Open Access Research Article
REGULATION OF CYBER FRAUDS IN THE ARENA OF E COMMERCE LAW
Published Paper
Article Details
REGULATION
OF CYBER FRAUDS IN THE ARENA OF E COMMERCE LAW
AUTHORED BY
- ADV. RASHMI. A
Pursuing
LLM in Corporate and Commercial laws.
ABSTRACT
The barter system, the time when the
act of exchange of goods and services between people to satisfy their needs and
wants, gave birth to the term “trading”. Since then, trading has become an
integral part of our society. In the year 1989, when the concept of the
internet took birth, the virtual world became accessible at the fingertips of
people; it would not be wrong to say that the internet has absolutely become an
integral part of every person as it governs almost all the important aspect of
human lives like Education, shopping, gaming, and virtual socialization. In
today’s era, the buying and selling of goods and services are vastly done over
the internet. Any kind of such online transactions made over the internet will
be termed as Ecommerce.
From one angle, we can see how the
E-commerce sector is becoming an important part of our lives, but on the flip
side, we are also witnessing the dark side of this platform where people are
becoming the victims of cybercrime and cyber fraud. E-commerce is a platform
that involves monetary and informational transactions online, which is also
highly susceptible to data breaches and money theft. We should know that the
theft of information of someone causes more harm and damage than the latter and
puts millions of innocent internet users into mental trauma.
In order to tackle these problems,
the Indian government enacted the Information technology act in the year 2000.
However, this has just been an enabling statute to deal with cyber-related
issues and crimes. Other than this act, we can clearly observe that there are
no further dedicated acts to deal with in the matters of E-commerce law. The
nation is witnessing the growth of Digital India; the trajectory of the
e-commerce industry has been exponentially growing and is expected to beat the
US by 2034; by this analysis, we can determine how the sector has tripled its
growth from 2015. however, this is just the beginning of our technology sector
getting ready for an e-commerce warfare and competition of its own. At least
now, it's high time that we can get fresh regulation to give provisions and
regulations to anticipate the problems that might occur due to fraud and data
breach that happens in E- the commerce industry.
Therefore, this research paper
follows the doctrinal method of research examining various primary resources
like acts, statutes, commentaries etc., tries to make an in-depth analysis on-
1. why we need
stronger regulations in order to enable a friendly environment in the arena of
E-commerce
2. and we
shall also try to analyse various kinds of cyber fraud-related cases
3. explore the
grey areas as to where the Indian cyber regulation can do better and their
effectiveness in dealing with the legal issues involved in E-commerce.
And thereby conclude why the nation is
in dire need of new regulation and a proper framework for a hassle-free online
transaction where people can be safe, and their information can be protected,
and monetary transaction can take place in a secure manner.
INTRODUCTION
The legal domain of e-commerce in
India is multifaceted and dynamic, addressing several aspects such as contract
law, cybersecurity, data protection, and consumer protection. The Information
Technology Act, 2000 (IT Act) is the primary legislation of law that
governs e-commerce in India. A comprehensive framework for regulating
cyberspace, including e-commerce, is provided under the IT Act. The IT Act,
however, has come under criticism for being outdated and unable to keep up with
the quick speed of advancement in technology and the ever-evolving landscape of
e-commerce. Notwithstanding these recent advancements, the Indian e-commerce
legislation still has a lot of unclear provisions. For instance, India lacks a
comprehensive data privacy regulation, which is problematic given the growing
volume of private data that e-commerce companies gather and handle.
In the field of e-commerce law, cyber
fraud regulation is a complicated matter, but it is one that must be addressed
to safeguard customers and companies. To provide a more reliable and safer
environment for online transactions, a new legislative framework addressing the
critical areas of consumer protection, data protection, cybersecurity, and
payment security is required.[1]
Furthermore, e-commerce companies are
not yet subject to any particular cybersecurity regulations from the Indian
government. Companies that operate in
the Indian e-commerce sector must to be aware of the applicable rules and
legislation and take the necessary precautions to abide by them. This entails
putting in place suitable cybersecurity and data protection safeguards as well
as making sure that their online contracts adhere to Indian law.
