Unit 4 : E-Commerce and Online Credit Card Payment

4.1 E-Commerce - Meaning, Concept and Background, Online Contracts and Issues

Meaning of E-Commerce

E-commerce, which stands for electronic commerce, is the buying and selling of goods,
services, and information through the internet. It involves using digital platforms,
websites, or applications to conduct transactions, ranging from product purchases to
financial exchanges. E-commerce includes a variety of business activities, such as
transferring money, exchanging information, and fulfilling product orders—all done
electronically. This allows individuals and businesses to interact with each other
globally, eliminating the need for physical presence, and providing both sellers and
buyers with greater flexibility and convenience.
The e-commerce ecosystem is vast and can take many forms depending on the
participants involved, ranging from businesses and consumers to individuals and
organizations. E-commerce can facilitate both tangible and intangible exchanges, and it
is rapidly evolving with new technologies, creating even more opportunities for
businesses to engage with customers.

Key Features of E-Commerce:

1. Online Shopping:
 Buying Physical Goods Through Online Stores: One of the most common forms of
e-commerce is online shopping, where consumers can browse, compare, and
purchase physical products directly from e-commerce websites or mobile apps.
These can include anything from clothing, electronics, groceries, and furniture, to
books and toys.
 Online shopping provides consumers the flexibility to shop 24/7, without the need
to visit physical stores. Consumers can explore a wider variety of products, read
reviews, and compare prices from multiple sellers or brands in one place.

2. Electronic Payments:
 Secure Methods of Payment: Electronic payments are a vital part of e-
commerce, as they enable customers to pay for products or services
online. These secure payment systems include credit and debit cards,
PayPal, mobile wallets (like Apple Pay and Google Wallet), and bank
transfers.
 Payment systems have evolved to become more secure and user-friendly,
with encryption technologies such as SSL (Secure Sockets Layer) ensuring
that sensitive financial information remains private. Additionally, the rise of
 digital payment platforms and services allows for quicker transactions,
both for consumers and businesses, while reducing the risk of fraud.

3. Digital Products:
 Intangible Products and Services: Unlike physical products, e-commerce
also facilitates the sale of digital goods and services. These include things
like e-books, downloadable software, music, movies, video games, online
courses, and subscriptions (e.g., Spotify, Netflix).
 Digital products have grown immensely popular due to the convenience of
instant access and downloadability. These products typically don’t require
physical shipping and are available to the consumer as soon as the
transaction is completed. For instance, you can purchase and download
an e-book within minutes without needing to wait for shipping.

4. Marketplaces:
 Online Platforms with Multiple Sellers: Marketplaces like Amazon, eBay,
and Etsy serve as platforms where multiple independent sellers list their
products for sale, and consumers can shop from a wide range of options.
These platforms act as intermediaries, connecting buyers with sellers and
often providing additional features such as product recommendations,
reviews, and secure payment gateways. Marketplaces allow small
businesses and individuals to tap into a large customer base without
having to create their own online store.
 Amazon and eBay, for example, provide a global platform where sellers
can list items, manage inventory, process orders, and ship goods to
customers, while buyers enjoy an extensive variety of products from
di erent sellers in one place.

Concept of E-Commerce:
E-commerce represents the use of internet technologies to facilitate commercial
transactions, and it can be broken down into several key concepts:
Business Models in E-Commerce: E-commerce supports di erent types of business
models, each involving di erent participants. These include:

1. B2C (Business-to-Consumer): This is the most common form of e-commerce

where businesses sell goods or services directly to consumers. For example,
Amazon, eBay, and Walmart o er products directly to individuals. This model is
highly dependent on website design, customer experience, and e icient logistics.
2. B2B (Business-to-Business): In this model, businesses sell products or services
to other businesses. It often involves large transactions and may include
wholesale distributors and manufacturers. Platforms like Alibaba, Thomas Net,
 and Grainger are examples of B2B marketplaces where businesses can find
suppliers or manufacturers.
3. C2C (Consumer-to-Consumer): This model allows individuals to sell directly to
other individuals. Websites like Craigslist, eBay, and Poshmark are popular
examples where consumers list items for sale to other consumers.
4. C2B (Consumer-to-Business): In this unique model, individuals o er products or
services to businesses. For example, a freelance designer may o er services to a
company through platforms like Upwork, or a consumer may sell photos to stock
photo websites.

