Let the online buyer beware

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Vietnamese law struggles to keep pace with the boom in online shopping

A man browses for cell phones online. The rapid development of Vietnam's e-commerce industry has led an increase in fraud, while a new government decree lacks punitive measures. Photo: Diep Duc Minh

Tran Minh Tan was delighted to find a used Sony Vaio laptop for just VND5 million (US$236) online.

The computer technician from Ho Chi Minh City's Go Vap District transferred money to the seller's account and was promised he would receive the computer within two days.

"It wasn't until the fourth day that I realized I'd been cheated," he said, adding that he found the laptop on a popular IT site.

Similar instances of fraud are becoming more commonplace in Vietnam, where the increase of Internet users has resulted in booming online consumerism, the management of which has been lax.

Vuong Ngoc Tuan of the Vietnam Standards and Consumers Association (Vinastas) said his agency has received an increase in complaints from online consumers over the past year.

Among them, Vo Thi Anh Hong said she ordered 15 pairs of contact lenses from the VickyDinh Company in Hanoi and transferred money into the account of Nguyen Thi Hoa, per instructions provided by the company's site.

When Vinastas later made inquires to VickyDinh, the company responded by saying it had no record of any transactions involving Hong and that it has no knowledge of Hoa.

In another case, Nguyen Xuan Hiep of Bac Ninh Province bought a Lancaster watch from the BrandsFavor online store that arrived with scratches.

After repeated complaints, the online shop agreed to refund half of the money Hiep paid without providing further explanation.

Tuan said common e-commerce problems include the unclear origin of products, fake products, and those which arrive without receipts or which differ from how they were advertised.

"This enables sellers to easily evade responsibility after delivering products," he said.

Tuan said the increased number complaints simply reflect the increase in online shopping.

According to the Vietnam Internet Network Information Center, the country had more than 31.3 million Internet users by the end of 2012, a significant segment of the country's population of around 90 million.

A report by the Vietnam E-commerce and Information Technology Agency under the Ministry of Industry and Trade shows e-commerce revenues last year totaled VND7 trillion ($354 million), excluding those of unregistered online stores.

The agency estimated that Vietnam's e-commerce revenues is on pace to reach $1.3 billion by 2015.

A report by the Ministry of Information and Communications found the proportion of local residents who buy goods online had risen by nearly 14 percentage points, up to 79.2 percent in 2012.

The proportion of residents to make payments online or use online banking were 57.3 percent last year, a threefold increase from 2011 and 11 times higher than 2010.

Risks well-publicized

Although Vietnam does not keep official statistics on the number of consumers victimized by e-commerce fraud, many cases have been reported widely by the local media of late.

Last month, police in Lao Cai arrested Nguyen Thuy Hien of the Muaban24 Online Trade and Training Company (MB24). She was just the latest MB24 employee to be arrested since last August. The firm is being investigated for fraud alleged to have cheated customers out of a total of more than VND700 billion ($32.92 million).

Police said while working for MB24 from July 2011 to September 2012, Hien worked her way up to become deputy director of the firm's Lao Cai branch. During this time, she allegedly swindled more than VND2 billion from local consumers, transferring VND1.6 billion to the company and pocketing the rest.

Since being founded in August 2011, MB24 has been accused of persuading thousands of people, including farmers, students and teachers, into buying shops on the company's online store. By the time the Lao Cai branch closed, it had sold 8,274 shops for approximately VND43 billion ($2 million), police said.

According to police findings, MB24 defrauded people by offering them online shops for VND5.2 million ($245.43), promising the opportunity to buy and sell goods at cheap prices.

But while people paid real money to the company, they received credit vouchers in return. Although they were told initially that the virtual money could be exchanged into cash, when shop owners attempted to cash in their credit, they were told to sell their credits to other shop owners.

In another case, customers who purchased coupons from the Nhom Mua Company were left high and dry after it shut down without warning late last year.

Many suppliers have refused its coupons, saying Nhom Mua still owes them money. The company resumed operations soon afterward.

Incomplete decree

In response to the burgeoning e-commerce crisis, the government issued a decree that took effect on July 1, but which has been criticized for its lack of comprehensiveness and punitive measures.

At a recent conference on implementing the decree, Nguyen Huu Linh, director of the Vietnam E-commerce and Information Technology Agency, admitted that it does not cover all e-commerce activities, only the most common issues.

The decree bans multilevel marketing, the sale of fake and illegal products, swindling; and the hacking and sale of consumers' confidential information.

Websites selling coupons must give customers refunds if their coupons are rejected by relevant retailers.

According to the decree, the Ministry of Industry and Trade is responsible for publishing a list of online trading websites that violate the decree, as well as those that receive complaints.

Nguyen Van Tuan, e-commerce director of the Vietnam Communications Corporation, said the decree only covers half the problems the industry currently faces.

"There are no penalties and insufficient regulations regarding payment systems," VOV news website quoted him as saying.

"For example, it is still difficult to calculate the actual value of many online deals," he said, adding that his company has six years experience in the field and found several problems.

He also said it is wrong for the decree to stipulate that online firms merely accused of wrongdoing be publicized.

Deputy minister of Industry and Trade Tran Tuan Anh said the government will amend the decree after it is implemented, explaining that Vietnam's e-commerce industry still lags behind those of the region and the world.

"The ministry is drafting penalties against e-commerce fraud that are expected to be approved by the year's end."

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