Governing the Digital Marketplace: Indonesia’s Consumer Protection Reform in an Evolving Economy

Indonesia’s digital economy is expanding at an unprecedented pace. E-commerce platforms, social commerce, and livestream selling have transformed how Indonesians buy and sell goods. However, this rapid growth has also exposed significant regulatory gaps – particularly in consumer protection. One major development highlights this shift: the government’s plan to revise the Law Number 8 of 1999 on Consumer Protection. 

This move signals a broader transition. Indonesia is no longer just enabling digital commerce, but it is beginning to regulate it more assertively.  

The Growing Complexity of Digital Consumer Risks 

Over the past decade, Indonesia’s e-commerce ecosystem has empowered millions of small businesses and consumers, transforming the way transactions take place. However, as more economic activity shifts online, the scale and complexity of risks have grown significantly. Data from the Ministry of Trade illustrates this shift clearly: between 2021 and March 2026, there were 37,813 consumer complaints, with an overwhelming 94.73% (35,820 cases) linked to online transactions. This indicates that consumer issues are no longer centered in traditional marketplaces but have largely migrated into digital environments.  

The nature of these complaints also reflects a more complex risk of landscape. Consumers are not only dealing with conventional issues such as fraud and counterfeit goods, but also newer challenges like misleading digital advertisements, illegal online lending, and manipulative interface designs that subtly influence purchasing decisions. Further insights from parliamentary discussions reveal that these risks cut across sectors, with more than 3,000 complaints in financial services and over 2,000 cases related to drugs and food products. This suggests that vulnerabilities are not limited to digital services alone but extend to physical goods distributed through online platforms.  

Certain sectors appear particularly exposed. Clothing and household goods, for instance, account for 14,737 complaints (51% of the total), highlighting how everyday consumer needs are increasingly intertwining the digital risks. As a result, consumer harm is no longer just about defective products of unfair pricing, but it has evolved into a more systemic issue embedded within digital ecosystems. 

Furthermore, at the same time, the good news is that there is a sign of progress. Indonesia’s Consumer Empowerment Index rose from 60.11 in 2024 to 63.44 in 2025, indicating that consumers are becoming more aware of their rights and more active in voicing complaints. Yet this growing awareness has not been matched by an equally robust protection mechanism. The gap between consumer behavior and regulatory capacity remains evident.  

Adding another layer of concern is the issue of data privacy. As digital transactions increasingly require sensitive personal information, the risks associated with data misuse and breaches have become more pronounced. Previous incidents affecting more than 1.3 million data records serve as a stark reminder that consumer protection today must go beyond transactions and extend into the realms of data security. 

Taken together, these trends point to a clear conclusion: while digital platforms have expanded access and opportunity, they have also introduced new forms of vulnerability. The challenge now lies in ensuring that consumer protection evolves at the same pace as the digital economy itself.  

How Platforms Shape Consumer Decisions 

E-commerce platforms have evolved far beyond their original role as simple intermediaries connecting buyers and sellers. Today, they function as powerful decision-making environments, actively shaping consumer behavior through algorithms, dynamic pricing, and carefully designed user interfaces. 

Features such as flash sales, countdown timers, and personalized recommendations are engineered to maximize engagement and conversion. While these tools enhance user experience and convenience, they can also create a sense of artificial urgency or limit transparency. Consumers may feel pressured to make quick decisions without fully evaluating product quality, pricing fairness, or alternative options. 

Moreover, the rise of misleading advertisements and subtle manipulative techniques—often embedded within platform design—has blurred the line between persuasion and exploitation. Practices such as hidden fees, biased product rankings, or pre-selected choices (commonly referred to as “dark patterns”) can steer users toward outcomes that may not align with their best interests. 

The Regulatory Catch-Up 

The planned revision of Indonesia’s consumer protection law is essentially an effort to catch up with the realities of today’s digital economy. When the law was first introduced in 1999, commerce was still largely offline. There were no large-scale e-commerce platforms, digital payment systems, or algorithm-driven marketplaces. As a result, many parts of the current framework are no longer fully relevant or effective. 

