Introduction

In the last decade of twentieth century, the Indian marketplace witnessed a host
of economic reforms that culminated into a gradual opening up of the market eco
nomy with the objective of eventual integration into the world economy. This era
of globalization also saw the national trade and fiscal policies being subjecte
d to a host of reforms on the policy and procedural level with a view to facilit
ate international trade. The information technology revolution was soon to follo
w, and terms such as the Internet and electronic commerce (hereinafter referred
to as "e-commerce") began to be increasingly used in the context of trade, besid
es transforming the methodology of business transactions altogether. Interorgani
zational business process has achieved new heights of efficiency with the rapid
advent of technology and online platforms. An ever-increasing number of consumer
s are now turning to the online market and e-commerce facilities to procure good
s and services at the
most competitive price.
A slew of new opportunities has been created for business and commerce by the In
ternet, with the barriers between the different parts of the world having been b
lurred, leading to the creation of a single global cyber market. For the consume
rs, this means getting easy and affordable access to goods and services from dif
ferent corners of the world at the click of a button or a mouse, while for the s
ellers of goods and service providers, this accords a huge opportunity to tap in
to consumer bases they never had prior access to at a fraction of the costs earl
ier envisaged. Despite these benefits, the growth of cyber market can never reac
h its true potential, unless ambiguities such as non-applicability of national l
egislations in the online platform for consumer protection, jurisdictional confl
icts and technological barriers used by certain producers can be overcome at the
earliest; such ambiguities have collectively sapped ordinary consumers of a cer
tain amount of confidence when it comes to placing reliance on the online market
.
What does e-commerce mean?
There is no legislation relating to consumer protection that provides a workable
definition of e-commerce as such. It can be looked upon as any type of business
or commercial transaction that involves transfer of information over the Intern
et, whether it be via consumer-oriented retail websites, or websites dealing wit
h music or auctions, or business corporations engaging in trading in goods or se
rvices. Another acceptable definition of e-commerce can be the use of electronic
transmission medium to engage in exchange, including buying and selling of prod
ucts and services requiring transportation, either physically or digitally, from
one location to another. A wide range of activities may fall within the ambit o
f such a definition, such as electronic presentation of goods and services (this
includes putting up e-catalogues on websites to be browsed by potential buyers
for selection of appropriate goods for purchase, perhaps with the additional fac
ility of searching made available), online order placement and presentation and
receipt of bills thereof (this includes the user being able to specifically iden
tify the goods/services he wishes to procure, following which he is presented wi
th well-defined terms of payment and delivery and automated billing system), aut
omated customer account inquiries (this consists of an integral part of customer
support and can assume various forms) and online payments (the e-retailer merch
ant can tie-up with third party handlers for payment verification and specialise
d methods be set up and back-end connectivity ought to be established), to name
a few. Depending on the parties involved in such transactions, most of them can
be classified into the following categories of business to consumer (B2C), busin
ess to business (B2B) and consumer to consumer (C2C).
With a growing number of the Indian populace getting attracted towards the usage
of online platforms and cyber media with the passage of time, it is perhaps ine
vitable that e-commerce ends up providing domestic and foreign traders an ever-g
rowing opportunity to ply their business in the Indian market.
How is the online market different from a real market?
One of the major reasons consumers find it different to navigate within an onlin
e virtual market is that there are certain characteristics, which set it apart f

rom an ordinary physical marketplace for business transactions. The traders need
not confine themselves within territorial boundaries to sell their products and
services. They can reach out to consumers across the world. The consumers too c
an avail of several advantages. These include having a wide range of products to
choose from, saving time and effort, obtaining more extensive product informati
on and the advantage of cross-brand comparison, the convenience of having the pu
rchased goods and services delivered to their doorstep, being able to avail of t
he best quality of products for a competitive price by making informed choices a
nd so on. The interactive nature of computer networks allows communication betwe
en buyers and sellers, which separates it from a mere advertising medium and ope
ns the possibilities for conveyance of offers and acceptances, as well as negoti
ations related thereto. The portable nature of the computer and the Internet, ch
iefly owing to the present-day proliferation of wireless networks, renders it ac
cessible from any place of convenience, which of course also allows fraudulent a
ctors to evade surveillance.
How e-commerce is flourishing in India
On the one hand, new businesses have flourished in the light of such development
s, such as online platforms like Flipkart, Snapdeal, Amazon, which have revoluti
onised the manner in which Indian consumers buy and sell products and services.
On the other hand, existing goods and service providers are gradually migrating
to such platforms to increase their sale and spread their businesses
the Indian
Railways is one such example, with the IRCTC website for railway ticket booking
being one of the most frequently visited website in the whole country, besides h
aving one of the highest daily transaction levels in terms of money.
Whether it be financial institutions such as banks and insurance and mutual fund
services providers, or entertainment service providers such as movie halls, pre
sence in the online market today is perhaps inevitable if one is to meet commerc
ial success. At present, the e-commerce market in India is valued over INR 21 cr
ores and it is supposed to grow by at least 6-7 times in the next three years. C
ompared to the global growth, however, this is merely a small handful. At the sa
me time, it is promising that Indian users of the Internet are using more and mo
re of the latter's connectivity to perform routine tasks like communication, ent
ertainment, daily chores, bill payment and shopping.
Online transactions: Difficulties and shortcomings
Despite the aforesaid advantages, online markets and e-commerce are not without
their pitfalls and shortcomings either. Every other day, one gets to hear about
consumers falling victim to online frauds, partly owing to the greater exposure
of credit and debit card-related information. Instances of sub-standard products
and deficiency in product delivery services are there manifold. Misleading adve
rtisement and promotions are exhibiting a disturbingly popular trend too. The si
tuation if anything is worse in the developing countries, with the pitfalls thre
atening to turn into a contagion for lack of a separating barrier between jurisd
ictions. Anonymity of network users using the technology brought forth by the In
ternet can also pose certain consumer concerns regarding the viability and secur
ity of the medium.
There is little assurance of quality of goods and services, applicability of the
rules pertaining to warranty or guarantee, which coupled with lack of protectio
n from hazardous materials and a range of unfair trade practices, may give rise
to grave concerns.
Along with anonymity, comes uncertainty on the part of consumers, when it comes
to determining exactly whom they are dealing with online this holds true for bot
h B2C and C2C transactions, but mostly the latter. Unlike when a consumer tries
to shop from, say, a convenience store, where he can automatically get the trade
name, location and means to contact in case the goods bought turn out to be def
ective, similar facilities and information are seldom available in case of e-com
merce. Next comes the problem relating to privacy and invasion thereof, involvin
g electronic footprints of consumers left behind on online platforms that can be
used to track down their preferences and activities in the cyberspace. In the l
ight of the possibility of this data being mined and sold to interested parties,
who may be prone to abuse it, concerns regarding cyber privacy gains further si

