Daraz at odds with govt over campaign to woo customers

Daraz, one of the largest e-commerce platforms, is in dispute with the government over one of its campaigns to attract customers.

Replying to a show-cause notice served by the commerce ministry on November 11, it said it had not violated the law while running the 11.11 campaign from November 1.

But the ministry said the company had clearly breached the law.

In the notice, the ministry sought explanations for why legal action would not be taken against the company for the campaign.

Daraz Chief Corporate Affairs Officer AHM Hasinul Quddus (Rusho) said in the reply the company had not violated the Digital Commerce Management Guidelines, the Competition Act, the Consumers’ Right Protection Act, and the Contract Act.

He said the campaign involved no gambling or lottery.

Besides, he said the 1-taka game under the campaign is a free participation quiz contest, which is essentially a skill-based game where the winner is selected among the participants on the basis of the earliest submission of the correct answer.

That is why there is no scope for the 1-taka game to fall under the ambit of lottery, he said.

He also said Daraz had not received any observation or objection from the ministry until the seventh day of the campaign on November 7. Till then, the company had handled all promotional activities and borne the related expenses.

Daraz had grown a legitimate expectation to run the contest based on the above mentioned facts due to the absence of any objection or restriction from the ministry. Also, despite the accrual of the legitimate expectation, Daraz stopped the contest on November 11, Rusho said.

The commerce ministry notice asked the company to reply within three working days, but Daraz replied on November 18.

The company said it always respects the law and regulations and had duly notified the commerce ministry, the youth and sports ministry, and the home ministry about its intention to run the 1-taka game prior to any communication or promotion of the campaign.

A commerce ministry official told The Business Post Daraz had violated the law as it had sought permission from the ministry to run the campaign on October 6.

“But they ran the campaign without receiving the permission,” he said.

He said the ministry in a notice on November 4 asked Daraz not to continue the campaign, which included offers such as the 1-taka game and spin the wheel.

But the company continued the campaign even after that, he also said.

“That is why the ministry served the show-cause notice on November 11. Replying to that, the company said it had run the campaign last year. But the Digital Commerce Management Guidelines were formulated on July 4 this year.

“The guidelines say e-commerce companies cannot arrange raffle draws or lotteries without the government’s prior permission. If a company does not comply with this, Section 294(B) of the Penal Code 1860 will be applicable to it,” he explained.

Section 294(B) of the Penal Code 1860 says such acts will be punishable with imprisonment of either description for a term which may extend to six months or fine or both.

The guidelines define a lottery as the process of randomly selecting winners on the basis of any ticket or number and making them economically beneficial.

Meanwhile, the competition commission is investigating the activities of Daraz. “The Daraz campaign could be against the rules of competition. We will take necessary action after the investigation,” Md Mofizul Islam, chairperson of Bangladesh Competition Commission, told The Business Post.

Ahsanul Karim, an advocate of the Supreme Court specialising in company and commercial law, told The Business Post there are business laws, but many companies do not follow those.

“Daraz breached the law by running the campaign. The government can take action in this regard.”

He also said the government should look into how Daraz imports goods and the payment system. “They should also investigate the possibilities of tax or duty evasion in importing goods.”

Daraz in its reply to the commerce ministry notice said it had been running the 11.11 campaign every year since 2018, the year it became a part of the signature shopping event of Alibaba to celebrate the Singles’ Day among the China-based company’s entire ecosystem around the world.

In Bangladesh, 11.11 is celebrated by conducting various gaming contests, including the 1-taka game, to give customers a unique digital shopping experience in an attempt to increase digital literacy, the company said.

It also said it had not operated the spin the wheel contest this year following the instruction of the commerce ministry it received on October 19.

Moreover, for the 1-taka game, the modality was that participants would take part in an interesting quiz contest by paying a nominal participation fee of Tk 1, which Daraz would refund after the end of the campaign.

It said it had already instructed payment partners and initiated the refund of Tk 1 to participants.

On November 3, at a meeting with the ministry in the presence of e-CAB, Daraz was advised by the ministry not to take Tk 1 as registration fee from participants to avoid any confusion.

“In compliance with that, we acted promptly and declared free participation in the game from November 3,” the company said in the reply.

Daraz wrote to the ministry on November 8, saying it had changed the modality of the game complying with the ministry guidance.

It also urged the ministry to provide the specific relevant provisions of the relevant acts that the latter believes the company had violated so that it could reassess its position and take remedial steps, if necessary.