PETALING JAYA: As the 11.11 online shopping sale approaches, small businesses and delivery operators are bracing for losses from fake orders and customers refusing to accept parcels after dispatch.
Sunway University economics professor Dr Yeah Kim Leng said failed cash-on-delivery (COD) transactions could put considerable pressure on small businesses operating on thin profit margins.
Sellers would have already paid for delivery and could incur additional return charges when buyers refuse parcels, leaving them with losses and no revenue, he said.
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Yeah urged e-commerce platforms to introduce targeted compensation for sellers and delivery operators affected by fraudulent orders or unreasonable cancellations.
He suggested using customer verification, artificial intelligence tools to detect suspicious orders and escrow arrangements to prevent fraud.
Platforms should also compensate affected parties when their safeguards failed or buyer fraud was verified.
Other measures could include AI-assisted address verification, restricting COD services for repeat offenders and requiring photo or video evidence of delivery attempts.
However, such safeguards should not make COD less accessible to genuine consumers, he added.
Lawyer Kokila Vaani said sellers could claim damages from buyers who wrongfully refuse to accept and pay for goods under a legally binding online purchase agreement.
She said the Electronic Commerce Act 2006 recognises contracts formed electronically, while Section 56 of the Sale of Goods Act 1957 allows sellers to claim damages when buyers wrongfully refuse to accept goods.
Section 74 of the Contracts Act 1950 also provides for compensation arising from a breach of contract, including reasonably foreseeable expenses.
“However, the seller must still establish that the buyer’s refusal was wrongful and that the losses claimed were actually suffered.”
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Kokila said order confirmations, communication records, delivery tracking information and proof of delivery attempts would be crucial when pursuing claims.
She added that the proposed E-Commerce Bill should clarify when an online order becomes binding and distinguish legitimate cancellations, such as those involving damaged or incorrect goods, from unjustified refusals after dispatch.
Complaints involving COD transactions have risen sharply, with 46 cases recorded in the first eight months of this year compared with 18 for the whole of 2025, says the Federation of Malaysian Consumers Associations.
Its chief executive officer Dr Saravanan Thambirajah said consumers have also reported receiving items vastly different from what they ordered, including parcels containing bricks, sand or other worthless goods.
He said the actual scale of the problem could be much greater, as many affected consumers do not lodge complaints.
Some are unaware of where to seek help, while others feel the process is not worth their time, particularly when small amounts are involved.
A key weakness of COD is that buyers usually have to pay before opening their parcels, making refunds difficult once the delivery person has left, he said.
Unsolicited deliveries are another concern, with consumers who merely provide their contact details to enquire about products later receiving parcels demanding payment despite never confirming an order.
“Providing an address or expressing interest in a product should never be treated as confirmation of a purchase.”
Saravanan called for stronger seller verification, clear purchase confirmation before dispatch and more effective refund mechanisms.
He also proposed that logistics providers or platforms temporarily hold COD payments until delivery is confirmed, giving consumers time to report serious discrepancies.