gnificance. In case a consumer makes his choice based on the geographical locati
on of the manufacturer or service provider, or the jurisdiction the latter is su
bjected to, getting such information with any cogent hope of accuracy is difficu
lt in online transactions, given the website may not reveal it readily. The prac
tice of charging consumers hidden costs in course of e-commerce, which they are
not expecting to have to pay, is another of the concerns involved. Such costs ma
y involve components like delivery charges, handling fees, taxes, customs duties
, or brokerage.
Displaying the total cost payable with clarity while a consumer is making the ch
oice is therefore a practice that, despite its urgent need, the law is till date
silent about. Consumers need also be assuaged of their doubts about the exact p
rocedure to seek refund or replacement in case the goods delivered at their door
step turns out to be incomplete or defective. This process should be made as les
s complicated and as much hassle-free and expeditious as possible. One of the bi
ggest threat to consumer welfare in e-commerce is the proliferation of fake webs
ites with extraordinary and attractive offers, which leave the consumer little s
cope to verify the credibility of such websites or offers before he has to part
with money.
With a wide variety of domestic laws applicable to issues such as consumer prote
ction, prevention of fraud and promotion of competition in vogue across the worl
d, it may be difficult, if not well-nigh impossible for the online sellers to ad
here to all of these laws at the same time, given his area of work transcends ju
risdictional barriers. Inherent conflicts between the rights of copyright holder
s and the online entertainment industry on the one hand, and the rights of the c
w
onsumers and technology users on the other, can give rise to yet new questions
hile measures like DRM technology, anti-circumvention laws are in vogue to prote
ct the former, they often end up infringing the rights of consumers like the doc
trine of first sale, fair use exceptions, sharing of material in good faith and
so on. All these shortcomings are further exacerbated by the ambiguity in existi
ng laws, including consumer protection laws that address such issues inadequatel
y, or not at all. In the light of the various factors that necessitate legislati
ve instruments aimed to accord protection to the consumer, such as rapidly enhan
cing variety of goods and services enabled by the modern technological growth, e
nlarging of the production and distribution systems as well as resultant increas
ed complexities, employment of sophisticated marketing and selling practices, es
pecially in
fields like advertising, the buyer-seller relationship growing increasingly impe
rsonal especially because of mass marketing strategies and increased mobility on
the part of the consumers, such legislative activism appears all the more immin
ent. Any such activism, however, would have be subjected to a series of basic qu
estions, such as its position on the right of the consumer to choose and the eff
ect of such right on the producers and services providers, right to safety accor
ded by way of adequate certification and labelling standards, right to informati
on and whether the consumers can be provided value for their money.
Insofar as these rights are concerned, care must also be taken of there being ad
equate remedies available to the consumers in case of infringement thereof, such
as an effective redressal mechanism, as well as awareness and accessibility reg
arding the same among the aggrieved consumers.
Consumer protection in online markets: Legal scenario
International Legal Scenario
In the international front, way back in 1997, the General Assembly of the United
Nations had adopted the U.N. Commission on International Trade Laws (UNCITRAL)
Model Law on Electronic Commerce, which exhorted the U.N. Member States to formu
late new laws or amend the existing ones in the lines of the Model Law. It is fo
llowing the spirit of the Model Law that the Indian government had first mooted
the formulation of one or more legislative instruments to render e-contracts leg
al, e-records capable of being introduced as evidence and bring about suitable c
hanges in legislations in areas such as contract, criminal law and the law of ev
idence.
Insofar as the global responses to consumer protection in the online market is c

oncerned, different countries have come up with their own versions of regulation
s, but such regulation and policies need to have, at the very least, a uniform o
bjective so as to be effective in dealing with the global network environment as
a whole. Perhaps international coordination can see a way out of this conundrum
. Some of the developed countries in the West have sought to adopt such approach
es with an emphasis on information exchange and general consensus on issues and
redressal mechanisms, modifying their consumer protection laws to make room for
e-commerce and combining them with self-regulation, with inputs from civil socie
ty activists, technologists, lawyers, businessmen and other stakeholders involve
d. Perhaps the finest instance of such cooperation is the 1998 Guidelines for Co
nsumer Protection in the Context of Electronic Commerce issued by the OECD (Orga
nization for Economic Cooperation and Development) Committee on Consumer Policy
that tried to achieve a balance between consumer protection in e-commerce and ma
intenance of free trade. These Guidelines were not meant to be binding; they are
only recommendations made
to governments and private enterprises, as well as to consumers, to foster facil
itation of consumer protection in the digital market and generate and maintain a
framework for the same. Among other things, the Guidelines were meant to assist
governments in reviewing, formulating and implementing consumer and law enforce
ment policies, practices and regulations if necessary for effective consumer pro
tection in the context of e-commerce, help business associations, consumer group
s and self-regulatory bodies by guiding them to the core characteristics of effe
ctive consumer protection that should be considered in reviewing, formulating an
d implementing self-regulatory schemes in the context of e-commerce and also pro
viding clarity to individual businesses and consumers engaged in e-commerce rega
rding issues such information disclosure and fair business practices that should
be provided by businesses and expected by consumers. These Guidelines are at pr
esent the only cogent and uniform global response towards developing a self-regu
latory consumer protection framework for international cross-border e-commerce a
nd they can appear as a beacon of
light for developing jurisdictions like India to follow.
Among other things, the Guidelines seek to track current international consumer
protection standards and enforcement actions and to formulate a framework for va
rious governments working together to address concerns relating to consumer prot
ection in the virtual marketplace. Recommendation and support have been provided
by the Guidelines for the evolution of self-regulation and leaders in such dire
ction to emerge from the private sector enterprises, as well as for inter-agency
cooperation in prosecuting fraudulent, unfair and misleading commercial conduct
in the digital world.
The Guidelines require e-businesses to adhere to the following prescriptions, vi
z.
(a) Avoid making representations or engaging in practices that are likely to be
fraudulent, deceptive, unfair, or misleading;
(b) Provide information about themselves, the goods and services that they provi
de or claim to provide in a manner that is clear, accurate, conspicuous and acce
ssible;
(c) Adhere to the representations that they make and substantiate the same;
(d) Keep all the regulatory features of their target markets under consideration
;
(e) Refrain from exploiting the singular features of the Internet to conceal the
ir identity or evade adherence to the industry standards for consumer protection
or means of enforcement of consumer rights;
(f) Distinguish between advertisement and promotional material and other content
s of the website;
(g) Implement the processes that would allow consumers to make a choice as to wh
ether or not to receive e-mail or other forms of communication that is not solic
ited; and
(h) Take special care when it comes to advertising or marketing product or servi
ces to a target group of children.
With regard to the standard of disclosure mechanisms that the e-businesses are s

upposed to maintain, the Guidelines also provide certain prescriptions:

