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The Trusted Advisors Legal Digest: Legal issues surrounding e-commerce and online transactions in Nigeria (Part II)

The Trusted Advisors Legal Digest: Legal issues surrounding e-commerce and online transactions in Nigeria (Part II)

Consumer Protection in E-Commerce

The Federal Competition and Consumer Protection (FCCP) Act 2019 provides more robust protection to consumers in the context of e-commerce. It relies on information disclosure techniques as a tool for protecting consumers who engage in electronic transactions.

Rights and remedies for consumers in online transactions

Right to information and transparency

In electronic transactions, contracting parties do not usually meet physically; rather they deal with each other from a distance through information communication technology. Before purchase, the consumers do not typically have the opportunity to physically inspect the goods or to properly assess the quality and the true value of the product in the same manner as consumers who purchase products from the traditional marketplace.

The decision of the consumer to buy or not to buy the product is most often based on information provided by the seller who does not always have sufficient incentive to disclose relevant and clear information which he believes might discourage potential buyers from purchasing the product. Although access to adequate and simplified information does not promise to solve all the problems that arise from consumer electronic contracts, it promises to reduce dissatisfaction and disputes by providing interested consumers with sufficient information to determine whether the goods they propose to purchase meet with their realistic expectations and preferences.

Right to cancellation, return, and refund

The FCCPA has several provisions that guarantee the rights of Consumers to cancel an advanced service and/or ask for a refund. Under Part XV, the FCCPA provides for the following:

Under Section 120(1), a Consumer has the right to cancel any advance booking, reservation or order for any goods or services, subject to a reasonable charge for cancellation of the order or reservation by the Service Provider. It also provides in Subsection (3) that a cancellation fee shall not be imposed where the cancellation is due to the death or hospitalization of the Consumer.

Under Section 121(3), a Consumer is entitled to receive from the Service Provider goods that correspond to the pre-agreed description or sample, the basis upon which the contract was entered.

Under Section 122, a Consumer has the right to return products supplied to him and get a full refund where the product is defective or unsafe, or where the product is found unsuitable for use after delivery, or where in an advanced sale, the Consumer rejects the delivery within a reasonable time following discovery that the product does not correspond to the type/quality reasonably contemplated in the sales agreement.

Under Section 125(1), a Consumer is entitled to damages and monetary restitution where the Service provider in marketing the goods, makes to the Consumer or implies a false, misleading or deceptive representation concerning a material fact.

Under Section 129(1)B, a Service Provider shall not make a transaction or sales agreement subject to terms and conditions which purports to waive or deprive a Consumer’s right to return defective goods or any right set out in the FCCPA.

Under Section 130, a Consumer has a right to a timely performance and completion of services provided by a Vendor, and where this fails, a right to refund of a reasonable portion of the price paid having regard to the extent of the failure.

The foregoing provisions of the FCCPA establish the right of the Nigerian Consumer to seek a refund of his/her payment where the goods are found unsuitable after delivery, or where the goods do not correspond to pre-agreed descriptions or where the service provider fails to render the services according to the terms of the agreement. Except as provided above, the inclusion and/or implementation of a “no refund” clause in a sales agreement are prohibited by the FCCPA.

Dispute resolution mechanisms for consumer complaints

E-Commerce by its very nature results in an increasing number of distance (or even cross-border) interactions and thus, disputes between parties located far from each other. Litigating and enforcing such disputes by the courts can be disproportionately expensive for smaller and medium claims due to added costs (such as hiring local lawyers, and travel costs). This means that only redress for very large claims can be obtained in this way.

The need for an alternative means of dispute resolution other than the traditional method of litigation which would cater for the peculiarity of e-Commerce disputes arose and it is against this backdrop that Online Dispute Resolution emerged as the most suitable remedy for disputes which is the outcome of e-Commerce transactions or dealings on the internet.

Alternative Dispute Resolution refers to a wide range of techniques used in resolving disputes without having recourse to court. It includes the use of dispute resolution mechanisms other than litigation. Some of these techniques includes: Arbitration, Mediation, Negotiation, Conciliation, etc.

