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INDIVIDUAL ASSIGNMENT:
ONLINE SHOPPING THE CHALLENGES /
VIEW FROM LAW & ETHIC

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TABLE OF CONTENT
TABLE OF CONTENT ............................................................................................................. 2
ABSTRACT ............................................................................................................................... 4
CHAPTER 1 .............................................................................................................................. 5
INTRODUCTION ................................................................................................................. 5
1.1 Online Shopping .......................................................................................................... 5
1.2 Security Issues ............................................................................................................. 6
1.3 Computer Crimes Act 1997 ......................................................................................... 7
1.4 Penal Code - Cheating ................................................................................................. 7
1.5 Electronic-Commerce Act 2006 .................................................................................. 8
1.6 Consumer Protection Act 1999 .................................................................................... 8
1.7 Tribunal for Consumer Claim (TCCM) ..................................................................... 10
CHAPTER 2 ............................................................................................................................ 11
FRAUD AND DECEPTION ............................................................................................... 11
CASES REPORTED ........................................................................................................... 11
CHAPTER 3 ............................................................................................................................ 13
RELATION WITH LAW AND ETHICS ........................................................................... 13
3.1 Law Related Issues .................................................................................................... 13
3.5 Ethical and Morality Issues ........................................................................................ 15
CHAPTER 4 ............................................................................................................................ 16
RECOMMMENDATION .................................................................................................... 16
4.1 Consumers Awareness ............................................................................................... 16
4.2 Enforcement Agency ................................................................................................. 17
CHAPTER 5 ............................................................................................................................ 18
CONCLUSION .................................................................................................................... 18
REFERENCES ........................................................................................................................ 19
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STATUTE ................................................................................................................................ 19
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ABSTRACT
The development of the Internet and the globalization of market have brought changes in
business and marketing throughout the world including Malaysia. The increase in world trade
due to globalizations has received immense criticisms from society for its detrimental impact
on the environment and causing social as well as trade injustices. These issues have led to the
emergence of ethical consumers, who challenge business practices by demanding a more
ethical conduct in the marketplace. The current legal framework is inadequate to serve as
efficient and effective tools of control in protecting consumers against illegal and harmful
online business despite the existence of several legislation, guidelines and codes of practice
regulating online shopping. The government should think of ways and means of appropriate
solutions to address the problem of online shopping fraud in order to protect the rights of
Internet users in Malaysia.
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CHAPTER 1
INTRODUCTION
1.1 Online Shopping
Internet has been a commonly accepted means of technology to conduct daily activities. The
growth of the Internet since the starting of a new millennium has been extraordinary. There
were 17,723,000 Internet users in Malaysia representing 60.7% of the population at mid-year
2012, according to Internet World Stats (Internet World Stats, 2012). More than 11 million
people age 15 and older accessed the internet from a home or work. One of the most famous
about Internet now is online shopping where consumers can purchase any goods or services
over the Internet wherever they are and with the minimal effort. Online shopping is the process
whereby consumers directly buy goods or services from a seller in real-time, without an
intermediary service, over the Internet. Consumers believe, with online shopping, shopping
time may reduce and online shopping would make their life easier. Consumer also can browse
the entire product with minimal effort, less inconvenience and time investment.
Online shopping is a potentially growing business for todays market. The traditional
boundaries have been replaced with a whole new technology as well as a mechanism and media
for purchasing goods and services. The electronic payment system provides opportunities for
new global and national trading relationships. Doing transaction online will bring many
benefits for both trader and consumers. Online shopping eliminates the traditional purchase
approach, which is time-consuming and labor-intensive. It also would provide consumers with
benefits such as interactive communications, fast delivery, and more customization that would
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only be available for consumers through online shopping. Product information in the Internet
is more compact and it ranges from various sites. Users have more opportunity to choose and
compare products they want to purchase or easily find and select specialized products. This
kind of open market place would increase competition, provide benefit for industrial buyers as
it will promote better quality and more variety of goods.
