Building a healthy e-commerce sector needs strong actions

The recent crisis that has been created in the emerging e-commerce sector of Bangladesh is another example of financial fraudulence in the country. There have been complaints, for quite some time, about malpractices by a number of e-commerce companies. But those complaints fell on deaf ears, and the companies continued their business right under the nose of the relevant authorities. However, the problem could not be ignored for long as it became too big and unavoidable. The owners of e-commerce platform Evaly have been arrested for fraud, and cases have been filed against them under the existing law of the land. If they are proven guilty, they may have to stay behind bars for three to seven years, according to legal experts.

But will it help those who have lost their money? This is the most important question in the whole Evaly episode right now. Judging by our previous experience, getting back the customers' stolen money is a distant reality. Though the measures taken by the authorities are a positive move, it will not solve the problems faced by the affected people. Recovery of the money by confiscating the assets of Evaly seems to give a little hope. It has been reported that the value of Evaly's assets seems to be much less than the amount customers have paid the company to purchase products. The legal battle is a long process, and the affected people may not get their money back. Indeed, there have been similar cases before where the affected customers were not fully compensated. One may recall the misappropriation of customers' deposits by the sponsor of the Oriental Bank Ltd in 2007, and the collapse of the bank. Till today, many clients of the bank have not gotten their money back. Not too long ago, people were also cheated by multilevel marketing companies that allured innocent people with the promise of higher returns on their deposits. The deceit of those businesses was unearthed a few years into their operations, and the culprits were put behind bars. But the cheated customers did not get their money back. Several low-income people lost their lifelong savings.

Will the customers of Evaly get their money back? When and how? As discussion on the solutions to the Evaly problem continues, there have been demands for compensation from the government. This is, indeed, a dangerous proposition. Government money is taxpayers' money, and that money is for the development of the country and to support the poor. We are still in the middle of the Covid-19 pandemic; a good number of people in the country—who lost their jobs during the pandemic—are yet to get their jobs back and earn their living like they used to before Covid hit the country. Public money is to support people during such difficult times, generate jobs, and create opportunities for the people. Why would the hard-earned money of our taxpayers be used to compensate for a crime committed by two greedy individuals? This will only encourage malpractice in this sector as well as in others. The government's objective should not be encouraging bad practices, but to root out the greed of deceitful businesses like Evaly.

E-commerce is a new but potential sector for Bangladesh. It is a source of employment for the youth. In Bangladesh, the capacity of the job market to absorb all of the aspiring young population is limited. This sector creates opportunities for them. But this prospect is not for the unemployed youth only; many smart and promising young citizens, who could easily find good jobs but do not want to work for others, have started their own businesses with innovative ideas. They have created jobs for others; they have set examples of ethical business. Several successful e-commerce businesses are also attracting foreign investment because of their reputation. Having a large population, Bangladesh is an attractive destination for the e-commerce industry. As our per capita income is increasing, consumerism is also expanding. It will continue to do so as the country is expected to do better in the coming days. But unethical practices of a few e-commerce companies have damaged the customers' confidence. If this is not remedied, it will not only have a negative impact on youth employment, but also on the overall economy. So, policymakers must address customers' concerns without delay.

With the unveiling of fraudulent practices of a few e-commerce companies, the role of regulatory bodies has come into question. The Ministry of Commerce and the Bangladesh Bank have critical roles to oversee and monitor such businesses. These malpractices have been going on for several months. Why these were not tracked and stopped by the responsible departments are questions that must be answered. Going forward, there is a need for coordination between these and other relevant bodies, such as law enforcement agencies, e-commerce associations, the financial organisations which facilitate payments, and a consumer rights protection department, for a healthy e-commerce sector. Following the Evaly debacle, the Ministry of Commerce has launched Digital Commerce Operation Guidelines, 2021. It has instructions on product delivery, payment, information to customers, etc. It also mentions that if companies fail to comply with the guidelines, the government can shut them down. Also, consumers can lodge complaints with the Directorate of National Consumer Rights Protection and relevant courts. There are demands from some groups that these guidelines should be more comprehensive and stringent. There are also suggestions for new laws. However, e-commerce companies do not want a separate regulatory body. They want facilitation, not regulation. Legal experts suggest that the existing laws can be amended to take measures against the fraudulent companies. But having good laws is not the solution to the problem—proper implementation of the law is the key.

Since the unveiling of the Evaly scam and the dishonest practices of a number of other e-commerce businesses, the issue has become the centre of our attention. Affected and agitated customers are on the street demanding their compensation; news and expert analyses are also pouring in. Many have been trying to say that the customers who have been ordering recklessly from the e-commerce company in question have also been greedy. This is an inappropriate analogy. The Evaly owners got involved in the crime of misappropriating customers' money through their unchecked greed. In the process of their financial accumulation via cheating customers, they were also involved in other unethical practices, such as sponsoring various organisations, giving gifts to important people, etc. On the other hand, some customers wanted to make money by buying products at discounted prices and reselling them to others at higher prices. There are also small customers who ordered goods for their own use, but never received their products, nor was their money refunded. Both types of customers were naïve: they did not realise that such discounted rates are impossible, and businesses cannot sustain through such irrational practices. This cannot be a business model. This is a cheating model.

Given the importance of the issue, it may continue to be the topic of discussion for some time—perhaps before another, more serious incident happens! However, this issue is important not only because customers have lost over Tk 1,000 crore to Evaly; the problem is much bigger than that. It is about this whole practice of becoming rich overnight through malpractices and corruption, and yet receiving acceptance and even accolades from our society. They occupy the cover pages of magazines, they are projected as role models and are discussed in the media and elsewhere, and they take the centre stage of programmes attended by powerful people. They would shamelessly show off their wealth, while others would admire them. At times, the power of their money is stronger than the power of policymakers. Hence they stay above the law. They get away with crimes. The Evaly scam is yet another test case for the policymakers to prove its commitment to the common people of the country.

Dr Fahmida Khatun is executive director at the Centre for Policy Dialogue (CPD).