Background of E-Commerce:

The background of e-commerce is deeply rooted in technological advances, economic

needs, and the rise of the internet. Here's a detailed timeline of how e-commerce
developed:

I. Early Days of E-Commerce (1970s-1980s):

o Electronic Data Interchange (EDI): In the 1970s, businesses began using EDI to
transfer documents like purchase orders and invoices electronically. This early
form of e-commerce helped reduce the costs of paper-based transactions.
o ATM Transactions: The first electronic banking transaction using Automated
Teller Machines (ATMs) marked a significant early step toward e-commerce by
allowing electronic transactions outside physical bank branches

II. The Rise of the Internet (1990s):

 World Wide Web: The launch of the World Wide Web in 1991 by Tim
Berners-Lee provided a platform for building websites that could support
online commerce.
 First Online Transactions: In 1994, Netscape Navigator, the first widely
used web browser, introduced Secure Sockets Layer (SSL) encryption,
which made online transactions safer. This enabled the first real-time
online purchases, including the sale of books and music.
The Birth of E-Commerce Giants: In 1994, Je Bezos launched
Amazon.com as an online bookstore. eBay followed in 1995, allowing
individuals to auction items online, paving the way for widespread online
buying and selling.

III. Expansion and Growth (2000s):

 Dot-Com Boom and Bust: The late 1990s and early 2000s saw a surge in
the number of e-commerce companies, many of which were part of the
 dot-com boom. However, the burst of the dot-com bubble in 2000 led to
the closure of many e-commerce startups.
 E-Commerce Maturity: By the mid-2000s, large players like Amazon, eBay,
and Walmart had solidified their positions in the market, while smaller
businesses began to develop their own e-commerce sites. Payment
systems like PayPal became widely used.
 Mobile Commerce (M-Commerce): With the advent of smartphones, m-
commerce grew rapidly in the 2010s. Mobile apps and mobile-friendly
websites allowed consumers to shop on the go, further expanding the
reach of e-commerce.

IV. The Digital Era (2010s to Present):

 Social Commerce: E-commerce began integrating more with social media
platforms like Facebook, Instagram, and Pinterest, where consumers
could discover and purchase products directly from social media feeds.
 Subscription Economy: Companies like Netflix, Spotify, and subscription
box services saw a rise in recurring revenue models, where customers pay
a set fee for ongoing access to digital content or physical goods.
 AI and Personalization: Machine learning and AI technologies enabled e-
commerce businesses to o er personalized shopping experiences,
targeting customers based on browsing behavior, preferences, and
previous purchases.
 Voice Shopping and Virtual Assistants: The rise of voice-activated devices
like Amazon Echo and Google Home allowed consumers to shop through
voice commands, further streamlining the shopping process.

V. E-Commerce in the Future:

o Omnichannel Retail: Retailers are increasingly blending physical stores
with e-commerce to provide a seamless customer experience across all
channels, whether online or o line.
o Augmented Reality (AR) and Virtual Reality (VR): New technologies like AR
and VR are transforming how consumers interact with products online,
allowing them to virtually try on clothing, visualize furniture in their homes,
and more.
o Blockchain and Cryptocurrency: The integration of blockchain technology
in e-commerce could o er enhanced security, transparency, and
decentralized payment systems using cryptocurrencies like Bitcoin or
Ethereum.

Conclusion:
E-commerce is a dynamic and continuously evolving sector that has fundamentally
changed how businesses operate and how consumers shop. From the early days of
electronic transactions to today's sophisticated digital marketplaces, e-commerce has
become a cornerstone of the global economy, and its future continues to be shaped by
new technological innovations and changing consumer behaviors.

