E-Commerce In India: The Urgent Need For A Better Legal And Regulatory Framework

What Is E-commerce?

Any form of business transaction that is done online or virtually through the internet comes under e-commerce. The most common example of e-commerce can be online shopping (shopping from Amazon, Myntra, and Shein, etc). It can also entail other types of activities such as online auctions, payment gateways, online ticketing, and internet banking.

There has been a rapid increase in the way people are approaching e-commerce apps. Mobile commerce, or m-Commerce, is a rapidly growing new avenue of e-Commerce that’s mostly driven by the expanding market and influence of smartphones and millennials’ comfort with shopping online. In 2018, the m-Commerce sector enjoyed a 39.1% increase in sales compared to the previous year.

Top Advertising agencies make used for representation purposes only. What Are The Various E-Commerce Laws And Regulations?

Information Technology Act, 2000

Information Technology Act, 2000 was the first enacted law by the government of India on e-commerce. The major purpose of this enactment was to give effect to the UNCITRAL Model Law on Electronic Commerce, 1996. The General Assembly of the United Nations had adopted a resolution on January 30, 1997, commending the Model Law on Electronic Commerce for favourable consideration by the Member States.

The main aim of this Act was to provide legal recognition to the transactions that were carried out by the means of the internet and there was an exchange of electronic data by electronic means of communication (e-commerce). There are many provisions for legal recognition of the records and data that are available online. It also has digital signature rules for the attribution of e-records. The Act establishes a regulatory framework and it also lays down certain punishment for cyber crimes and offences.

Most of the provisions are related to the Regulation of Certification Authorities i.e. appointment of a Controller of CAs, the grant of licenses to CAs, recognition of foreign CAs, etc. There are offences related to cyber crimes such as hacking, damage to computer source code, publishing of information which is obscene in electronic form, breach of confidentiality and privacy, and fraudulent grant and use of digital signatures punishable.

There had been an increased number of crimes which were done through internet and the electronic media was misused by many, which is why there was a dire need to come up with cybersecurity laws so that electronic medium can also be used keeping in mind all safety factors and privacy concerns. 

Information Technology (Amendment) Act, 2008

The Information Technology (Amendment) Act, 2008 was also incorporated to give an implementation of the UNCITRAL Model Law on Electronic Signatures, 2001 in India. The previous IT Act of 2000 was amended to make it more technology-neutral and recognized electronic signatures over-restrictive digital signatures. There were new changes such as the introduction of the concept of e signature, amendment of the definition of intermediary, etc.

To control the problem of privacy, the states assumed specific powers to control the website and to also keep a check on the misuse leading to tax evasions. This Act recognized the legal validity and also the enforceability of the digital signatures and electronic record first time India. The aim behind it was to have a secure pathway for the digital records and electronic signatures which had become an important concern since the use of electronic mediums had boosted top a great extent.

Issues Regarding E-Commerce 5 Ways You Can Improve Your eCommerce Store's Security To Get Ahead Of Your CompetitionImage used for representational purposes only.

Whenever there is a contractual relationship between two parties, there are high possibilities of disputes to take place. These disputes can be on contract terms, regulations, conditions, and negotiations. Issues related to e-commerce are copyright issues, data protection issues, and completions issues as well. Intellectual Property Rights is one of the foremost considerations for any company that is entering into an e-contract or in e-business which includes e-commerce transactions. Internet is very vast and has minimum regulations regarding protection and safety thus;

Firstly, protection of IPR (Intellectual Property Rights) is a major concern in e-business and a challenge too. Protecting IPRs in the physical world is well defined and regulated but, when it comes to the field of e-commerce, the transactions are not that. Similar domain names registered by two people or identical domain names not registered are few problems that are commonly faced. There is no specific Indian Law on domain names except the judicial pronouncements, which is not properly defined and protected.

Secondly, whenever there is an e-commerce transaction, it is very difficult to complete that online transaction without collecting some form of personal information regarding the user which is also concerned with their privacy. The IT Act deals with this concept of privacy in a very limited manner such as it only provides that privacy of a person is deemed to be violated when images of her private body areas are captured, published or transmitted without her consent in the circumstances where she would have had a reasonable expectation of privacy and a punishment of imprisonment of up to 3 years and/or fine of up to INR 2 lakhs.

Personal information relates to the identity of personal and sensitive personal data includes information on password, bank account or credit card or debit card or other payment instrument detail, etc. There is only monitory compensation. Therefore, there are frequent concerns regarding privacy.

Lastly, All the e-contracts which are entered online are to be governed by the Indian Contract Act, 1887. Acceptance of the terms and conditions is the foremost requirement for any e-contract to be valid. There are ‘click-wrap’ contracts i.e. contract created by clicking on an ‘I accept’ tab. ‘Browse-wrap’ is also a recognized form of implied contract which is created by mere browsing of a website.

All principles of contract law implied to e-commerce transactions. Some issues arise out of an e-commerce contract that can make the contract void-ab-initio. Certain provisions under the Indian Contract Act deal with unconscionable contracts such as when the consideration involved in the contract is opposed to public policy. Therefore, Indian laws speak or guide very less on some serious issues related to the validity of e-contracts.

Through the years, there has been rapid growth in the e-commerce sector which also created the need for protecting accountability and creating an effective regulatory mechanism that will have to strengthen the e-commerce sector and legal infrastructure as well. There have been frequent concerns raised regarding weak cybersecurity laws in India and the absence of the regulatory framework is why the e-commerce industry faces so many challenges instead of enjoying a consumer-friendly and business-confident e-commerce environment in India.

The government should develop a legal framework for both the domestic and international trade in India to flourish and to prevent fraud, consumer protection issues, privacy issues, intellectual property rights issues, etc. This can be a measured step to guide entrepreneurs, consumers, and even the court in a manner that this fast-emerging e-business trend can be run effectively.