Friday, May 29, 2009

Online payment via credit/debit card is still risky, why?

online payment method online payment security
FOR e-commerce to succeed it is essential to have a mechanism that makes online payments via credit cards safe. What are any legal issues concerning this, frauds for instance that have been reported recently?

Credit cards are an important aspect of life today and have replaced hard currency. On the internet, however, there are several crucial issues involved relating to their security. Hackers and cyber criminals try to get credit card numbers of individuals so that they can be misused on the internet. We find a lot of misuse of credit cards taking place on internet — such cases have been reported in the US too.
On October 29, the US Secret Service announced that it had arrested 28 members of an alleged cybercrime ring. It was reported that the suspects who were from eight US states and six countries were charged with identity theft, credit card fraud and conspiracy. Authorities have said that members of this alleged crime ring stole 1.7 million credit card numbers with financial losses estimated at $4.3 million.
In India, credit card penetration is still low, and the absence of adequate security mechanisms adds to the problem. Also, it's we're still in the early days of internet here. Credit card transactions here are a purely contractual obligation between the parties. The credit card agreements are drafted mostly in favour of credit card companies with the result that there are hardly any effective remedies available to users. It is therefore essential that appropriate steps be taken not only to ensure that the security of credit cards is maintained, but also to ensure their continued legal usage. Further, there is a need to amend the Information Technology Act 2000 and the Indian Penal Code to incorporate new provisions relating to credit cards misuse. The Indian cyberlaw does provide for compensation by way of damages to the tune of Rs 1 crore in case of credit card misuses, but that concerns cases involving a computer system or network. Further, if the credit card number is obtained by hacking, the Indian cyberlaw provides for a penal offence punishable with three years imprisonment and Rs 1 lakh fine.
However, issues relating to the protection of credit card data and information by companies and their potential misuse, needs to be covered by certain legislative provisions or a broad law of data protection. Such provisions should provide for the legal responsibility for the companies and other legal entities handling credit cards and other sensitive financial information and the consequences in case of any breach concerning the same. The said law will further help to ensure the confidential handling and usage of credit cards by companies who are responsible in dealing with the same in the course of business activities and transactions.

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