Regulatory Framework of E-Commerce

Entry of E-commerce in the business scenario has changed the rules of the game and it has affected the economic relations between and within different countries and companies.
Hence, it becomes very important to create a policy and regulatory environment that favors the development of e-commerce and harmonizes national approaches in diverse areas such as telecommunications, trade, intellectual property, privacy etc.
So, here we’ll discuss about legal and policy issues which are associated with e-commerce along with the laws and environments effective to deal with them, with special reference to the laws applicable in India.

1. REGULATORY ASPECTS OF E-COMMERCE Presented by: Mamta bhola (Assistant Professor PG Department of Commerce and management arya college, ludhiana )

2. INTRODUCTION Entry of E-commerce in the business scenario has changed the rules of the game and it has affected the economic relations between and within different countries and companies. Hence, it becomes very important to create a policy and regulatory environment that favors the development of e-commerce and harmonizes national approaches in diverse areas such as telecommunications, trade, intellectual property, privacy etc. So, here we’ll discuss about legal and policy issues which are associated with e-commerce along with the laws and environments effective to deal with them, with special reference to the laws applicable in India.

3. REGULATORY ASPECTS OF E-COMMERCE LEGAL ISSUES SECURITY ISSUES CONSUMER PROTECTION ISSUES INTELLECTUAL PROPERTY ISSUES CONTENT REGULATION ISSUES LIABILITY ISSUES TAXATION ISSUES JURISDICTION ISSUES

4. 1. LEGAL ISSUES Every business has to operate within the legal boundaries and it seems quite easy in case of E-Commerce, but there are political difficulties in collecting, storing and appreciating D igital Evidence. Cyber laws are the savior to combat cyber crime. It is only through stringent laws that unbreakable security could be provided to the nation’s information. While performing the activities of E-Commerce, there is highest possibility for the occurrence of legal issues and the basic issue is of the Formation of e-Contract.

5. TYPES OF E-CONTRACTS FORMED IN E-COMMERCE Click wrap contract (the contracting party acceptance is taken by a click on the “I Accept” option or tab.) 2. Browse Wrap Agreement: It is binding on the party by mere use or browsing of the website. 3. Shrink Wrap Agreement: Here, the contracting party can read the terms and conditions only after opening the box within which the commodity license is packed .

6. SOME OF THE IMPORTANT REQUIREMENTS Here all the rules regarding the Indian Contract Act, 1872 will be applicable. For instance: free consent of the parties, lawful consideration, competence of parties and lawful object etc. Along with the Indian Contract Act, 1872, other legal acts such as Intellectual property acts (Copyright Act, 1957, Patents Act, 1999 etc.) and Information Technology Act, 2000, Indian Penal code, 1860and Reserve Bank of India Act, 1934 will also be applicable.

7. 2. LIABILITY ISSUES Liability issues are raised when a customer purchases a product over internet and it is found to be defective. Intermediary Liability: As per IT Act, Intermediary is: Any person, who on the behalf of other person Receives, stores and transmits any record or provides service (telecom service, network service, web hosting such as payment sites, cyber cafes etc.)

8. The IT Act provides exemptions to the liability of intermediaries if certain requirements have been fulfilled such as; The intermediary merely provides access to the communication system over which information is transmitted. The intermediary does not initiate the transaction or alter any information contained in the transmission process. The intermediary observes the guidelines issued by the Central Government. LIABILITY ISSUES (cont.)

9. Some of the important aspects regarding publication of information on the communication portals are: The intermediary should publish all the information on the web regarding privacy policy and user agreements ; while this information should be updated after certain period of time. The portals must also contain the policies regarding the publication of false or prohibited information on the web , in case of any discrepancy, the this information should be deleted within the period of 36 hours of the knowledge regarding the same. LIABILITY ISSUES (cont.)

10. 3. SECURITY ISSUES Security issues deal with the taking care of all the sensitive information which may have a threat of unauthorized access or data loss due to virus or spyware attacks. These issues are generally related with the recreation and modification of personal information , so that, data remains safe with the contracting parties only. The major security issues can be found while the process of E-payment .