1.2 Security Issues
The growth of computer networks and businesses on the Internet has left a major problem to
be addressed. How will this growth comply with the legal need of the society? Many nations
are investing millions of dollars on Information Technology (IT) every year. Society is
becoming virtual and businesses are entering the era of globalization. Borders are virtually
defined by computer networks. In addressing the need for cyber law, many nations have made
computer crime act as part of their bill. Why computer crime acts is the major issues to be
addressed in the cyber law? Technology growth will leave a loop hole behind and the smart
ones in the society will take full advantage of these loop holes to make personal hole. Nearly
every country around the world, computer have been used as a tool to enable crime.
The main obstacle that prevents Internet users from transacting over the Internet is security.
This issue is not only the major concern among Malaysian consumers but all users around the
worldwide. Regardless of the reason, security issues have been creating unnecessary anxieties
for many businesses and consumers. Both online purchasers and non-purchasers claimed that
they would shop more online if they could be assured that a company or a seller on the Web
was reputable. The reliability of businesses on the Web is one of the key concerns for online
consumers.
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In a broader context, online shopping is in fact just an extension of a traditional commerce.
By this account the laws that already exist to regulate the traditional commerce now can also
remain to afford some form of legal protection to the online shopping practices. Therefore, the
government have already enacted few Cyber laws Act on the Internet usage within the nation
and extended some of these do relate to the commercial activities that are very likely to be
carried out through the Internet. The few acts that are related to the online business transaction
as to date are as below:
1.3 Computer Crimes Act 1997
The Computer Crimes Act 1997 was gazette on 30 June 1997 and was made effective
immediately. It gives protection against the misuses of computers and computer criminal
activities such as unauthorized use of programs, illegal transmission of data or messages over
computers and hacking and cracking of computer systems and networks. By implementing the
Computer Crimes Act 1997, users can protect their rights to privacy and build trust in the
computer system. At the same time, the government can have control at a certain level over
cyberspace to reduce cybercrime activities.
1.4 Penal Code - Cheating
The section 420 under Penal Code is about cheating and dishonestly inducing delivery of
property and it been used and give the power to Royal Malaysia Police (PDRM) to start the
investigation paper about fraud cases reported regarding online shopping transaction. This
section stated that whoever cheats and thereby dishonestly induces the person deceived to
deliver any property to any person, shall be punished with imprisonment of either description
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for a term which shall not be less than one year and not more than ten years and with shipping,
and shall also be liable to fine.
The element of deceiving, fraudulently, dishonestly and intentionally induces have been stated
in section 415 and is the key element that the investigate officer need to prove first in order to
propose a charge under section 420 Penal Code to the Attorney-General Chambers (AGC)
office for cases reported regarding online shopping. The AGC lead by the Deputy Public
Prosecutors (DPP) will study the case forwarded to them must have burden of proof to the
extent of beyond reasonable doubt to charge a person under the section.
1.5 Electronic-Commerce Act 2006
In the realm of online advertising in Malaysia, another legislation which is a source of law is
the Electronic Commerce Act 2006. This act was established on 10 July 2006 and aims to boost
the e-commerce and recognize it as a valid business transaction medium in Malaysia. Besides
that, the act also aims to protect e-commerce transaction from being victimized by irresponsible
party in the virtual commerce environment.
1.6 Consumer Protection Act 1999
Consumer Protection Act 1999 (CPA) in Malaysia was introduced on 1st October 1999. It is a
piece of legislation enacted with the main objective to provide greater protection for
consumers. The provision of this act is to cover areas not covered by other existing laws. This
act provides simple, inexpensive redresser to consumers grievances and relief of a specific
nature.
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Who is a consumer? A consumer is an individual purchasing an item off a supplier, for example
a shop or retailer. The legal definition for 'consumer' can be found in section 3(1) of
the Consumer Protection Act 1999. If an individual buys an item out of the local paper he/she
is not a consumer, and do consumers really need protecting? Yes consumers do need protecting.
Long before statutes were introduced it was a case of 'caviot emptor' (BUYER BEWARES)
which through the aid of parliament now becomes 'caviot venditor' (SELLER BEWARES). In
effect the parliament has found no alternative but to intervene in order to maintain a measure
of stability in commercial situations.
