REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF TRADE AND INDUSTRY

FAIR TRADE ENFORCEMENT BUREAU
ADJUDICATION DIVISION
Makati City

ARTEMIO CUSI and STEPHANIE

MULLINS-CUSI
Complainant
FTEB ADM. CASE NO. CC2021-
197
-vs- FOR: Alleged violation of the Consumer
Act of the Philippines particularly its
provisions on Deceptive, Unfair and
Unconscionable Acts/Practices.

LAZADA PHILIPPINES
Respondent

x - x

DECISION

Before this Office is a Consumer Complaint initiated by

ARTEMIO CUSI and STEPHANIE MULLINS-CUSI seeking to hold
LAZADA PHILIPPINES liable for violation of a Republic Act No. 7394
otherwise known as the ‘Consumer Act of the Philippines’ particularly
its provisions on Deceptive, Unfair and Unconscionable Acts/Practices.
Complainant prays for the imposition of an Administrative Fine against
the Respondent 1

PARTIES

Complainant ARTEMIO CUSI and STEPHANIE MULLINS-

CUSI (Cusi for brevity) of legal age and with an address of record at
Brgy. Totolan, Municipality of Dauis, Bohol where notices, orders and
the decision of this Office shall be sent electronically at
stephanie.mullins74@gmail.com 2

Respondent LAZADA PHILIPPINES is a corporation duly

organized and existing under the Philippine Laws with address of

1
Complainant’s supplemental Position Paper reads: “We seek the maximum penalties on each
and every infraction that Lazada has caused in violation of R.A. 7394 otherwise known as the
Consumer Act of the Philippines”
2
as indicated on the Formal Complaint

Enabling Business, Empo wering Consumers

FAIR TRADE ENFORCEMENT BUREAU
Adjudication Division
2nd Floor, UPRC Building, 315 Sen. Gil J. Puyat Avenue, Makati City, 1200 Philippines
Email: fteb_adjudication@dti.gov.ph
 DECISION
ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs. LAZADA PHILIPPINES
CC 2021-197

record at 23rd floor, Seven/Neo Building, 5th Ave., Bonifacio Global City,
Taguig and electronically at j.nabong@lazada.com.ph

Respondent is represented by JERIC ALVIN CRUZ with an

attached Secretary’s Certificate on their Position Paper.

THE ANTECEDENTS

The factual antecedents including the relevant dates based on

the pleadings available on records are as follows:

Complainant allegedly ordered through the Respondent’s

website two home appliances 3 initially via ‘cash on delivery’ method
from seller ABENSON Home Appliances. Thereafter, Complainant got
a phone call allegedly from a representative of Lazada confirming the
orders and further instructing the Complainant to pay the amount of
the items before shipping because the items ordered was allegedly
“bulky” and “fragile”.

Respondent’s representative allegedly sent a ‘bar code’ to the

Complainant via the Lazada Application chat box from someone with a
name “Customer Service and Account Assistance” with a Lazada
logo in the photo 4. The bar code will allegedly be shown to the cashier
of the over-the-counter outlet of the Respondent in order to process
the payment.

Complying the with the instruction, the Complainant paid the

amount representing the items ordered online 5.

After an hour, Complainant found that no email of confirmation

was sent to her email and that the order details in her Lazada
Application still does not change despite the advise 6 of the alleged

3
Annex A of the Complainant’s Position Paper shows that the two items based on the
screenshots were:
a. Samsung RS542NCAESL 19 cu. ft. side by side digital inverter refrigerator in the amount
of Fifteen Thousand Six Hundred and Ninety-Nine Pesos (Php. 15,699)
b. LG 2HP Dual-Cool Split Type Aircon Inverter HSN09ISS in the amount of Sixteen
Thousand Two Hundred and Ninety-Nine Pesos (Php. 16,299)
4
attached is the screenshot of the chat, Annex B of the Complainant’s Position Paper
5
Annex C, supra shows the respective receipts evidencing the payment made by the
Complainant
6
Par. 1.20 of Position Paper, Complainant

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 DECISION
ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs. LAZADA PHILIPPINES
CC 2021-197

Lazada representative.