The disclosures should be clear and conspicuous and should include:
(a) Name, address, contact numbers, e-mail address and relevant licensing or gov
ernment registration information, wherever applicable;
(b) The location for service of legal processes and summons and where law enforc
ement authorities and regulatory officials can communicate and get in touch with
them;
(c) All costs involved in a purchase should be clearly itemized in the applicabl
e currency;
(d) The terms and conditions of delivery or performance of the purchase contract
;
(e) Methods and conditions of payment and similar consideration;
(f) Condition precedent for purchase, such as minors requiring approval by a par
ent or guardian, or territorial or temporal limitations;
(g) Necessary instructions for usage, including safety and health related cautio
ns;
(h) Information on after-sales service;
(i) Refund, return, exchange, cancellation, withdrawal or termination policies;
(j) Warranties and guaranties, if any applicable.
With regard to making confirmation or cancellation, the Guidelines simply provid
e that the consumer should be able to cancel the transaction before the purchase
is deemed to be complete. At the same time, user-friendly, secure payment mecha
nisms have also been recommended, along with the necessary data on the level of
security provided, as well as the restrictions on the liability of the e-retaile
r, which can considerably enhance confidence on the part of the consumer.
With regard to online marketing dispute resolution, the Guidelines refrain from
directly making all the consumer laws directly applicable to the online scenario
, instead just limiting themselves to making a suggestion to the respective nati
onal governments should find a way to accord suitable protection to online consu
mers by coming up with a suitable method resolving their disputes with e-retaile
rs and related grievances. Alternative dispute resolutions mechanisms and utilit
y and cost-effectiveness thereof have also been emphasized on by the Guidelines
in this context. In fact, this avenue can perhaps be implemented using Internet
itself as the forum for resolution, something certain credit card companies in t
he United States of America have achieved with a fairly high degree of success.
In the matter of privacy, the Guidelines have clearly recommended that online B2
C transactions should adhere to the provisions contained in the OECD 1980 Guidel
ines governing the Protection of Privacy and Trans-border Flow of Personal Data,
as well as the directions assumed by the OECD Ministerial Declaration for the P
rotection of Privacy on Global Networks in 1998. For the purpose of implementati
on of its provisions, the Guidelines have made a suggestion for educational, awa
reness and advocacy mechanisms, promoting private sectors leadership and self-re
gulatory efforts on global as well as local levels and involving inter-agency an
d inter-nation cooperation.
Consumers International, on the other hand, has recently undertaken an initiativ
e to propose the inclusion of certain amendments in the Model United Nations Gui
delines for Consumer Protection to the effect of enabling it to deal with the vi
rtual market space and the singular challenges posed by it, along with addressin
g all the concerns surrounding access to knowledge in a proper fashion. A few bi
lateral treaties and multilateral initiatives such as the 29-member country stro
ng International Marketing Supervision Network have also yielded fruit in this r
espect.
The Position in India
The Consumer Protection Act
Under the provisions of the various laws relating to consumer protection that ar
e in vogue in India at present, a consumer can avail of a wide spectrum of right
s. Of these, the Consumer Protection Act, 1986 (hereinafter referred to as "CPA"
) is the primary legislation that bestows upon the consumer several such rights.
Under this Act, a three-tiered consumer grievance redressal mechanism has been
laid down at the district, state and national levels to take care of most of the

problems faced by the individual consumer. However, the CPA has for the most pa
rt been ambiguous regarding whether its provisions can be extended to address co
ncerns relating to transactions originating in the virtual marketplace. It was a
s late as on July 8, 2014 that the Minister of State for Consumer Affairs, Food
and Public Distribution, has provided a written confirmation of online transacti
ons also falling within the ambit of the provisions of the CPA. Following such c
onfirmation, the road appears to be clear for individual consumers or representa
tive groups approaching consumer fora, including the District Consumer Forum, th
e State Consumer Commission and the National Consumer Commission for redressal o
f grievances arising out of e-commerce transactions. One must keep in mind thoug
h that such an announcement on the ministerial level does not imply creation of
a new law or establishment of a new mechanism or any new provision dealing with
consumer issues in e-commerce
on the other hand, it does affirm the applicabilit
y of the existing provisions of CPA to such issues and is therefore certainly at
least a significant step forward in the right direction.
Even before this official confirmation, there was no express barrier to applying
the CPA provisions to transactions taking place online. A consumer has been def
ined as any person who buys any good or avails of any service for any considerat
ion, paid or otherwise, other than for commercial use, as per Section 2(d) of th
e CPA. At the same time, Section 2(1) of the Sale of Goods Act, 1930 defines a b
uyer as any person who buys or agrees to buy any good. One can also look at the
definition of a contract of sale of goods as defined in Section 4(1) of the Sale
of Goods Act, 1930, as a contract whereby the seller transfers or agrees to tra
nsfer the property and all associated rights in the concerned good to the buyer
in return for a price this renders the question of whether the medium of sale is
an online or a physical one, a moot question. A combined reading of these provi
sions would therefore imply that irrespective of whether the platform for transa
ction is physical or virtual, so long as it involves a person who has either pai
d or agreed to pay a specific price in return of any
particular good or service, then he can be regarded as a consumer for the purpos
es of the CPA.
One can, for instance, talk about the decision is Wheels World vs. Pradeep Khura
na [I (2008) CPJ 324 NC], wherein the aggrieved consumer had complained about po
or service for not repairing a technical fault in his car despite the fault havi
ng occurred during the warranty period, as well as delay in return of the car fo
r as long as four years! The National Consumer Dispute Redressal Forum fined and
jailed the accused, besides awarding damages to the consumer. There is no reaso
n why the same standards cannot be applied in case the goods under consideration
are bought from the online market. The same sort of relief can be provided to t
he online consumer too, at least theoretically, with appropriate action being br
ought against the manufacturer for faulty products or deficient services such as
inept customer support system, inefficient product delivery mechanism etc. Even
the online retailer can be made a party to such an action on the part of the co
nsumer, depending on the surrounding circumstances.
The consumers also have the right to examine each and every product that is avai
lable with the retailers and they have the freedom to purchase any product based
on the specifications provided by the retailers, which assumes even more signif
icance in case of e-commerce, since often the specifications are the only way th
e consumers can distinguish between two products. If the specifications provided
by the retailer prove to differ subsequently from the product itself, then the
consumer also has the right to return the same.
The definition of the term complainant is fairly clear as per Section 2(b) of th
e CPA, as any consumer, voluntary consumer associations, central/state governmen
t, one or more aggrieved persons having same interest or the legal representativ
es of a deceased consumer, all of whom can file a complaint in case of any griev
ance before the competent Dispute Redressal Forum on grounds established under S
ection 2(c), such as unfair trade practice of the service provider, defective go
ods or deficient services, prices charged by the trader being greater than the p
rice fixed under any law for the time being in force, or the price printed on th
e goods package, or the price agreed upon mutual consent at an earlier stage, fo

r services being provided posing hazard to the people's lives or public safety,
or for goods contravening existing regulations governing standard of product. Th
e definition of consumer is of course available from Section 2(d) of CPA. Howeve
r, when the turn comes to determine who can be perceived as a manufacturer under
CPA, the provisions of Section 2(j) needs to be looked into, which defines a ma
nufacturer as a person, who manufactures the goods concerned or any person, who
assembles the parts manufactured by some other person, leading to the production
of the goods under consideration. In the context of e-commerce, online portals
chiefly act as a mediator between the manufacturer and the consumers, or they bu
y the product from the manufacturer and then sell it to the ultimate consumers
t
herefore, occasionally they could be mistaken as a consumer as against the manuf
acturer. However, in the matter of Raj Kumar vs. S.C Verma [2001 (1) CPR 437], i
t has been held that a person buying goods either for re-sale or for large scale
profit making activity will not be considered as consumers and will not be prot
ected under the provisions of the CPA.
Product Liability
Product liability is one of the legal concepts that can be used to accord to the
consumer, including an online consumer, a set of rights, including the right to
initiate actions against the manufacturer and retailer in case the products pur
chased turn out to be inconsistent with the acceptable industry standards as per
the laws of the land and hence unfit for consumer use. An ideal consumer jurisp
rudence that has incorporated product liability within its statutory framework i
s the 1987 Consumer Protection Act of England. Common Law furnishes other instan
ces of such product liability, as in the matter of Donoghue vs. Stevenson [1932]
UKHL 100], wherein Lord Atkins had laid down the principle of neighbour, where
even in the absence of direct contact between the parties, compensation can be c
laimed in lieu of defective product hazardous to public safety. This degree of s
eparation, if used in the online retail context, can prove to be quite useful, a
lthough it is necessary to prove that manufacturer was at fault to avail the rem
edy. While the CPA is of course able to provide certain relief in that regard, t
he concept of product liability is not absolutely applicable in India, due to wh
ich any defect in product does not make manufacturer prima facie liable for defa
ult. For defective product, either the manufacturer or the retailer can be held
liable, depending on the circumstances, with the burden of proof resting on the
consumer to prove the injury suffered. Product liability can in the long run pro
vide incentives to the manufacturer and retailer to reduce product risk and exer
cise greater degree of care. Regulation of product risk and making consumers awa
re of the same can also lead the consumer taking certain precautions while buyin
g the product. For instance, in case of cash of delivery, the product can be exa
mined to see at least whether it is the same product that had been ordered, befo
re the payment is made. There are legislations such as the FSSAI Act that set st
andards for the food products available in the market. Given that the Indian con
sumer jurisprudence accepts only a diluted standard of product liability, as exp
lained above, perhaps the lacuna can be filled with appropriate regulatory stand
ards, in the absence of which, the said product liability standard needs to be e
nhanced so as to achieve the desired level of consumer safety. Market force can
also play an important role in this context. Consider, for example, electronic s
tability control in automobiles, a feature that can reduce the risk of skidding
and rollovers. Market pressure could lead to adoption of this feature if consume
rs appreciate its value, or a regulator might require it. Hence, product liabili
ty might not be necessary to induce automobile manufacturers to adopt electronic
stability control.
The problem is that the CPA provisions do not have anything specific to the scen
arios that may arise in the context of online transactions and consumers. Hence
they cannot provide any solution to the several loopholes that tend to arise owi
ng to the impersonal nature of such transactions. Their entire ambit is restrict
ed to making the same framework applicable to regular transactions to those invo
lving e-commerce. Moreover, one needs to establish either defect in goods, or de
ficiency in service in order to bring a claim under the CPA. Neither situation c