All things considered; Indian
e-commerce legislation is still developing. However, the government is
dedicated to developing a strong legislative framework for online commerce that
safeguards the interests of both businesses and consumers.[2]
Some of the key features of
E-commerce is as follows:
i.
Data protection: The IT Act stipulates a number of
fundamental data protection measures, including the need to get consent before
collecting or using personal information. But the IT Act doesn't offer a
thorough foundation for data security.
ii.
Protection of customers: In the context of e-commerce,
consumers are given further protection under the Consumer Protection Act, 2019.
For instance, the Act grants customers the right to a fast and equitable
resolution of their complaints as well as the right to a refund or exchange
within seven days of receiving a goods.
iii.
Cybersecurity: E-commerce companies are not subject to
any special cybersecurity regulations under the IT Act. On the other hand, the
Indian government has released cybersecurity rules for online retailers.
iv.
Contract law: Online and offline contracts are formed
and enforced in accordance with the Indian Contract Act, 1872. Certain laws
pertaining to electronic contracts are also included in the IT Act.
RESEARCH QUESTIONS
1. What are
the gaps and challenges in the current regulatory framework? Which are the grey
areas as to where the Indian cyber regulation can do better and their
effectiveness in dealing with the legal issues involved in E-commerce.
2. Which are
kinds of E commerce fraud and analyse with case study.
3. How can
consumers be educated about the risks of cyber fraud in e-commerce and how to
protect themselves?
RESEARCH OBJECTIVES
The aim of
the research is to help create a stronger and more efficient legal and
regulatory framework to fight cybercrimes in e-commerce, safeguarding both
companies and customers.
i.
to determine the legal obstacles to controlling
cybercrimes in e-commerce, especially when dealing with international
transactions.
ii.
to create a legislative framework to control payments
made through online stores in an effort to lower the danger of cybercrime.
iii.
to evaluate the contribution of data protection laws
to the control of cybercrimes in online shopping.
iv.
to create suggestions for strengthening consumer
protection legislation in order to shield customers against online scams.
v.
to determine the best methods that companies may use
to stop and fight online fraud.
vi.
to provide consumer education on the dangers of
cybercrime in e-commerce and self-defence strategies.
RESEARCH METHODOLOGY
For this current research work, the doctrinal method of research has
been followed. In order to conduct this research, the reference of all the
Primary sources like Acts, statutes and bare acts have been made and the
reference of the secondary sources like websites, Legal databases like
Manupatra has been utilised for the purpose of this research.
ANALYSIS
why we need stronger regulations in
order to enable a friendly environment in the arena of E-commerce
The way we purchase has been
completely transformed by e-commerce, but it has also given fraudsters new
avenues to operate. Cybercrime in electronic commerce can manifest in several
ways, including credit card fraud, identity theft, and phishing schemes.[3]
Some nations have additionally
enacted particular rules and regulations to handle particular forms of cyber
fraud in e-commerce in addition to these basic guidelines. The Information
Technology Act, 2000, for instance, was put into effect in India and provides
prohibitions against cybercrime. The Act also created the Indian Computer
Emergency Response Team (CERT-In), whose duties include coordinating cyber
security measures in India and reacting to intrusions.
Regulators' best efforts
notwithstanding, cyber fraud in e-commerce persists. However, hackers are
finding it harder to operate as a result of the increased regulation of
e-commerce.
Here are a few particular instances
of how regulations are being applied to stop cybercrime in online shopping:
i.
European Union: The General Data Protection Regulation (GDPR) in the
European Union mandates that e-commerce businesses get consumers' consent
before collecting or using their personal data. Customers now have the ability
to view, update, or remove their personal data thanks to the GDPR.
ii.