Felt that it was a scam, the Complainant then called the

Respondent’s hotline on 5 April 2021 where the Respondent’s
customer service representative assured that the matter will be relayed
to their fraud team and that the summary of report will be sent to her
electronically.

On 9 April 2021, Complainant was allegedly informed by one,

Julius Gagarin 7, an alleged employee of the Lazada Ph Recovery Team
that they were allegedly able to locate the payments made by the
Complainant and have locked the wallet/account of the alleged
scammer.

Gagarin then told the Complainant that they may re-order the
same item again this time with a different seller, named
“ROBINSONS(Home Appliances)” to which the Complainant again,
made the same order but clarified that it shall this time, be paid via
‘cash on delivery’.

Unsatisfied, Complainant lodged a Complaint before the

Department of Trade and Industry. Mandatory Mediation Conference
was conducted by the DTI-FTEB Mediation Division on but no
settlement was reached. Consequently, a Certificate to File Action was
issued by Mediation Officer, Mario Asis.

On 4 May 2021, the Complainant received an alleged call from a

person representing herself as “Mary” from Lazada Ph Recovery Team
explaining to them the payment methods. An email was likewise sent
to the Complainant informing them that the best solution would be for
a request for manual refund but also confirmed that Lazada will not be
able to grant the manual refund because no payment was captured on
their system for the order made.

Proceedings Before the Adjudication Division

The case was elevated to the Adjudication Division where a Notice

of Adjudication (Notice) was issued on 18 May 2021 after examination
of the Complaint and evidence finding it sufficient for a case to be filed.

7
“Gagarin” for brevity

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 DECISION
ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs. LAZADA PHILIPPINES
CC 2021-197

The Notice of Adjudication was issued ordering both parties to submit

their respective Position Papers within a non-extendible period of TEN
(10) working days from the receipt of such notice. It was electronically
sent to both parties and delivery receipt shows that it was received by
both parties on the same day that it was issued.

Complainant submitted its Position Paper and was received by

this Office on 2 June 2021. On the said Position, the Complainant
argues that the Respondent, as an online marketplace has, with
fraudulent manipulation, induced them into payment transactions that
they would not have otherwise considered had it been provided for in
their website. Moreover, Complainant maintains that the Respondent’s
reason for the refusal to grant a refund, which is that their payment
was made outside the platform, is untenable because it was not
stipulated in writing and therefore, unenforceable.

A Supplemental Position Paper was likewise submitted by the

Complainant positing that a security reminder is not a disclaimer and
prays that a maximum penalty be imposed to the Respondent for its
alleged violation of the Consumer Act of the Philippines.

RESPONDENT LAZADA’S
CONTENTION

Respondent Lazada Philippines on their Position Paper prayed for

the dismissal of the instant Consumer Complaint for utter lack of merit.

As a way of Counter-Statement of Fact, Lazada maintains the

following:

a. Lazada generally does not sell products but merely provides

platform for sellers to sell their goods and for buyers to purchase
the same 8;
b. They continuously inform the consumers that they should only
pay through one of their limited payment methods available 9;
c. They have posted numerous reminders and other measures to
protect their consumers against online fraud 10.
d. Based on their transaction history, the Complainant’s order was
cancelled and that they never received any payment for such

8
Par.4, Respondent’s Position Paper
9
Par 8, ibid
10
Par. 12, ibid

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 DECISION
ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs. LAZADA PHILIPPINES
CC 2021-197

orders.

Lazada maintains that they have not violated a provision of the

Consumer Act of the Philippines.

The alleged ‘second transaction’ which was made thru a phone

call is allegedly outside the Lazada’s platform hence, the fraudulent
manipulation was therefore committed by the alleged caller and not
Lazada. Moreover, the Complainant alleged that the loss suffered by
the Complainant is due to her own negligence considering that they
(Lazada) have sufficiently warned their customers not to transact
outside their platform.