an claim to cover situations involving inefficient or delayed delivery for insta

nce, something that happens in many cases involving online markets. Furthermore,
buyers from e-commerce stores do not have the ability to sample and test the pr
oducts and services that they are purchasing. The seller of such goods often bei
ng anonymous, the consumer's problem is further compounded. A simple look at the
nature of grievances brought forward by the consumers throughout the years in r
elation to e-commerce would be sufficient to drive this point home.
With regard to cogent goods or services having to exist for the purposes of CPA,
there is not much differentiate between physical and online markets when it com
es to physical items sold as goods. However, when it comes to software programme
s and music files, for instance, the scenario becomes somewhat more problematic.
As per the provisions of the General Clauses Act, 1897, these can be treated as
movable property, since they clearly do not belong to the cateogry of immovable
property such as land etc. The Apex Court of the country has in the matter of T
ata Consultancy Services v. Andhra Pradesh clarified this position under the Sal
es Tax Act by clubbing 'canned software' with other taxable goods for the purpos
e of the Sales Tax Act: A good may be a tangible property or an intangible one. It
would become goods provided it has the attributes thereof having regard to (a) i
ts utility; (b) capable of being bought and sold; and (c) capable of transmitted
, transferred, delivered, stored and possessed.
If a software whether customized or non-customized satisfies these attributes, t
he same would be goods. However, whether the same decision can be applied mutais
mutandis to CPA remains to be adjudicated on.
With respect to the sales requirement of the goods and services, again the answe
r seems to be simple in that the physical and online markets do not differ much
from each other. In the virtual market too, the ownership of the goods passes fr
om the retailer to the consumer and payment and delivery follow the same. The pr
oblem again seems to arise with the sale of products like software programmes in
an online market, given such sales usually take place not by outright transfer
of ownership, but through the issue of a license to the consumer to use the soft
ware under certain specific terms and conditions. On the other hand, a counter a
rgument can be that the websites often project such licensing as actual sale, as
is evidenced by the so-called "buy now" button placed alongside the products un
der consideration. There are even occasions when the buying has to take place wi
thout the customer ever getting to know the actual terms and conditions of the l
icense at that stage; it is only revealed to him once he has purchased the produ
ct and attempts to install it. Again, in the TCS v. A.P. Case, Supreme Court has
once again sought to answer this quandary, by terming the sale of canned software
(non-customized software sold off the shelf) as a sale of goods and hence liabl
e to be taxed under the Sales Tax Act.
Interestingly, with respect to defect in goods that is another requirement for b
ringing a consumer action, setting aside obvious defective products, in which ca
se the same principles of return and refund should be applicable, one can also a
rgue usage of DRM (Digital Rights Management) techniques with respect to product
s like e-books that prevent lending or further selling, the consumer's ownership
rights and right to property are automatically getting affected, which can be p
erceived by some as an inherent defect! Till date, this issue is yet to be agita
ted before a court of law. The counter argument can be that the consumer has ent
ered into a licensing agreement at the time of entering into the transaction, wh
ich in turn grants the consumer only certain specific and limited rights vis-a-v
is the good being procured. Of course, the fact that agreement is seldom present
ed to the consumer in a concise and cogent form before he makes his decision can
be used to argue about unequal bargaining positions, especially with the standa
rd form of the contracts precluding any negotiation on the consumer's part. This
is perhaps the Common Law jurisprudence requires a standard form of contract to
fulfil certain extra requirements before it can be legally enforced. These cond
itions include sufficient notice, which means inter alia that such restrictive c
ovenants in the contract need to be highlighted in sufficiently pronounced fashi
on so that any reasonable consumer does not miss them [as has been laid down in
Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd. [1988] 1 All E

R 348], that the contract should not be drafted in a manner as to impose any add
itional obligations or diligence on the consumer's side or limit any liability o
n the producer's side, so as to effectively cause breach of any fundamental cont
ractual terms [as has been decided in Harbutt's "Plasticine" Ltd. v. Wayne Tank
and Pump Co Ltd [1970] 1 QB 447] and the absence of any unreasonable contractual
term that renders the contract unable to fulfil its very purpose or is against
public policy [as held in Lily White v. R. Mannuswami, AIR 1966 Mad.13]. Therefo
re, one can argue based on such principles that if a standard form of contract i
ncludes onerous terms to support the DRM restrictions, then the consent of such
a consumer to be a party to such a contract may be invalidated and the good unde
r consideration may be held to be a defective good.
Information Technology Act
One must also stand ready to refer to the provisions of the Information Technolo
gy Act, 2000 (hereinafter referred to as "ITA") that would be applicable to matt
ers involving online markets and e-commerce. The ITA was framed by the Indian Go
vernment under Article 253 of the Constitution of India in pursuance of the obli
gations under the U.N. Assembly Resolution, so as to provide the necessary legal
and business infrastructure to simplify conducting business in India. This legi
slation lays down a fairly functional and comprehensive legal framework covering
virtual commercial transactions, especially when it comes to matters of e-gover
nance in public and governmental institutions. Authentication of electronic reco
rds by way of using digital signature certificates is a significant step introdu
ced by this legislation that can have considerable impact on daily transactions
involving filing and reviewing documents in the electronic format. Through the I
TA, the legislature appears to have tried to digitize as much information availa
ble in the public domain as possible. Considerable progress has also been made t
o secure the authenticity of online transactions. This legislation covers not on
ly transactions through the Internet, but also to those involving other networks
, proprietary or otherwise. Insofar as remedial measures are concerned, the ITA,
by virtue of provisions such as Section 17, appointed a Controller, established
a Cyber Regulations Appellate Tribunal (as per Chapter X of ITA) and classified
a range of cyber offences as per Sections 43 to 47 of ITA, with the aforesaid a
uthorities having the power to penalize said offences. In particular, Section 8
of the ITA has revolutionised the laws of evidence in particular by legally reco
gnizing electronic records as admissible evidence, thereby amending the correspo
nding provisions of the Indian Evidence Act, the Indian Stamp Act, the Indian Pe
indeed such recognition goes to
nal Code and the Bankers' Books of Evidence Act
the very heart of consumer grievances arising from e-commerce and allows the con
sumers to seek positive enforcement of their rights provided the latter have bee
n infringed.
Having said that, the ITA is not, nor has been intended to be, a legislation add
ressing all the consumer concerns relating to e-commerce in a holistic manner
it
is supposed to encompass chiefly commercial transactions involving private bodi
es corporate and the government.
While the ITA does lay down a series of rules relating to filing of documents, r
etaining the same, accessing documents in relation to a corporate entity and pro
vide protection to the privacy of such documents by way of digital signature cer
tificates, asymmetric cryptographic systems and similar tools, the ordinary cons
umer seldom has occasion to engage in such activities when he is shopping online
, transferring money or banking. ITA in reality leaves most of such concerns una
ddressed, despite the legislative objects of ITA having included facilitation an
d giving legal sanction to electronic fund transfers between banks and financial
institutions, as well as according due acknowledgment to the requirement by the
banks of maintaining electronic records. When it comes to plain and simple prot
ection of consumer rights in e-commerce, however, the ITA has proved to be inade
quate at best.
E-Contracts and Indian Contract Act
One must not forget about another piece of legislation, viz. The Indian Contract
Act, 1872 (hereinafter referred to as "ICA"), which plays quite a significant p
art in any contract that a consumer may enter into, online or offline. In case i

