Regulating the Digital Marketplace: The Impact of the Internet Transactions Act on E-Commerce

Republic Act No. 11967, also known as the Internet Transactions Act (ITA), was signed into law on December 5, 2023, by President Ferdinand Marcos Jr. This landmark legislation is designed to protect both online consumers and merchants engaged in Internet transactions while promoting the widespread adoption of digital commerce across the Philippines. By fostering trust in e-commerce and regulating digital platforms, the act aims to create a secure environment for online transactions in the country.

Key Provisions of the ITA

• Consumer Protection: Consumers have the right to access detailed information about the products or services they purchase online, including seller details, product descriptions, and transparent pricing. The law also grants consumers the right to seek redress through the E-Commerce Bureau’s Online Dispute Resolution (ODR) system, allowing for faster resolution of conflicts.
• Mandatory Registration: Both local and foreign digital platforms and online merchants are required to register with the E-Commerce Bureau (ECB). This registration ensures accountability and provides consumers with added protection when transacting online.
• Liability of Platforms and Merchants: Digital platforms are held subsidiary or solidarily liable with online merchants for damages suffered by consumers due to transaction-related issues. Failure to adhere to the required code of conduct may result in civil or administrative penalties.
• Penalties: The ITA imposes penalties ranging from ?50,000 to ?500,000, with further penalties including the suspension or revocation of business permits for non-compliant platforms and merchants.

Creation of the E-Commerce Bureau (ECB)

A cornerstone of the Internet Transactions Act is the creation of the E-Commerce Bureau (ECB) under the Department of Trade and Industry (DTI). The ECB is tasked with regulating digital commerce, overseeing the registration of platforms and merchants, and providing a dispute resolution mechanism through the ODR system. Undersecretary Mary Jean Pacheco emphasized the ECB's pivotal role in ensuring accountability, transparency, and consumer protection in the growing e-commerce sector.

The Evolution of the Philippine E-Commerce Roadmap

The journey toward a robust digital economy has been shaped by several key milestones, with each E-Commerce Roadmap contributing to the country’s development.

The 2016 E-Commerce Roadmap laid the groundwork by focusing on infrastructure development and raising consumer awareness. This roadmap became critical during the COVID-19 pandemic when businesses needed to pivot rapidly to online operations, resulting in a significant rise in digital transactions.

Building on these successes, the 2022 Roadmap, with the slogan “Basta e-Commerce, Madali”, focused on making e-commerce accessible to all, especially for small businesses. It emphasized digitalization, logistics integration, and expanding market access to ensure that e-commerce became mainstream.

Now, the 2028 Roadmap sets ambitious goals, such as doubling the number of e-commerce enterprises from 2 million to between 4-6 million and driving significant growth in Gross Merchandise Value (GMV). These goals reflect the government’s commitment to inclusivity by promoting e-commerce participation among marginalized sectors like women, PWDs, and rural entrepreneurs.

How the Internet Transactions Act Supports the Roadmap

The Internet Transactions Act (RA 11967) complements the goals of the 2028 Roadmap by addressing the regulatory challenges associated with rapid e-commerce growth. By establishing the E-Commerce Bureau, the ITA creates a legal framework that enforces the roadmap's goals, particularly in ensuring that platforms and merchants comply with best practices and regulations.

This regulatory framework enhances consumer trust by holding digital platforms accountable, thus ensuring fair practices and safety. The ITA's emphasis on transparency and consumer protection aligns with the broader goals of the roadmap, ensuring the sustainability and growth of the e-commerce sector.

ITA’s Alignment with Other Laws

The Internet Transactions Act builds on earlier legislation, creating a comprehensive approach to regulating digital commerce:

• E-Commerce Law (RA 8792): Enacted in 2000, this law recognized electronic contracts and transactions. RA 11967 expands on this foundation by addressing the complexities of modern e-commerce.
• Data Privacy Act (RA 10173): The ITA strengthens data privacy by promoting secure data storage and transmission practices, ensuring compliance with the Data Privacy Act to safeguard consumer information.
• Anti-Cybercrime Law (RA 10175): By promoting fair business practices and reducing opportunities for fraud, the ITA also supports the goals of the Anti-Cybercrime Law, helping create a safer online environment for consumers and businesses alike.

Creating a Trustworthy and Inclusive E-Commerce Ecosystem

One of the key objectives of the Internet Transactions Act is to build trust in online transactions through initiatives such as the creation of an e-commerce trustmark, which will help consumers identify legitimate sellers and platforms. Furthermore, the law promotes inclusivity by ensuring that the benefits of e-commerce extend to marginalized groups, including women, persons with disabilities, and senior citizens.

The ECB will also play a role in educating society on cybersecurity risks and promoting safe business practices. This helps develop a safe and robust digital economy that can withstand cyber threats and encourage broader participation in e-commerce.

A Path Toward Digital Transformation

In conclusion, Republic Act No. 11967 represents a significant milestone in the Philippines' journey toward becoming a fully digital economy. With the establishment of the E-Commerce Bureau, the country is better equipped to regulate the growing e-commerce sector, protect consumers, and ensure that digital platforms operate within a clear, fair regulatory framework.

The Internet Transactions Act complements existing legislation, including the E-Commerce Law, Data Privacy Act, and Anti-Cybercrime Law, and is expected to play a critical role in the continued growth and innovation of the Philippine digital economy.