PositionPaper_CCNo.2021-197_Cusi | ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs.

LAZADA PHILIPPINES

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF TRADE AND INDUSTRY
FAIR TRADE ENFORCEMENT BUREAU
ADJUDICATION DIVISION
Makati City

ARTEMIO CUSI and STEPHANIE

MULLINS-CUSI
COMPLAINANTS
FTEB ADM. CASE NO. CC2021-197
FOR: Alleged violation of the Consumer
-VERSUS - Act of the Philippines particularly

provisions on Deceptive, Unfair and

Unconscionable Acts/Practices.

LAZADA E-SERVICES PHILIPPINES, INC.

RESPONDENT
X___________________________/

COMPLAINANTS’ POSITION PAPER

COMPLAINANTS, by themselves, respectfully submit this position paper, together with the
attached supporting affidavit and documents to wit:

PARTIES
COMPLAINANTS’ ARTEMIO CUSI and STEPHANIE MULLINS-CUSI (“I”, “we”, “us”,
“our”) are both Filipino, of legal age, married, and are residents of Barangay Totolan, Municipality of
Dauis, Province of Bohol with corresponding email addresses artcusi@gmail.com and
stephanie.mullins74@gmail.com .

RESPONDENT LAZADA E-SERVICES PHILIPPINES, INC. (“LAZADA”, “LAZADA PH”) is a

corporation providing an e-commerce online marketplace platform duly organized and existing under
the laws of the Philippines with primary address at 23rd Floor, Net Park Building, 5th Avenue, Bonifacio
Global City, Taguig, represented herein by Jose Vicente Nabong with corresponding email addresses
j.nabong@lazada.com.ph and Lazada DTI-TP@list.alibaba-inc.com.

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NARRATION OF FACTS
-(Chronology of Events)-

SECTION 1. On 3 April 2021, Saturday at 11:35 a.m., while shopping online Lazada’s website, my
wife, Stephanie, placed the orders and checked out using the checkout counter on Lazada's
website/platform utilizing one of Lazada's payments method – COD. (Reference provided in ANNEX
A Lazada Online Seller ABENSON (Home Appliances) Order Confirmations received dated 3 April
2021)

1.1 Shortly thereafter, my wife got a call from somebody claiming to be

a representative of Lazada acting on behalf of the Lazada’s online seller,
ABENSON (Home Appliances). Calls of this nature are not unusual to my
wife since she has been getting calls and introducing themselves as
Lazada representatives to confirm my wife's orders every time she would
be ordering high-value items from Lazada.

1.2 The said representative then stated that because the items ordered
were "bulky" and "fragile" and comes with free installation, items must be
prepaid before they ship it.

1.3 So, then my wife told him that she will reorder the said items and
pay with her card through the website/platform of Lazada.

1.4 To which the said representative replied that because the said
items were on "FLASH SALE" and are good for one day only, a cash
payment is required and processed over the counter.

1.5 To which said rep added that the FLASH SALE will end at 3:30 p.m.
of the same day and if my wife wishes to avail of that, that she must pay
before the deadline.

1.6 To which my wife asked said rep how she was going to do that and
said rep replied that a "BARCODE" will be sent to her messaging app of
Lazada by the "Customer Service and Account Assistance” of Lazada.
(Reference provided in ANNEX B Lazada’s Customer Service and Account
Assistance message with received BARCODES)

1.7 Said rep also said that once the message with the barcodes is
received, my wife will need to pay through one of Lazada's over-the-
counter (OTC) outlets- 7Connect of 7Eleven.

1.8 Lazada's representative also told her to just show the barcodes to
the cashier to scan.

1.9 Lazada representative also said that once payment has been made
the items ordered will be shipped the next day and delivered to our house
within 3 days.

1.10 When my wife received the barcodes on Lazada’s messaging app,

she noticed that the prices for both items were the same (Php15,699 for
each) when supposedly the price for LG 2HP Aircon is Php16,522 and the

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price for Samsung Refrigerator is Php15,955, that is when she asked

through the messaging app, "Is the price the same for both?”

