Licensing for E-Commerce and Direct Marketing in Thailand

By John Formichella

john@fosrlaw.com

Business-to-Consumer (“B2C”) commerce has grown exponentially over the past 10 years in Thailand as a result of the utilization of new digital platforms. The sales volume of B2C electronic commerce (“E-commerce”) doubled from 63,425 Million Baht in 2007 to 121,392 Million Baht in 2012, which is 47.75 per cent growth. In 2013, B2C businesses accounted for 79.7 per cent of total E-commerce business.

Internet access has created opportunities for SMEs to enter new markets at a considerably lower cost than establishing a typical commercial presence. This is evidenced by the fact that in 2013 more than 50 per cent of E-commerce entrepreneurs were small enterprises; nearly 40 per cent of which operated exclusively on the Internet. For large enterprises, E-commerce has become a key tool in the expansion of market share by providing the ability to connect with individual customers, whilst also enhancing competitiveness and driving innovation. With the rapid expansion of the Internet and development of E-commerce goods and services, entrepreneurs can now communicate directly with Internet users/consumers with purchasing power, and can access E-commerce websites anytime and from everywhere. E-commerce businesses now offer ever-more sophisticated products and almost every kind of service. As with any commercial endeavor, regulations are soon to follow based on a number of variables, including claims of fraud or violation of consumer laws.

The Thai government is increasingly aware of how E-commerce is impacting consumers and the economy. In response to the emergence of E-commerce, in 2010 Thailand’s Ministry of Commerce (“MOC”), via Notification on Commercial Registration (No. 11) B. E. 2553 (2010) under the Commercial Registration Act B. E. 2499 (1956), started requiring businesses involved in the sale of goods and services by electronic media – specifically platforms open to users to offer their products or services – to register with the Department of Business Development (“DBD”). An entrepreneur is required to register his/her business with the DBD within thirty (30) days from the start of business. Late registration entails a 2,000 Baht fine as well as a continuing fine of 100 Baht per day until compliant.

In addition, the MOC recently amended its policies to make registration of “Direct Marketing” businesses under the Direct Sales & Direct Marketing Act B. E. 2545 (2002) (“Act”) a prerequisite to operating an E-commerce business. Under the Act, an entrepreneur whose business involves marketing goods or services by means of data communication “directly” to consumers, and whose goods or services are expected to be purchased by and delivered to consumers via online mechanisms (such as payment gateways and delivery ordering), must now register with the Office of the Consumer Protection Board (“OCPB”). The scope of the Act affects vendors of online goods and services selling directly to consumers; the Act does not apply if the activity is limited to advertising goods or services online for promotional purposes. Failure to register a Direct Marketing business with the OCPB incurs criminal liability of one (1) year imprisonment and/or a 100,000 Baht fine; additionally, a fine not exceeding 10,000 Baht per day will also be levied until registration is complete.

From a public policy point of view, the above-mentioned requirements can be seen as part of wider government measures to enhance Thailand's standing in the digital economy. Measures are intended to instill trust in the markets by imposing certain responsibilities on E-commerce businesses, especially in terms of being able to identify owners of E-Commerce businesses via registration obligations, and greater reliability in relation to electronic transactions. A DBD-registered E-commerce business may also apply for “DBD Verified” and “DBD Registered” trust marks from the DBD as certification of its credibility to gain consumers’ confidence.

Further, the Thai government – by way of various other laws and regulations – affords protection to consumers and businesses who engage in E-commerce, including the Electronic Transactions Act (which, among other things, provides safety measures regarding electronic signatures), the Computer Crimes Act and Offences Re: Electronic Payment Cards in the Thai Criminal Code (which provide protections against economic crime and fraud), and consumer protection laws such as the Direct Sales & Direct Marketing Act (which aims to directly protect consumers).

In summary, Direct Marketing business registration and E-commerce business registration are both components of a larger legal infrastructure established by the Thai government to boost public confidence, and provide enhanced consumer protection measures. For foreign investors, such infrastructure is a clear signal of Thailand’s readiness to become a secure E-commerce market and support digital businesses.

This article contains information in summary form and shall be understood as general information only. It is not to be understood as and is not to be relied upon as legal advice.

© John P. Formichella. All rights reserved.