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Protecting consumer rights in the digital epoch
The government must employ a two-prolonged strategy of regulatory enforcement and financial education to ensure the protection of consumer rights.
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At a click: Online marketplaces and food delivery services have become a lifeline for making additional incomes during the pandemic. (Unsplash/Edi Kurniawan) (Unsplash/Edi Kurniawan)
T
he e-commerce and financial technology (fintech) industries have significantly altered consumers’ relationships with business owners across the globe. Indonesia is no exception, having one of the highest rates of e-commerce adoption in the world, with as much as 90 percent of its population being internet users aged between 16 and 64, engaging in online transactions.
The value of the country’s e-commerce industry topped Rp 401.25 trillion (US$25.7 billion) in 2021 with a transaction volume of $1.73 billion, while fintech generated $63.59 billion in 2021, led by digital payments, neo-banking, digital investments and alternative financing.
In 2021, the Indonesian Consumers Foundation (YLKI) noted that complaints against financial services institutions accounted for 49.6 percent of all complaints received, with around 22 percent related to illegal peer-to-peer (P2P) lending companies.
E-commerce followed closely behind for the second largest amount of complaints received at 17.2 percent, mostly related to delivery and shipping, ranging from failed receipt of the products ordered and to product quality.
While the government has made efforts in updating regulations to cater to the complicated web of the digital economy, significant improvements are still needed in effective regulatory enforcement.
Preventive measures through consumer education and better financial literacy are also necessary to ensure consumer protection, which is at this time mainly addressed by Law No. 8/1999 on Consumer Protection that details the rights and obligations of consumers and sellers.
The law came into force in April 2000, decades before digital transactions began to boom. The government has since, however, adopted new laws and regulations to keep up with the industry’s dynamic and rapid development.
