This article has been written by S.Aditya who is an alumnus of K.L.E. Society’s Law College, Bangalore. This article purports to describe the e-commerce aspects of cyber law. The article dwells into the legislation governing e-commerce in India, the author also makes conscious note of the advantages and disadvantages of e-commerce. E-commerce ethics has been discussed in this article as ethics determines the longevity of the business endeavour in any market.
Table of Contents
Definition of E-commerce
E-Commerce refers to all the legal and regulatory aspects of the internet and the world wide web. Anything concerned with or related to or emanating from any legal aspects or issues concerning any activity of netizens and others, in Cyberspace comes within the ambit of Cyber Law.
‘Netizens’ is the integrated word comprising Internet + Citizens.
The legal framework of cyberlaw
Legal aspects of all the interactions taking place in the cyber world comprises the legal framework of Cyber Law. For Instance, Cyberlaw includes in its ambit the e-contracts executed via the opening of the website, various economic interactions, it also includes the Punitive provisions for the cyber crimes etc.
Cyberspace is a virtual medium. It is the conventional means to describe anything related to the Internet and the diverse Internet culture such as social networking, e-commerce, e-governance etc. The all-pervasive nature makes the role of the cyber law policy critical.
Since the internet is open to the entire globe and hence jurisdiction rests with all the courts of the world. Netizens: entity or person actively involved in the cyber world also called cyber citizens.
The Information Technology Act, 2000 and Objectives
The Information Technology Act, 2000 was enacted in the backdrop of the Global recognition of the need for the exposition of the cyber regulatory framework. UNCITRAL (United Nations Commission International Trade Law) in the year 1996 adopted the model law on e-commerce to bring uniformity amongst the countries of the globe regarding Cyber regulation. The Information Technology Act elaborates on Data privacy, wherein, with the growth of the Internet, the data of people are online and is vulnerable to be misused. The big data analysis is something which stands testimonial to this concern. Big Data analysis suggests that the searches made by people can be used to persuade the choices of people analysing their pattern of search made.
The new Information technology legislation has by defining cyber café created a better institution for catching hold of the perpetration of cyber phishing, which used to be earlier executed by such Cafe but now after the notification, the personal id has to be submitted to the shopkeeper in order to trace the perpetrator and create deterrence.
The Act by authorizing an inspector to investigate a cyber offence has increased the resource of the cyber investigation by manifolds. Earlier only a commissioner was allowed to investigate into the cyber crimes but after the amendment now the inspector may also investigate into a cyber offence.
The Legislation fundamentally aimed:
- To grant legal recognition to E-commerce which is the transactions carried out by electronic data interchange and other means of electronic means of communication.
- To recognize to keep the books of accounts by the bankers in electronic form: the books of accounts maintained by the bankers have always been a source of evidence and also subjected to scrutiny whereby making the banks answerable.
- To amend the Indian Penal Code, Indian Evidence Act, the Banker’s Book Evidence Act and the Reserve Bank of India Act, the Information Technology Act has recognised the e-evidence in a court of law making access to justice easier and making the Indian legal system dynamics with time.
- To recognize documents filed with the government: the e-Governance has been a great boon to the society in general as the resources are at easier access via the internet and also effectively reduces the need of middle man and hence cutting the need of corruption.
- To recognize Electronic data storage: the government recognises the Digi locker wherein the citizens can access their important documents such as voter id, PAN card, Driving License etc. Another news in hype was the demand made by the government towards the internet service providers to save the data in India.
- To recognize Electronic fund transfer between banks and financial institution: the advent of e-banking has infused a never seen before pace in the banking sector. It may not be wrong to suggest that the advent of net banking has almost brought the bank at the palm of the account holder.
- To recognize the authenticity of digital signature for authentication of any information or matter requiring authentication under law.
Types of E-commerce
E-commerce/e-business may be classified at large in the following six basic types:
Business to Business (B2B)
Refers to all electronic transactions of goods and sales that are conducted between two companies, generally between the producers and wholesalers. The famous website acting as a catalyst between such wholesalers and producers maybe India-mart.
Business to Consumer (B2C)
Various predominant e-commerce persisting in India wherein the customer gets a big market to purchase goods and services. Here, the E-commerce website serves as a platform for the sale of the goods directly to the end-consumer of the products. For instance Flipkart, Amazon, Myntra etc.
Consumer to Consumer (C2C)
Generally this model uses the online platform of money and various social media for its existence. The widespread known phenomenon of “OLX pe Bech de!” can be the best example to understand E-Commerce at the consumer to consumer-level basis. Example: eBay is one global example of this kind of e-commerce.
Consumer to Business (C2B)
When the Customer provides goods or services in exchange for money. For Ex. A customer review or the advertisement of a company by an influencer amongst his followers etc.
Business to Administration (B2A)
This e-commerce category refers to the services and products offered by the companies to the Public Administration. For Instance: the small company providing IT support to the local administrative body
Consumer to Administration (C2A)
This heading includes all the transaction whereby there is a payment made electronically towards the public administration such as taxes, health appointment.
Important Issues in Global E-commerce
Although E-commerce is something which brings so many advantages and utility it comes with its own set of technical difficulties and consequences. E-commerce being a Global phenomenon, its issues also have global characteristics. Few of the important issues in global e-commerce can be understood as below:
- Legal aspects of e-commerce: As discussed earlier, the e-commerce model legislation has been accepted by the UNCITRAL, but whenever an international model code is formulated it is accompanied with its own safeguards to the individual state sovereignty wherein the Municipal Legislation keeping the model laws as standards may deviate in accordance to its own municipal laws.