Under the Consumer Protection Act 1999, consumers rights granted cannot be taken away
notwithstanding conditions in any agreement that have signed. As a consumer, we have the
right to all the products and services of daily basics needs including food, transport, education
and house.
Consumers are also protected from products, services and manufacturing processes that may
expose our health and life to danger. The Ministry of Domestic Trade, Co-operatives and
Consumerism (KPDNKK) public in the Gazette a list of products considered unsafe to be sold
and may then require the suppliers or manufactures of the prohibited products to either recall
the products, stop the sale and advertisements of the products, disclose to the public
information relating to the characteristics which make the products unsafe, repair or replace
the products or refund the purchasers.
In order to make the right choice, consumers have the right to obtain accurate and precise facts
about the product and service that been offered. Consumers can only act in a wise and
responsible way if they are equipped with enough information. A supplier and manufacturer
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are prohibited to use misleading and deceptive conduct, false misrepresentation and unfair
claims in selling the product or service to the consumers.
Nobody can force the consumers to buy a product or service. Consumers have the freedom in
buying or assuming that the product or service they need is obtained through the right channels,
based on the right price. Consumers have the right to claim for damages from unfair practices
from supplier or manufacturer.
1.7 Tribunal for Consumer Claim (TCCM)
The Consumer Claims Tribunal (TCCM) was established on 15 November 1999
simultaneously with the date of enforcement of the Consumer Protection Act 1999. The TCCM
is an independent body established under Section 85, Part XII of the Consumer Protection Act
1999 with the objective function of hearing and determining claims lodged by consumers.
TCCM been placed under the Ministry Domestic Trade, Co-operatives and Consumerism
(KPDNKK).
Before this, all doubtful or disputes between consumers and traders of goods or service provider
is been brought to the civil courts. This situation has resulted in high cost and time consuming
consequently the consumers does not want to make any claim
TCCM have the authority to hear:
Any claim in respect of any matter within its jurisdiction as provided under the act.
Where the total amount claimed does not exceed RM25,000.00.
Any other matter prescribed by the Minister by order published in the gazzette.
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CHAPTER 2
FRAUD AND DECEPTION
On the Internet, it is easy to reach millions and conduct different types of online shopping
related fraud because there is no face-to-face contract between seller and the buyer. There is
also widely publicized concern about scams and copycat web sites. The consumer has no direct
contact with the merchant and cannot easily verify the quality of the goods or the reliability of
the vendor. Marketing messages can be personalized and instantaneous, enticing consumers to
make impulse purchases. At first sight, the consumer cannot know for sure that the
advertisement are genuine and not conducting a fraud or scam. Advertisement to sell an item
over the online shopping can still be easily registered by potentially unscrupulous agents. It is
not difficult to create and publicize an advertisement, which could then be used to defraud the
customer. Customers must be educated to differentiate between the real genuine seller and
fraudster. Mechanisms to verify the authenticity of the advertisement and the merchant it
represents would be helpful in reducing the potential for fraud or scams.
CASES REPORTED
There are a lot of frauds cases have been reported to the Royal Malaysia Police (PDRM) and
also to the Ministry of Domestic Trade, Co-Operatives & Consumerism (KPDNKK) regarding
online shopping. In Malaysia, there are many online shopping website available for the
consumers to choose and from all of it the very famous website that always had been
highlighted to the police report or in Tribunal for Consumer Claim (TTPM) is mudah.my,
lelong.com.my and also facebook.com. The three famous online shopping website offer the
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free space and place to any Internet user specifically from Malaysia to post an advertisement
about their unused item and new item in order to sell it off to others. The website also doesnt
charge any fees to the buyer or seller to use their platform to do online shopping. The profit
they gain is through the advertisement that been added by the company to their website.
The problem is, there only provided the space whereas the seller and also the buyer need to do
the transaction on their owned. Normally the seller will request the buyer to transfer the money
first to their account and only after that, the item will be post. This is where the opportunity for
some seller / fraudster to get easy money by deceiving their buyers once the money has been
transferred.
There are two types of cheating regarding online shopping:
1) The seller received the money but never sent the item to buyer as promise.
2) The seller received the money and sent the different item to the buyer but the item not
as been advertised earlier.
