Consumer protection

Trade Minister Bandula Gunawardana has outlined plans to upgrade Sri Lanka’s consumer protection legislation to bring it in line with challenges posed by increasing e-commerce and a growing gig economy. This is a positive step, but it will need larger support from inter-linked policy to be truly successful. 

One key discourse that has gained traction over the past year is how to make ride-hailing, food delivery and other platforms more accountable to both their users and partners. How can vast companies that do not maintain corporate offices in Sri Lanka be held accountable while promoting a vital part of economic growth? How can data be protected and who will have ownership? These are some of the reasons why consumer protection in the digital age remains an evolving topic in many countries. 

Technological developments, digitalisation and platformisation have provided consumers with new products and services, often provided free-of-charge, in exchange for personal data. Digital platforms have become powerful players in the digital economy and disrupted ways of doing business in many sectors. Online platforms provide a digital infrastructure for a variety of services, including e-commerce, internet search engines, social networks and application stores. 

Digital platforms have become indispensable not only for consumers but also for businesses. With regard to specific sectors, Amazon held an over 90% share in five different product markets in the first quarter of 2018, Facebook is the leading social networking website with a 68.95% share as at February 2019, and Google dominates the search engine market with an 89.95% share as at January 2019. 

E-commerce provides convenience and facilitates shopping for consumers. However, the online shopping experience comes with challenges. In 2017, UNCTAD identified the challenges faced by consumers, particularly in developing countries, which related to information on goods, services and traders; returns and refunds for products; data security; payments; and misleading and unfair business practices.

Consumer protection legislation should aim to be technology neutral; that is, its provisions should be effective regardless of the means of commerce. One of the key issues that is rapidly evolving is the liability of online platforms in consumer protection; that is, the level of legal responsibility of platforms in cases of breaches of consumer law by traders.

Another key aspect to consider in assessing the appropriateness of consumer protection legislation in addressing challenges in the digital economy is consumer data protection. The United Nations guidelines for consumer protection state that businesses should protect consumers’ privacy through a combination of appropriate control, security, transparency and consent mechanisms related to the collection and use of their personal data. Consumers are increasingly concerned about their privacy online and demand it be protected by governments. 

Sri Lanka is in the midst of rolling out its first data protection legislation that seeks to fine tune the contours of this discussion. It will also set the foundation for more widespread consumer protections, not just legally but also at policy level. The quest for stronger consumer protection in the digital age will have to be nimble and expansionary or it risks being outmoded or worse an actual hurdle to growth.