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October 17, 2023

Two New Laws Will Impact E-Commerce Activities in Vietnam

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On June 20, 2023, Vietnam’s new Law on Protection of Consumers’ Rights (“CPL 2023”) was officially promulgated, followed two days later by a new Law on E-Transactions (“LOET 2023”). The new laws, which will both take effect from July 1, 2024, replacing the CPL 2010 and the LOET 2005, respectively, provide new regulations for e-commerce platforms and will impact e-commerce activities in Vietnam. Some of the more significant changes are outlined below.

Law on Protection of Consumers’ Rights

Regulation of offshore entities: Previously, the CPL 2010 regulated only organizations and individuals in the territory of Vietnam. Under the CPL 2023, both onshore and offshore agencies, organizations, and individuals related to protecting consumers’ rights are regulated. In other words, Vietnam intends to monitor and manage activities of platforms with no legal presence in Vietnam.

Remote transactions: Previously, the laws on consumer protection regulated “remote contracts.” The CPL 2023 introduces and defines “remote transactions” as transactions made online, by electronic means or by other means wherein consumers cannot check or have direct contact with products, goods or services before participating in the transaction. In addition, the CPL 2023 also provides for additional responsibilities of business entities offering remote transactions such as adequately and precisely providing consumers with information when entering into these remote transactions, including the rights of consumers in case of incomplete or inaccurate provision of information and complaint handling mechanisms.

Online businesses: The CPL 2023 introduces “online businesses,” which are defined as (i) those trading products, goods, and services via their self-established platforms or digital platforms or (ii) those establishing or operating intermediary digital platforms. According to the Vietnam Competition Commission in a recent workshop, the definitions of “digital platforms” and “intermediary digital platforms” can be referred to in the LOET 2023 (see below).

Under this new category, online businesses which provide services for three months or more (defined as “continuous supply of services”) will have responsibilities similar to those engaging in remote transactions. Further, additional responsibilities apply, depending on the category:

  • Intermediary digital platforms are required to, among other things,have a mechanism to store information about their products, goods, and services and related transactions; allow consumers to access documents related to their transactions; report content censorship activities; and be responsible to consumers in Vietnam according to the law.
  • Large digital platforms are required to, among other things, monitor advertisements that use algorithms to target specific consumers and consumer groups and assess the handling of fake accounts and application of technology to the platform (such as the use of algorithmic and advertising systems and AI). A new government decree guiding the CPL 2023, currently in the draft stage, will provide the criteria for “large digital platforms.”

Law on E-Transactions 2023

Information systems serving e-transactions: An information system serving e-transactions is a combination of hardware, software, and databases established with the main purpose of serving e-transactions and ensuring the authenticity and reliability of e-transactions.

Administrators of these information systems, which are defined to capture e-commerce platforms, are responsible for, among other things, (i) complying with the provisions of the LOET 2023 and laws on network information security, cybersecurity, personal information protection, personal data protection, and other relevant laws and (ii) monitoring the safety of the information system according to the provisions of the laws on network information security.

Online businesses: The LOET 2023 provides some new definitions. In particular, a “digital platform serving e-transactions” is an information system that creates an electronic environment allowing parties to conduct transactions, provide and use products and services, or develop products and services. An “intermediary digital platform serving e-transactions” is a digital platform whose administrator is independent of the parties performing the transaction.

The LOET 2023 regulates the responsibilities of administrators of large and extremely large intermediary digital platforms.

  • Large intermediary digital platforms are required to, among other things, publish the mechanism to handle problems or content violating Vietnamese law arising in e-transactions and annually report to the Ministry of Information and Communications on incidents of taking advantage of the information system to violate Vietnamese law.
  • Extremely large intermediary digital platforms are required to, among other things, publish the basis used to make recommendations to users and allow users to opt out of such recommendations and uninstall any applications without affecting basic technical features of the system.

A new government decree guiding the LOET 2023 will detail the responsibilities of administrators of large and extremely large intermediary digital platforms based on the scale, number of users in Vietnam, or number of accesses from users in Vietnam of such platforms.

Outlook

E-commerce undoubtedly has helped consumers buy goods and services faster and more easily. However, it also poses many risks, such as the risks of having personal information taken advantage of, being scammed, or buying fake or counterfeit goods. The CPL 2023 is expected to improve the legal framework for consumer protection, especially in e-commerce and cyberspace, and the LOET 2023 will provide a complete legal environment for converting traditional transactions to the digital environment in all industries and fields, promoting efficient, safe, and reliable transactions in cyberspace. However, these laws will also create some new burdens for online businesses, who would be well advised be aware of these new requirements to prepare for them, and ensure ongoing compliance.

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