The Legal Vacancy of Consumer Protection in Smart Contract Execution: A Substantive Justice Approach

Totok Catur Wismo Malaicanto

Abstract


The transformation of the Web3 digital economy has introduced smart contracts that operate autonomously and decentralized based on the "Code is Law" doctrine. The immutable nature of these algorithms creates a legal paradox because it eliminates the obligation of good faith and cripples consumer protection, especially when virtual defaults occur, such as the practice of Rug Pull. This normative legal research aims to analyze the legal vacuity in the Consumer Protection Law (UUPK), the Electronic Information and Transactions Law (UU ITE), and the Privacy and Data Protection Law (UU PDP) and formulate a reconstruction of protection based on substantive justice. The results show that agreements in smart contracts are susceptible to defects in will (wilsgebrek), and the architecture that rejects refunds constitutes obfuscation by code, which is null and void under Article 18 of Law No. 8 of 1999. The immutable nature also conflicts with the right to data deletion under the Personal Data Protection Law. As crypto oversight shifts to the Financial Services Authority (OJK), problem-solving demands a Fairness-by-Design approach. This research recommends mandating Smart Contract Escrow, integrated Online Dispute Resolution (ODR), and implementing off-chain storage. The imposition of this architecture is justified by the government's authority under Article 40A of Law No. 1 of 2024 for the sake of a fair digital ecosystem.

Keywords


Smart Contract; Consumer Protection; Financial Services Authority; Obfuscation by Code; Virtual Default.

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References


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DOI: http://dx.doi.org/10.30659/akta.v13i2.53625

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