Online Contract

E-Contracts are those contracts which are formed between two or more parties through
negotiations by the use of any electronic means. They are also known as cyber
contracts, digital contracts and online contracts. It is similar to traditional contracts
which are based on paper and the exchange of goods and services takes place for a
specific amount of consideration. The only exception in e-contract is the mode of
contract which is digital in nature I.e. internet or any e-instrument.

Essential Elements of E- Contract Legal advice

1. There must be two parties

2. Use of electronic means
3. E-Proposals and E-Acceptance
4. Amount of Consideration
5. Certainty and Possibility of Legal Performance
6. Intention to Create Legal Relations
7. Competency of the Parties and Free Consent

Definition of E-Contract

E-Contract is any kind of contract formed in the course of e-commerce by the interaction
of two or more individual using electronic means , such as e-mail , the interaction of
individual with an electronic agent such as computer program or the interaction of at
least two electronic agents that are programmed to recognize the existence of a contract
.

Issues and challenges faced in e-contract

1. E-contract:

The Indian Contract Act and the IT Act are legally valid e-contracts. E-contracts are ruled
by certain rules that mandates that contracts can be undertaken through free consent
and lawful consideration between the two individual. There is a huge possibility that in e-
contract minors also enter into contracts. So in order to stop minors entering into
contract the forms on the websites should mention that whoever the individual
undertakes the contract should be above 18years.

2. Data Protection:

Protecting the facts in online is the major worry of every individual. The Information
Technology 2011 and the Section 43A of the IT Act both highlights the recommendations
of how to protect the data in India.Every Company should take care in order to protect
from corruption , damage , loss or destruction of any kind of private information or data
also in the communication of the contract between parties.

3. Intellectual Property Rights:

Sometimes it is seen that e-commerce website are operated by some other parties who
are specialized in the same stream . The information is protected by the third party. If the
agreement do not provide IP rights between parties then there is a possibility of
infringement on trademark , copyright or patent at online platform.

4. Product returns and refunds:

In e-contract the consumer has the right to cancel the product after it was ordered. If the
customer is not satisfied with product returns the product to the seller. Many times we
have seen that consumers get attracted with the products on the screen as it looks eye
catching and orders it but when the product reaches in hand they become unsatisfied
and returns the product. Many times consumers also face fraudulence. It should be
further observed that if goods are canceled the refunds should be receive by the
consumers within few days but traders usually block the consumers money by not
refunding. Hence refund time should be mentioned in advance by the law which if
exceeded by the trader will lead to fine.

5. Delivery of faulty goods:

In electronic contracts we have faced issues like ordering goods but receiving false
goods. We have many time seen such cases in our real life as well as read in newspapers
like a person ordered a laptop but received a brick , a vim bar instead of Samsung Galaxy
Core 2 , pieces of stones was received once instead of iPhone 4S. The legislation orders
the seller to provide equal amount of compensation to the su ered consumers to curb
the issues. But still there are sellers who does acts in order to harass the consumer. In
order to stop this issue strict rules and laws should be imposed.
4.2 Online Payments and Information Technology Act 2000

Online Payments are financial transactions conducted through digital platforms or over
the internet, where goods, services, or other financial obligations are settled
electronically rather than through physical forms of payment such as cash, cheques, or
money orders. This method of transaction has revolutionized the way businesses and
consumers interact, enabling instantaneous financial exchanges in a global
marketplace. Online payments are facilitated by various technologies that ensure the
secure transfer of funds, protection of personal data, and the integrity of the transaction.
Some common forms of online payments include:

1. Credit/Debit Card Payments: Using card details to make payments online

via secure payment gateways.
2. Mobile Wallets: Platforms like Google Pay, Paytm, Apple Pay, and others
allow users to store funds digitally for quick and easy payments.
3. Bank Transfers: Direct payments from a bank account to the merchant,
often facilitated by online banking platforms.
4. Third-party Payment Services: Payment processors like PayPal, Stripe, or
Razorpay allow individuals or businesses to make and receive payments
without directly interacting with banks.
5. Cryptocurrency Transactions: Though emerging, digital currencies like
Bitcoin are also increasingly being used for online payments.