For the first one, normally all the report will be investigate by PDRM under section 420 Penal
Code about Cheating. Whereas the second one, consumers can filed a claims under Tribunal
for Consumer Claim (TTPM) to get their money back.

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CHAPTER 3
RELATION WITH LAW AND ETHICS
3.1 Law Related Issues
In online transactions, it appears that the contracting parties are not in an equal bargaining
strength. The traders seem to be in a better position than the consumers to stipulate the terms
of the contract. The traders determine the terms of the contract and the consumers are bound to
accept the terms stipulated by the traders before any purchases can be made. The terms
stipulated by the traders might give an advantage to the traders rather than consumers. There
might be terms which may disadvantage the consumers.
Given the nature of online transactions, a minimum prerequisite in online contracts needs to be
clear and comprehensive information should be given before and after any purchase of goods
and/or services. Such information should include the seller's legal identity and physical
location, the total price of goods, payment arrangements, any restrictions or conditions on
purchases, including warranties or guarantees, refund arrangements length and validity of the
offer, and mechanisms for handling complaints and offering redress.
As been mention above, the different between the two categories of cases investigate by PDRM
and handle by KPDNKK is between of the item having been received and also item not been
received by the consumers in online transaction. Section 420 Penal Code is about cheating and
dishonestly inducing delivery of property. One of the element of cheating is deception which
is to deceive someone is to cause that person to believe what is false. The word deception refers
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to the action of deceiving or cheating or is indicative of something which deceives or which a
piece of trickery is. If a person makes a representation which he honestly believes to be true
can be no question of cheating, but if he knew that the representation is false and is made with
a view that the other person should act upon it, then that will amount to cheating. Section 415
of the Penal Code was to give a description of the offense plot. The key element to prove the
offense of cheating is (i) a person has to deceive another person, (ii) the person has the intent
to defraud or with fraudulent intent was to deceive people, and (iii) the deception is causing
people being deceived to deliver any property to someone or do or not do an act. Refer case of
Mohd Jalani Bin Saliman v. PP [1998] 1 CLJ 123; [1997] 5 MLJ 551 and Tan Peng Ann v. PP
[1949] MLJ 10.
If there is no element of cheating in the report lodge by consumers, PDRM couldnt open
investigation paper under criminal law and the report will be submitted to KPDNKK so that
the consumers can filed a claims under Tribunal for Consumer Claim (TTPM) to the seller or
merchant. There are many cases where the item received is not what has been advertisement in
the Internet. There is a cases reported to the TPPM on October 2012, the victim who purchase
three mobile phones at RM3,250 through online shocked to receive a precious stone mortar
cost only RM14.50, the day after to settle. The victim make a purchase after visiting a online
shopping website and interested in mobile phone deals Samsung Galaxy S worth RM1, 100 per
unit compared to the current market price of RM1,900 per unit. TPPM has ordered the company
to restore back RM3,250 to the victim within 14 days after the order.
In the expanding online environment where buyers and sellers often interact at great physical
distance, there is growing recognition that resolving disputes arising from transborder
transactions may involve greater difficulty than resolving those conducted within the
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consumer's national boundaries. Questions of jurisdiction, choice of law, and effective
enforcement of protection against fraud and deception are important in light of the boundary-
less nature of the medium. Transborder disputes that arise from online purchases might cause
consumers to have to face high litigation and travel costs and great emotional inconvenience
in settling such disputes. Therefore, one of the major challenges to global online shopping is to
provide consumers with a reasonable and simple way to resolve disputes. In section 122
Criminal Procedure Code Act 593 (CPC), accused triable in place where act is done or where
consequence ensues. In cases of cheating, the accused should be charged at place where he was
deceived. There is a case study taken from Ratanlal & Dhirajlals Law of Crimes, the accused
sent from Madras by value payable parcel to a person at Hyderabad four boxes of tea. The
person got delivery at Hyderabad on payment of INR (India Rupee) of 168 but when he opened
the boxes he found they contained saw dust. The accused was charged with an offence under
section 417 held: (1) the offence was committed at Hyderabad and the Madras court had no
jurisdiction. (2) The deceit and the delivery in consequence of the deceit were complete when
the money was handed to the post office, and the subsequent delivery of the money by the post
office to the accused was not a necessary ingredient of the offence.