1.11 The said rep then called her in answer to her question (which said
rep read through the messaging app), that the prices are the same because if it is
prepaid, she gets a discount for a total of Php1,079, waiving off the shipping cost.

1.12 My wife did not doubt the legitimacy of the transaction since the
barcodes sent were from the Lazada Customer Service and Account Assistance.

1.13 After my wife gave me the printout of the barcodes, I went to

7Eleven and showed the barcodes to the cashier.

1.14 Before I gave the payment to the cashier I asked if it was a

Lazada account I am paying to.

1.15 The cashier reassured me that it was and even showed me from the
POS system that it was a Lazada account.

1.16 The cashier then gave me the receipts and showed me that the
payments went to a Lazada account.

1.17 On 3 April 2021 at 2:48 p.m. and 2:50 p.m. respectively payments
were made via one of Lazada’s cash-in channels Over the Counter (OTC) Outlet -
7Connect of 7-Eleven. (Reference provided in ANNEX C 7Eleven receipts of
payments made to Lazada’s Online Seller’s wallet account.

1.18 Shortly thereafter, the said rep called my wife again asking if
payment has already been made, to which my wife answered that the payment has
been made.

1.19 My wife then asked the said rep if she can avail of a
confirmation letter by email that payment was made for the items she ordered.

1.20 Said rep replied that she will get a confirmation letter plus it will also reflect on
her order details that payment has been made.

1.21 After an hour, my wife checked her orders in her account with
Lazada and noticed that nothing has changed and that no email was sent to her with
regards to her payment. That was when she started to worry that maybe she was
scammed.

1.22 My wife then called the number used to contact her by the said
representative.

1.23 Said rep answered but then hung up the phone right in the middle of my wife's
sentence.

1.24 My wife dialed the number again, but it just kept ringing and after numerous
attempts, my wife then gave up.

1.25 My wife then called Lazada’s hotline number, but since it was a
Saturday there was no answer from that end because Lazada’s hotline number is only
available from Monday to Friday from 9 a.m. to 8 p.m.

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SECTION 2. On 5 April 2021, Monday, my wife called Lazada Customer Service at 9 a.m. and a
customer service representative answered to whom my wife relayed the scamming incident dated 3
April 2021.
2.1 The customer service rep told my wife that she will be reporting it to Lazada's
fraud team, and the summarization of the report will be emailed to her right after their
conversation and for my wife to attach the copies of her receipts from 7-Eleven in
reply to said customer service rep's email.

2.2 Several calls later on the same day April 5th, each time inquiring about the
report, my wife then got the email report of said customer service rep in the evening of
the same day April 5th to which my wife replied with the receipts attached.

2.3 The next few days we would be calling customer service to

inquire if they have any update of the reported incident, and each time we would get
the same answer, a repetitious mantra of their security reminder that Lazada will never
ask to send cash or deposit money to any… etc. When, in fact, what we wanted
to know was an update on the investigation of the incident, if there ever was any
investigation conducted.

SECTION 3. On 7 April 2021, I sent a complaint letter against Lazada Philippines to DTI Consumer
Care by email.

SECTION 4. On 8 April 2021, a notice was issued through email by DTI Consumer Care c/o Fair
Trade Enforcement Bureau to Lazada.

SECTION 5. On 9 April 2021 at 10:42 a.m., we received a call from Lazada’s Julius Gagarin of
LAZADA PH Recovery Team.

5.1 I relayed the scamming/fraud incident and our complaint to him.

5.2 Julius apologized to the scam that was done to us by their online seller and
that they (Lazada) have already reprimanded said online seller/scammer and took down
said seller’s ad from their website.
5.3 Julius further said that unfortunately we cannot be refunded because we paid
outside Lazada’s platform and that the money can never be recovered.
5.4 I told Julius that the payment we made was to a Lazada wallet
account.
5.5 Julius replied that it was not a Lazada account that we paid to.
5.6 I then asked Julius that from his experience working with
Lazada Recovery Team, what were the chances that our money will be recovered?
5.7 Julius answered that the chances for us recovering our money are zero.
5.8 Seeing that our conversation was going nowhere near to resolving the issue at
hand, I then told Julius that with the understanding that the payments I made