We note that Section 10 of Department Administrative Order No.

20-02 Series of 2020, provides that the case is deemed submitted for
Decision after the position papers of the parties has been filed or the
lapse of the period to file the said pleadings.

Hence, this case is now submitted for Decision based on the

pleadings and pieces of evidence submitted on record.

ISSUE

Whether or not the Respondent shall be held

liable for violation of the Consumer Act of
the Philippines.

RULING

Complainant maintains that the Respondent has committed a

violation of the Consumer Act particularly its provisions on Deceptive,
Unfair and Unconscionable Acts/Practices.

For reference, the pertinent provisions of the Consumer Act of

the Philippine read:

REGULATION OF SALES ACTS AND PRACTICES

Article 50. Prohibition Against Deceptive Sales Acts or

Practices. – A deceptive act or practice by a seller or supplier in

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 DECISION
ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs. LAZADA PHILIPPINES
CC 2021-197

connection with a consumer transaction violates this Act whether it

occurs before, during or after the transaction. An act or practice shall
be deemed deceptive whenever the producer, manufacturer, supplier
or seller, through concealment, false representation of fraudulent
manipulation, induces a consumer to enter into a sales or lease
transaction of any consumer product or service.

Article 52. Unfair or Unconscionable Sales Act or Practice. – An

unfair or unconscionable sales act or practice by a seller or supplier in
connection with a consumer transaction violates this Chapter whether
it occurs before, during or after the consumer transaction. An act or
practice shall be deemed unfair or unconscionable whenever the
producer, manufacturer, distributor, supplier or seller, by taking
advantage of the consumer's physical or mental infirmity, ignorance,
illiteracy, lack of time or the general conditions of the environment or
surroundings, induces the consumer to enter into a sales or lease
transaction grossly inimical to the interests of the consumer or grossly
one-sided in favor of the producer, manufacturer, distributor, supplier
or seller.

A perusal of the above quoted provision reveals that in order to

hold a particular seller liable under the provisions, it must be clear that
the deceitful conduct, misrepresentation or unfair act was committed
by the said seller.

While there may be deceit employed based on the series of

transactions between the Complainant and the purported caller/seller
and such was grossly inimical to the interest of the Complainant as
Consumers, there is no direct evidence much less proof pointing that
the said caller/seller is Respondent Lazada as the online platform itself.

Considering that the deceptive conduct was actually committed

by a purported seller from the Respondent’s platform and not by the
platform itself and in view of the lack of evidence to prove that the
platform had participated on the deceitful conduct committed, this
Office does not find the Respondent itself liable for acts of deception
is the sales transaction.

This Office however cannot brush aside the fact that the sending
of the purported ‘bar codes’ and instructions which facilitated the
fraudulent transaction was made possible through and within the
Lazada Application 11
11
Annex B, Complainant’s Position Paper

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ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs. LAZADA PHILIPPINES
CC 2021-197

Worthy it is to note that while there is no direct proof that

Lazada has benefitted from or participated on the alleged
fraudulent transaction, this Office finds it highly suspicious
that after the Complainant has made an online order using
their website, someone immediaetley contacted the
Complainant regarding the said order.

To this Office, it thus logical and reasonable to infer that there

was breach or negligence on part of the Respondent’s system insofar
as after an online transaction with the Respondent’s site, a purported
seller from the application would immediately contact the Complainant
regarding the said order hence, such caller/scammer clearly has
knowledge that an order has been placed by the Complainant.

Much more to this Office’s surprise, it appears that the purported

caller also knows the details of the Complainant’s orders even alleging
that it is bulky hence, an advance payment shall be made.