t is online, whether or not entered into between a consumer and a business enter
prise, is of the nature of an electronic contract (hereinafter referred to as "e
-contract"). Section 10 of the ICA contains the requisite elements for the forma
tion of a valid contract, a provision that is equally applicable to an e-contrac
t, especially since the latter has been accorded due legal recognition by the pr
ovisions of the ITA. In this context, one may refer to the provisions of Section
10A of the ITA, which goes on as follows: Where in a contract formation, the com
munication of proposals, the acceptance of proposals, the revocation of proposal
s and acceptances, as the case may be, are expressed in electronic form or by me
ans of an electronic record, such contract shall not be deemed to be un-enforcea
ble solely on the ground that such electronic form or means was used for that pu
rpose. Therefore, in the light of the aforesaid provisions, consumers can claim p
rotection of all their rights arising out of such contracts under the applicable
provisions of the ICA too. The aforesaid Section 10A of the ITA, which was intr
oduced by way of the 2008 Amendment, makes it easier for the provisions of the I
CA regarding issues such as offer, acceptance, revocation and novation of contra
cts to electronic contracts too.
While the theoretical underpinnings thus appear to be on a sound enough foundati
on, it can still pose difficulties to ensure that all the conditional prerequisi
tes for a valid contract are adhered to in case of e-commerce. For example, one
of the major requirements is to ensure that the contracting parties are of the a
ge of maturity and possess necessary competence, such as soundness of mind. The
question is to what extent this can be ensured in the case of an e-contract in t
he virtual world? Often such contracts are entered into by minors, which can lea
d to considerable complexity, given that as per the well-known decision in Mohor
ibibi v. Dharmodas Ghose [(1930) 30 Cal 549], such contracts are supposed to be
void ab initio, which means law does not recognise the very existence of such co
ntracts.
Most of the online contracts can be broadly categorised into two groups, Click W
rap Contracts and Shrink Wrap Contracts. The former are those involving a party,
who, after going through the terms and conditions provided in the website or pr
ogramme, has to typically indicate his assent to the same, by way of clicking on
an "I Agree" icon or decline the same by clicking "I Disagree". The latter, on
the other hand, have derived their name from the "shrink-wrap" packaging that ge
nerally contains the CD ROM of software. The terms and conditions of accessing t
he particular software are printed on the shrink-wrap cover of the CD. The purch
aser is supposed to go through these terms before he tears the cover to access t
he CD ROM. On certain situations, additional supplementary terms are also impose
d in such licenses, only to appear on the screen once the CD is loaded to the co
mputer. In case the user does not agree to the conditions, he usually has the op
tion of returning the software and seek a full refund.
In the present days, it is virtually impossible to conduct almost any activity o
nline without entering into one or more of these e-contracts. The major concern
with such contracts is that their terms and conditions are not negotiable insofa
r as the consumer is concerned. It is more or less a take-it-or-leave-it kind of
deal. Such an impersonal nature of the e-contract implies that if the consumer
wishes to go ahead with the concerned transaction, in reality he is left with no
other choice than to go ahead with the contract and agree to all of its terms a
nd conditions. Given such an unequal bargaining position of the consumer vis-a-v
is the provider of goods and services in the online market, the possibility of s
uch e-contracts being tainted with undue influence, as defined under Section 16(
3) of the ICA, is quite real. Despite that threat, the validity and enforceabili
ty of such contracts have been periodically upheld in cases such as Hotmail Corp
oration v. Van $ Money Pie Inc, et al. [C98-20064 (N.D. Ca, April 20, 1998)] and
ProCd, Inc v. Zeidenburg [86 F.3d 1447 (7th Cir. 1996)]. The upside of such con
tracts being legally recognised is that in case one or more of the obligations u
nder the contracts are subjected to violation or breach, thereby causing harm to
the consumer's interests, then the latter would have a valid ground for bringin
g his grievance forth before the judiciary.
One of the problems posed by e-contracts was their inability to be stamped, espe

cially in the light of the provisions of the Indian Evidence Act, 1872 that requ
ires a legal document to be properly stamped in order to be admissible before a
court of law. The problem assumes further complications given the apparent incon
sistencies between the Central and State laws addressing this matter. Take for i
nstance Article 51A of the Bombay Stamp Act, 1958, which levies stamp duty on th
e record of transactions relating to purchase or sale of gilts, shares, debentur
es and other securities. At the same time, one cannot find in the Indian Stamp A
ct, 1899 any requirement with respect to stamp duty on e-contracts. Not only tha
t, Section 8A of the 1899 Act specifically states that there should be no stamp
duty on securities. Such ambiguity does not make the task of an aggrieved consum
er any easier. If one is to get out of such a conundrum, one should refer to Sec
tion 65B of the Indian Evidence Act that directly acknowledges the evidentiary a
dmissibility of e-commerce and e-contracts arising out of the same, thereby dilu
ting the main objective behind stamping.
Electronic Documents as Evidence
The courts in India have also recognised the admissibility of electronic records
as evidence and further held that in case the accuracy of such records is chall
enged on the ground of system misuse, operating failure or interpolation, then t
he burden of proof rests on the person challenging the accuracy. This was what w
as held in the case of State of Delhi v. Mohd. Afzal & Others [107 (2003) DLT 38
5]. A similar approach intended to facilitate e-commerce and egovernace can also
be seen in the matter of Societe Des Products Nestle S.A. Anr. v. Essar Industr
ies And Ors [(2006) 33 PTC 469 (Del)], where the court commented upon the requir
ement for a legislation specifically addressing the admissibility and proof of e
lectronic records in the light of the increasing reliance placed on such records
, especially in relation to virtual transactions. The treatment accorded to elec
tronic records and evidence obtained from the Internet have also been commented
upon by the judiciary in matters such as State of Punjab & Ors. v. M/S. Amritsar
Beverages Ltd. & Ors, wherein certain provisions of the Indian Penal Code, such
as Sections 29, 167, 172, 192, 463 and 464, have been amended to include electr
onic documents within the scope of 'documents', and other provisions of the IEA
have been subjected to similar amendments too, such as Section 63 (to include ad
missibility of computer outputs in the media, paper, optical or magnetic form),
Section 73A to include procedures for verification of digital signatures), Secti
ons 85A and 85B (to raise a presumption regarding electronic contracts, electron
ic records, digital signature certificates and electronic messages etc.
One of the most common disputes that arise in e-commerce to be faced by consumer
s is the liability associated with defective goods and deficient services. For e
very right related to this that the consumer has, there is corresponding liabili
ty to the seller of goods or the provider of services. Both Common Law principle
s, as well as legislative instruments like the Sale of Goods Act, 1930 (hereinaf
ter "SGA"), the ICA and the CPA apply impose certain checks and balances on such
rights and liabilities, although it is the CPA, as has been mentioned earlier,
that provides immediate relief to the aggrieved consumer in case infringement of
said right or affixation of said liability.
The SGA and the ICA can both be interpreted to apply to the online environment t
oo, despite the fact that in case of e-commerce, goods are sold on the basis of
their description, while in case of physical market buyers can try the product o
r at least examine it before they buy it. Section 41 of the SGA allows the buyer
ample opportunity to check the product before taking delivery, if he has not ex
amined it before. The same provision also allows a buyer to reject the goods, pr
ovided he is not given ample opportunity to examine the same. Apart from consume
r protection laws, an aggrieved consumer can also have recourse to Tort law, cla
iming negligence on the part of the online retailer or service provider, using t
he principle of strict liability, as laid down in the seminal decision in Donogh
ue vs. Stevenson. The manufacturer may also be brought within the ambit of prose
cution for cheating and fraud as per the provisions of the IPC.
Despite such legislative progress, infringement of consumer rights in the electr
onic arena still persists. Apart from concerns relating to online contracts, con
sumer data protection, or rather lack thereof, is one of the major hindrances fo