11. SECURITY ISSUES (CONT.) 1 . Authentication and Identification As there is no personal contact between the contracting parties, hence, the users must have authentic means to have access across the web. Digital Signatures are supposed to be the best measure for ensuring the authenticity and legitimacy of the users. The IT Act provides for a penalty of Rs. 1 Lakh or 3 years imprisonment in case of discrepancies.

12. SECURITY ISSUES (CONT.) 2. Privacy Some of the E-commerce platforms indirectly ask from their users regarding their personal preferences regarding certain goods and services, hence they need to maintain a certain level of privacy policies. As IT Act, does not provide for the direct actions in this regard, but the clause of “Right to life and personal liberty” has been added in the constitution of India and when it is mentioned in the Constitution, any suitable legal actions can be taken in case of discrepancies. Hence, two major concerns of E-Commerce platforms are: Unauthorized access to personal information Misuse of the personal information by these E-Commerce applications.

13. SECURITY ISSUES (CONT.) 3 . Data Protection: It means safeguarding users’ information against all types of thefts and misuse, as users have to pass certain personal information to the E-Commerce platforms in order to complete the transactions. IT Act divides the information into 2 categories: Personal Information: This means information related to the person, which may either directly or indirectly is capable of identifying a person. Sensitive Personal Data or Information: It may include an information like USER-ID or passwords, bank information (Card No., Account No. etc.), medical details and personal preferences. Penalty: IT Act Provides for the penalty of Rs. 5 Lakhs or imprisonment up to 3 years. Reasonable security practices and procedures in accordance with the requirements of the data protection rules should be maintained.

14. SECURITY ISSUES (CONT.) 4. Security of Systems: The main concern here lies with the internal security systems of the organization. Which means that the information should be protected from the unauthorized intrusion (internal threat) and hacking and virus attacks (External threats). 5. Security isuues in payment mechanisms : Banks have to provide online alerts to the cardholders for all the transactions irrespective of the amount, involving usage of cards at various channels. Bitcoins: These can also be used as the traditional currency or transferred like E-mail and can be used to pay for the goods and services, if these are accepted by the owner.

15. 4. CONSUMER PROTECTION ISSUES All the provisions of Consumer Protection Act, 1986 are applicable in case of an online transaction and user and the distributor, both come under the purview of the Act. Some of the penalties imposed under the CPA are: Removal of defects/ deficiencies Replacement of goods Return of paid price Pay compensation Discontinuance of unfair trade practices.

16. 5. INTELLECTUAL PROPERTY ISSUES There are certain intellectual property rights available for ensuring the security of one’s own created work and inventions . Copyrights are there to safeguard all kinds of artistic or literary work. Trademarks are there to protect the words and taglines whereas Patents are used to protect the scientific inventions. Some countries also provide patents for the software programs but there is no such provision in India.

17. Issues related to intellectual properties in E-Commerce: Designing an Application Use of third party content on website Hyperlinking and meta tagging Domain Names Liabilities for Infringement of Intellectual Properties: Injunction (temporary or permanent) Damages Order for presentation / seizure or destruction of accounts INTELLECTUAL PROPERTY ISSUES (CONT.)

18. 6. CONTENT REGULATION An E-Commerce organization should be aware regarding the laws and regulations related to the content regulation so that no objectionable content is published on the web. The organizations should take care of the following things: Obscenity Issues : No offensive content should be posted on the website, and in case of any discrepancy the provisions of Indian Penal Code and IT Act will be applicable . Defamation Issues : No such content should be publishes which can cause damage to a person’s reputation or personal life.

19. 7. JURISDICTION ISSUES As internet is a virtual world, growing rapidly, therefore it is quite difficult to set territorial jurisdiction. But at present in India the rules and provisions of Indian Penal Code and It Act are applicable in case of any emerging issue.

20. 8. TAXATION ISSUES Direct Taxes: All the provisions of Income Tax Act,1961 will be applicable. As the law states all the residents will have to pay tax on the income from worldwide, whereas non-residents have to pay tax only on their Indian source income. Indirect Taxes: all the provisions of GST, Service Tax, Custom Duties and sales tax will be applicable in case of E-Commerce transactions also.

21. THANK YOU!