The United States: The Federal Trade Commission (FTC) in
the US has released rules for online retailers on how to safeguard customer
information. In addition, the FTC has taken legal action against online
retailers that have neglected to secure customer information.
iii.
China:
According to China's E-Commerce Law, online retailers must confirm the
legitimacy of their vendors and take action to stop the selling of fake goods.
Additionally, customers have the legal right to return items they bought online
for a complete refund within seven days.[4]
Cybercrime legislation in e-commerce
is a complicated and developing legal field. Regulators' dedication to shielding
customers from this kind of deception is evident, though.
Which are the
grey areas as to where the Indian cyber regulation can do better and their
effectiveness in dealing with the legal issues involved in E-commerce.
There are a few murky areas under the Information Technology Act, 2000
(IT Act), which codifies Indian cyber legislation, and they might be filled in.
These consist of:
i.
Privacy: In the context of
e-commerce, the IT Act lacks a thorough structure for safeguarding user
privacy. This has raised questions about how e-commerce platforms gather and
handle personal data and the possibility of data exploitation.
ii.
Content regulation: The IT Act gives
rise to some restricted authorities concerning content regulation, although
these are not clearly outlined or put into practice. This has made it harder to
handle new issues like hate speech and disinformation, and it has also created
confusion about what material is allowed on e-commerce platforms.
iii.
Protection of intellectual property:
The protection of intellectual property rights in the internet space is not
sufficiently covered by the IT Act. This has made it more difficult for
companies to defend their intellectual property rights online and opened up
gaps that can be taken advantage of by infringers.
iv.
Domain name issues: There is no set
procedure for handling these disputes under the IT Act. Due to this, many
instances are now being tried in court, which may be expensive and
time-consuming.[5]
v.
Antitrust: Anti-competitive actions
in the e-commerce industry are not specifically addressed by any provisions in
the IT Act. This has sparked worries about the possibility of big e-commerce
platforms abusing their position of market dominance.
Which are kinds of E commerce fraud and analyse with case study
E commerce fraud is a kind of
criminal activity that includes using a computer or the internet to trick or
take advantage of someone in order to get money. Cybercriminals employ a range
of techniques, including identity theft, ransomware, malware, and phishing
campaigns, to perpetrate cyber fraud. Victims of E commerce fraud may suffer
greatly on an emotional and financial level. E commerce fraud victims could
experience financial loss, credit damage, or even extortion or blackmail.[6]
Following are some of the infamous
kinds of E- commerce frauds that people should be aware of:
1.
Classic Online Credit Card Fraud: This kind of e-commerce fraud is the most prevalent and is
usually committed by inexperienced thieves.
This kind of attack
involves the fraudster obtaining credit card information that has been stolen
in one way or another (for example, by buying credit card credentials that have
been stolen from the dark web or by breaking into someone's credit card account
and taking note of the credentials). The fraudster then uses the credit card
credentials that they have obtained to make an online purchase.
The con artist may employ
a number of ruses to make sure they can get their hands on the products (such
as sending them to re shippers) and may also employ a number of strategies
(such as using home proxies) to conceal their identity.[7]
1. Phishing: Phishing is a kind of social
engineering assault in which a hacker sends a phony text message or email
purporting to be from a reputable organization, bank, or government agency.
Frequently, an attachment or link in the email or text message can download
malware or take the recipient to a phony website when clicked. The victim can
be asked to submit sensitive information, such their credit card number or bank
account number, after they are on the fraudulent website.
2. Malware: it is harmful software that can
take data from a computer, harm it, or both. Numerous channels, such as USB
devices, compromised websites, and email attachments, can propagate malware.
3. Ransomware: Malware that encrypts a victim's
data and requests a ransom to unlock it in return for the decryption key is
known as ransomware. Attacks using ransomware may be incredibly expensive for
both people and companies.[8]
4. Identity theft: When a thief takes a person's name,
Social Security number, or credit card number and utilizes it to perpetrate
fraud or other crimes, it is known as identity theft. For victims of identity
theft, there may be severe financial and legal repercussions.
