of the law. In Punjab and Khyber Pakhtunkhwa, however, consumer councils and courts are working at provincial, divisional and district levels.
All these laws have an almost similar definition of the consumer: a person or an entity that buys or obtains on lease any product or hires any service for their personal or family use. However, this definition does not include the e-consumer.
The provincial and district level council, which draws its members from the government, the business community, and civil society, has a critical role in formulating local policies for the promotion and protection of the rights of consumers. It is supposed to ensure fair and honest trade practices by manufacturers, producers and suppliers of goods and services. It is also expected to coordinate among the government, manufacturers, producers, suppliers, and consumers. However, no information is available whether these councils are active and what their contribution towards consumer protection is.
Another important aspect of consumer protection is the ‘dispute resolution mechanism.’ This policy framework proposes that it should be mandatory for all online businesses to provide for efficient customer support and dispute resolution mechanisms, and that federal and provincial governments should make arrangements to establish independent, alternate dispute resolution centers for expeditious settlement of disputes.
The framework also talks of establishing e-courts for quick processing of consumer cases and their disposal efficiently and effectively.
Concerns about data can contribute to a lack of trust in e-commerce. In a 2017 KPMG online shopping survey of more than 18,000 consumers in 50 countries, 41 percent of respondents said that having control over how their data is used was more likely to make them trust a company.
Many countries, especially developing countries, do not have laws or regulations concerning data protection and privacy, thus leaving consumers completely unprotected in the face of breaches of privacy. According to the UNCTAD Global Cyberlaw Tracker, 57 percent of countries have data protection and privacy laws.
In Pakistan, laws relating to data protection can only be found in fragments under different legislations. Only recently, a Personal Data Protection Bill was tabled in parliament, but it is yet to be promulgated.
However, in its very first step toward the implementation of the framework, the commerce ministry has flunked. The top federal and provincial e-councils have representation from public and private businesses but no representation of the consumers.Nadeem Iqbal, "Protecting e-consumers," The news. 2019-10-28.
Keywords: Economics , Digital economy , Food security , Trade system , Commerce sector , Global economy , Commerce ministry , Cyber-law tracker , E-commerce