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previously to the said online seller/scammer were never going to be recovered based on
his (Julius’s) prior statement, and
5.9 Because we still needed those items,
5.10 I then proposed to Julius that my wife and I are willing to resolve this issue
only > If and when, he (Julius) can find me another ad, from a legit online seller
this time, selling similar (if not the same) products with similar (if not the same) prices
to the items my wife previously ordered from the online seller/scammer, and that my
wife can reorder and pay for the items Cash-on-Delivery (COD), and
5.11 Only when said orders have safely been delivered to our residence, then and
only then, shall the issue be considered resolved.
5.12 Julius readily agreed to my proposal of resolving the issue.
5.13 Julius further stated that he will investigate based on the screenshots I have
previously forwarded.
5.14 I then told Julius that I would appreciate a call from him, from this time onwards
to give me an update on his investigation on the issue.
5.15 Julius then promised to call with an update on how his investigation goes.
--End of Conversation--

SECTION 6. On 10 April 2021 at 8:17 p.m., I received an email from Julius Gagarin. (Reference
provided in ANNEX D (parts 1, 2) Julius Gagarin’s email dated 10 April 2021)
6.1 In his email, Julius apologized for not having been able to call
earlier that day (10 April 2021).
6.2 Julius also stated that he had good news for me.
6.3 Julius advised me that they (Lazada) were able to locate the
payments I made that were credited to the account provided to me by the said
Lazada online seller/scammer.
6.4 Julius stated further that they (Lazada) already locked the wallet
account of said Lazada online seller/scammer and details have been blacklisted
and that this will be in Lazada’s system for a year.
6.5 Julius also suggested that I file a complaint with the cybercrime division of the
NBI/PNP to further investigate this matter and that Lazada would provide the necessary
legal documents these government agencies will require.
6.6 At this point in his email, Julius shifted his topic to other matters
particularly concerning the items my wife previously ordered from the said Lazada
online seller/scammer, also showing images of the same items with corresponding
links to a Lazada online seller’s ad in Lazada’s website.
6.7 Julius then stated that shall I wish to order said items that I look at the
linked images (ANNEX D (parts 1, 2) of the advert with the said items sold by a
Lazada online seller with the store name ROBINSONS (Home Appliance).

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(NOTE: Linked advert had a close similarity to the advert of the said Lazada online seller ABENSON
(Home Appliances) who defrauded us. Apart from the name ROBINSONS, everything else looked the
same. The items are exactly the same, the items’ prices are exactly the same, the images of the items
are exactly the same, as well as the names used to identify and describe the items are exactly the
same. Comparison of the images referenced in ANNEX E and ANNEX E (continued) LAZADA Online
Seller ROBINSONS (Home Appliance) Profile (see ANNEX F)).
6.8 Julius stated further, that since he was able to provide clarification to my
concern and that he was able to find the same items previously ordered so that
I can reorder, further stating if we can already consider the matter resolved.
6.9 Julius then ended his email but not before providing information on where
and how to contact Lazada should we have other concerns requiring their assistance.

SECTION 7. On 12 April 2021 at 11:24 a.m. I sent an email to Julius Gagarin in reply to his email
dated 10 April 2021. (Reference provided in ANNEX G Complainant’s email reply dated 12 April 2021
to Julius Gagarin) Complainant’s email respectfully states that:
7.1 That I thank Julius for taking the time to call me last Friday, 9 April2021 to
clarify and bring light to the issue at hand; adding further that I appreciate Julius’s
quick response, commitment, and determination in his effort to expedite the
issue at hand, as well as, addressing the status of the issue/case at hand in so far
as locating the wallet account where the payment I made was credited to.
7.2 That as per the discussion during the conversation, Friday, 9 April 2021, that
my wife, Stephanie, using the links that Julius provided in his email dated 10 April
2021, was able to re-order the same items having the same price that of which
was previously ordered and that of which I pre-paid for and the items ordered will be
paid by Cash-on-Delivery (COD) as previously discussed. (See ANNEX F Order
Confirmations dated 11 April 2021 at 4:17 p.m. and 4:20 p.m. respectively
for ROBINSONS (Home Appliance) Samsung Refrigerator and LG AirCon unit)
7.3 That the case will be resolved if and when: 1) the said items ordered have
been received by us, and 2) a written confirmation signed by Julius with the
timeframe of the located wallet account where my payment was credited to will be
released and refunded to us.
7.4 Thus ending the email stating with hope of having the matter
resolved the soonest.