A totality of these instances strengthens the Complainant’s

reliance despite the caution provided by Lazada itself, that indeed it
was from the seller which the Complainant had transacted through the
Respondent’s platform. Complainant was clearly induced by the
alleged seller/scammer through the Respondent. The said series of
event considering the time period the alleged fraudulent call was made
not to mention the fact that the scammer knows the character of the
Complainant’s orders made at the platform and the personal mobile
number of the Complainant convinces this Office that the scam had
happened within or through the Respondent, wittingly or unwittingly.

As such, contrary to the allegation of negligence to the

Complainant by the Respondent, it is actually the Respondent whom
this Office finds as the negligent party for had it been a seller/scammer
utilizing their platform, the Complainant would not have suffered the
loss. We reiterate that as a mainstream electronic commerce platform
and a known marketplace, the Respondent should not only remain
vigilant with the identity and legitimacy of their sellers but also to make
sure that the information specifically confidential information they
process would not be at risk by these scammers.

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 DECISION
ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs. LAZADA PHILIPPINES
CC 2021-197

In this regard we refer to the provisions of the Consumer Act of

the Philippines, which the Respondent may have been liable for their
failure to provide adequate safeguards to minimize the proliferation of
online scammers through their platform as evidenced from the instant
case:

“Article 102. Liability for Service Quality

Imperfection. – The service supplier is liable for any quality
imperfections that render the services improper for consumption or
decrease their value xxx

Improper services are those which prove to be

inadequate for purposes reasonably expected of them and
those that fail to meet the provisions of this Act regulating
service rendering.”

This Office reiterates that both the Complainant and the

Respondent has their correlative obligations in a sales transaction.
While the principle of ‘caveat emptor’ or buyer beware may not find
application in online transactions because of the lack of opportunity to
inspect the products, buyers in general should nonetheless remain
wary and vigilant as to red flags that raises suspicion especially if the
modes being utilized to are not mentioned or not sanctioned by the
mother platform or marketplace. In the same manner, online
marketplaces and platforms such as the Respondent may not always
be permitted to use as a shield their limited liability incase of online
fraud especially when there is breach or negligence on their part.

We emphasize that the business of online marketplaces in the

new normal is imbued with public interest; it is an industry where
the general public’s trust and confidence in the system is of paramount
importance and dependence. Consequently, online platforms such as
the Respondent are expected to exert the highest degree of, if not
the utmost, diligence in making sure that no fraudulent or deceitful
conduct will be utilized through them. They are obligated to treat their
online seller’s and buyer’s account with meticulous care, always
keeping in mind the fiduciary nature of their relationship with the
general public in general.

Considering the foregoing, this Office grants the relief prayed

for by the Complainant specifically on the imposition of Administrative
Penalty.

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 DECISION
ARTEMIO CUSI and STEPHANIE MULLINS-CUSI vs. LAZADA PHILIPPINES
CC 2021-197

WHEREFORE, in view of the foregoing, the Consumer

Complaint is hereby GRANTED. Judgment is hereby rendered
ordering the Respondent LAZADA PHILIPPINES to

I. PAY an administrative penalty in the amount of

TWO HUNDRED THOUSAND PESOS (PHP.
200,000.00) as provided for under the Schedule II,
Section 3 of DTI Department Administrative Order No. 6
Series of 2007 within FIFTEEN (15) days from the
finality of this Decision at the Cashier’s Office of DTI-Fair
Trade Enforcement Bureau, UPRC Building, 315 Sen. Gil
Puyat Ave., Makati City

II. Expenses incurred in the execution of this Decision

shall be borne by the party at fault.

SO ORDERED this 22 June 2021 at Makati City, Philippines.

ATTY. RONALD VIRAY

Adjudication Officer

TO:

ARTEMIO CUSI and STEPHANIE MULLINS-CUSI

Complainant,
Brgy. Totolan, Municipality of Dauis, Bohol
stephanie.mullins74@gmail.com

LAZADA PHILIPPINES
C/O: Jeric Alvin Cruz
Respondent
23rd floor, Net Park Building, 5th Avenue, Bonifacio Global City, Taguig
j.nabong@lazada.com.ph

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