In practice, several gaps have become increasingly visible, ranging from outdated legal provisions to weak enforcement mechanisms and fragmented institutional coordination.  

To address this, the revision is expected to focus on several key areas. 

• Strengthening platform accountability.
  E-commerce platforms are no longer just passive intermediaries. They shape consumer behavior, control visibility of products, and influence transactions. The revised law is expected to place clearer responsibilities on platforms for the products and services offered within their ecosystems, including how they monitor sellers and handle violations. 

• Improving transparency in digital advertising and user interfaces.
  Misleading advertisements, hidden fees, and manipulative design practices are becoming more common. The new framework will likely introduce clearer rules to ensure that consumers receive accurate information and are not misled by how products are presented or promoted online. 

• Enhancing dispute resolution mechanisms.
  In the digital space, resolving disputes is often more complex, involving multiple parties such as sellers, platforms, and payment providers. The revision aims to make complaint systems more accessible, faster, and better suited to handling online cases. 

• Strengthening enforcement against digital risks.
  This includes tighter action against online fraud, counterfeit goods, and illegal financial services such as unlicensed online lending. Given how quickly these issues evolve, enforcement will need to be more agile and coordinated. 

• Improving cross-agency coordination and oversight.
  Consumer protection in the digital era involves multiple institutions. The government has begun establishing supervision teams and strengthening coordination across ministries and agencies to better monitor digital trade, including cross-border transactions that are harder to regulate. 

Additionally, the government has formed a digital trade oversight task force to enhance coordination in enforcing regulations against non-compliant businesses, both at the domestic level and across borders. 

In the longer term, efforts to strengthen consumer protection are backed by national strategic frameworks, including Presidential Regulation No. 49 of 2024 on the National Consumer Protection Strategy and Minister of Trade Regulation No. 17 of 2024 on the National Consumer Protection Action Plan. 

Persistent Challenges 

Despite these efforts, several structural challenges remain. 

First, enforcement in the digital space is inherently complex. Transactions occur at high speed and scale, often involving multiple actors across jurisdictions. Monitoring and intervention have become significantly more difficult compared to traditional commerce. 

Second, businesses and bad actors adapt quickly. Sellers can change identities, shift platforms, or modify tactics faster than regulations can respond to. This creates a continuous cycle of enforcement and evasion. 

Third, there is still a gap in digital literacy. While consumers are more active online, many are not fully aware of the risks, their rights, or how digital systems influence their behavior. 

Looking Ahead to Indonesia’s Trust in Digital Economy 

Indonesia is entering a new phase in its digital economy, one where growth alone is no longer enough. As online transactions become the norm, the focus is starting to shift toward something more fundamental: how well consumers are actually protected. 

The data tells a clear story. More people are shopping online, but more people are also facing problems whether it’s scammed, misleading ads, or issues that are harder to even recognize, like manipulative design or hidden risks. At the same time, consumers are becoming more aware and more vocal. This creates both pressure and opportunity for the government to step in and update the rules. 

Revising the Consumer Protection Law is an important move, but the real challenge goes beyond regulation. Platforms need to take more responsibility for how their systems influence users. Regulators need to move faster and work more closely across sectors. And consumers need better awareness to navigate an increasingly complex digital space. 

At its core, this is about trust. People will only continue to engage in digital commerce if they feel safe and fairly treated. Without that trust, even the fastest-growing digital economy can start to slow down. 

 Sources

1. https://www.hukumonline.com/berita/a/celah-digital–regulasi-baru–pemerintah-dorong-revisi-uu-perlindungan-konsumen-lt69d5e6e71de22/?page=all 
2. https://rri.co.id/en/business/2318190/indonesia-to-amend-consumer-protection-law-to-address-modern-trade-dynamics 
3. https://lombokpost.jawapos.com/nasional/2604110015/kemendag-kaji-revisi-uu-perlindungan-konsumen 
4. https://www.kupangnews.com/ekonomi/amp/417355078/kemendag-kaji-revisi-uu-perlindungan-konsumen-kasus-perdagangan-digital-melonjak