Legal Issues in

e-Commerce
Today’s presenters
Content
What is e-commerce?
Communication
channels
Issues Surrounding E-
commerce
Obstacle, problems and
issue faced by companies
in engaging e-commerce
Impact of e-commerce
Legal Issues in
Ecommerce
 What is e-commerce?

From these two definitions, e-commerce simply means:

the implementation of business transactions through the information superhighway using computer networks.

In other words, business transactions are conducted in cyberspace.

To implement it, e-commerce requires new physical and legal infrastructure (such
as computer systems, telecommunication network, and cyber laws), new skills,
new workflows and new processes.
Buyer and Seller Roles In Commerce
 Communication on the Web

Mass media
One-to-many model
Flows from one advertiser to many customers
Seller is active, buyer is passive

Personal contact
One-to-one model
Interchange within a framework of trust
Seller and buyer are active
 Communication on the Web (cont.)

Web
Many-to-one/many-to-many model
Buyers can communicate with many sellers
Buyer actively searches, and controls the length, depth and scope of the search
Communication Channels
Levels of Trust
 Legal issues in E-commerce

Internet fraud and its sophistication have grown even faster than the Internet
itself. There is a chance of a crime over the internet when buyers and sellers do
not know each other and cannot even see each other. During the first few years of
e-commerce, the public witnessed many frauds committed over the internet. Let’s
discuss the legal issues specific to e-commerce. There are following issues
Fraud on the Internet
Copyright
Privacy & Security
Legislation Dilemma
 Fraud on the Internet

E-commerce fraud popped out with the rapid increase in popularity of websites. The
swindlers are active mainly in the area of stocks. The small investors are lured by the
promise of false profits by the stock promoters. Auctions are also conductive to
fraud, by both sellers and buyers. The availability of e-mails and pop up ads has
paved the way for financial criminals to have access to many people. Other areas of
potential fraud include phantom business opportunities and bogus investments.
 Copyright

The copyright laws protect Intellectual property in its various forms, and cannot be
used freely. It is very difficult to protect Intellectual property in E-Commerce. For
example, if you buy software you have the right to use it and not the right to
distribute it. The distribution rights are with the copyright holder. Also, copying
contents from the website also violates copy right laws.
 Privacy & Security

While shopping on the Internet, most people typically do not think about what is
happening in the background. Web shopping is generally very easy. We click on a
related site, go into that site, buy the required merchandise by adding it to our
cart, enter our credit card details and then expect delivery within a couple of days.
This entire process looks very simple but a developer or businessmen knows
exactly how many hurdles need to be jumped to complete the order. Customer
information has to pass through several hands so security and privacy of the
information are a major concern. The safety and security of a customer's personal
information lies within the hands of the business. Therefore businesses have to
give the customer first their guarantee, and second peace of mind, that the
information passed over is of no risk to any invading eyes.
 Legislation Dilemma

Electronic transactions separate e-business from traditional types of businesses.

When a transaction takes place, Who has jurisdiction? Who has the authority to
apply law over the transaction?
For example, if you buy a laptop in your local computer store, you know your
legal rights. If the computer does not work when you take it home, and the store
refuses to settle up, then you can probably take the dispute to your local small
claims court. But if you buy the same computer online, from a vendor on the other
side of the world, perhaps through a dealer based in yet a third country, then your
rights are a lot less clear.
JURISDICTION
 JURISDICTION

There is a dire need for a specific legislation to be

enacted to determine issues involving jurisdiction for e-
commerce disputes.
 Enforcement of Rights of the Parties
 Dispute Settlement
 Consumer Protection
 Data Protection
 Taxation
PRIVACY AND DATA
PROTECTION
 PRIVACY AND DATA PROTECTION –
ISSUES
In an online environment, use of innovative technologies and lack of secure systems
makes it easy to obtain personal and confidential information about individuals and
lack of secure systems makes it easy to obtain personal and confidential information
about individuals and organizations. Online consumers are confronted with privacy
issues like:

i. Sending spam (unsolicited) e-mails;

ii. Tracking activities of consumers by using web cookies; or

iii. Unreasonable check and scrutiny on an employee's activities, including their

email correspondence.
TAXATION
 TAXATION ISSUES

Difficulties in taxing e-commerce transactions:

 International taxation arises from cross border transactions for the
reason that the author of the transactions arises in one country
(called the Home State) and the sites of the transactions is in the
other country (Host State). Income arising out of such transaction
is subject to tax in both countries by virtue of personal
attachment to the transfer (in the Home State) and again by
virtue of economic attachment to the income itself (in the Host
State). Thus, this gives rise to double taxation of the same
income. This problem is generally solved by a Double Taxation
Avoidance Agreement between the two countries concerned.