The International Institute for Sustainable Development reported that “E-commerce has grown significantly in recent years. E-commerce retail sales, estimated in 2020 at USD 4.25 trillion, make up a growing share of total retail sales and could rise to nearly a quarter by 2025. The Covid-19 pandemic has accelerated this trend, which is expected to persist as consumers continue to alter their shopping behaviour.” Bhutan is no exception, particularly when it comes to informal e-commerce. However, only a limited number of e-commerce businesses in Bhutan are currently regulated, posing serious vulnerabilities for consumers due to rampant emergence of unregulated e-commerce.

With the drastic increase in the use of digital platforms, especially social media apps, hundreds of thousands of products and services are posted online, primarily on platforms like Facebook, Instagram, and even Telegram. This unregulated sector encompasses a wide range of goods, including used vehicles, furniture, household items, beauty products, and jewellery. Unfortunately, along with this growth, there has been a corresponding increase in reports of frauds and scams, disproportionately affecting vulnerable groups such as farmers and the semi-literate population.

While regulated e-commerce entities with trade licences can be held accountable, informal e-commerce enjoys complete impunity due as they are completely unregulated. The existing e-commerce regulations primarily target registered businesses and those operating without registration freely engage in complex and non-transparent practices, including undisclosed pricing and incomplete product information since they have no obligation under consumer laws and regulations. 

The lack of regulation in informal e-commerce puts consumers at a disadvantage when making informed decisions. As a result, consumers are frequently compelled to purchase products and services without adequate details, driven by false claims of limited availability or superior quality. Such unregulated behavior denies consumers their right to life, health, and safety in the consumption of goods and services. Additionally, they are deprived of true, sufficient, clear, and timely consumer education, including information on pricing, product characteristics, quality, and associated risks. Moreover, they are denied fair and equitable treatment, including reasonable terms of contract and fair price.

The absence of regulation further undermines consumer rights enforcement, leaving consumers without recourse against misleading and false representation, safety concerns, guarantees, and other issues. Consequently, consumers have no access to dispute settlement mechanisms or compensation when they fall victim to such unfair practices.

Despite the challenges, there are legal provisions that can be utilized to address the issues surrounding informal e-commerce. Section 19 of the Contract Act of Bhutan recognizes all forms of agreements or transactions unless specified otherwise by specific laws. This provision allows for the enforcement of consumer agreements under the Contract Act.

To safeguard consumers, the Competition and Consumer Authority should establish rules that hold informal e-commerce operators liable for damages resulting from their transactions. Additionally, administrative penalties must be imposed to deter non-compliance. The Revenue and Customs Office must also explore ways to ensure that these informal e-commerce entities, pay their fair share of taxes specially those generating significant revenue. Without these measures in place, more people will go online using social media not only to sell their products without liability but also to evade taxes.

Therefore, regulating informal e-commerce has become urgent to for protection of consumers, particularly those vulnerable and disadvantaged consumers. This will also help enforce consumer rights and ensure fair treatment of all business entities, whether informal or formal. Implementing effective regulations is a necessary step towards addressing challenging modern economy.

Sonam Tshering

Lawyer, Thimphu

Disclaimer: The views expressed in this article are author’s own.