SECTION 8. On 13 April 2021 at 11:28 a.m. (due to COMPLAINANTS were not satisfied with the
action taken by RESPONDENT thereon) I (COMPLAINANT), sent an email addressed to DTI Consumer
Care and Fair-Trade Enforcement Bureau (FTEB) with the subject: DTI Complaint |Re: Fw: Non-
Compliance of Consumer Retail Act | Stephanie Mullins-Cusi |ON 369575923434537/
3695845199343537. (Reference provided in ANNEX H Complainants email to DTI Consumer Care and
FTEB dated 13 April 2021) Email respectfully states that:
8.1 That I am informing the offices to which this email is addressed to, that this
case has not been resolved.

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SECTION 9. On 13 April 2021 at 5:13 p.m. I received an email from FTEB – MEDIATION issuing a
Notice of Mediation to be held on 16 April 2021 at 9:00 a.m. to 10: a.m. through MS Teams Meeting
for the parties concerned which we accepted. (Reference provided in ANNEX I (parts 1, 2) Notice
of Mediation email dated 13 April 2021)

SECTION 10. On 16 April 2021 at 9:00 a.m. we (COMPLAINANTS) attended the mediation meeting.
However, the meeting resulted to a failure of mediation from both parties (COMPLAINANTS vs
RESPONDENT).

SECTION 11. On 23 April 2021 at 3:09 p.m. we (COMPLAINANTS) received another email from
FTEB-Mediation and accepted the invitation for another mediation to be held on 30 April 2021 at 1:00
p.m. to 2:00 p.m. through MS Teams Video Conference for the parties concerned. (Reference provided
in ANNEX J (parts 1,2) Notice of Mediation dated 23 April 2021)

SECTION 12. On 30 April 2021 at 1:00 p.m. we (COMPLAINANTS) attended the mediation meeting.
However, the meeting resulted to a failure of mediation from both parties (COMPLAINANTS vs
RESPONDENT).

SECTION 13. On 4 May 2021 at 10:48 a.m. we (COMPLAINANTS) received an email from FTEB-
Mediation stating that due to failure of mediation that resulted from the mediation meeting held on 30
April 2021, that a Certificate to File Action pursuant to DTI Department Order 20-02 is issued.

SECTION 14. On 4 May 2021 at 3:30 p.m. we (COMPLAINANTS) received a call from one of LAZADA
PH Recovery Team’s employees, named Mary. An excerpt of the conversation we (COMPLAINANTS)
had with Lazada’s employee Mary, respectfully follows:
14.1 To wit: Mary asked us (COMPLAINANTS) if we were available to talk, to which
we agreed.
14.2 To wit: We then relayed to Mary the facts of the issue at hand.
14.3 To wit: Mary then stated that Lazada provides security reminders stating Lazada
will never ask to send cash or deposit money to any personal bank account or remittance
center. Mary further stated that we (COMPLAINANTS) paid outside of Lazada.
14.4 To wit: We then stated that the BARCODES that were used to pay for the
items were sent to Lazada’s messaging app in Lazada’s website and the sender was
from Lazada’s Customer Service and Account Assistance and even if we paid outside
of Lazada, which was through 7-Eleven, that the payment went to a Lazada
wallet account and therefore it was still an online payment.
14.5 To wit: Mary then agreed that the payment we made went to a
Lazada wallet account and that 7-Eleven is one of Lazada’s cash-in channels,
stating further, that the online seller who scammed us must have hacked the system
to be able for the said online seller to send us those BARCODES through Lazada’s
messaging app.
14.6 To wit: We then stated that if what Mary stated is true that
Lazada’s system can be hacked, then the consumers using Lazada’s platform to
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purchase online will not be safe from online fraudsters/scammers/hackers, and that
being the case, should not Lazada do something to make their website safer
for consumers to shop online using Lazada’s platform?
14.7 To wit: Mary then agreed that Lazada must do something to make the
website safer for consumers. Mary added further that she will bring our suggestion to
the attention of Lazada management.
14.8 To wit: Mary further stated that the best resolution Lazada can offer is to request
a manual refund if the payments we made to the online seller’s Lazada wallet account
have not been used yet. Mary further informed us that, the payments we made to the
online seller’s Lazada wallet account have, unfortunately, been used already, and
therefore, Lazada will not be able to grant us any refunds.
14.9 To wit: We then pointed out that we (COMPLAINANTS) have no need to
further exhaust ourselves toward explaining our side of the issue since we are
pushing through with our complaint to DTI.
--- End of conversation---

