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E-Commerce Laws in Pakistan

The e-commerce industry is booming these days. It has provided small and medium-sized businesses with a way to gear up their business operations in order to maintain eye level with big names. But what actually is E-commerce? It is buying and selling of goods over the internet. The transactions are either B2B, B2C, customer-to-customer, or customer-to-business. The rapid growth of the internet and the increased use of cellular phones have taken the e-commerce industry to a whole new level. The main advantage to businesses is that they can still reach out to existing and potential customers, even when physically unavailable.

However, with a sudden increase in the e-commerce industry, the competition between involved businesses has also been intensified.  A business that competes and operates within the boundaries of laws and regulations is not only safe from penalties, fines, and bad reputation but also gains a competitive advantage over competitors.

Abiding by laws is not only necessary but also a way for businesses to make their way to success and explore great opportunities; otherwise, they won’t ever be able to focus on their operations. There certain areas which a business should consider before deciding on an e-commerce business:

  • Data Protection
  • Shipments and deliveries
  • Refund
  • Payments
  • Consumers laws and rights
  • Terms and conditions related to the website use or for any online purchase
  • Laws related to online advertising
  • Financial data management of online customers
  • Trademarks, patents and copyright license
  • Taxation
  • Maintenance of written agreements

Understanding and operating under laws and regulations will definitely make a business outperform other competitors in the industry. In general, there are no particular conditions to get into e-commerce. Like any other business, the owner has an option to either start e-business as a sole proprietorship, public/private limited company, or partnership.

The first and the most important thing prior to starting an online business is to have a software in order to maintain inventory, customers’ data, account, and other related information. As far as the software program is concerned, it is protected under the copyright law regardless of the fact that whether the owner actually registered the software program with the concerned authorities. So, while you purchase the software, you must make sure that you do so in the original form from the original proprietor or any person who is actually licensed under the law to sub-license the program.

Since transactions will take place online, the first and foremost thing a business requires is a separate website dedicated to buying, selling, marketing, promotion, and customer care services of the products. In order to have your website, there must be a unique domain, and it should be registered as a trademark according to Trademark law in order to prevent from being misused or used by any other person. In order to protect your website, under Copyright laws, you can get it registered to prevent any other business or person to copy the layout. Now comes another step – creation of privacy policy and terms of use statement.

A privacy policy states privacy practices regarding protection and usage of customers’ data and personal information. Terms of use could be an agreement or a disclaimer regarding website usage and its copyrighted material.

Now comes the part where a business fills in its content, either private or commercial, on the website. For any products on sale, a business must clearly give the product’s quantity, quality, the applicability of taxes, and any other related information on the website. Otherwise, any misleading information may lead to legal disputes and a consumer may take the matter to a consumer protection court. A customer has the authority to sue a business if they are given any substandard product or a product different from the given parameters.

Another important thing to remember in e-business is whether the sales tax is applied to the products being sold. If the sales tax applies, a business must get registered with the sales tax department. Moreover, if the business has a yearly turnover that exceeds the exempted threshold set by law, a sales tax invoice must be issued against the sale of any taxable product/service. The development of policies regarding payment methods, exchange/return of products, delivery and refund is another thing a business must consider before going online.

In such a case where a business doesn’t want a website or want to increase the visibility of products and their sale, it may approach other online marketplaces, like daraz.pk, to place products. However, such marketplaces have their own policies which a business may abide by. In general, only the owner of the products being placed for sale is liable to consumers for the quality and other related matters. Remember, the legal framework for commercial transactions is defined under the 2002 Electronic Transactions Ordinance.

Apart from above-mentioned things, an e-business owner must also be aware of prohibitions prescribed under  2016 Electronic Crimes Act. Any act of violation may result in imprisonment and/or fine. The act may include obtaining, transferring or use of any person’ identity or information without any authorization; disclosing of personal information except when required by law or on governmental requests; displaying content against Islam, government, morality or defense, and displaying of misleading or fraudulent information.

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