Online marketplaces: A need for regulation in Ghana
In today’s digital age, online marketplaces have become a popular platform for buying and selling goods and services. From electronics to fashion and home goods, the internet has made it possible for consumers to purchase items from the comfort of their own homes. The COVID-19 pandemic was a driver for increased online transactions.
We are seeing post pandemic growth of online shopping is in the country and it is not slowing down anytime soon. Traditional shops are taking advantage of the growth of online shopping and have started listing their goods on online marketplaces.
For example, Ingco, a major supplier of tools and other hardware has listed its items on Jiji a popular online marketplace. There are other such shops which use marketplaces like Jumia to list their goods. The advantage for such shops is that they don’t have to maintain many shop outlets with the attendant cost of shop floor workers and overhead administrative costs. The advantage to customers is that they are able to reach many stores as well as individual sellers who might have something to sell.
Online sellers might include established shops, individuals selling from their homes and even from their car boots. Delivery agents increase their business by either signing up with shops to deliver goods to customers or operate on their own to help get goods from seller to buyers.
This is becoming a key component of the digital economy in Ghana as it is elsewhere in the world. Many returned diasporians who were used to shopping online feel comfortable to shop online. However, as online transactions continue to grow in popularity, there is an increasing need for laws and regulations to govern these marketplaces.
Types of Online Markets
Online marketplaces can range from large multinational e-commerce websites to smaller local platforms. Regardless of size, they all provide a platform for buyers and sellers to engage in transactions. Some popular examples of online marketplaces include Amazon, eBay, and Jumia. In Ghana Jiji and Tonaton are marketplaces that emulate the eBay model.
However, they are not as integrated as eBay which requires buyers to pay through its payment gateway, PayPal. Payment on Jiji is therefore handled between buyer and seller either on cash on delivery or mobile money payments.
Players in the Online Market
The players in the online market include the seller, the buyer, the delivery agent, and in some cases, a third-party shop owner. The seller is responsible for advertising and selling the product, the buyer searches the online marketplace for products to purchase and the delivery agent is responsible for delivering the product to the buyer for a fee. A shop owner may sell directly to the buy or in some cases to another seller who sources the product from a physical store.
Fraud in Online Marketplaces
Fraud and disputes are unfortunately common in online marketplaces. For B2C (business to customer) market models like Amazon and Jumia which have integrated platforms, it is rare to have fraudulent transactions. However, for marketplaces like Jiji and Tonaton fraud is growing in leaps and bounds. Here’s a specific example. A customer on Jiji wanted to purchase a corner bath.
He searched Jiji for corner baths in Greater Accra and found a number of them. He then checked the specifications and compared prices. When he found what he wanted he called the seller. The seller arranged a delivery agent to deliver the bath. All this time there is communication between the seller, the delivery agent and the buyer. The delivery agent delivered the bath to the buyer who called the seller and made payment by mobile money.
However, the delivery agent remained waiting because a store owner who is unknown to the buyer and who does not know the buyer has asked the delivery agent to bring back the bath since he has not received the money for the bath.
What actually happened is that the seller on Jiji sourced the bath from a shop. There is communication between the shop owner and the seller for delivery to the seller. The shop owner gives the number of the seller to the delivery agent who then puts him in contact with the buyer. As per Jiji’s safety guidelines, the buyer received the bath and paid the seller. The seller (who’s a fraudster) received the payment and disconnects his phone.
The store keeper is not paid by the fraudster seller and asks the delivery agent to return the bath. As with many things in Ghana, the shop owner gets two policemen dressed in riot gear (or whatever these are) and carrying guns to go to the buyers house to demand that the bath be returned to the shop keeper. The buyer explains that he does not know this shop keeper and has not communicated with him to purchase anything but they insist on taking the bath. They take the buyer to the nearest police station since this was not their jurisdiction.
At the station it turns out similar fraudulent cases have previously been reported to them. This is where things get interesting and requires new laws. The Chief Inspector, one Kodar, admits to having similar cases and that this is a new fraud scheme. It turns out however that the buyers are always the losers because Chief Inspector Kodar applies Section 148 of the Ghana Criminal code regarding Having Possession of Stolen, etc, Property, and thus causes the goods to be taken to the shop owner.
Clearly Chief Inspector Kodar is applying a law that may not necessarily be the right one in this situation. The buyer has fulfilled an online marketplace contract of purchasing and paying a seller who delivered the item bought. A third party, who is not known to the buyer, and who the buyer does not know claims the item and the buyer loses.
The law applied does not give any relieve to the buyer and the fraudster escapes scot-free. It is clear the law applied does not give any protection to the buyer. The police are stymied and though such cases are growing they continue to apply a law which did not take into consideration the situation outlined above.
The Need for New Laws
These types of incidents highlight the importance of laws and regulations to govern online marketplaces. Laws should clearly define the responsibilities of each party involved and provide a clear process for resolving disputes. This can protect the rights and interests of both buyers and sellers and prevent fraudulent activities. Additionally, the enforcement of such laws can ensure a fair and trustworthy online marketplace for all and advance the digital economy.
The growth of online marketplaces in Ghana has made it easier for consumers to purchase goods and services. However, this has also led to the need for new laws or revision of existing ones to govern these marketplaces. Laws and regulations can protect the rights of both buyers and sellers, prevent fraudulent activities, and ensure a fair and trustworthy online marketplace for all.
Jiji’s Safety Guideline
• Don’t pay in advance, including for delivery
• Meet the seller at a safe public place
• Inspect the item and ensure it’s exactly what you want
• On delivery, check that the item delivered is what was inspected
• Only pay when you’re satisfied
The writer is a Chartered Information Technology Practitioner
BY OSAY OSMAN YUUNI