SECTION 15. On 4 May 2021 at 10:44 p.m. We (COMPLAINANTS) received an email from Mary of
the LAZADA PH Recovery Team. Contents of the email is a summary of the telephone conversation
between Mary and us (COMPLAINANTS) that occurred earlier of the same day, specifically at 3:30 p.m.
dated 4 May 2021. (See ANNEX K (parts 1, 2, 3, 4) Mary of LAZADA PH Recovery Team’s email
dated 4 May 2021)

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ISSUES and ARGUMENTS

STATEMENT OF ISSUES

1. That, a fraudulent act committed by RESPONDENT LAZADA (can either be a, …“customer

service representative”, …“LAZADA representative”, “…seller”, “…online seller”, “…employee”,
“…staff”, …recovery team” of LAZADA PH) towards the COMPLAINANTS (hereinafter
referred to as “COMPLAINANTS”) constitutes in a violation of R.A. 7394, otherwise known as
the Consumer Act of the Philippines, following provision on Deceptive, Fraudulent,
Unfair and Unconscionable Sales Act or Practice.

2. That, the RESPONDENT LAZADA, resisted and refused to provide means of redress upon
receiving consumer complaint, further constitutes in a violation of Consumer Rights, according
to provisions on adequate rights and means of redress. Thus, the dispute required
intervention by consumer protection authorities.

3. That, the RESPONDENT LAZADA’S, Privacy Policy and User Agreements, as well as Terms
and Conditions of Sale, is excessively biased and one-sided in favor of RESPONDENT
LAZADA and its affiliates, which further constitute in a violation of R.A. 7394 otherwise known
as the Consumer Act of the Philippines, particularly, Article 52. Unfair or Unconscionable
Sales Act or Practice.

4. That, the RESPONDENT LAZADA, exhibited non-compliance with Requirements for On-
line Disclosure of Information, per Section 5 of the JOINT DTI-DOH-DA
ADMINISTRATIVE ORDER NO.01 (SERIES OF 2008) Rules and Regulations for
consumer protection in a transaction covered by the Consumer Act of the Philippines (R.A.
7394) through electronic means under the E-Commerce Act (R.A. 8792).

STATEMENT OF ARGUMENTS

The real argument to put into question here with emphasis on CONSUMER
PROTECTION and CONSUMER RIGHTS are the Liabilities of the E-Commerce
Online Marketplace’s Operator- the RESPONDENT LAZADA, on the Fraudulent Act
caused by their own Representative/Seller towards the Consumer whilst shopping
online LAZADA’s website.