The ease of use, convenience, and global accessibility of online payments have made
them the preferred method for millions of users worldwide. They play a central role in e-
commerce, online subscriptions, utility bill payments, peer-to-peer transfers, and
various other financial activities. However, due to the sensitivity of the information
involved, especially in the case of credit cards, personal data, and banking details,
security is paramount. As online payment systems have evolved, ensuring data
protection, fraud prevention, and regulatory compliance has become essential.

The Role of the Information Technology Act, 2000 (IT Act, 2000)

The Information Technology Act, 2000 (IT Act, 2000) is a landmark legislation in India that
provides the legal framework for electronic governance, cybersecurity, and digital
transactions. As the use of the internet and online platforms for business and
communication grew exponentially, there was a need to regulate and safeguard
electronic interactions. The IT Act addresses various aspects of digital and online
transactions, including those involved in online payments.
In the context of online payments, the IT Act plays a pivotal role in ensuring that digital
transactions are secure, legally recognized, and protected from fraud or unauthorized
access. Below is an in-depth analysis of how the IT Act is linked to online payments:

1. Legal Recognition of Electronic Transactions (Section 4 & 5)

One of the key features of the IT Act is its provision for the legal recognition of electronic
records. Traditionally, contracts and financial transactions were executed on paper, but
the rise of digital commerce necessitated a legal framework to recognize electronic
transactions. Section 4 of the IT Act gives legal validity to electronic records and
electronic contracts, ensuring that online transactions and payments are as legally
binding as traditional paper-based ones.

Furthermore, Section 5 of the IT Act provides that electronic signatures or digital

signatures, which are used for verifying the authenticity of digital documents, are
recognized as valid under the law. This is especially important in online payments,
where digital signatures are often used to authorize and authenticate payments,
ensuring the integrity of the transaction and protecting it from tampering.

2. Cybersecurity and Data Protection (Sections 43A and 66E)

As online payments involve the transfer of sensitive financial and personal data, the IT
Act addresses the importance of cybersecurity and data protection.

Section 43A of the IT Act mandates that entities, including businesses that handle
sensitive personal data (such as credit card details or bank account numbers), must
implement adequate security practices and procedures to safeguard this information.
This section ensures that payment processors and e-commerce platforms maintain
stringent security standards to prevent data breaches and unauthorized access,
minimizing the risk of data theft or fraud.

Section 66E criminalizes the violation of an individual's privacy by unauthorized capture,

publication, or transmission of personal information, which is particularly relevant in the
context of online payments, where the exposure of financial details could lead to identity
theft or fraud.

This provision ensures that online payment systems maintain robust encryption and
other security measures to protect the confidentiality of users’ sensitive data during the
transaction process. Failure to adhere to these standards can lead to penalties and
legal consequences for businesses.
 3. Protection Against Cybercrimes (Sections 66C, 66D, and 66F)

With the increasing use of online payments, there is also an escalation in cybercrimes
like fraud, hacking, phishing, and identity theft. The IT Act includes several sections
aimed at penalizing and deterring such criminal activities:

Section 66C criminalizes the identity theft of an individual’s personal or financial details
with the intent to commit fraud, including stealing information to make unauthorized
online payments.

Section 66D deals with cheating by personation, particularly in cases where criminals
use fraudulent means, such as phishing attacks, to steal payment credentials and carry
out unauthorized transactions.

Section 66F addresses cyber terrorism, which includes using online platforms to engage
in acts that threaten the financial stability of individuals, businesses, or even the nation.
This provision helps protect online payment systems from becoming a target for large-
scale attacks or malicious activities.

These sections are crucial for ensuring that online payment systems and platforms
remain secure, protecting both businesses and consumers from financial losses due to
cybercrimes.