r consumer protection in the online commercial sphere. The terms and conditions
under which the data provided by the consumers in course of a virtual transactio
n usually depend on the nature of the contract that the consumers enter into wit
h the online goods/service provider in course of said transaction
thus is it dec
ided whether the said date can be disclosed at will by the merchant collecting t
he same, or whether non-disclosure is going to be the norm of the day. In case a
ny disclosure occurs by way of infringement of contractual terms, the infringer
can be punished with imprisonment ranging up to three years and fine ranging up
to INR 5,00,000, provided the disclosure has taken place wilfully and knowingly
and without the prior consent of the concerned consumer. The statutory support t
o such prosecution stems from Section 72A of the ITA.
There is still a dearth of legislative treatment of according sufficient protect
ion to data or sensitive personal information insofar as the Indian jurisprudenc
e is concerned. There are certain provisions of the ITA that do refer to this ma
tter. Case in point is Section 43A, which holds of a body corporate liable for n
egligent implementation or lack of maintenance of reasonable security practices
with regard to any sensitive personal data or information that it possesses, dea
ls with or handles, which may result into wrongful loss or gain to any person.
Yet there is little clarification regarding the definitions of such data, the na
ture of mandatory security to be provided or the nature of loss or gain that req
uires to be proven for liability to be established. Prior consent of the data pr
ovider for all usage that such data may be put to is also something that few bod
ies regularly obtain, and most of the corporate policies lack a proper privacy p
olicy in place with regard to electronic information. Yet these are very essenti
al steps for the purpose of maintaining and preserving integrity of the data col
lected by online sellers and service providers.
Jurisdictional Problems
One of the biggest concerns that aggrieved consumers face while trying to get re
dressal of their grievances vis-a-vis defective goods or deficient service or mi
suse of personal information with regard to online transactions is the ambiguity
that exists in terms of determining where the jurisdiction for a dispute clearl
y lies in such matter. The presence of consumer protection fora on the district,
state and national levels have not entirely settled the territorial conflicts r
egarding jurisdiction. One of the ways in which this conflict can be resolved is
perhaps by resorting to the provisions of Section 20 of the Code of Civil Proce
dure, 1980, which allows suits to be filed in the courts within the jurisdiction
of which the defendant voluntarily resides, or carries on business, or personal
ly works for gain; or the cause of action, wholly or in part, arises. There have
been some confusion as to whether this provision should squarely apply to dispu
tes arising out of online transactions. However, recently the consumer courts th
emselves have clearly opined that the jurisdiction in such disputes would fall,
where the company, against whom the grievance may lie, has its registered office
or branch office, or even where the event has taken place (where the cause of a
ction arises). In case of an online purchase, the precise venue where the purcha
se is being made being uncertain, the place where the delivery is taking place o
ught to suffice. In case the matter involves goods or services the provider of w
hich reside in another country, the judiciary can use the so-called 'long-arm ju
risdiction' of the law, whereby local laws can be applied with an extra-territor
ial scope. In situations like these, one can refer to Section 1(2) of the ITA, t
ogether with Section 75 of the same Act, which collectively allow the provisions
of the Act to be applicable to any situation where a person has violated the pr
ovisions of the Act by using a computer, a computer system or network located in
the country, even if the action constituting the violation has occurred outside
India. Further statutory support for trying an offender liable of any offence c
ommitted under any Indian law, even if the commission has taken place beyond Ind
ia, can be found in Section 3 of the IPC, just as if the commission has taken pl
ace within India. Collectively, therefore, these provisions provide more than am
ple scope for consumer right violations to be addressed notwithstanding any juri
sdictional problems arising due to the virtual nature of the online platform.
Certain e-commerce platforms provide a range of various reliefs if products sold

through them turn out to be defective. Of course, for this to happen, the autho
rities manning the platform need to be intimated within the mandated timeline. F
or instance, Myntra provides a 30-day exchange window for certain goods such as
apparels and accessories and Home Shop 18 has been known to consider defective p
roduct replacement provided intimation is made within 2 days from the delivery d
ate. In case the portal itself turns out to be engaging in fraudulent actions, h
owever, infringement of consumer rights becomes even more rampant. A case in poi
nt would be that of Timtara.com, where customers had to pay money in advance, bu
t the goods purchased were never delivered within the promised 3 weeks. Finally,
the directors of the portal were arrested after the consumers brought multiple
criminal complaints against the portal and agitated in various social media plat
forms. This case was a classic example of how consumers, if made to be aware of
their rights, could be counted on to take care of most of the events of violati
ons of such rights.
Novel Usage of Technology like Shopping Cart
Among the different mechanisms that a consumer is likely to face in a online sho
pping website is the usage of a shopping cart software. This is an operating sys
tem that can be tasked with helping consumers select and purchase goods and/or s
ervices, track customers and tie together all aspects of e-commerce into one coh
esive whole. There is a whole range of competing software that can be tweaked to
achieve this kind of result. Of them, customizable, turnkey solutions have been
established to be a cost-effective method to build, edit and maintain an online
store. When compared to an ordinary grocery store, the picture that one can ima
gine is that of an invisible shopping cart or basket where one can place the pro
ducts that one chooses to buy on entering a virtual shopping store, while lookin
g for other suitable products to buy. Once the consumer has finished browsing an
d filled his shopping cart to his content, then he can click checkout and comple
te the transaction by providing the relevant payment information.
Examples like the one above is just one among many ways in which creation of new
approaches and modes of e-commerce has been facilitated by technological advanc
ement. Take for instance the various financial products and services that are of
fered through Internet in various countries including India. Such practices have
started posing serious challenges to their traditional brick-and-mortar counter
parts. Canada is one of the countries to have made considerable progress in this
direction, with many financial institutions therein perceiving the Internet as
an alternative product delivery channel. For functions such as this, one scarcel
y requires any proprietary software or private communication network. Mere indus
try-standard Web browser software is sufficient to provide access to the consume
rs of such services and the latter ought to arrange their own access to the Inte
rnet through an Internet service provider.
Protection against Fraud including Financial Fraud
Any fraudulent activity taking place using the Internet related communications s
uch as websites or e-mails, or computer programmes as the medium can be classifi
ed as Internet fraud, which is one of the most pernicious forms of white-collar
crimes in the present world. For an action to be classified as fraud, there must
be involved either deceit or intention to deceive, as well as any injury to per
son or property. Therefore, frauds on consumers can take place in ways such as b
y defeating or wrongfully frustrating their right to property, by depriving him
of any other right by obtaining anything by way of deception or in a wrongful ma
nner without his knowledge or consent, or to withhold wrongfully from him what h
e is entitled to or prevent him from making a just claim.
Identity theft through digital media, viz. impersonating one with wrongful inten
tion, is one of the ways in which such fraud may take place against e-consumers
in an epidemic proportion. It can assume graver significance if coupled with the
ft of personal information for monetary gain. Another form of such fraud is refe
rred to as phishing, which involves stealing one s banking or other financial cred
entials and using the same to siphon money off his account or other valuable inf
ormation.
In the matter of Debasheesh Chakravartee, a former employee of a bank s direct sel
ling associate abused the credit card information of several card-owners by book

