• Monday, July 15, 2024
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Legal Issues Surrounding E-Commerce and Online Transactions in Nigeria (PART 1)

The Trusted Advisors Legal Digest: Legal issues surrounding e-commerce and online transactions in Nigeria (Part II)

Introduction

E-commerce activities in Nigeria are rapidly growing due to vast improvements in telecommunication services. E-commerce is the use of the Internet for marketing, identification, payment and delivery of goods and services. The appearance of e-commerce has transformed the traditional means of shopping and doing business. Its acceptance has brought more e-commerce business models in Nigeria and has introduced more competition.

Overview of the legal issues surrounding e-commerce in the country

Privacy Policies

An e-commerce website privacy policy is a concise document that explains how a website collects, uses, safeguards, and shares the personal information of its visitors and customers. It outlines the website’s commitment to protecting user privacy and ensures transparency in data handling practices. If an e-commerce operator negates the purpose of the privacy policy, the data subjects whose data was breached could sue the operator. If the data are not properly stored, the data subject information are no longer safe with the e-commerce operator and is at the risk of their data being leaked.

Cybersecurity and Data Breaches

E-commerce businesses are prime targets for cyberattacks. Ensuring robust cybersecurity measures and data breach preparedness is essential to protect both consumers and the business. Cybersecurity protocols are plans, rules, actions, and measures to use to ensure your company’s protection against any breach, attack, or incident that may occur. Implementing encryption, firewalls, and intrusion detection systems can help safeguard customer data from cyber threats. If an E commerce operator fails to put these measures in place to safeguards all types of data against theft and loss – Sensitive data, protected health information (PHI), personally identifiable information (PII), intellectual property, personal information, the e commerce operator may be liable to a legal suit.

Data Breach Notifications

E-commerce businesses must promptly notify affected individuals and authorities during a data breach. Failing to do so can result in hefty fines and legal repercussions.

Contractual Agreements and Obligations

E-commerce businesses enter into numerous contracts with various stakeholders, including payment systems, tech providers, consumers, employees, suppliers, and website hosting services. Managing these contracts effectively is vital to ensure smooth operations and legal compliance.

Overview of relevant laws and regulations governing e-commerce

There are various laws/regulations regulating e-commerce in Nigeria but for this article, we will be looking at the three listed below:

Nigerian Communications Commission (NCC) regulations

The Nigerian Communications Commission (NCC) is the regulatory body responsible for the development and regulation of the telecommunications industry in Nigeria. The NCC Act provides for the regulation of electronic commerce, including the protection of consumers’ interests, licensing of e-commerce service providers, and establishment of a dispute resolution mechanism.

Under this Act, all e-commerce service providers operating in Nigeria are mandated to obtain a license from the NCC and adhere to the guidelines and regulations set by the Commission. Failure to comply with these regulations may result in sanctions or revocation of the license.

Electronic Transactions Act (ETA)

The Electronic Transaction Act (ETA), provides for the recognition and validity of electronic signatures and transactions in Nigeria. It allows businesses to smoothly conduct commercial transactions without having to resort to paper-based methods. The objectives of the ETA are to facilitate electronic commerce and to ensure certainty and predictability in the law relating to electronic transactions. The ETA does not mandate the use of electronic transactions but provides a legal framework for businesses that choose to use them.

The ETA sets out rules about the formation, validity and enforcement of electronic contracts, as well as disclosure and security requirements for businesses engaged in electronic commerce.

Consumer Protection Council (CPC) Guidelines

The Consumer Protection Council (CPC) is the regulatory agency responsible for the protection of consumers’ interests in Nigeria. The Act also empowers the CPC to impose sanctions on businesses that infringe on consumers’ rights as well as take legal action against such businesses.

The Council introduced a set of guiding principles for the operation of E-commerce platforms to protect e-commerce consumers as well as enhance consumer confidence.

Some of the guiding principles are:

Online marketers recognize that a dedicated customer service apparatus, is required to ensure engagement and a complaint resolution process which is not burdensome to the customer.

Online market platforms recognize the importance of full, frank and complete disclosures of any terms, conditions, exceptions or restrictions on products marketed on their platforms.

Online marketers also recognize the need to promote consumer confidence and eliminate distrust. Advertisements of products should be truthful, transparent and factual.

Online market platforms recognize that timely delivery is a material and vital term of the contract/ agreement between platforms and their customers.

Online marketers recognize and respect the privacy of consumers and the need to protect such privacy by securing and only disclosing consumer data/personal information by operation of law or following consumer preferences.

Contractual Issues in E-Commerce

Formation and validity of online contracts

A contract is an agreement which gives rise to rights and obligations which can be enforced and recognized by law. Online contract could also be formed via a website (click-wrap transaction). Products for sale are advertised on the website and the buyer clicks on icons indicating the item he wishes to purchase, the mode of payment and delivery. The buyer is then presented with a standard form contract which sets out the rights and obligations of the parties. The agreement can be viewed by the buyer who either ‘Agrees’ or ‘Disagrees’ with the standard terms and conditions by mouse-clicking the desired icon. In the instance where he ‘Agrees’ to the terms of the contract, he may proceed with the transaction, but where he ‘Disagrees’ with the terms of the contract, the transaction is automatically terminated. In a click-wrap transaction, the buyer does not deal directly with the vendor, but rather with the vendor’s computer system (software), this gives rise to electronic agency.

Offer and acceptance in the digital context

In a click-wrap transaction as explained above, acceptance is formed in an e-commerce transaction when the buyer pays for the goods on the website. That is; if it is transaction via email, acceptance is formed when the other party reviews and accepts to go on with the transaction.

Electronic signatures and their legal recognition

There are various reasons why some parties might prefer the traditional paper-based mode of contracting to the electronic mode, one of the main reasons is the ability of the parties to endorse the contract. Apart from the fact that most parties desire to have their contracts authenticated as an assurance of genuineness, there are instances where the law might require that an agreement be signed for it to be valid. There are now technologies that allow for the authentication of an electronic document. With the availability of scanners and PDF documents, identification documents can be made available electronically.

Electronic signature is known as an E-signature or digital signature. Electronic signatures are admissible. Although no statute in Nigeria defines Electronic Signatures in Nigeria. This issue has been addressed in the UK by the enactment of the Electronic Signatures Regulation 2002 and the Electronic Communication Act 2000, which promotes the use of digital signatures and provides that electronic documents should not be denied enforceability merely because it is in electronic form.

Terms and conditions of online sales and services

Standard form contracts (SFCs) are agreements mostly used in E-commerce transactions, which contain terms and conditions that regulate the rights and obligations of the contracting parties. They employ standardized, non-negotiated provisions, usually in pre-printed forms, which are mostly used for contracts of the same nature.

Mandatory disclosure requirements

A disclosure statement implies the information that the business is legally obliged to provide to the public by the land laws.

Disclosure statements are made mandatory by the government to ensure the protection of consumer and investor rights. The disclosure statement intends to inform the customers or investors about certain data so that they don’t end up making a misguided decision.

A business has to follow compliance with a variety of disclosure requirements which relate mainly to the following areas:

Consumer protection

Companies Act regulations

E-commerce business practices

Services provided to customers

Data collection and protection

Privacy policy

Conclusion

Electronic commerce is no doubt a budding phenomenon in commercial transactions in Nigeria because of its peculair nature. Although, it has its own problems because of the rate of its growth in Nigeria. Thus, legal issues and problems presently confronting e-commerce in Nigeria should be addressed directly and expeditiously, in the interests of the consumers. When this is done, the country will be able to benefit from the use of the internet for commercial transactions.