Law on cards to put a leash on errant e-commerce firms

Amid rampant irregularities and embezzlements in the country’s mushrooming e-commerce sector, the government has prepared the draft of a law to regulate the industry with provisions for fines and jail times.

Currently, there is no separate act to regulate this sector but the Commerce Ministry’s Central Digital Commerce Cell monitors and regulates it.

The draft act, titled “Digital Commerce Act 2023,” has already been completed and sent to different stakeholders for their opinions before it is finalised, officials concerned said.

Its necessity came under the spotlight and the ministry moved to formulate it after the sector saw dozens of high-profile embezzlements, money laundering and rampant irregularities in recent years.

The lack of proper supervision under a specific law has resulted in ineffective actions failing to prevent the crimes from happening again and again.

“The government has been working to prevent these crimes. However, due to the complexity of some laws, concrete steps could not be taken. This is why the new digital commerce law is being prepared,” Senior Commerce Secretary Tapan Kanti Ghosh told The Business Post.

“The draft law will be finalised based on the opinions of all parties concerned and then we will send it to the Cabinet Division,” he said.

He believes that once enacted, the new act will easily solve many problems in the e-commerce sector. “There will be order and the sector will gain new momentum.”

What is in the draft?

The draft of the Digital Commerce Act has defined “digital commerce” as a trade that is done using digital media, the internet and information communication technology.

According to the draft, companies will be fined three times the value of goods and services if they fail to deliver within the specified time. Non-payment of the fine will result in a maximum of three months of imprisonment.

It also states that sellers must disclose accurate information about the description, size and measurement of goods and services in the digital marketplace. In case of providing false information, the seller or the owner of the marketplace will be punished with a maximum of three years of imprisonment and a fine of Tk 5 lakh or both.

Besides, the draft states that advertising illegal goods and services for sale in a marketplace or organising online gambling and betting will be punishable with up to three years in prison or a Tk 3 lakh fine or both.

Moreover, the draft also criminalises issuing lotteries, creating digital wallets, and creating and selling cash vouchers without permission from the authorities concerned. Doing so will result in imprisonment of up to six months or a Tk 2 lakh fine or both.

The same penalties and fines have been put in place for using non-registered transport and logistics service providers as well.

Under the draft law, operating a website and/or Facebook page without displaying a Digital Business Identity (DBID) will be punishable with one-year imprisonment or a Tk 5 lakh fine or both.

Formation of new authority

The draft law includes a provision for the formation of a new digital trade authority to properly implement the act.

The administrative body will conduct operations under the Commerce Ministry. It will have a director general and three directors. Its head office will be in Dhaka but will have branches across the country.

It will take necessary and remedial measures to prevent the rights of buyers and sellers from being undermined in digital trade.

Apart from this, the authority will also take action against fraud, failure to maintain quality of goods and services, rigging in weight and measurement, fake products, expired and adulterated mixtures, and storing and selling products that are dangerous to human life and health.

Mandatory registration

Meanwhile, according to the draft, a company must register itself with the authorities concerned within the prescribed time to conduct digital business. Banks, mobile banking institutions and payment gateway companies cannot enter into transaction-related agreements with unregistered organisations.

Organisations providing goods transport and logistics services must be registered in line with the mailing operators and courier services law, which is also in the pipeline for passage to become a full-fledged act.

However, registration will not be required for a company’s own transportation services. But e-commerce companies must have an agreement with the registered transportation service provider.

Also, companies must have their own warehouses with product storage and parcel tracking systems.

Payment methods

The draft law allows customers to pay in advance or cash on delivery at their convenience. It states that all digital market platforms or online sellers will have to have both types of systems for customers.

Customers will also be able to use a Bangladesh Bank (BB) approved credit card, debit card, digital fund transfer, and mobile financial service for advance payment.

However, money cannot be deposited directly in the bank accounts of a marketplace or an online seller.

The seller company has to have a contract with a payment gateway for the payment. The amount paid by the buyers will be transferred through the payment gateway.

Purchase limits

According to the draft, businesses will have to specify the maximum purchase order that can be placed for the products and services displayed for sale.

However, for daily essentials, the maximum purchase order limit is five per product, and for luxury goods, the limit is two. Provided that, if the value of luxury goods is less than Tk 1,000, the limit has been set at five per product.

Buyers may make purchases for personal use only.

Furthermore, there should be an opportunity for customers to lodge complaints on digital platforms or websites. Sellers shall resolve the complaints within 72 hours and notify the complainant afterwards.

Cross-border trade

According to the draft law, all digital commerce companies will be able to conduct cross-border business.

It said BB will issue necessary policies and circulars regarding payment and acceptance of goods and services for conducting cross-border trade.

The central bank’s policies and circulars should be followed in terms of payment and repatriation of the value of the goods sold. In the case of importing goods from abroad, the Import Policy Order of the Commerce Ministry will have to be followed properly.