1. That, the RESPONDENT LAZADA representative who acted on behalf of LAZADA’S

online seller with the store name ABENSONS (Home Appliances), with fraudulent
manipulation, induced COMPLAINANTS into a payment transaction, that
COMPLAINANTS otherwise would not have considered, before and without sending or
providing the products or items that which have been ordered on the LAZADA
website prior. (Relevant statement of facts referenced in NARRATION OF FACTS Section 1
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and all other numbers with each corresponding statement under this section, also, in ANNEX
A -LAZADA Online Seller ABENSONS (Home Appliances) Order Confirmations dated 3 April
2021, ANNEX B LAZADA’S Customer Service and Account Assistance message with received
BARCODES, and ANNEX C 7-Eleven’s receipts of payments made to LAZADA Online Seller’s
wallet account).

2. That, the RESPONDENT LAZADA’s persistent refusal to refund the

COMPLAINANTS, stating that because the payments made were outside the platform.
(Referenced in ANNEX K). Where, exactly, in their Policies, User Terms of Sale and
Agreements, does it stipulate that when a buyer/consumer pays outside the LAZADA
platform that said buyer/consumer will not be refunded? After reading LAZADA’s
Policies, User Terms, Terms and Condition of Sales, etc., (for reference, see website links
provided: LAZADA’s Privacy policy (www.lazada.com.ph/privacy-policy/ ), Terms of Use
(www.lazada.com.ph/terms-of-use/)). COMPLAINANTS did not find any stipulation in writing in
relation to the above statement anywhere. Therefore, the RESPONDENT LAZADA’s reason as
to why they refuse to give back the payments made by the COMPLAINANTS is unenforceable
and will not hold on the grounds that RESPONDENT LAZADA’s above mentioned reason is not
expressly stipulated in writing on RESPONDENT LAZADA’s policies, and therefore, should
not be used as such.

3. That, the RESPONDENT LAZADA stated that LAZADA provides security reminders
stating that LAZADA and its sellers will never ask for payment via money order, wire or bank
transfer. (referenced in ANNEX K) This is another one of RESPONDENT LAZADA’s means to
wiggle out of their responsibility as to give back the payments to the COMPLAINANTS. A
security reminder is not a disclaimer and should not be used as such; therefore,
RESPONDENT LAZADA’s reason does not have validity for them to enforce their claim to
refuse to give refund to the COMPLAINANTS. Thus, a violation of Consumer rights, the
Right to seek Redressal.

4. That, the RESPONDENT LAZADA pointing out what was stated in their security
reminder that payment for purchases should only be done and completed through LAZADA’s
checkout page by choosing accepted payment methods. (Referenced in ANNEX L FIG.1 )
Citing from LAZADA’s Terms and Conditions of Sale under #5. Payment (referenced in ANNEX
L FIG.2); to wit:

5.1 General: You may pay for the Product using any of the payment methods
prescribed by LAZADA from time to time. When you place an Order, actual payment will be
only charged upon Seller’s acceptance of your Order and formation of a Customer Contract. All
payments shall be made to Lazada, either accepting payment in its own right or as Seller’s
agent (where Seller is a Third-Party Vendor). You acknowledge that Lazada is entitled to
collect payments from you on behalf of Third-Party Vendors.

Do take note of the underlined phrase from time to time, which indicates that
something will or can happen from time to time: it means “occasionally” and
“irregularly” or “sometimes”. If one were to say, “You may pay for the Product using
…from time to time”, it would mean that You have the option to pay using one of the
payment methods mentioned or in some instances have the OPTION to pay using another
payment method not mentioned, such as in our case, using the over-the-counter (OTC)
outlets, 7Connect of 7Eleven, an accepted cash in channel of the LAZADA Wallet.
(Referenced in ANNEX C and ANNEX K ) This indicates that the payment method used by
COMPLAINANTS is an accepted payment transaction.
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5. That, in the RESPONDENT LAZADA’s Privacy Policy, an excerpt is shown below (you
may also check out their website for your reference www.lazada.com.ph/privacy-policy/ )
Do take note of the underlined words below. It states that offline payments,
remittances, or e-wallet transactions are included as payment transactions; this shows that the
payments made by the COMPLAINANTS through 7Eleven’s 7Connect is an offline payment and
an e-wallet payment transaction; case in point, contrary to what the RESPONDENT LAZADA’s
repetitive claims not an accepted payment method, this confirms what the COMPLAINANTS
have been refuting all this time against the RESPONDENT LAZADA; that the payments made is
an acceptable payment transaction; thereby payments made is a legitimate transaction which
is evidenced by the receipts(referenced in ANNEX C).

