More than 60 countries around the world have enacted laws that protect the privacy and integrity of personal data. These are collectively referred to as data protection laws.

Data protection laws focus on issues relating to the minimum standards for the collecting, processing, & securing of data and the use of the data provided by internet users. Data protection laws limit the use of the personal data only for the purpose for which the data was given. Visitors to any website want their privacy rights to be respected when they engage in eCommerce. It is a part of the confidence-creating role that successful eCommerce businesses have to convey to the consumers. India presently does not have any law governing data protection or privacy. India's cyber law, i.e., The Information Technology Act 2000 (IT Act 2000) incorporates a few provisionas relating to data protection. On 11 April 2011, the Indian government published the Data Privacy Rules to implement certain provisions of the Information Technology Act.

The Data Privacy Rules deal with:

  • protection of sensitive personal data: security practises and procedures that must be followed by organisations dealing with sensitive personal data
  • due diligence to be observed by intermediaries; and
  • guidelines for cybercafe's

Sensitive Data is defined as personal information that relates to:

  • Passwords;
  • Financial information such as Bank account or credit card or debit card or other payment instrument details;
  • Physical, psychological and mental health condition;
  • Sexual orientation;
  • Medical records and history;
  • Biometric information;

Sensitive Data is broadly defined to include data obtained by any method, including lawful contract. Information that is freely available, accessible in the public domain, or furnished under the Right to Information Act 2005, is excluded from the ambit of the above defination.

The problem that arises in eCommerce is that the Internet is global. Generally the regulations of the Indian Government will have very little impact unless they are part of a larger international setting. The protection of personal data has never been a purely national problem; it was always a global issue.

The type of information collected by the operating websites can be classified as either individually identifiable information or mass undisclosed information.

Individually identifiable information can be defined as information that can be used to identify an individual, that consist of information like name, address, telephone number, credit card number, or email address and other consumer specific information. This information is linked with identifiable information from other sources, or from which other personally identifiable information can easily be found, including, but not limited to, name, address, phone number, fax number, email address, financial profiles, credit card information. And also IP address is associated with Personally Identifiable Information, unless you have affirmatively disclosed this information. The Internet generates an elaborate trail of data at every stop a person makes. Pentium III processor identifier chip, called Processor Serial Number or PSN, is a number tied to the individual and used to validate one's identity through a range of interactions with any organization or demographic.

On the other hand, mass undisclosed information" can be defined as information that: a website or a third party on its behalf aggregates and categorizes by established geographical areas, such as postal codes and contains non-consumer specific information created from anonymous transactions for use by merchants in better managing their businesses and conducting mass media advertising.

There are abundant technologies that are utilized to collect both classes of information on consumers. One of these tools is called "Cookies" Which is simply a piece of information [computer code] that is saved on your own computer or your browser. It contains information as to the personal preferences exhibited when visiting a website. As it is impossible to differentiate between visitors to a Web site, the server will somehow mark the visitor by storing information on them.

While Cookies themselves are not gathering the data, they are used as tracking devices to help people who are collecting information. Any information gathered is associated with the value they keep in any Cookie. A Cookie cannot read the hard drive to find out who they are, or there incomes or place of residence, However, that information could end up in a Cookie if you provided it to a site and that site saved it in a Cookie.

Accountability by organizations for information within their possession limit the collection of information. Revelation of personal data to the declared purpose except with the consent of the individual. Organizations should retain information only as long as necessary. Information in possession of an organization should be accurate and up-to-date, Security should be the Priority. Organizations collecting data should be transparent in their policy and practice. Organizations should allow individuals to access the data and rectify errors.

Web sites would be required to provide consumers a notice of what information they collect and how they use it. Web sites would be required to offer consumers choices as to how that information is to be used beyond the use for which the information was provided. Web sites would be required to offer consumers a reasonable access to that information and an opportunity to correct inaccuracies. Web sites would be required to take reasonable steps to protect the security and integrity of that information. Websites that collect personal information from children, 12 and under, need to provide actual notice to the parent and obtain parental consent.

The agency should issue interpretive rules defining fair information practices with greater specificity, taking into account industry-specific differences.

The purpose is to prevent violations of fundamental human rights such as unlawful storage of personal data, or the abuse or unauthorized disclosure of such data.

In recent days there has also been concern in India about the impact of data protection laws enacted by other countries.

For example, in the EU countries according to the latest guidelines, they will cease to part with data, which are considered the subject matter of protection to any third country unless such other country has a similar law on data protection. One of the essential features of any data protection law would be to prevent the flow of data to non-complying countries and such a provision when implemented may result in a loss of "Data Processing" business to some of the Indian companies.

The EU guidelines are an out come of the OECD guidelines of 1980 which has listed eight broad principles to be adhered in protecting personal information of the citizens of the country.

They are,

1. Collection Limitation Principle

There should be limits to the collection of personal data and any such data should be obtained by lawful and fair means and, where appropriate, with the knowledge or consent of the data subject.

2. Data Quality Principle

Personal data should be relevant to the purposes for which they are to be used and to the extent necessary for those purposes, should be accurate, complete and kept up-to-date.

3. Purpose Specification Principle

The purposes for which personal data are collected should be specified not later than at the time of data collection and the subsequent use limited to the fulfillment of those purposes or such others as are not incompatible with those purposes and as are specified on each occasion of change of purpose.

4. Use Limitation Principle

Personal data should not be disclosed, made available or otherwise used except:

  • with the consent of the data subject; or
  • by the authority of law.

5. Security Safeguards Principle

Personal data should be protected by reasonable security safeguards against such risks as loss or unauthorized access, destruction, use, modification or disclosure of data.

6. Openness Principle

There should be a general policy of openness about developments, practices and policies with respect to personal data. Means should be readily available of establishing the existence and nature of personal data, and the main purposes of their use, as well as the identity and usual residence of the data controller.

7. Individual Participation Principle

An individual should have the right:

  • to obtain from a data controller, or otherwise, confirmation of whether or not the data controller has data relating to him;
  • to have communicated to him, data relating to him within a reasonable time;
    at a charge, if any, that is not excessive;
    in a reasonable manner; and
    in a form that is readily intelligible to him;
  • to be given reasons if a request made under subparagraphs (a) and (b) is denied, and to be able to challenge such denial; and
  • to challenge data relating to him and, if the challenge is successful to have the data erased, rectified, completed or amended.

Accountability Principle

A data controller should be accountable for complying with measures which give effect to the principles stated above.

In framing the laws in this regard, the data protection right of an individual may have to be balanced with the requirement of the law enforcement authorities who are demanding recording of every move that a Netizen makes on the net.

Law enforcement authorities in India are keen to monitor electronic transactions. These agencies have requested that every visitor to a cyber cafe needs to be identified through a photo-ID card and monitored. As long as India is a country affected by terrorism of the kind we are presently facing, it will be difficult to pass any strict privacy laws in the country. Rather the POTA will ensure that information can be extracted forcibly if the authorities think it is necessary in the interest of the country.

Interception rights are already available in ITA-2000 and will also be retained by authorities in the forthcoming legislation on Communication Convergence.

In this scenario, the Government has to tread carefully in enacting data protection laws. If it becomes necessary, the laws should be passed without jeopardizing the interests of the law enforcement authorities.

India needs to put in place stringent laws for data protection and intellectual property rights if the country wants to emerge as a leading destination for outsourcing.

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