ing a series of railway tickets over a space of five months through the IRCTC po
rtal and also opened several bank accounts by using photocopies of those credit
cards as residential proof. In State v. Manohar & Moses, a steward in a hotel an
d copied down credit card details of clients residing therein when the latter ha
d handed them over for payment of bills. These details were passed to an externa
l computer expert, who used those to make several online purchases. They were su
bsequently arrested and charged under several provisions of the IPC and the ITA.
Online investment schemes are another popular mode of internet fraud in vogue, r
un through investment newsletter and dubious platforms, offering seemingly genui
ne information about investment opportunities free of cost by making recommendat
ions relating to stock markets etc.
Spam mails are yet another avenue to perpetuate fraud over the Internet. These c
onsist of mass unsolicited emails often in the nature of advertisements or solic
itations, wherein the addresses of the recipients have been obtained from the In
ternet without their consent, with the intention of obtaining personal sensitive
information from the unwary consumers. The minuscule efforts and resources that
need to be spent towards perpetuating such fraud have made it quite a frequent
occurrence in today s world, which exerts considerable pressure on the time, produ
ctivity and resources of Internet Service Providers, as well as corporate networ
ks.
In the StampsofIndia case, for instance, the host of a website was involved in a
litigation regarding the operational activities of the Indian Philatelic Congre
ss, in an effort to ensure transparency. He had been subjected as a result to va
rious threats, abuse on the digital platform, hacking of email accounts and deni
al of service attacks by way of spam emails that were sent to him and from his i
nbox to all his contacts.
Fraudulent invitations for jobs are yet another form of scams that happen over o
nline platforms, usually with an objective to defraud the victims out of money o
r sensitive information. For example, the Central Bureau of Investigations has o
nce arrested a person who had opened a website where applicants had been given l
ucrative promises for foreign jobs in the information technology sector and mana
ged to amass a huge fortune by way of deceit, which included using forged letter
s from different High Commissions of other countries. Another time, Deli law enf
orcement authorities had come across a software company misrepresenting its webs
ite SurfaectransportIndia.com as that of an official ministry portal by way of i
llegal and unauthorised usage of official emblems. The company had tried to get
money from gullible people by promising to hire them for opening traffic control
centres throughout the country using cyber booths. Another case in point is tha
t of CBI v. Mohammed Feroz, wherein the accused had put up online advertisements
for non-existent jobs in Germany, and required applicants to deposit advance mo
ney with him.
Inter-country transaction is another fraudulent pretext commonly used over the I
nternet. For a consumer to avail of protection of the domestic consumer protecti
on laws, he has to ensure that all the parties involved are also subjected to su
ch laws, which is not the case here usually. A case in point is the infamous Nig
erian Hacking Case, wherein four Nigerian citizens had been arrested by the CBI
for hacking credit card numbers and using them to book air tickets and also for
impersonating tour managers and travel agents and creating false identities. Aga
in, the Nigerian 419 case is yet another notorious example, wherein numerous vic
tims had complained about online cheating by fraudsters apparently based in Nige
ria, 419 being the provision of the Penal Code there relating to cheating.
One of the ways in which consumers can take precaution against certain fraudulen
t practices would be to insist on paying cash on delivery of the products, inste
ad of making advance payments online. This would partially ensure that the produ
cts reaches the consumer before he needs to make any payment, as well as not all
ow any fraudulent retailer to obtain the credit or debit card details and simila
r sensitive personal information of the consumer.
The Reserve Bank of India has issued several guidelines for the purpose of mitig
ating risk during online banking transactions. For example, one can set up a sys
tem wherein the user would have to provide certain specific information meant to

establish authenticity of the user's identity whenever the user is carrying out
an online monetary transaction that does not require the credit/debit card itse
lf to be produced. The user can also put in place a mechanism of 'online alert'
that will notify the user separately any time a transaction beyond a certain val
ue (at present Rs. 5000/- or more, but many of the banks can inform even for les
ser sums) takes place through a 'card not present' transaction. The specific RBI
circular in this instance is RBI / DPSS No. 1501 / 02.14.003 / 2008-2009 dated
February 18, 2009. Both card payment transactions and electronic payment transac
tions can be similarly secured by banks and the consumers can insist that their
individual banks put such a practice in place, as per the requirements of RBI DP
SS (CO) PD No.1462/02.14.003 / 2012-13 dated February 28, 2013.
These range from converting all existing MagStripe cards to EMV Chip card for al
l customers who have used their cards internationally at least once for or throu
gh e-commerce to framing rules based on the transaction pattern of the usage of
cards by the customers in coordination with the authorized card payment networks
for arresting fraud. This would act as a fraud prevention measure. In addition
banks should provide easier methods (like SMS) for the customer to block his car
d and get a confirmation to that effect after blocking the card.
Given the high degree of usage of online payment mechanisms such as NEFT, RTGS a
nd IMPS, the need to make such mechanisms safe and secure is paramount; otherwis
e all the parties involved, whether it be the bank, or the online goods or servi
ce provider, or the customer, can be adversely affected. One of the ways to achi
eve such security is to put a restriction on the number of beneficiaries that ma
y be added on a daily basis for every account, with an alert to be communicated
to the consumer's email account or phone whenever a new beneficiary has been add
ed. It goes without saying that adoption of technological advancements such as a
daptive authentication by the banks as an early warning system for fraud detecti
on can go a long way to secure this kind of transactions. RBI has also issued Ci
rcular DPSS.CO.PD.Mobile Banking. No. 2/02.23.001/2014-15 to provide operative g
uidelines for mobile banking and operations relating thereto from the perspectiv
e of informational security, mostly by way of using technology that must be secu
re and should ensure confidentiality, integrity, authenticity and non-repudiabil
ity. Banks have been known to use these guidelines to resolve consumer grievance
and disputes arising from such transactions, such as unauthorized transfer thro
ugh hacking, denial of service on account of technological failure etc. On the o
ne hand, banks need to disclose to the consumers all forms of risk they subject
themselves to by offering services of this sort that are prone to technological
abuse, and on the other, they need to clarify their liabilities and responsibili
ties relating to the same to all their consumers, chiefly by putting all this up
on their official websites. In matters involving a payment transaction dispute
of the customer directly with the bank, the latter is supposed to address the sa
me in an expeditious manner, using their internal dispute resolution system at f
irst and then if that fails, escalate the matter to the Banking Ombudsman. The e
xact details of the steps and policy involved ought to be disclosed by every ban
k to all its customers. For the purpose of any monetary settlement, the Indian l
egal jurisdiction will be deemed to hold sway.
While financial transactions vide the Internet is unlikely to completely replace
traditional modes anytime soon, yet studies have revealed the lower transaction
costs associated with electronic transactions, as well as the more attractive d
emography of consumers inclined towards using the electronic media for financial
transactions are collectively attracting more and more financial companies with
the passage of time. As a result, the total volume of financial payments over t
he cyber space is increasing rapidly, an indicator of which is the increasing us
age by financial institutions of click wrap/shrink wrap contracts instead of ent
ering into separate customised contracts for every single customer.
Best Practice Standard for Consumer Safety
While the regulatory regime undoubtedly needs to be improved and coordinated, no
netheless, the consumers can perhaps make their online transactions at least a l
ittle safer by following a few simple practices. For instance, shopping from sec
ure websites only is a basic precaution to take. Such websites utilise data encr