3. Use and Disclosure of Your Personal Data

Purpose of Use
3.1. The personal data we collect from you or via third parties may be used for certain purposes, as follows:
(a) Where you are a buyer:
(i) Processing your order for products (whether sold by us or a third- party seller)
• To process orders, you submit through the Platform;
• To deliver the products you have purchased through the Platform. We may pass your personal information on
to a third party (e.g., our logistics partner) or relevant regulatory authority (e.g. customs) in order to make
delivery of the product to you;
• To update you on the delivery of the products.
• To provide customer support for your orders; and
• To verify and carry out payment transactions (including any credit card payments, bank transfers, offline
payments, remittances, or e-wallet transactions) in relation to payments related to you and/or Services
used by you. To verify and carry out such payment transactions, payment information, which may include
personal data, will be transferred to third parties such as our payment service providers.

6. That, when an online marketplace that connects buyers and sellers can run the risk
of a seller taking payment from the buyer and not sending the goods, in the sense that
fraudulence is committed on the platform, in that case, regardless of the payments
transaction used by the buyer is online or offline and whether the funds have already been
withdrawn or utilized, if the funds cannot be recovered from the seller, responsibility for
the disputed amount and fee is, therefore, ultimately on the operator of the
website/platform. To wit:

RESPONDENT LAZADA, in conducting its activity as an e-commerce marketplace

website, plays two (2) different roles or functions:

1) a ”NEUTRAL” function, when merely hosting third party offers, is eligible

under hosting exemption;
2) an “ACTIVE” role, when promoting its own activities, ( such as selling its
own products or acting on behalf of a third party seller, sending
promotion e-mails, entertaining before and after-sales calls and
complaints, returns and refunds (later to be relayed to sellers), is,
thereby, liable under a regular regime of liability.
In both roles, RESPONDENT LAZADA has a best-efforts obligation to ensure that
its activity does not harm any person.
7. That, while service providers, such as online marketplaces, are normally entitled to the
hosting provider exemption, this is only on the condition that they confine themselves to

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providing an intermediary service, NEUTRALLY, by a merely technical and automatic

processing of (third party) data.

8. Whereas, on the other hand, the RESPONDENT LAZADA website/platform plays an

“ACTIVE” role of such a kind as to give them knowledge of or control over those data, thus
are not entitled to such exemption.

9. That, as operator of the online platform, the RESPONDENT LAZADA, deems to play an
“ACTIVE” role where it is assisting its customers, which entails, in particular, having a
Customer Care Support Specialists and Help Center that handles inquiries and complaints,
returns and refunds (referenced in ANNEX M fig.1 LAZADA’S Customer Care and Help Center
webpages), as well as, optimizing the presentation of the offers for sale or promoting those
offers (referenced in ANNEX M fig.2 LAZADA’S adverts and promotions with “FLASH SALE”
and ANNEX D Julius Gagarin’s email letter dated 10 April 2021, particularly the images with
the linked adverts from LAZADA website)

10. That, even as a hosting safe harbor, RESPONDENT LAZADA is subject to a duty of
care as a “diligent operator” to make sure its platform is safe to use by consumers and
platform is not used for unlawful purposes, that regardless of its liability, an e-commerce
platform is always the subject of injunctive procedures to take any effective, proportionate
and dissuasive measures to prevent and/or put an end to online fraud.

11. . That, the RESPONDENT LAZADA’S platform’s antagonistic Policies grossly proclaim
unfavorable to the interests of consumers, thereby is deemed to be an unfair and
unconscionable act or practice and is in violation of R.A. 7394 otherwise known as the
Consumer Act of the Philippines particularly, Article 52 Unfair or Unconscionable Sales Act or
Practice.