4. Digital Signatures and Authentication (Sections 3 and 5)

To ensure the authenticity of online payments and transactions, the IT Act makes
extensive use of digital signatures. A digital signature is a cryptographic mechanism that
guarantees the integrity and authenticity of electronic documents or messages, ensuring
that the sender is legitimate and the information has not been altered in transit.

Section 3 of the IT Act defines the concept of digital signatures and the process for their
issuance. Digital signatures are essential in online payments to verify that the transaction
was initiated by the rightful party, making them an indispensable feature of secure
payment gateways and platforms.

Section 5 of the IT Act discusses the legal recognition of digital signatures, which makes
it clear that a digitally signed electronic transaction holds the same legal standing as a
traditional paper-based signature.

By ensuring that online payments are authenticated through secure digital signatures,
the IT Act helps to prevent fraudulent transactions and secure sensitive payment data.
 5. Regulation of Online Payment Systems (Section 70B & Payment Systems
Guidelines)

The IT Act also lays the foundation for the regulation of online payment systems in India.
Section 70B of the Act established the Indian Computer Emergency Response Team
(CERT-In), which is responsible for monitoring and responding to cyber threats,
particularly those a ecting payment systems and online transactions. CERT-In
collaborates with other government agencies, financial institutions, and businesses to
ensure that online payment systems are safe from cyber threats and attacks.

Moreover, the Reserve Bank of India (RBI), in conjunction with the IT Act, has issued
various guidelines and regulations for the operation of online payment systems. These
include mandates for secure payment gateways, the use of two-factor authentication
(2FA), encryption protocols (e.g., SSL/TLS), and periodic security audits. These
guidelines aim to ensure that online payments are processed in a secure and compliant
manner, minimizing the risk of fraud or data breaches.

6. Consumer Protection and Dispute Resolution

The IT Act also provides provisions related to consumer protection in e-commerce

transactions. It ensures that consumers have legal recourse if their online payment
transactions are subject to fraud, unauthorized payments, or breaches of privacy. The Act
encourages transparency in e-commerce platforms by requiring them to display clear
terms of service, including payment terms and refund policies.

Additionally, mechanisms for dispute resolution related to online payments are provided
under the IT Act, empowering consumers to take legal action in cases of unresolved
disputes, faulty transactions, or non-compliance with payment agreements.

Conclusion

In conclusion, the Information Technology Act, 2000 is essential for the legal and
regulatory framework surrounding online payments in India. By recognizing the legality of
electronic records and signatures, safeguarding sensitive data, criminalizing
cybercrimes, and ensuring the security of digital transactions, the IT Act plays a crucial
role in enabling secure, trusted, and legally protected online payment systems. It
provides businesses and consumers with the assurance that online financial
transactions are protected from fraud, data breaches, and other cyber threats, while also
promoting transparency and accountability in the digital economy. As e-commerce and
online payments continue to grow globally, the IT Act remains a vital tool in maintaining
the security and integrity of the online payment ecosystem in India.
4.3 Consumer Protections in Cyberspace, Liability of Internet Service Providers

Consumer protections in cyberspace

Introduction

The document begins by discussing the rapid growth of the cyber world, driven by
advancements in networking technologies. The internet has transformed into a major
platform for trade and commerce, o ering consumers benefits such as competitive
prices, diverse product choices, and convenient delivery services. This has led to a
significant shift towards online transactions. However, the growing use of the internet for
shopping has also introduced challenges, particularly regarding consumer protection in
cyberspace. Common issues such as undelivered products or goods that don’t match
the description have become prevalent, creating a need for robust consumer protection
mechanisms.