KEY
FINDINGS AND SUGGESTIONS
HOW TO FIGHT BACK AGAINST E COMMERCE
FRAUD?[9]
1. Maintain PCI Compliance: The Payment Card Industry Data
Security Standard (PCI DDS) is a generally accepted collection of guidelines
that make sure businesses, such as e-commerce enterprises, that store and handle
credit card and cardholder data do so in a safe manner. Basic security
measures, such as putting a firewall between your internet connection and any
system that stores credit card details, are the outcome of PCI compliance. In
the end, PCI compliance is required, therefore in order to avoid any sanctions
or penalties, you must make sure that you are adhering to the applicable PCI
requirements.
2. Be Extra Watchful During the Holidays: With more people shopping online on
Black Friday, Cyber Monday, and other December holidays, the holiday season
might be one of the most important times for your company. Additionally,
customers are distracted and busy during these hours, and they frequently take
less safety precautions.
The truth is that during these months,
a lot of con artists take advantage of merchants who are too busy or distracted
to notice possible fraudulent activity. Be especially cautious over the
Christmas season if you get a large volume of rush orders, small-dollar sales,
or foreign orders. These actions may indicate that con artists are trying out
ruses such as card testing fraud.
LEGAL
PROVISION
PROVISIONS UNDER IT ACT W.R.T.
INFORMATION TECHNOLOGY ACT
India's main statute against
e-commerce fraud is the Information Technology Act, 2000 (IT Act). Any conduct
that exploits information technology to perpetrate fraud or deceive others is
considered e-commerce fraud according to the IT conduct.[10]
Some of the
specific provisions of the IT Act that deal with e-commerce fraud include:
1. Section 43: This section prohibits the use
of information technology to cheat or defraud any person.
2. Section 44: This section prohibits the use
of information technology to make false or misleading representations.
3. Section 46: This section prohibits the use
of information technology to commit forgery.
4. Section 66C: This section prohibits
the use of information technology to commit identity theft.
5. Section 66D: This section prohibits
the use of information technology to commit cheating by impersonation.
Additionally, the IT Act stipulates
penalties for e-commerce fraudsters. E-commerce fraud carries a maximum
sentence of three years in jail and a maximum fine of Rs. five lakhs.
There are other Indian statutes that
can be utilized to punish e-commerce fraud in addition to the IT Act. The
Trademark Act, the Consumer Protection Act, and the Indian Penal Code are some
of these laws.
CONCLUSION
In the field of e-commerce law, cyber
fraud regulation is a complicated matter, but it is one that must be addressed
to safeguard customers and companies. To provide a more reliable and safer
environment for online transactions, a new legislative framework addressing the
critical areas of consumer protection, data protection, cybersecurity, and
payment security is required.
Adopting stricter legal safeguards
for protecting sensitive data, information, and intellectual property online
becomes essential as technology develops and leads to breakthroughs. The advent
of innovative cybercrimes directed at intellectual property necessitates the
creation of new rules that go beyond conventional prohibitions. This is due to
the fact that the current legal system is unable to handle the particular
difficulties involved in identifying and apprehending those who violate
intellectual property in the online realm. The Information Technology Act now
governs the e-commerce industry in India, with specific legislation pertaining
to the protection of intellectual property. Legal professionals are essential
in ensuring that e-commerce businesses operate in accordance with current laws
by striking a balance between the potential of technology and realistic
regulatory constraints.[11]
To prevent e-commerce fraud, the
Indian government has also implemented a variety of measures. Among these
stages are:
Creating a National Cyber Crime
Reporting Portal: Victims of cybercrime can report offenses online using the
National Cyber Crime Reporting Portal.
Giving law enforcement agencies
cybercrime training: The Indian government has given law enforcement agencies
cybercrime investigation and prosecution training.
Developing self-regulatory mechanisms
in collaboration with industry stakeholders: To stop and identify e-commerce
fraud, the Indian government is collaborating with industry stakeholders to
establish self-regulatory systems.
