On the other hand, this case proves that online auction website is nowadays slow to respond when wrongdoing occurs on their website because there is too, much protection by the law and liability to online auctions and encourage more responsibility to protect online participant. At least, the result of this case will alerts online auction website in helping the online auction participant to eliminate fraud that occurs from counterfeit products.

Identification problem on enforcement a right of online auction participant
The problem of identity has long been a crucial problem for the commercial transaction for a long time. As someone said that "On the internet, nobody knows you're a dog”73 This can imply feature of the internet that on the internet, the sender or receiver of an internet communication cannot necessarily be presumed to be who he deal with, nor can they be sure that this is true identity of who he/or she deal with.74 Of course, with this feature, the commercial transaction always face the problem on enforcement the right of the internet whether it be B2C or B2B transaction. In C2C transaction. like online auction also cannot avoid this problem. In addition, the problem of the identity seems to be more severe than another transaction. This is because, as said above, online auction website all avoids any liability in financial and legal burden on commercial transaction between auction participant. So, the online auction participant can only enforce their right through the party who has done transaction with them. Of course, this creates more difficult to enforce right arising from the fraudulent act of another party whether it be in the common law right or statutory right such as Law of Tort or Negligence or Consumer Protection Act. These are two factor that why there are difficulty in enforcing right on the online auction.

The first factor is arising from the feature of online auction itself. With this C2C characteristic, the online auction is a transaction between individual to individual. Of course, this feature can impede. enforcing the right of online auction participant. The first reason is about the reputation between participants. Unlike another transaction such as B2B or B2C transaction, the party can take action such as law of negligence against that reputation business for example we can take action against Apple Inc. if fraudulent practice occur in www.apple.co.uk. In other words, party can get a true identity from the reputation of the business in enforcing their right. Of course, the situation will be different if fraudulent practice occurs between online auction participant. Because of individual status 4here can be difficult to identify their identity through the reputation. Another reason is that there are obstruct of privacy
legislation in getting a true identity of another fraudulent party. As can, be seen the individual have crucial protection from various statue. For example, in the UK., the individual have protect from both Data Protection Directive75 and Data Protection Act in their personal data from the business.76 with this protection, in practice, it is difficult for the online auction participant to obtain
personal information from the operated online auction website because there are fear of online auction provider in contravene privacy protection legislation. Therefore, the enforce right should be cumbersome procedure for online auction participant while damage or loss can be less than the legal fee which use in enforcing the procedure.

Another factor may be raised from an inadequacy of verification system in the online auction. website. The one reason 'is that online auction website does not quickly develop the law to deal with' identification problem. As can be seen, in another transaction such as B2C or B2B has legal supportive in their verification system. For example, in Electronic Signature 2001 or EU directive,77 there are legal support in the legally status of electronic signature and legal control on the certificate authority who verify the Identification of electronic signature,78 whilst the verification system of online auction (C2C) does not have any legal supportive and control in their ID verification technique. For instance, the law does not support the legal status of the user who receive a verification sign as `Verify User' from eBay and also does not have any control on the third party who certified an identity such as Equifax or Square Trade. Another reason may be that the reliable of verification itself. the fraudulent user can easily forge their identity. For example, in registering process, the eBay only require valid e-mail address in entering to the online auction market. Of course, this can be easily for user to forge their identity.

B. New payment intermediary risk
As noted above in chapter 2, the new payment intermediary system such as PayPal has rapidly growth in the context of C2C transaction. Because of PayPal provide a new feature of payment method in convenient to both seller and buyer in C2C transaction. However, the question also arises about whether this new kind of payment is safe enough for using. The section below will describe what the problem that may occur in using this payment method.

Common problem in this new payment intermediary
The problem that contributes to this new payment intermediary is still predominantly related in transferring the fund in this new online payment system. At least there are two problem in respect of transaction in the PayPal. The first common problem is about fraud on PayPal account which is about unauthorized user again access to PayPal user's fund or called account scam.79 Of course this generate a lot more serious consequence because unauthorized user can do something fraudulently to the account such as stealing account balance or gain access to confidential information or financial data.

In general, gaining access to PayPal account was not easy because Paypal has used encryption and password to protect against unauthorized user in using account. However, nowadays, there has been various scam scheme intended to hack password from this kind of payment in order to gain access over the account fraudulently. For instance, one scam scheme send an bogus email and these bogus e-mail has contain reliability logo such as PayPal logos and contain the web link that direct to fake version of PayPal website which request PayPal's consumer about filling the password or personal information. Another problem is about responsibility of PayPal on accidentally pay to the wrong recipient or wrong amount. This is specific circumstance that may occur with the `e-mail payment' method like PayPal. That is because there are opportunities for user in mistyping or typographical error in sending e-mail to intended recipient's e-mail address or amount of money in the transaction.80 Accord to this Problem the PayPal user may take risk in losing money that occur from typographical error without any responsibility of service provider in take a money back to the user.81

Another critical problem that may contribute to this new payment system is about the protection of customer fund in their account. The first apparently problem is that there are no regulation at all concerned when there are insolvency occur with the payment intermediary company. The only concerned about this problem is in user agreement for example PayPal state that;

"Papal will at all times hold your funds separate from its corporate funds, will not use your fund for its operating expense or any other corporate purposes, and will not voluntarily make funds available to its creditors in the even of bankruptcy or for any other purposes82

From this point, it can be said that payment intermediary cannot ensure protection on customer or participant fund in the account. In other words, the user may loose their money in account to those creditor of payment intermediary company according to insolvency act.

Another problem is that the payment system intermediary cannot ensure in withdraw rights of user. Unlike bank, PayPal often limit their customer to access in their fund without any legal control process. As can be seen, PayPal state clear in their user agreement that;

"we may limit withdrawals and require additional information from you depending upon your location”83

From this user agreement, the problem can be examined that if you are doing business in non-US country such as Thailand, you cannot withdraw your money from the PayPal account directly from the bank you have an account. Of course, this can argue that using PayPal may impede withdrawal right of user in using it.


73..See Chris Reed, Internet law : Text and Material (2"d Ed. 2004) Ch 4.
74.. Id.
75.. Directive 95/46/EC.

76. The second data-protection principle requires that personal data shall be obtained only for one or more specified and lawful purposes shall not be processed futher in any mannyer incompatible with purpose or that purpose. For example section 29(3) of Data Protection Act allows to explot the personal information only criminal investigation or allege illegal activity. See also Ian J Lloyd, Information Technologies law (41h ed 2004) Ch7.
77. Directive 19991931ECon a Community framework for electronic signature, OJ L1 3, 19 January 2000.
78. See Chris Reed above n 81 Ch5,143.
79. See Mark E. Budnitz, Consumer payment system : new product new service, new law and• new problems (2002) 56 Consumer Finance buaterly Report 52, 53.
80. See Sorkin, above n17, p13.
81. See PayPal user agreement para 2.2 "PayPal is only a Payment service Provider we do not control over the 2000. product and services that are paid for which our service".
82. See PayPal User agreement para 2.1
83. PayPal user agreement rule 5.3.

 

 

© Copyright Thailand Law Forum, All Rights Reserved
(except where the work is the individual works of the authors as noted)