How Must Live-Stream Retailers Protect Consumers?
Introduction
Live-stream selling on social media marketplaces combines advertising, product demonstrations, real-time negotiations, payment collection, and order fulfillment in a single online event. Because consumers often rely on statements made during the broadcast, retailers must ensure that product descriptions, prices, safety information, warranty terms, and refund representations are accurate and sufficiently clear.
Philippine law treats these transactions as internet and consumer transactions. A live-stream retailer may therefore be subject to the Internet Transactions Act of 2023, the Consumer Act of the Philippines, product-specific safety regulations, and rules issued by agencies such as the Department of Trade and Industry (DTI) and the Food and Drug Administration (FDA).
Governing Philippine Laws
Republic Act No. 11967, or the Internet Transactions Act of 2023, applies to internet transactions involving the Philippine market. A person who engages in e-commerce and establishes minimum contacts in the Philippines may be subject to Philippine laws and regulations even without a legal presence in the country. (R.A. No. 11967, Sec. 5.)
Republic Act No. 7394, or the Consumer Act of the Philippines, prohibits deceptive sales acts and practices. A representation may be deceptive when it falsely describes a product’s quality, grade, model, characteristics, benefits, price advantage, warranty, or other rights and remedies. (R.A. No. 7394, Art. 50.)
The Supreme Court has recognized that the DTI may investigate and sanction deceptive, unfair, and unconscionable sales practices under the Consumer Act, including continuing violations even when an individual complaint has been settled. (“Aowa Electronic Philippines, Inc. v. Department of Trade and Industry, National Capital Region,” G.R. No. 189655, 2011.)
Information That Must Appear During Live Selling
Under Section 23 of the Internet Transactions Act, an e-retailer or online merchant must ensure that goods and services conform to their descriptions, samples, pictures, models, specifications, and representations made during the transaction.
For live-stream selling, the following information should be stated or made readily accessible before the consumer completes the purchase:
- Product identity: the correct name and brand of the goods or services;
- Price: the actual selling price, including material charges, fees, shipping costs, and applicable conditions for discounts or promotions;
- Description: relevant specifications, dimensions, materials, ingredients, functions, inclusions, exclusions, and limitations;
- Condition: whether the item is brand new, used, refurbished, reconditioned, altered, damaged, or subject to any other material condition; and
- Merchant identity: the merchant’s business or corporate name, physical address, mobile or landline number, and valid email address.
The Internet Transactions Act requires e-retailers to publish their corporate or trade name, business address, and contact details on their homepage. These details must also be submitted to the E-Commerce Bureau with at least one government identification card or registration document as proof of identity. (R.A. No. 11967, Sec. 23.)
Product Safety and Regulatory Disclosures
Retailers must not treat a live-stream presentation as a substitute for mandatory product compliance. Regulated products may be advertised or sold only when the merchant has the permits, licenses, certifications, or registrations required by the relevant law or government agency.
The Internet Transactions Act requires e-marketplaces to prohibit the sale of regulated goods unless the online merchant provides the necessary permit and license information and complies with applicable sale procedures and limitations. (R.A. No. 11967, Sec. 21.) Other digital platforms have a similar obligation to prohibit the sale and advertisement of regulated goods without the required permit and license information. (R.A. No. 11967, Sec. 22.)
Health products require particular care. The quoted FDA rules provide that the manufacture, importation, sale, offering for sale, distribution, promotion, advertising, or sponsorship of a health product without proper FDA authorization is prohibited. Health products must also comply with FDA labeling requirements and advertising standards. (Food and Drug Administration rules quoted in “Department of Health, et al. v. Philippine Tobacco Institute, Inc., et al.,” G.R. No. 200431, 2021.)
The Supreme Court has held that tobacco products are health products for purposes of the FDA’s authority over their health aspects. The Court also held that the jurisdiction of the Inter-Agency Committee-Tobacco is limited to acts covered by its governing law and does not prevent FDA regulation of tobacco products concerning public health. (“Department of Health, et al. v. Philippine Tobacco Institute, Inc., et al.,” G.R. No. 200431, 2021.)
For products covered by mandatory Philippine Standard certification, the retailer must verify the required product markings. The Supreme Court ruled that retailers may be directly liable for selling or offering products that do not bear the required certification marks or identification markings. (“Robinsons Appliances Corporation v. Department of Trade and Industry, et al.,” G.R. No. 264196, 2024.)
Prohibited Product Claims During a Broadcast
A live-stream host must not make statements that overstate a product’s quality, safety, performance, benefits, or availability. Statements such as “FDA approved,” “guaranteed safe,” “original,” “brand new,” “clinically proven,” “limited stock,” or “lowest price” should be used only when they are accurate and can be substantiated.
A product may be deceptively represented when it is described as new, original, or unused even though it is deteriorated, altered, reconditioned, reclaimed, or second-hand. The Supreme Court applied this rule to a seller that represented an altered or second-hand product as brand new. (“Autozentrum Alabang, Inc. v. Bernardo, et al.,” G.R. No. 214122, 2016.)
Promotional mechanics must also be disclosed before the consumer commits to the transaction. If a supposed free gift requires the consumer to purchase another product, pay an additional amount, or satisfy another condition, that condition should be announced clearly at the beginning of the promotion and repeated during the live stream.