12. That, the RESPONDENT LAZADA’s failure to display a fair, clear, and transparent
information of its online sellers, demonstrates a non-compliance as per Joint DTI-DOH-DA
Department Administrative Order No.01, Series of 2008, specifically, Section 5 which requires
retailers, sellers, distributors, suppliers or manufacturers engaged in electronic commerce shall
provide accurate, clear, and easily accessible information to identify themselves. This
constitutes in a violation of the Rules and Regulations for consumer protection in a transaction
covered by the Consumer Act of the Philippines (R.A. 7394) through electronic means under
the E-Commerce Act (R.A. 8792).

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CONCLUSION

 In response to stay-at-home orders and social distancing requirements, Filipinos

quickly shifted to conducting their daily activities online. Moving online allows us to
work, go to school, and keep in touch with family and friends. But it also opened up
opportunities for online hackers and scammers to exploit cybersecurity weaknesses and
fears created by the pandemic.

 While it is nearly impossible to hold online marketplaces OWNERS/OPERATORS,

such as LAZADA, responsible for every possible thing that can go wrong with a
purchase, they cannot, at the same time, shun responsibility, especially when a
fraudulent act has been committed on their platforms.

 As the COMPLAINANTS were able to determine the RESPONDENT LAZADA’s

“active participation” between the online seller and the COMPLAINANTS based on the
facts as follows;
1. The COMPLAINANTS “perused” the LAZADA website to find the 2 items,
specifically, LG 2HP DUAL COOL SPLIT TYPE INVERTER HSN09ISS and
Samsung RS542NCAESL 19.6 cu. ft. Side by Side Digital Inverter
Refrigerator.
2. LAZADA processed the order.
3. The COMPLAINANTS received the Order Confirmations.
4. LAZADA transmitted the order to the seller.
5. The COMPLAINANTS contacted LAZADA Customer Service hotline (02)
7795 8900 to report about the scamming incident that occurred prior, since
there is no information available to identify who the seller is; where and how
the seller can be contacted, etc.
Upon COMPLAINANTS corroboration of facts mentioned above, they have
reached the conclusion that LAZADA’s “actions” (facts) stated above, proved that
LAZADA is an “ACTIVE participant” in the stream of commerce that resulted in the
COMPLAINANTS getting scammed by seller. LAZADA “placed itself squarely”
between the seller and the COMPLAINANTS, and therefore was part of the vertical
chain of distribution. Hence, the RESPONDENT LAZADA must be held liable due to
RESPONDENT LAZADA’s contributory actions that led to its seller’s fraudulent act
towards COMPLAINANTS.
 Is there a need for some form of legislation and set standards for transparency?
Most definitely! Consumers have a right to know what they are getting into and know
who to blame when things go wrong. However, legislators need to consider service
models like Fulfillment By Lazada (FBL) which essentially “hides” the seller from the
consumer for all practical purposes.

 Third-party sellers should not be permitted to hide behind marketplace owners

because this can and does incent carelessness with consumer protections. There
must be some shared responsibility between marketplace owners and sellers that is in
the best interest of consumers.
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 Therefore, regardless of the marketplace or the seller, consumer protection should

be a priority.

 SCAMS are FRAUD: a criminal activity designed to trick someone out of money or
personal details. Committing any type of fraud can lead to some significant criminal
penalties.

 A fraudulent act was committed by RESPONDENT LAZADA towards COMPLAINANTS;

therefore, RESPONDENT LAZADA is in violation of COMPLAINANTS Consumer Rights,
as well as, R.A. 7394 otherwise known as the Consumer Act of the Philippines.

AMENDMENTS COMPLAINANTS PRAY FOR

WHEREFORE premises considered and in view of the foregoing, complainants respectfully pray
of the honorable office that this complaint for the violations aforementioned by the respondent
be affirmed and that the respondent be fined the maximum under the law and any damages
caused to the complainants.

City of Tagbilaran, Province of Bohol, Philippines, June 1, 2021

Artemio Cusi and Stephanie Mullins-Cusi

Barangay Totolan, Municipality of Dauis,
Province of Bohol, Philippines 6339

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