Online Reputation: Once Again, when Innovation Might Raise Legal Issues in Indonesia (Part I)

When I wish to buy a new mobile phone from a shop, I would appreciate reviews on the product I want to buy before making a purchase. Buying from an online shop would even increase that need, especially because I do not physically meet the seller and I never know in advance whether he and his product are real, until the transaction is completed, i.e. I receive the product and the seller receives the money. Well, unless I have already had an experience with the same seller before and thereby I could judge his performance in the past and his trustworthy for the next transaction.

While word-of-mouth has been long recognized in bricks and mortar world, the importance of reputation in the digital world has increasingly received attention from both online platforms and users. Let’s think about globally recognized commercial online platforms such as eBay, Amazon, TripAdvisor, or Airbnb, or non- commercial online platforms like LinkedIn, that have been using online reputation systems. Similarly, we can find online reputation system used by Indonesian online platforms like Tokopedia.com - an online shop for different types of merchandise - where users can review product quality, the speed of delivery, product accuracy, and service quality. Apart from giving review for users who already made transactions, the platform also provides a discussion forum, in which potential buyer can pose questions. Not all Indonesian online platforms – actually only very few – uses online reputation system, but at least those very few have started and it is a good start.

Reputation serves a function similar to a certificate of good conduct. The difference is that reputation is given by the community in which certain practices have been constantly performed and valued, instead of being granted by a certain state authority like the ministry of justice or police department or other institution alike in the case of certificate of good conduct. Constant performance and valuation also apply in building reputation in the digital world. The way online reputation system is built would contribute to a better life in the digital world: easy and secure. Bringing reputation online has been, thus, the next innovation after the creation of the digital world itself. Nevertheless, despite the undoubted necessity, in practice, online reputation might be entangled by certain legal issues or even legal uncertainty. And this will be the topic of my article today, taking the viewpoint of Indonesian legal system.

Freedom to Review: Freedom of Speech?

In Indonesia, freedom of expression belongs to the fundamental rights guaranteed in the Indonesian Constitution of 1945.[1] Further, the Constitution also recognizes the fundamental right to “communicate and obtain information in order to develop personal and social environment, and to seek, obtain, possess, store, process, and convey information by using any available channel”. [2]

Freedom to review in the context of this article is part of the freedom to express one’s mind about a certain product, be it goods or service, the transaction process to obtain the product or the personal interaction process, and the party(ies) in the transaction or interaction. The channel that can be used to give a review can take different forms. Even a contact form for users to write their opinion can serve as a channel, albeit less transparent because of its invisibility to other users.  The use of social media to post reviews has also become more popular these days. A single thumb up on Facebook exemplifies a simple form of review without further information of what being liked. An open letter sent to be posted in an e-newspaper containing a complaint on a particular service of a company is another channel to deliver a review, such as that provided by detik.com or kompas. However, an online platform can simplify the reviewing process by creating a mechanism, by which users or consumers can directly review the product on the platform, the review is made visible also to all other users of the same platform, and made easier to read by categorizing the information of the item being reviewed and the value, for instance by means of rating system. This way, it is also easier for the party being reviewed, for instance a seller, to gain reputation over a certain period of time after receiving a number of reviews because users can easily read his track records. This is the online reputation system we are dealing with in this article.

Online Reputation and Consumer Protection

Law No. 8 of 1999 on Consumer Protection recognizes the right of consumer to information of a product[3] and the right to be heard with regard to her opinion and complaint concerning the product being used. [4] The Law also prohibits business actors to provide incorrect or misleading information concerning the products being offered or advertised. [5]

Online reputation system helps to protect the interest of consumers in two ways. First, as discussed above, it provides channel for consumers who directly involve in the transaction, to provide feedbacks or write complaints. Because the review is visible to other users, the reviewee will be encouraged to react positively and thereby, improve or at least keep their reputation. In turn, this will also help the reviewee to improve the quality of their product and their performance in completing transactions in the future.

Second, it protects the interest of other consumers (those who have not made a transaction with the reviewee) to obtain as many information as possible regarding the product, the process, and the party they will deal with, if they decide to make a transaction. Online reputation system also provides information concerning the check on whether the product has met the specifications being promised and advertised.

There is no contradictory concept between the idea behind the building of an online reputation system and the understanding about the rights consumers entitled to according to the Law. Furthermore, online reputation systems help simplify the implementation process of consumer right by providing a mechanism for consumers to give feedbacks and at the same time ensuring the provision of accountable responses by the reviewee through the work of reputation itself. An individual consumer does not have to go through a complaint process without certainty of what could be the result or even if it would be responded at all. To make it extreme, she does not have to go to court for a civil claim only to make sure that her complaint is heard.

“If you are happy with our services, please let others know. If you are unhappy, please let us know.”  We might be familiar with this when we visit a shop or a restaurant. The idea of giving recommendations to others is also used in online reputation system by giving positive reviews. Writing feedbacks to a seller or service provider is also enabled in online reputation system. However, because in online reputation systems not only the seller or service provider can see that a certain customer is unhappy, but also other users of the online platform, the seller  or service provider is encouraged or even under pressure to respond to it in accountable manners. His reputation is put at stake.