The term Online Dispute Resolution simply refers to the resolution of disputes electronically.
The American Bar Association Task Force on Electronic Commerce stated that ODR is a broad term that encompasses many forms of alternative dispute resolution (ADR) that incorporates the use of the Internet, websites, email communications, streaming media and other information technology as part of the dispute resolution process. Parties may never meet face-to-face when employing ODR mechanism. Rather, they might communicate solely online.

Online dispute resolution (ODR) offers the advantage of speed, reduced cost, greater convenience and accessibility. It enables parties to resolve their disputes without the need to physically travel or meet with dispute resolution professionals. ODR therefore has the potential to significantly reduce the transaction costs arising from a dispute.

ODR is a branch of dispute resolution which uses technology to facilitate the resolution of disputes between parties. It primarily involves negotiation, mediation or arbitration, or a combination of all three. In this respect, it is often seen as being the online equivalent of alternative dispute resolution (hereinafter—ADR). However, ODR can also augment these traditional means of resolving disputes by applying innovative techniques and online technologies to the process.

Liability of e-commerce platforms and intermediaries

Intermediary liability refers to when internet intermediaries involved in the transmission processing or storage of electronic data across on the internet are held liable for unlawful content transmitted or stored on their networks. According to the Organization for Economic Cooperation and Development (OECD), “internet intermediaries bring together or facilitate transactions between third parties on the internet. They give access to, host, transmit and index content, products and services originated by third parties on the internet or provide internet-based services to third parties.”

Intermediary liability occurs “where governments or private litigants can hold technological intermediaries such as ISPs and websites liable for unlawful or harmful content created by users of those services.”

Intermediary liability can thus occur in a vast array of circumstances, around a multitude of issues including: copyright infringements, digital piracy, trademark disputes, network management, spamming and phishing, “cybercrime”, defamation, hate speech, child pornography, “illegal content”, offensive but legal content, censorship, broadcasting and telecommunications laws and regulations, and privacy protection.

Intellectual Property Issues in E-Commerce

Trademark infringement and brand protection in e-commerce

Trademark infringement in e-commerce occurs when an online seller uses a trademark, substantially similar to a registered trademark, to sell products or services, potentially confusing consumers about the origin, endorsement, or affiliation of the goods or services.

To protect against trademark infringement in e-commerce, businesses should register their trademarks, monitor online marketplaces against unauthorized use, enforce their rights by sending cease-and-desist letters, and consider legal actions if necessary, such as filing a lawsuit or seeking an injunction.

Challenges with enforcement of intellectual property rights in the online space

The major effect of digital technology on copyright is the ease at which copyrighted work are sourced and distributed with the help of digital gadgets and viable internet connection. The availability of a simple P.C with the right software application, may be used to duplicate a digital work with the same identical features and undistinguishable from the original.

The most profound indigenous legal framework against copyright violation in digital environment is the Copyright (Optical Disc Plants) Regulation 2006. The Regulation provides the basis for monitoring and control of the production and use of optical disc in Nigeria. The Regulations requires all manufacturers of optical disc or anyone who deal on the production of parts to register with the Nigeria Copyright Commission.

It is important to note that Nigeria is lagging behind in taking definitive steps to remove the obstacles to the facilitation of electronic commerce. However, despites these lofty provisions, it is worth noting that a significant number of copyright violation these days, has nothing to do with optical disc. Most often than not these violations occur on line or over the internet and the use of optical disc has been phased out. The copyright laws in Nigeria is inadequate to address copyright protection in the present.

Elizabeth Olalekan is a Senior Associate in the ICT and Media Practice group of the Firm.

The Trusted Advisors is a leading Nigerian full-service law firm providing cutting-edge and timely legal solutions and services to its clients.

Disclaimer: This article provides general information and does not constitute legal advice. For specific legal advice, readers are advised to consult with a qualified legal professional familiar with Nigerian laws and regulations.