Navigating The Digital Marketplace: Key Considerations For Consumers And Online Business Owners

• Published date: 06 March 2024
• Subject Matter: Corporate/Commercial Law, Consumer Protection, Privacy, Corporate and Company Law, Contracts and Commercial Law, Data Protection, Dodd-Frank, Consumer Protection Act
• Law Firm: Chooi & Company
• Author: Choo Yi Xi, Christine Lay Kei Een and Yong Huey Leng

Electronic contracts have become an integral element in fostering smooth transactions in the contemporary landscape of business transactions. The advancement of technology, coupled with the widespread accessibility of digital platforms, has led to a significant shift from traditional paper-based contracts to electronic formats. This shift has caused significant growth in the use of e-commerce platform and social media (social commerce) for business opportunities.

This article sets out the general legal considerations involving the different parties and stakeholders involved in an e-commerce transaction - from business owners to consumers and e-money issuers. Complying with the relevant legal requirements is not just a matter of regulatory compliance, but a pivotal factor in securing the prosperity of individual e-commerce businesses as well as propelling the growth of Malaysia's e-commerce sector, which is clearly becoming a driving force behind Malaysia's economic advancement.

A. What is e-commerce?

Electronic commerce ("E-Commerce") is the buying and selling of tangible products or services via an electronic network, primarily via the internet. E-commerce can be categorized into 6 types of business models, namely:

1. Business to Consumer (B2C): Where a business sells directly to the product/service end-user.
2. Business to Business (B2B): Where a business sells to another business.
3. Consumer to Consumer (C2C): Where a consumer resells to another consumer.
4. Consumer to Business (C2B): Where a consumer sells to a business or organisation.
5. Business to Government (B2G): Where a business sells to government agencies or administrations.
6. Consumer to Government (C2G) Where a consumer sells to government agencies or administrations.

The Malaysian Investment Development Authority (MIDA) has described E-commerce as an essential aspect in the development of the digital economy and a crucial enabler in catalyzing the growth of businesses, especially for micro, small and medium enterprises (MSMEs), which are the backbone of the nation's economy.¹

B. Who can carry out online business?

Online businesses can be carried out by an individual or a legal entity, and the latter must be registered² with the Companies Commission of Malaysia ("CCM") in order to carry out business.

E-commerce transaction falls within the ambit of the definition of "business" under section 2 of the Registration of Business Act 1956 ("ROBA"), encompassing every form of trade, commerce, craftsmanship, calling, profession, or other activity carried on for the purposes of gain, but does not include any office, employment, charitable undertaking or any occupation specified under the Schedule contained in ROBA.

Pursuant to the Guidelines for Registration of New Business published by the CCM, types of such business include sole proprietorships and partnerships - with the owner or a partner...