Online Reputation under the Purview of Indonesian ICT Law

At least two points from Law No. 11 of 2008 on Electronic Information and Transaction might be relevant to highlight as regards online reputation system. First, the Law requires business actors to provide full and true information about the contractual conditions, procedures, and products being offered.[6] User reviews provides a mechanism to check whether the business actors they deal with, have already complied with such obligation in the past experiences and thereby, help other users to estimate their credibility at present and in the future.

Second, parties in electronic transactions shall interact in good faith. [7] While Law No. 11 of 2008 in the first point above imposes an obligation on business actors, in this point, it addresses all parties in electronic transactions. Although the Law is silent regarding how a review shall be made, it is subject to the obligation to act in good faith. Complaints are to be distinguished from the act of offense in order to express disappointment.[8]

Indonesian ICT Law prohibits distributions, transmissions, and/or making accessible electronic information and/or electronic documents containing affronts and/or defamation.[9] Violations against the prohibition are subject to criminal charges.[10] In addition, civil actions could follow against parties providing electronic system and/or or using information technology to the detriment of the victim.[11] The Law also allows to resolve such civil actions through arbitration or any other alternative dispute resolution.[12]

Challenging the Devil: Bad Review vs. Defamation

Nobody wants to be charged for defamation after writing a customer complaint. True, the criminal charge will be judged by the court and due process of law shall ensure a fair trial. It shall guarantee even the fairness of the procedures prior to the trial. However, in practice, it is not a trivial case. In the case of Prita Mulyasari several years ago, Prita was charged for defamation after sending her complaint concerning a medical treatment she received from a hospital in Tangerang to a newspaper (a common practice to post a complaint in Indonesia as mentioned in the beginning of this post). Instead of receiving a response from the hospital to clarify the points she complained about, she was charged for defamation along with a claim to pay civil damages and under detention for a couple of months until the case was decided in the judicial review procedure by the Supreme Court. [13] In the verdict, the Supreme Court ruled out the charge and accordingly, Prita was released from her detention. [14]

The case illustrates how, despite it being advantageous for consumers, making a review could be daunting if it is not supported by sufficient legal certainty. A bad review in the sense of giving a negative review could backfire when the review itself is considered bad. But the questions remain: when is a review bad or good, what would be the minimum standard to be met, how to delineate a clear border between a negative review and a defamation? The Law is silent when it comes to details, but unfortunately the devil is in the detail. And certainly nobody wants to think about it from jail.

The use of online reputation systems help to reduce that legal risk, while lawyers, legislators and law enforcers including courts shall worry about answering the questions above. By using the system built by the online platform itself, users will have more certainty that what they do in order to give reviews is within the frame of what is allowed by the system. Users will also not need to bother finding other tools for reviewing, if a more straightforward and effective channel is available. A system could be made to filter out certain words that are not accepted for a free-formulated review. Another option is by implementing a rating system and using only keywords to point out major characters of the products, processes, and the parties being dealt with. The options are still open and here, innovation is most welcome. Building an online reputation system could also be daunting for business actors, because it entails a lot of works in order to give accountable responses to each review. But here is the challenge. Maybe it is worth to think that a reputable business actor shall be the most competitive one in the market. And this brings me to the next point.

Online Reputation from the Perspective of Indonesian Competition Law

There is no provision in Law No. 5 of 1999 mentioning online reputation. There is no case law concerning this subject either, not yet at least. So, why should competition law bother? Could it be reasonable to think about an imaginary scenario of a reputation cartel? Would having a good reputation contribute to gaining market power, or market dominance, something that the competition authority should look into?   

Well, let’s think about those questions for now. I will continue the discussion in my next blogpost. Until then!

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[1] Art. 28E par. (3) of Indonesian Constitution of 1945.

[2] Art. 28F of Indonesian Constitution of 1945.

[3] Art. 4 lit. c of Law No. 8 of 1999.

[4] Art. 4 lit. d of Law No. 8 of 1999.

[5] Art. 10 of Law No. 8 of 1999.

[6] Art. 9 of Law No. 11 of 2008.

[7] Art. 17 par. (2) of Law No. 11 of 2008.

[8] This might remind us of a case last year as an unhappy customer of a gas station in Yogyakarta wrote her complaint in a social media, but ended up writing a post considered as an insult against the people of the city.  

[9] Art. 27 par. (3) of Law No. 11 of 2008.

[10] Art. 45 par. (1) of Law No. 11 of 2008.

[11] Art. 38 par. (1) of Law No. 11 of 2008.

[12] Art. 39 par. (2) of Law No. 11 of 2008.

[13] The judicial review procedure was taken after the Supreme Court in the final instance made contradictory decisions on the criminal charge (defamation) and on the civil claim on Prita case. A regards the criminal charge, the Supreme Court in its Decision No. 822 K/Pid.Sus/2010 convicted the applicant of the cessation/the defendant in the criminal charge (Prita) guilty for a violation against Art. 27 par. (3) and 45 par. (1) of Law No. 11 of 2008, while in the civil claim the Supreme Court in its Decision No. 300K/Pdt/2010 dismissed the claim of the plaintiff and thereby, released Prita from all civil charges.

[14] Supreme Court Decision on a Judicial Review No. 22 PK/Pid.Sus/2011.