E-Consumers

With the growth of e-commerce and e-business, a new group of consumers known as "e-
consumers" has emerged. These are individuals who use online platforms to buy goods
and services. The rise of e-consumers is closely linked to the increasing accessibility of
the internet and the growing preference for the convenience of online shopping. The
document highlights the di erences between o line and online shopping:

 Choice: Online shopping o ers a much wider range of products compared to

traditional brick-and-mortar stores.
 Time: Online shopping saves time by allowing consumers to shop from anywhere,
whereas o line shopping requires travel to physical stores.
 Authenticity: O line shopping is more authentic because consumers can
physically examine products, while online shopping carries the risk of purchasing
products without seeing them in person.
 Taste and Preferences: While o line shopping allows consumers to try products
(like clothes), online shopping does not o er this experience.
 Pricing: Online retailers typically o er lower prices due to the lack of overhead
costs like store rent.
 Instant Gratification: O line shopping provides immediate possession of
products, whereas online shoppers must wait for deliveries.
Despite the advantages of online shopping, traditional retail stores are not becoming
obsolete. Many businesses operate both physical stores and online platforms, such as
Walmart and Target, o ering flexibility to consumers.

E-Consumer Support and Services

The document emphasizes the importance of consumer support services in online

shopping. As e-commerce has flourished, particularly in India, online retailers provide
services like email support, FAQs, customer feedback forms, and chat rooms. These
services are essential to enhance customer satisfaction and build trust in online
platforms. Additionally, the growth of e-commerce in India is linked to factors such as
increased internet access, smartphone penetration, and a youthful demographic. Online
shopping has become increasingly popular because it o ers the following advantages:

1) Access to a global marketplace.

2) Convenience and speed of shopping.
3) Ability to compare prices easily and find discounted o ers.
4) 24/7 availability of products and services.

E-commerce platforms ensure that product descriptions, sizes, and pricing details are
clear and accurate to help consumers make informed choices. However, the document
also notes that consumer protection issues, such as fraud and defective products, have
increased with the rise of online shopping.

Caveat Emptor and Privacy Policies

The principle of caveat emptor (let the buyer beware) is central to consumer transactions,
both online and o line. In the digital space, it implies that consumers should be cautious
and ensure they understand the terms and conditions of a service before entering into a
transaction. Online consumers are expected to read the privacy policies and terms of
service posted on websites, which serve as legal contracts between consumers and
service providers.

Privacy policies are legal agreements that explain how a business collects, uses, and
protects consumers' personal information. The document lists examples of personal
data collected by websites, such as names, addresses, email details, payment
information, and even social security numbers. Privacy policies are crucial because
many countries have laws that require businesses to protect users’ data. An example
cited is the California Online Privacy Protection Act (CalOPPA), which mandates that
businesses collecting personal data from California residents must disclose their privacy
practices.

Terms of Service

Terms of service agreements are essential for defining the relationship between online
businesses and consumers. They outline the rights and responsibilities of both parties
and serve as contracts. These agreements typically include:

1) Ownership and operation details of the website.

2) Copyright, trademark, and liability clauses.
3) The services and products o ered.
4) Customer expectations regarding website usage.
5) Consequences for misuse or abuse of the site.

While terms of service are not always legally required, they provide critical protection
for businesses and consumers alike. By clearly stating the terms, companies can
prevent misunderstandings and limit their liability in case of disputes.

Problems Faced by Consumers

The document identifies several issues that consumers face in online transactions:

1. Confidence in the Source: The internet allows anyone to create a website and o er
goods or services. This raises concerns about the legitimacy of sellers and the
potential for scams. Consumers must ensure they trust the seller before revealing
personal information.
2. Security of Information: Online transactions often require consumers to provide
sensitive information, such as credit card details. Consumers worry about the
safety of this information and whether it can be stolen or misused. Online retailers
must employ secure methods, such as encryption, to protect consumer data.
3. Privacy: Consumers are concerned about the use of their personal information.
They want assurances that their data won’t be sold to third parties or used for
purposes beyond the transaction.
4. Customer Service Standards: If products are not delivered as promised, or if they
are defective, consumers may struggle to resolve the issue. Many consumers
expect the same level of service from online retailers as they would receive from
physical stores, including warranties and easy returns.
5. Fraud: Online shoppers are vulnerable to scams, such as phishing emails, fake
websites, and fraudulent transactions. These threats require stronger regulation
and legal protections for consumers.
Remedies for Consumers

To address these challenges, the document outlines the remedies available to

consumers, both legal and technical:

1. Legal Remedies:
 The Information Technology Act, 2000: This act provides a legal framework for
electronic transactions, digital signatures, and online contracts. It ensures the
protection of personal data, regulates e-commerce platforms, and provides legal
recognition for electronic documents and payments.
 The Consumer Protection Act, 2019: The CPA 2019 addresses the challenges
posed by e-commerce, including issues like misleading advertisements and
unfair trade practices. It mandates that e-commerce entities provide clear
product information and establish grievance redressal mechanisms. The act also
created the Central Consumer Protection Authority (CCPA), which can take action
against non-compliant businesses.
 The Indian Contract Act, 1872: This act governs consumer contracts and o ers
protection for consumers in cases of breach of contract. It is particularly
relevant when disputes arise from online transactions.

2. Tort Remedies:
In cases where contractual remedies are insu icient, consumers can seek
damages under tort law. This includes cases of fraud, negligence, or product
defects. The landmark Donoghue v. Stevenson case established that
manufacturers owe a duty of care to all consumers, even if they are not direct
buyers.

3. Technical Remedies:
The internet has enabled the dissemination of product information at a reduced
cost, which helps consumers make informed decisions. It also allows
businesses to disclose contractual terms online, reducing the likelihood of
surprise clauses. Furthermore, online forums and complaints platforms give
consumers a voice and leverage in resolving disputes.

Conclusion

The document concludes by stressing the importance of consumer protection in

cyberspace as e-commerce continues to grow. While businesses are providing more
support services, consumers still face challenges related to fraud, privacy, and faulty
products. It is crucial for governments and industries to collaborate to create a safer and
more transparent online marketplace for consumers, ensuring that their rights are
protected and that they have e ective avenues for redress.
What is an ISP?

Wherein real-world road, air and rail networks were the access to travel, o ered by the
respective states and their governments, the network access to people on cyberspace to
surf was brought about by the ISP's, the internet services providers. In the simplest terms,
to be an intermediary is to be like a conduit for the passage of any
information/communication. They act like aggregators between those who wanted to
generate and spread information and those who wanted to consume information.

When the time came where the dubious and inauthentic information had become a
nuisance for global peace, economy, trade, etc. There was a need to regulate and
control the information on the internet, and since it was di icult to keep track of
individuals worldwide, it was done through the source that acted as a medium to
aggregate this connectivity, the ISP's, the internet service providers.

The issue of online copyright infringement liability for the ISP's thus became prevalent
since the use of the internet started to expand rapidly. The imperative question that
arises here is to what extent are ISPs responsible for the third party material put on the
internet by users of their facilities?

Because of the hurdles and constraints on keeping track and catching hold of individuals
on a worldwide level, because of geo-cultural, geopolitical and simply inability of
copyright and intellectual property owners to seek infringement damages against those
who misappropriate their intellectual or digital properties, the internet service providers
have become an accessible mule to address this problem, namely since they allow the
internet or data pirates to exist, for which reason the content owners find it righteous to
sue the ISP's for their data infringement because the ISP's naturally are in a position to
control and secure the internet through plausible policing.

Liability of internet service provider

The liability for copyright infringement rests on three theories; direct, vicarious and
contributory infringement. Direct infringement occurs when a person violates any
exclusive right of the copyright owner. Vicarious liability arises when a person fails to
prevent infringement when he can and has a right to do so and is directly benefited by
such infringement.

In the United States, one of the Acts which provides liability for the ISPs is the Digital
Millennium Copyright Act, 1998. This Act governs the liability of the internet sites and ISPs
for copyright infringement of its user. It provides a mechanism for copyright owners to
force site owners and ISPs to remove infringing material.
The following elements are part of the regime under the DMCA:

1) The online service provider [hereinafter OSP] must have a designated agent
to receive notices and it must use a public portion of its Web site for receipt
of notices;
2) The OSP must notify the U.S. Copyright O ice of the agent's identity and
the Copyright O ice will also maintain electronic and hard copy registries
of Web site agents.