The Financial Express

Protecting consumers from e-business spoilsport

Protecting consumers from e-business spoilsport

That the ongoing pandemic has many faces is evident from bizarre occurrences worldwide. While Covid nationalism, business contraction, and job losses are some of the broad markers besides of course the mounting death toll all over, crooked business practices--- some of which were unheard of in our part of the world --- are also on the rise. The boom in e-commerce, thanks to the series of shutdowns and health protocol requirements, has proved to be a hunting ground for some crooks to cash in on the situation in the name of online selling. Names such as Evaly, e-orange, unheard of even months back, are doing the rounds in the media as alleged masterminds in the spoilsport.

From the practices of e-purchases in the country, it appears that there are two distinct formats through which the business operations are run. For most households which prefer to get things delivered to their doorsteps, the practice is 'cash on delivery'. The products range across huge varieties of consumer items --- from ready-to-eat food stuffs, processed foods, grains, vegetables, fish, meat as well as scores of other household necessities. These are procured locally by the e-companies, stored in their warehouses and delivered as and when orders are received. Normally, the delivery is done pretty quickly, and according to most consumers the practice under this format is going on fairly well. There are occasional instances of delay or delivery of wrong products which do not pose any major problem. Wrong products can be replaced with the right ones. Delay counts on the services of the companies for which their business will suffer, which no one is supposed to invite. The other format of e-purchase is about asking e-platforms to procure products from abroad at prices suitable for them-- usually high value products. The difference in the two formats is that while the former operates on cash on delivery, the latter on advance payments-- partly or in full. It is here that many buyers do not get to see their products as the e-platforms seek more and more time holding their money. It has been reported that the amounts held back by some e-platforms have already crossed billions of taka. At a virtual meeting a few days ago, industry stakeholders and experts said that holding Tk 40 to 50 billion by only a few e-commerce platforms was not only a crisis for the business but also a crisis for financial regulation. No business entity except banks can hold clients' money for an uncertain period of time.

It got reported in the media that one of the firms is accused of embezzling nearly Tk 3.39 billion of customers' money paid in advance on special deals and discounts. The Commerce Ministry, it has been learnt, has written to the Anti-Corruption Commission (ACC) asking the agency to launch an inquiry against the online marketplace over its alleged cheating. In an inspection report submitted to the Commerce Ministry in June, the Bangladesh Bank said total liabilities of the e-platform stood at Tk 4.0718 billion. After receiving Tk 2.1394 billion in advance from customers and Tk 1.8985 billion from merchants, the company was expected to have at least Tk 4.0380 billion in current assets, but it only had Tk 6.517 million. The obvious question therefore is, where has the money gone? The company will, at its best, be able to deliver goods or return the money to only 16.14 per cent of the customers with its current assets. The company will not be able to clear its remaining dues owed to customers and merchants.

According to experts, this has happened because of the absence of any binding legal framework that, as they say, should have been in place to ensure avoidance of malpractices. Instead of the legal framework necessitating obligations and compliance, e-commerce business in the country is run by administrative regulations.  There are guidelines issued by the central bank and the commerce ministry, which are too general in character and do not particularly refer to precise activities that are prohibitive. 'The Digital Commerce Operations Guidelines, 2021' issued by the commerce ministry says that the existing laws of the country will apply to all digital commerce operations. Clearly, this is too inadequate to create a pathway for e-commerce operations, especially about do's and don'ts. It is not understood why the government did not enact a law to bring order in such operations given its spectacular growth since the pandemic outbreak.

At a time when digitisation is a government-announced goal in the country, emergence of digital businesses is no doubt most welcome. Because of the pandemic related restrictions, particularly on human mobility, digital business, especially online purchase, has significantly increased as consumers have responded eagerly to embrace the new mode of shopping.  Consumers greatly benefit from the e-platforms that are doing their job professionally and honestly. However, allowing things to roll out with some legally binding regulations would have contributed to further expansion of the business in a targeted manner. One hopes the government will take up the matter and formulate a legal framework in consultation with the stakeholders for the mutual benefit of both e-platforms and consumers.


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