Recent developments in e-commerce registration under the Direct Sale and Marketing Act: Implications for compliance in the e-commerce industry (Thailand)

(1) General Principles

One of the key regulations governing the operation of e-commerce businesses in Thailand is the Direct Sale and Marketing Act. Under the Direct Sale and Marketing Act, the legal term of e-commerce business is referred to ‘direct marketing’, where goods and services are marketed by means of communicating information, in order to directly offer goods and services for sale to remote consumers, with the expectation that consumers will agree to purchase such goods and services from the direct marketing operators.※3

From the given definition, it could be interpreted that any kind of e-commerce business that operates through an online platform, connecting business operators and remote consumers and enabling customers to directly purchase products and services from such e-commerce business operators, falls under the scope of direct marketing under the Direct Sale and Marketing Act. Therefore, it would be necessary to register with the OCPB for direct marketing business before the commencement of operations.※4 As described, this direct marketing registration aims to protect consumer rights when purchasing goods or services through online platforms, as consumers are unable to physically inspect the products or services prior to the purchase.

Although the Direct Sale and Marketing Act and the relevant regulations do not clearly specify the definition of a direct marketing business operator, a manual published by the OCPB has clarified the persons who are required to register for direct marketing business to engage in sales via an online platform, as follows:

1. The owners of a website, which is registered for sales of their own goods;
2. If there are intermediaries who sell products of other persons on an online platform, the owner of the online platform must notify the registrar of the direct marketing business with details of the type or category of the goods, the address of the owner of the products, purchase method, and any other relevant conditions;
3. The companies, shops, or individuals who own the products regardless of whether they are manufacturers, importers, distributors, or sellers. If they have registered the website to engage in sales of goods via their own internet platform, without using the website of which is the intermediate platform; and
4. Other individuals who engage in sales through alternative platforms, such as telephone, facsimile, or other electronic communication devices.※5

Upon the completion of the direct marketing registration, direct marketing business operators must comply with certain obligations, such as the duty to comply with information, advertisement, and warranty requirements,※6 the duty to submit a direct marketing report to the OCPB within the designated timeframe,※7 and the duty to prepare and deliver documents related to the sales of goods or services to consumers.※8

As the Direct Sale and Marketing Act aims to protect consumers from being deceived into actively marketing goods or services, thereby placing them at a disadvantage and resulting in unfair treatment, one of the key restrictions thereunder is that direct marketing business operators are strictly prohibited from operating their businesses in a manner that induces any person to join a direct sales or direct marketing network with promises of granting benefits that will be calculated based on the number of persons joining the network.※9 Those who fail to comply with this requirement will be subject to a penalty,※10 or the revocation of their direct marketing registration by the OCPB under the Administrative Procedure Act of 1996.※11

As of the date of this article, there are approximately 900 e-commerce business operators registered with the OCPB,※12 a number which is expected to increase considering the growth of e-commerce business and the shift in consumer preferences to online shopping.

(2) Exception

There are certain e-commerce transactions for the sale and purchase of goods and services that do not fall under the definition of direct marketing, as follows:

1. Sales of goods or provision of services by an individual who is not registered as a direct marketing business operator, and who generates no more than THB 1,800,000 per year in income from the sales of goods or services through an e-commerce platform;
2. Sales of goods or provision of services by a Small and Medium-sized Enterprise (SME) registered under the SME laws;
3. Sales of goods or provision of services by a community enterprise registered under the Community Enterprise Incentives laws; and
4. Sales of goods or provision of services by a cooperative and a group of farmers registered under the cooperative law.※13

Further to the statutory exemptions,

• The OCPB has clarified that an owner of goods, whether as a manufacturer or importer, who exclusively sells through platforms like Shopee or Lazada, is not subject to direct marketing registration.※14 This is because the OCPB considers that consumers do not purchase goods or services directly from the platform of the goods’ owner. Instead, the sale of goods is made through intermediate platforms.
• In addition, direct marking registration is not required in cases where companies, shops, or individuals who own the goods, whether as manufacturers, importers, distributors, or sellers, wish to promote the goods or services through media solely for advertisement purposes, without the intention to engage in sales of goods or services through such media.※15

Although direct marketing registration is not required for the above exempted business operations, e-commerce business operators are still required to comply with other e-commerce-related laws and regulations, including, but not limited to, the Electronic Transaction Act of 2001, the Commercial Registration Act of 1956, the Personal Data Protection Act of 2019, the Royal Decree on Operation of Digital Platform Services Which Requires Notification of 2022, etc.

(3) Penalty

Any person who fails to register for direct marketing business will be subject to imprisonment for a period not exceeding 1 year or a fine not exceeding THB 100,000 or both, and to a daily penalty not exceeding THB 100,000 per day throughout the duration of such violation.※16

In the case of a juristic person, if such misconduct of the juristic person arises from an order or act of a director, manager or any person responsible for such juristic person, or if the person has a duty to order or act but omit from such order or act, thereby giving rise to the juristic person’s violation, such person will be held liable.※17

Please note that the penalty under the Direct Sale and Marketing Act can be settled by paying a fine to the OCPB at the rate determined by the OCPB on a case-by-case basis,※18 except for the penalty resulting from a violation of Section 19 of the Direct Sale and Marketing Act, as elaborated on in Topic (1) General Principles above.

Our remarks

The incident involving the iCon Group emphasizes the importance of compliance in the e-commerce industry under the Direct Sale and Marketing Act, transparency of business models, and ethical business practices in e-commerce business. It is expected that the OCPB will adopt a more proactive stance to enforce the laws and sanctions against violators. Therefore, it is prudent for e-commerce business operators to have a clear understanding of compliance and their business model in order to ensure compliance with laws and restrictions under the Direct Sale and Marketing Act and relevant e-commerce laws and regulations to avoid the penalties described above.