- E-security: the security of the end-users has always been a matter of grave concern globally since the internet has netted two ends of the globe now it is easier for a person(hacker) to sit in his remote physical location and cause the data or financial breach of the Victims.
- Jurisdiction: the Internet is open to the globe and hence the jurisdiction of the cases has been given to all the courts.
- Contracts and Liability: the E-contracts made in the cyber-world have been given legal recognition and the liabilities are also enforceable but the same becomes a mammoth task when parties belong to two different nations and have not made a clause regarding the application of specific law.
- Taxation: Various facets of taxation such as tax collection, collection of sales tax, determination of taxpayer’s residence, determination of the origin of income, jurisdiction are inherently a difficult task in the plane of taxation, but on integration with the fact of expansion of the market to the present scale of globe the calculation of the Taxes becomes additionally difficult, wherein various nations apply various tax evaluation methods in accordance to their own legislations.
- Copyrights: Global e-commerce is like an ever-expanding universe of sellers and buyers and products, it becomes difficult to keep a tap at the copyright violation in such a huge number to deal with.
Pros and Cons of E-commerce
Advantages of e-commerce
- It’s a Business platform unaffected by the barrier of time and distance: the space of functioning of E-commerce is the internet which may be accessed from any point of the globe with minimal setup required. The barriers conventionally faced by any business regarding the limitations of time and distance, is not there for the e-commerce houses.
- Lowers the Cost of sale: The availability of the big number of options at the very click allows to compare the cost of various commodities and services and allowing to select the best product at the best price.
- Cheapest means of doing business: the Advantage of having an entity based upon the server is that the business although occupies a digital space in servers but need not invest on the physical space whereby improving the quality of the products via the money saved on the means.
- Less delivery time and less labour cost etc: the Fundamentals of the pricing of any products or services is the amount of money or sweat invested into it, the e-commerce by annulling the need of physical contact reduces the efforts which might have been otherwise required.
- Provides solution by decimating cost in price fixation: the major chunk of price fixation depends upon the cost incurred by the business runner since e-commerce reduces the costs incurred by the sellers to a large extent hence it decimates the final cost before reaching the consumer.
Buyer’s Advantages from E-Commerce
- Reduction in the buyer’s sorting out time: The E-commerce functions predominantly in well-managed websites or applications having various filters to produce the list of products as wanted by the individuals in accordance with their individual needs.
- Better buyer decision: the availability of various viable options to compare to the E-space becomes an empowering platform in many ways for the customers. The access to the information available on the net about the product makes the customer more enabled to make better-informed choices.
- Less time spent in resolving invoice and order discrepancies: the major e-commerce players have standardised the resolution of the discrepancies through use of well-trained customer executives or recently trending bots having all the required answers to various queries raised before it.
- Increased opportunities for buying alternative products: availability of so many options at the very click allows the consumer to compare the cost of various commodities and services and allowing to select the best product at the best price and also venture into the purchase of the alternative products.
Disadvantages of e-Commerce
- Fewer people using E-commerce: Indian trade depended heavily on the local traders and businessmen who were unorganised to run the show at the grassroots levels. Average household still prefers the physical market over e-market, there has been a great increase in the number of internet users but it has yet not attained the preference similar to the level of Local markets.
- Unable to personally or physically examine the product: the physical examination of the product has always been a must for a conventional purchase of commodities, giving the purchaser a sense of control over the quality of the goods or services to be consumed, but in the era of e-commerce these conventional methods are losing their glory.
- Special and costly hardware and software are required: Although the presence in the digital world requires lesser investments that of physically purchasing a place but, the spending on the software then increases and so does the spending on the hardware.
- The website must be maintained and updated regularly: the platform of communication between the consumer and the seller being the internet, regular maintenance of the same is a must in order to keep up the tempo of the services offers to rise.
- Skilled people are required to maintain the website: the skilled people are required to not just maintain the level but to constantly keeping on improving into a better and better platform as it provides the safety to the surfers of the website from the antagonist software or viruses.
- Not suitable for perishable commodities: the situations where the money has to be spent on e-commerce items ends up increasing the investment made by the seller hence reducing his profits. Hence e-commerce is not suitable for Perishable commodities. But the entities such as that of Big Basket have tapped into this market sector of the consumers already.
Ethics in e-commerce
Ethics is always a crucial component of any field. The ethics in e-commerce is very important as the unethical or oppressive behaviour of a business entity may ruin the balance of the market. The Company’s core values and its guiding principles are very crucial for a new business to operate and forms a part of the Company’s ethics. The ethical and legal duty of the Company to maintain the secrecy of the data of the customer and invest upon the encryption of the same to save it from the hackers. The Ethical duty of the Companies also includes not to make a misleading statement regarding its products, i.e. they must not promise stars to the consumers just to gain the loyalty of the consumers.
The E-commerce though different in its digital presence from a brick and mortar business entity faces its own set of advantages and disadvantages. The legislation of the Information Technology Act, 2000 was made so as to make a cyber regulatory framework in accordance to the model laws passed in UNCITRAL. There are various kinds of e-commerce based upon the entities between whom transaction takes place. These e-commercial transactions pose various problems of the nature of security, jurisdiction, taxation etc. on global scale. The advantages and disadvantages of e-commerce are the facets of the system which has to be understood while dealing with the e-commerce system. Ethics, as discussed towards the end of the article, plays a crucial role in establishing the entity’s image in the market.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.