yption technology to protect sensitive personal information such as credit card

details. One of the ways to check whether the website is a secure one is to look
for the url being initiated with https:// instead of the usual http://, the add
itional s indicating the extra layer of security. Once a person has been using a w
ebsite with satisfactory review for a while, he should usually try to use the sa
me instead of sitehopping or site-shopping for the same purpose. In case a compa
ny is maintaining such a website, basic diligence to find out about eh authentic
ity and credibility of that company will not be amiss either. A standard website
should have well-delineated security and privacy policies that a consumer shoul
d carefully go through before initiating any transaction, to ensure, for example
, that the data they may be sharing with the website do not get shared with any
third party affiliates. When a customer is placing any order in the digital doma
in, nothing more than the information that is absolutely essential ought to be p
rovided in advance. In case the websites ask questions such as the lifestyle cho
ices, preferences etc. of a customer, the ideal scenario is not to answer them u
nless they are essential for the purpose of making said purchase. Such informati
on may otherwise be abused to find out the customer's passwords or authenticatio
n details subsequently, if it falls into the wrong hands. Another step easy enou
gh to ensure the consumer's safety is to use a secure password for accessing the
website without fail. This password should not only not be shared with anybody
else, but should also be changed on a frequent and regular basis. The same passw
ord should not be used for more than one website and all of the passwords should
preferably have alphanumeric keys, as well as special characters that make it d
ifficult for them to be guessed or hacked through brute force methods. Every sin
gle time the consumer is placing an order online, usually a copy of the order is
communicated to him over email or directly through the website. The consumer sh
ould ideally keep this copy saved both in the digital form, as well as print out
a hard copy thereof, and preserve the same at least till the warranty period of
the purchased product remains valid, if not even later. The e-commerce websites
usually have some sort of specified policy regarding return of products, cancel
lation of orders, refund of price, exercise of warranty rights etc. Before the c
onsumer places the order, he should carefully look into all the terms of this po
licy, especially regarding the various time periods within which such claims nee
d to be made to be honoured by the e-retailer. In case anything specific is not
mentioned about the warranty system, then the consumer should get it clarified w
ith the website or the company running the same, as to whether products purchase
d from that website are amenable to warranties at all. Many a time, the consumer
is going to come across extremely alluring and attractive offers in various e-c
ommerce websites, which make it difficult for the consumer to exercise impulse c
ontrol and resist buying the products concerned. However, on every occasion, bef
ore making any decision regarding the purchase, the consumer ought to carefully
verify the authenticity of such offers and the hidden terms and conditions assoc
iated therewith, if any. The golden rule under such circumstances is that if an
offer usually seems too good to be true, that is because it usually is. Users sh
ould not keep their accounts open after the transaction is over, since that prov
ides hackers with the opportunity to get the relevant information from the same
or destroy it if they want to. Opting for the cash on delivery option in case of
online purchase, wherever possible, is yet another way of minimising chances of
fraud.
Conclusion
It is therefore certain that there is no dearth of legislative provisions in Ind
ia that can be used to redress consumer grievance in the online marketing sector
; however, the absence of a comprehensive piece of legislation addressing all th
e necessary aspects leave few options other than a piecemeal and ad-hoc solution
to situations as they tend to arise. One of the fallouts of such regulatory amb
iguity is the continuing debate surrounding whether or not to allow foreign dire
ct investment in the online retail sector. Perhaps things can turn for the bette
r with the new amendments introduced in the CPA as recently as in 2015, which in
ter alia provides a cooling off period that allows a consumer to cancel a transa
ction and demand payback of money for a certain period after it has opened and a

lso sets up a new regulatory authority that will have powers to recall goods and
services and also initiate class action lawsuits against companies that are def
aulting against the statutes of the law and these will now, explicitly, include
Indian e-commerce companies. Such measures will on the one hand accord some much
-needed protection to the online consumers, but at the same time, they will also
undoubtedly increase cost of businesses for the e-commerce companies, who are a
lmost definitely going to pass on this cost to the consumers in terms of hiked p
rices. Given the propensity of many e-commerce companies in India to engage in b
usiness malpractices and tax evasion, which in turn leads to the loss of governm
ental revenue, and victimisation of consumers to unscrupulous anonymous business
practices, a new separate law for protecting consumers in e-commerce sector is
still needed, however. Accurate information, fair contractual terms, strong gove
rnance mechanism to regulate unconscionable conduct, sufficiently strong regulat
ory standards vis-a-vis product quality and sustainability and clear and cogent
cancellation, return and refund policies, enforcement by way voluntary rule-base
d self-regulatory agencies, facilitation of mediation and arbitration using the
online platform itself, usage of cryptography and related technologies to enhanc
e safety standards, fostering awareness among consumers about standards such as
ISI Mark, Gold Halmark, Maximum Retail Price etc., using Oripay numbers to shop
online without having to divulge credit/debit card details, training competent c
onsumer laws experts and litigators of ways to use their experience to resolve d
isputes of this sort and sorting out jurisdictional issues in dispute resolution
that would allow the consumer to take legal action at the place of his domicile
or residence, to name a few, ought to be the prominent objectives for any legis
lative steps taken in this direction.
Refresher Questions
1. What are the various advantages of e-commerce over brick-and-mortar business?
2. What are the various shortcomings of online market transactions?
3. What does e-commerce mean and what are the different types of e-commerce?
4. What are the various mechanisms for online frauds?
5. What are the various guidelines, principles and initiatives prescribed by the
Reserve Bank of India to prevent financial frauds over the Internet?
6. What are the various international guidelines and efforts of collaboration to
accord consumer protection in the online market?
7. What are prescriptions of the OECD Guidelines for e-businesses to adhere to?
8. How do the OECD Guidelines require disclosures to be made in course of online
marketing of products and services?
9. How does the Consumer Protection Act provide protection to online consumers?
10. What is the role played by the Information Technology Act in online marketin
g and consumer protection?
11. What are e-contracts and its different types? How do they differ from ordina
ry contract, if at all, in their treatment under the Indian Contract Act?
12. What are the jurisdiction problems that can arise in course resolving consum
er grievance related to e-commerce?