In order to combat the problem of
cyber fraud in the e-commerce industry, the Indian government has established the
National Cyber Crime Reporting Portal and trained law enforcement organizations
on how to investigate and prosecute cybercrimes. To create a thorough and
efficient regulatory framework for e-commerce legislation, further effort must
be done.
However, there are issues with
taxation, data privacy, consumer rights, and cross-border trade when there is
no explicit legislation in place. The Indian government, business leaders,
attorneys, and other interested parties must work together to resolve these
problems. Adequate legal framework creation necessitates a thorough e-commerce
policy that promotes sustainability and inclusion. A strong regulatory
framework that protects consumer rights, promotes domestic and global trade,
and creates an open and predictable business climate for investors and
entrepreneurs should be in place to support this approach. India can fully
realize the promise of e-commerce as a major accelerator for economic growth
and development by fostering an enabling environment.
REFERENCES
i.
India:
e-commerce market size 2030 Published by A. Minhas & 16 https://www.statista.com/statistics/792047/india-e-commerce-market-size/
ii.
Indian
e commerce law under Cyberlaw (IT act). King Stubb & Kasiva. (2022, July
13). https://ksandk.com/regulatory/indian-e-commerce law-under-cyber-law/
[1] Rao &Metts, Electronic Commerce
Development in Small and Medium Sized Enterprises: A Stage Model and its
Implications 9 (1) Business Process Management Journal 11-32 (2003).
[2] See Dearmon Valorie, Risk
Management and Legal Issues (Jones and Bartlett Publisher, LLC) Available on http://www.jblearning.com/samples/0763757144/57144_CH15_470_493.
pdf
[3] Eisingerich, Andreas B.;
Kretschmer, Tobias, In E-Commerce, More is More, 86 Harvard Business Review
20–21 (March, 2008):.Available on http://hbr.org/2008/03/in-ecommerce-more-is-more/ar/1
[4] Ramakrishnan Et Al., E-commerce in
India-Growth and Prospects, 2(3) Asia Pacific Journal of Research in Business
Management 101-114 (2011).
[5] Ali.Z. Marossi, Globalization of
Law and Electronic Commerce, 'Toward a Consistent International Regulatory
Framework' (Delta Fredericton New Brunswick, Canada The Eighth International
Conference on Electronic Commerce, August 14-16, 2006).
[6] The Electronic Commerce and
Consumer Protection Group (“E-Commerce Group”), See
http://www.ecommercegroup.org/guidelines.htm
[7] Delamaire, Linda & Abdou,
Hussein & Pointon, John. (2009). Credit card fraud and detection
techniques: A review. Banks and Bank Systems. 4.
[8] Ramesh, Sai & Ck, Yogesh.
(2022). Google Play Malware Detection based on Search Rank Fraud Approach. KSII
Transactions on Internet and Information Systems. 16. 3723-3737.
10.3837/tiis.2022.11.014.
[9] Dharmavaram, Vijaya Geeta. (2011).
Online identity theft - An Indian perspective. Journal of Financial Crime. 18.
235-246. 10.1108/13590791111147451.
[10] Shaikh, Nihal & Chudasama,
Dhaval. (2021). Research on Cyber Offenses under Information Technology Act,
2000. 8. 2021. 10.37591/RTPC.
[11] Krishna
Prasad, Smitha, (Draft) Paper on Information Technology Act, 2000 and the Data
Protection Rules (December 30, 2017). Available at SSRN: https://ssrn.com/abstract=3094792 or http://dx.doi.org/10.2139/ssrn.3094792
Article Information
REGULATION OF CYBER FRAUDS IN THE ARENA OF E COMMERCE LAW
Authors: ADV. RASHMI. A
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/02/01
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
All research articles published in International Journal for Legal Research and Analysis are open access and available to read, download and share, subject to proper citation of the original work.
Disclaimer: The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of International Journal for Legal Research and Analysis.