Refund, Replacement, and Cancellation Disclosures
A retailer should disclose, before payment, the circumstances in which the consumer may obtain a refund, replacement, repair, price reduction, or other remedy. The disclosure should not misstate or eliminate rights granted by law.
Under Article 100 of the Consumer Act, suppliers are jointly liable for product imperfections that render a product unfit or inadequate for its intended use, decrease its value, or make it inconsistent with information appearing on the container, packaging, labels, publicity materials, or advertisements. The consumer may first demand replacement of the imperfect parts.
If the imperfection is not corrected within thirty days, the consumer may alternatively demand replacement of the product, immediate reimbursement of the amount paid with monetary updating and without prejudice to losses and damages, or a proportionate price reduction. The parties may modify the thirty-day period, but the agreed period must not be less than seven days or more than 180 days. Immediate resort to these alternatives is allowed when the extent of the imperfection makes replacement of the defective parts likely to jeopardize the product’s quality or characteristics and decrease its value. (R.A. No. 7394, Art. 100.)
The Supreme Court has confirmed that suppliers and distributors may be solidarily liable for product imperfections and that a consumer may demand replacement when the defect is not corrected within thirty days. (“Toyota Motors Philippines Corporation v. Aguilar, et al.,” G.R. No. 257084, 2021.)
A retailer’s “no return, no exchange” statement cannot be used to defeat remedies that arise from defective, misdescribed, unsafe, or nonconforming products. A live-stream seller should instead publish a lawful return and refund policy that identifies the complaint channel, filing period, documentary requirements, inspection procedure, available remedies, and expected processing period.
Primary Liability of the Online Merchant
The e-retailer or online merchant is primarily liable for indemnifying the online consumer in civil actions or administrative complaints arising from the internet transaction. This liability is without prejudice to other penalties under the Internet Transactions Act and other laws. (R.A. No. 11967, Sec. 25.)
The retailer should therefore avoid assuming that the social media platform will answer for inaccurate product claims, defective goods, missing disclosures, or failures to process refunds. The platform’s liability may arise separately when the statutory conditions are present, including failure, after notice, to act expeditiously against goods or services that are prohibited by law, imminently injurious, unsafe, or dangerous. (R.A. No. 11967, Sec. 27.)
Responsibilities of the Social Media Marketplace
An e-marketplace must require online merchants to submit identifying and business information before listing products, including the merchant’s name, government identification or registration documents, geographic address, and contact details. It must maintain and regularly update its list of registered merchants. (R.A. No. 11967, Sec. 21.)
The e-marketplace must also maintain an effective redress mechanism, protect consumer data under the Data Privacy Act of 2012, and exercise ordinary diligence in performing its statutory duties. (R.A. No. 11967, Sec. 21.)
Other digital platforms that do not retain oversight over the consummation of the transaction must enable consumers to distinguish commercial from private accounts, require basic product information and merchant contact details, maintain an updated list of e-commerce accounts as far as practicable, provide a complaint mechanism, and protect consumer data. (R.A. No. 11967, Sec. 22.)
Recommended Live-Stream Compliance Procedure
- Verify the merchant. Confirm the seller’s business registration, address, contact details, and required professional or regulatory credentials.
- Screen the product. Determine whether the item is regulated, subject to FDA authorization, covered by mandatory product certification, or governed by another product-specific rule.
- Prepare an approved script. List permitted product claims, required warnings, exact prices, promotional conditions, warranty terms, and refund disclosures.
- Display the information repeatedly. Put material information in the video, caption, product listing, pinned comment, and order confirmation where appropriate.
- Document the broadcast. Preserve recordings, comments, product descriptions, invoices, customer messages, and records of changes to the offer.
- Process complaints promptly. Maintain a responsive channel for returns, replacements, repairs, refunds, and safety complaints.
- Escalate safety issues. Immediately suspend promotion or sale of goods that may be prohibited, dangerous, unsafe, counterfeit, unregistered, or materially misdescribed.
Typical Compliance Problems
Unclear “sale” prices. A host announces a discounted price but reveals during checkout that shipping, service fees, or mandatory add-ons substantially increase the amount payable. The complete price and all conditions should be disclosed before the consumer orders.
Unstated product condition. A seller demonstrates a used appliance without stating that it is second-hand or refurbished. Representing it as new or failing to disclose its material condition may constitute a deceptive sales practice.
Unsubstantiated health claims. A host claims that a supplement cures a disease or guarantees a medical result without the required authorization or substantiation. Such claims may create liability under consumer and health-product regulations.
Improper refund denial. A seller rejects a complaint solely because the livestream announced “all sales are final.” That statement does not automatically defeat statutory remedies for defective, unsafe, or nonconforming products.
Final Observations
Live-stream retailers should regard every spoken claim, visual demonstration, pinned comment, and promotional condition as part of the consumer transaction. Compliance requires accurate product information, visible safety and regulatory disclosures, transparent prices, lawful refund and replacement procedures, and reliable records.
The safest approach is to review the product and the sales script before each broadcast, assign responsibility for regulatory checks, preserve the complete transaction record, and respond promptly to safety and refund complaints. These measures reduce the risk of deceptive-sales findings, administrative sanctions, civil liability, and platform enforcement.
About Nicolas and De Vega Law Offices
Nicolas and de Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com.
