eCommerce: Legal Challenges

Ecommerce or electronic commerce is the buying and selling of goods and services over the Internet. The buying or selling of goods on the online platform is known as Ecommerce Business. The value of Physical Analogue Stores[1] is decreasing day by day due to ecommerce business, nowadays five out of eight companies are doing business by ecommerce. We have to say that a major part of the business is covered by ecommerce. Doing business online does not mean that you are not bound by legal issues or policies. In Ecommerce business, you have to face a lot of legal challenges and these are even more complicated than the issues of physical analogue stores. We know that ecommerce business is making our life easier day by day but in ecommerce there is a lot of risks. Cybercrime[2] is one of the serious crimes in the present time and it gives a lot of tension to the ecommerce businessmen. Hackers[3] are doing theft in ecommerce business but due to high level of comfort in ecommerce businesspeople is interested in doing this.

Introduction

Electronic commerce is a business model that lets firms and individuals buy and sell things over the internet or on the online platform. Ecommerce operates in four major market segments. Ecommerce can be conducted over computers, tablets or smartphones means a device which runs with the internet. In today’s time almost every product is available on the ecommerce business like books, music plane tickets and many more. Ecommerce has helped businesses to establish a wider market with cheap prices and more varieties of products. Now it is easy for the people to compare the products of the same variety, but different quality and features and they can buy the best product for them. Not to be outdone individual sellers have increasingly engaged in online business via their websites.

With the advance and increased use of social media, online business or ecommerce business is also increasing. Online functioning about business does not mean that you can escape legal matters. Ecommerce business means that buying or selling goods through an online platform. Nowadays doing online business is very common and many new emerging companies started their business by the online platform. But the online platform is not so safe as physical analogue stores because of hackers and cybercrime. There are a lot of legal problems that are faced by companies in doing online business. Ecommerce means electronic commerce i.e. doing business with the help of internet. If we do not take care of the legal issues on time, then serious problems occur in the ecommerce business.

There are some common and major legal issues which are as follows: –

Incorporation[4] Problem

If your company is merely operated via a website which is not incorporated, can become a major problem. Product sold or purchased by a website that is not incorporated is illegal and you cannot claim any right if any fraud or corruption happens. Your business has no shelter if it is not incorporated. Incorporation of business is one of the necessities to make your business successful.

Privacy Issues

Privacy is the major problem that occurs in ecommerce business and it creates a problem both for businessmen and customers. When consumers buy any product from any website or ecommerce then they buy products with the belief that their information must be kept confidential. But the leakage of consumer information creates a lot of problems to consumer and businessman. This leakage of information decreases your potential consumers and also put a question mark on the image and reputation of your company. Moreover, you have to face serious legal problems according to the law of which you are the subject.

Detailed Terms and Conditions

According to law, a business firm does not need to have a term and condition page, but it is a smart decision by the company to include a term and condition page. But if the company have detailed terms and conditions page and consumer agreed to them then they are legally enforceable. It is a difficult decision in ecommerce business that what to include in terms and conditions and what is not to be included. The terms and conditions are the ground rules for the website and limit the liability if anything went wrong. There are different T&C for every website, but some common terms are: –

  • Return policies
  • Tax regulations
  • Delivery terms
  • Refund Policies

Copyright Protection Issue

The issue of copyright is a serious issue and it can put you to the end of your e-business. When you publish content for your website and if it is matched to the content of any other website then the owner of that website can easily sue you for copyright. It does not matter that you intentionally theft the content or the content is coincidentally[5] matched. You can be able to see the content of many websites because some websites do not put the content confidential. This legal problem creates problem to the ecommerce businessmen, not to the customers.

Managing Fraud and Securing Electronic Transaction

There are many incidences related to fraud and online securityare entertained in the court every year and the rate is increasing with the increase in ecommerce business. A report projected that the rate of fraud will grow by 14% annually up to 2023. This is a serious problem for the ecommerce businessmen because they will get the losses of fraud during online payment. If you are hacked, then you have to inform the customers and the public. In many countries like U.S., the companies are obligated to inform the public if they are hacked.

Trademark[6] Security Problem

In the field of ecommerce not having a trademark is a very serious issue and cause legal problems. Trademark is the company’s logo and symbol mean the representation of your business all over the web, it must be protected. If your trademark is not secure, then it will not take time to be infringed by anyone. Hackers can easily infringe your trademark and you are unable to do anything about it. The matter of trademark infringement is very hazardous for your business and one of the serious legal problem faced by ecommerce business.

Taxes

We know that every business in the world must pay taxes because it is a legal principle or natural principle from the time of rajas. Every country has different rates of taxes and this will be the problem for the ecommerce businessmen of some countries. The common issue faced by ecommerce start-ups is the high taxes in some countries like India. In ecommerce business main problem faced by start-ups is the taxes and also a reason people scared in opening a new business.

In the case of Amway India Enterprises Pvt. Ltd. v. 1Mg Technologies Pvt. Ltd. & Anr.[i] Plaintiff filed a suit that his product is sold by shopkeepers without his permission. Later in investigation it is found that products are sold illegally, and no benefit was given to the plaintiff. Many products of Amway are advertised and sold on various ecommerce platforms and hence court gave a decision against the defendant and told him to fulfil the losses.

Conclusion

Ecommerce business means selling or buying goods and services with the help of internet. In ecommerce business products are sold by a firm with the help of internet. But doing online business does not mean that you can escape from legal matters. In doing online business there are many legal problems that a businessman’s face. In today’s time electronic commerce is a major source of business because it makes our life easier and it is comfortable for both businessmen and customers. But you cannot deny that there is a lot of risk in ecommerce business related to data security and online transaction. Cybercrime is increasing day by day because people are showing a lot of interest in ecommerce business. Legal problems faced by ecommerce must be looked seriously by the businessmen to stay away from it.

FAQs

Does Trademark Necessary to Authenticate the Logo of a Company?

Yes, the trademark is necessary for the representation of your business all over the web.

Does A Terms and Conditions Page Necessary for A Company?

No, a company does not need to have a Terms and Conditions page.

What Is the Reason Behind the Increment in The Number of Ecommerce Business Companies?

Increasing use of media and the comfort in doing online business are the main reasons.

What Happens If the Content of One Site Is Coincidently Matched with Another Site?

If the content matches, then the company who writes the content first can sue another company for copyright.

What Is the Full Form of Ecommerce?

Full form of ecommerce is electronic commerce.

References


[1] Stores from which you can buy products physically.

[2] Crime related to internet, online banking, etc.

[3] Criminals who illegally theft the data of others.

[4] The process of constituting a company as a legal corporation

[5] Unintentionally or not wanted to do

[6] It is a sign which makes the logo and symbol of a company authentic.


[i] 2019 Delhi High Court, CS. 410/2018.

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