This document discusses the key regulatory aspects of e-commerce, including legal issues, security issues, consumer protection issues, intellectual property issues, content regulation issues, liability issues, taxation issues, and jurisdiction issues. It provides details on the types of e-contracts formed in e-commerce and requirements under Indian law. It also explains issues around intermediary liability, privacy, data protection, authentication, and payment security. The document outlines the applicable consumer protection and intellectual property laws in India and penalties for non-compliance. It discusses challenges around setting territorial jurisdiction for online transactions and taxation of both direct and indirect taxes.

1. REGULATORY ASPECTS OF E-
COMMERCE
P R E S E N T E D B Y :
M A M T A B H O L A
( A S S I S T A N T P R O F E S S O R P G D E P A R T M E N T O F
C O M M E R C E A N D M A N A G E M E N T A R Y A C O L L E G E ,
L U D H I A N A )

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 Digital 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
1. 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;
a) The intermediary merely provides access to the communication system
over which information is transmitted.
b) The intermediary does not initiate the transaction or alter any information
contained in the transmission process.
c) 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:
a) Unauthorized access to personal information
b) 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:
A. Personal Information: This means information related to the person, which may either
directly or indirectly is capable of identifying a person.
B. 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:
a) 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.
b) 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!