Unfortunately, in addition to the increases in transaction value and consumer number, the growth of e-commerce in Indonesia is also marked by an increase of disputes between business owners and consumers about issues such as failed transactions and fraud claims. Indeed, the Trade Ministry reported it received 9,393 complaints from e-commerce consumers throughout 2021, which is 10 times the number of complaints filed in 2020.

With numerous potential disputes arising from electronic transactions, Indonesian consumers need an easy, fast and affordable mechanism to resolve their disputes. Unfortunately, the existing dispute resolution mechanisms provided under the 1999 Consumer Protection Law seem unable to provide optimal consumer protection in the digital era, as this law has no provisions specifically on disputes relating to electronic transactions.

Challenges in the current consumer dispute resolution mechanisms

Following a problematic transaction, the first redress option by consumers is to submit a complaint through the business owners’ internal complaint handling mechanism. Should this option fail, the Consumer Protection Law offers two mechanisms: the litigation mechanism through court and the alternative dispute resolution mechanism through the Consumer Dispute Settlement Agency ().

The conventional litigation mechanism might not be the “best fit” to resolve e-commerce consumer disputes, mainly due to the small claims nature of the disputes. While the disputed amount may be small, litigation processes usually include additional costs, such as the administration fees, lawyer’s fees, or execution fees, which in total can easily exceed the value that is being disputed by the consumers, thus making it arguably inaccessible for consumers.

In response to such drawbacks, the Indonesian Supreme Court has introduced the mechanism of gugatan sederhana (small claims court lawsuits) designed to provide prompt, simple and affordable proceedings for any civil claims under the value of Rp 500 million. However, despite accommodating the small claims nature of e-commerce disputes, this mechanism can still prove problematic for e-commerce consumers living in a different area to the business owner since it requires disputing parties to be domiciled within the same area in order for lawsuits to proceed.

Fortunately, the Supreme Court has now allowed small claims court proceedings to be conducted despite the difference of domiciles if the plaintiff submits the lawsuit through a proxy/representative located within the same domicile as the defendant. However, regardless of said flexibility, the disputing parties are still required to personally attend all the relevant proceedings.

Alternatively, in relation to the litigation aspect, consumers with the same underlying issues and interests may also opt to file their lawsuits collectively to the court through the class-action mechanism. This mechanism may be deemed efficient since these consumers may appoint a single party to represent them at court hence reducing the representation-appointment formalities and costs. Moreover, such collective consumer action may increase the strength of consumers’ position against business owners.

However, in pursuing this class-action mechanism, consumers must ensure that their appointed representative does suffer direct losses from the same business owners of the presented disputes and therefore have the same interests as them, as proven by the transaction documents (e.g., agreements or receipts). Consumers may not be aware of these requirements and eventually get mistaken when appointing a lawyer or agency to represent them.

The second consumer dispute resolution mechanism featured under the Consumer Protection Law is alternative dispute resolution though conciliation, mediation or arbitration processes conducted by the BPSK, as agreed by the disputing parties. Similar to litigation, this non-litigation mechanism also sparks some issues.

To begin with, it is difficult for consumers and business owners to agree to settling their disputes through the BPSK. Even when they agree to do so, Consumer Protection Law sets arguably confusing provisions on the binding forces of the BPSK’s decision as the law states the BPSK’s decision to be final and binding yet allows the disputing parties to challenge said decision at the district court and the Supreme Court afterwards.

In fact, up to 80 percent of the BPSK’s decisions are overturned by the courts under the consideration that the  BPSK has no authority to rule over the presented disputes. Mostly, the overturning of the BPSK’s decisions occurs for disputes within the financial service sector, since the Financial Services Authority (OJK) has established a list of agencies for alternative dispute resolutions. This is interesting to note since the financial service sector also contributes to the high number of consumer disputes in Indonesia, including in this digital era.

Meanwhile, in terms of e-commerce, Government Regulation No. 80/2019 on trade through electronic systems stipulates that disputes related to e-commerce activities should be filed with the BPSK or other judiciary bodies in consumers’ domiciles. While better clarity seems to have been provided for e-commerce, the Consumer Protection Law has yet to provide clear specifications or limitations on the BPSK’s jurisdiction as it authorizes the BPSK to settle any consumer disputes and this might prolong the ongoing chaos of Indonesia’s consumer protection issue in the digital era.

Online approach to dispute resolution

It is important to re-emphasize that the nature of disputes in the digital era, including those in e-commerce, demand that the resolution process be brief, simple, affordable and accessible for all groups of consumers. Physical proceedings, which are still heavily utilized in the current process of dispute resolutions, lack the flexibility and accessibility of online proceedings. Without the need to attend dispute proceedings physically, consumers can choose where they may attend that could further reduce the inherent costs necessary to settle their disputes. Furthermore, the hassle in processing the submission of disputes may be significantly reduced as there is no longer a need for applicants to wait physically in courts.

The Supreme Court has actually implemented the e-court system (as accessible through https://ecourt.mahkamahagung.go.id/), which allows for the filing, payment and summoning of parties to be conducted by electronic means. The implementation of this innovation has been quite successful in driving the interest of parties to settle their cases in court as the number of e-court cases skyrocketed from 47,244 cases in 2019 to 186,987 cases in 2020. This number also shows that the accessibility provided through online means may encourage consumers to seek out redress and settlement of their dispute. However, courts must prepare well to handle a rapid surge in the case number, which could lead to a backlog of cases and further jeopardize the consumers’ means of protection.

In relation to e-commerce specifically, Regulation 80/2019 has already mentioned that the disputes may be resolved electronically hence acknowledges the online dispute resolution mechanism. While resolution through the litigation avenue may rely on provisions on an e-court system as mentioned earlier, there is not yet any elaboration on this matter for non-litigation mechanisms. Indeed, the BPSK and other alternative agencies that may also handle dispute resolutions have not yet employed such online measures in handling their disputes. Consumers are still required to conduct conciliation, mediation or arbitration through conventional means. This is unfortunate as the world is already developing online dispute resolution mechanisms as a way to further improve the alternative dispute resolution process.

The future of consumer dispute resolution

The previous section elaborated on a number of issues that should be resolved to provide better protection for Indonesia’s consumers in this digital era, as it may be reflected from the e-commerce sector. Since they are rooted from the current provisions of Indonesia’s Consumer Protection Law, the simple answer to the given issues is at least the revision of the law itself. The revision should at least accommodate the better details on specific characteristics of disputes that are related to transactions in the digital era so it can then arrange more accurate and more harmonized dispute resolution mechanisms, as well as details on online dispute resolution mechanisms.

Aside from a revision of the Consumer Protection Law, all the relevant stakeholders must also take the necessary measures to ensure better protection for Indonesia's consumers in this digital era. For instance, government or nongovernmental agencies need to actively promote their online complaint systems (e.g., the Trade Ministry’s SIMPKTN, the BPKN app and the OJK’s APPK) and enhance the role of the BPSK in consumer dispute resolution. Business owners also need to strengthen their internal complaint handling mechanisms with the aim of further reducing the number of complaints that escalate into disputes. Ultimately, consumers also need to be aware of the existing dispute resolution procedures and educate themselves on the mechanisms to lodge their complaints within these respective resolution procedures.

The implementation of the abovementioned measures will hopefully provide Indonesian consumers with better protection in the digital era. 

This opinion piece is prepared by Sinatrya Primandhana, editor of the Legal Research and Analysis Division at Hukumonline, in cooperation with Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) through the Consumer Protection in ASEAN (PROTECT) project.

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