3.5 Ethical and Morality Issues
When using the Internet and online shopping, it is important to remember that there are many
moral and ethical issues to consider. All consumers or businesses that enter the online shopping
will be facing a new set of ethical challenges. It is easy for businesses to become sidetracked
in the technical challenges of operating in this way and to pay little attention to the ethical
implications. There are many ethical implications for businesses to run into that would
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normally be addressed when doing business face to face, for example selling pirated DVD/CD
or pirated software to the buyers over the internet. Sure it is impossible to regulate easily and
affectively, not only this unethical but it is also illegal.
Again there is an unethical and immoral issue to sell medicine on Internet. When a community
pharmacy decided to start up an online shopping site, there were plenty of moral and ethical
decisions to be made, as Pharmaceuticals are different from other items of commerce.
Obviously there any a list of items that have moral and ethical decisions to be made about it
being sold online such as weight loss pills, which could be bought by an already underweight
anorexic girl on facebook or mudah.my. Also a Viagra, catuaba as well as tongkat ali pill, can
be order from Internet and taken by someone with a high risk of heart attacks and suffers from
one. The question is whether the sellers are selling products that have been registered with
National Pharmaceutical Control Bureau (BPFK) and also have knowledge what ingredient
inside the pill that they sell.
CHAPTER 4
RECOMMMENDATION
4.1 Consumers Awareness
The most effective tool in consumer protection in online shopping world is consumer education
as it helps to develop skills to enable consumers to function as socially-responsible consumers.
Before any planning to buy item from Internet, consumers need always do their own research
before hitting the Buy button or proceeding with payment. Verify that the seller has listed all
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of his or her particulars in detail and has provided all the relevant information before you
commit to making the online transaction.
4.2 Enforcement Agency
As technology in ICT becomes more advanced, law enforcement agencies must provide their
computer crime investigators with the technology required to conduct complex computer
investigations. Besides access to technology, law enforcement agencies must also be given
forensic computer support as many computer crimes leave footprints on the computer as well
as on the Internet. Most prosecutors also lack the training and specialization to focus on the
prosecution of criminals who use computer-based and Internet system as a means of
committing crimes. Thus, they must have a working knowledge of computer-based and Internet
investigations if they are to handle these crimes effectively

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CHAPTER 5
CONCLUSION
In conclusion, it can be concluded that the current legal framework is inadequate to serve as
efficient and effective tools of control in protecting consumers against illegal and harmful
online business despite the existence of several legislation, guidelines and codes of practice
regulating online shopping. Due to this, many people who joined the online business thinking
they could make quick profits by way of cheating other people. This phenomenon can be
overcome if all parties including the users own work in increasing the level of consumer
protection in knowledge. The consumer plays and important role in helping the development
of the national economy towards Vision 2020. Practically all Malaysians are users, so
appropriate legal protection given priority to ensure that the interests of consumers are not
affected. Emphasis on the implementation of the law there is also need to be upgraded so that
the users are not ill-treated. Certain existing relevant legislations such as the Consumer
Protection Act should be extended to cover online shopping transactions to enhance the current
consumer protection law in the interest of businesses and ultimately the consumers. Since the
process of passing laws takes years, the legislation enacted should be flexible enough to cope
with the fast advancement of technology. Electronic Transaction Act to be tabled in parliament
in the near future is part of the government's effort to prevent online shopping frauds.


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REFERENCES
Mohd Jalani Bin Saliman v. PP [1998] 1 CLJ 123; [1997] 5 MLJ 551
Tan Peng Ann v. PP [1949] MLJ 10.
Ratanlal & Dhirajlals Law Of Crimes
Harian Metro, 1 October 2012 Aduh! Galaxy lesung batu
Internet World Stats - http://www.internetworldstats.com/asia.htm#my


STATUTE
Computer Crimes Act 1997
Penal Code Act 574
Consumers Protection Act 1999
Electronic-Commerce Act 2006
Criminal Procedure Code Act 593