What Are The Rules For Mobile App-Based Commerce?

    Cyber and Technology Law
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Mobile app-based commerce, or m-commerce, has transformed the retail and financial landscape by enabling users to make purchases and payments through smartphones. However, to protect consumers and ensure secure transactions, various rules, regulations, and best practices must be followed. These rules cover aspects like data security, user privacy, regulatory compliance, and responsible platform management. Both businesses developing these apps and consumers using them must be aware of these requirements to avoid legal, financial, and security issues.

Rules and Guidelines for Mobile App-Based Commerce

RBI Guidelines (India Specific)

Apps facilitating digital payments must follow Reserve Bank of India (RBI) regulations. This includes using licensed payment aggregators, storing data within India, and complying with tokenization policies for card storage.

PCI DSS Compliance

Apps that process or store payment card information must adhere to Payment Card Industry Data Security Standard (PCI DSS). This includes encryption of card data, secure authentication, and regular security assessments.

App Store Policy Compliance

Google Play Store and Apple App Store have strict commerce-related policies. Apps must clearly disclose their business model, payment methods, data handling practices, and refund mechanisms.

User Data Protection and Privacy

Apps must comply with global and national data protection laws like the EU’s GDPR or India’s DPDP Act. This includes obtaining informed user consent, secure data storage, and transparent privacy policies.

Secure Authentication Methods

Apps should implement two-factor authentication (2FA), biometric login options, and OTP verification for transactions to ensure that only authorized users can access and transact.

Fraud Prevention Mechanisms

Mobile apps should integrate AI/ML-based fraud detection systems that flag unusual activity, device changes, or location anomalies.

Periodic Security Updates

App developers must regularly update the app to patch vulnerabilities, improve performance, and comply with the latest security standards.

Clear Terms and Conditions

Apps must clearly list terms of service, return policies, and transaction conditions to avoid disputes and ensure user transparency.

Grievance Redressal Mechanisms

According to government regulations, apps offering financial services must provide dedicated customer support and grievance redressal systems.

Common Threats and Compliance Challenges

Unregulated Apps

Apps operating without licenses or regulatory oversight pose high risks of data misuse or fraud.

Phishing Through Fake Apps

Cybercriminals often publish look-alike apps to steal user credentials or banking information.

Lack of Encryption

Some apps fail to encrypt sensitive data properly, exposing users to breaches and leaks.

Unauthorized Data Sharing

Sharing user data with third parties without consent is a serious violation of privacy regulations.

Legal Framework and Consumer Protection

Digital Personal Data Protection (DPDP) Act – India

Protects users’ personal data and mandates clear consent for data collection and processing.

Consumer Protection (E-commerce) Rules, 2020

Requires fair practices, transparency in pricing, and proper dispute resolution for online commerce.

Information Technology Act, 2000 (India)

Covers cybercrimes, electronic records, and legal recognition of digital signatures and contracts.

Reserve Bank of India’s Master Directions

Govern mobile wallets, UPI transactions, and customer protection in digital payments.

Grievance Portals

Consumers can report issues to RBI’s CMS portal or cybercrime.gov.in for fraud or misconduct.

Consumer Safety Tips

Download apps only from official app stores.

Verify the app developer's credentials and user reviews.

Avoid granting unnecessary permissions (e.g., contact access).

Do not store sensitive information like card details or passwords in the app.

Use biometric locks or PINs for app security.

Report suspicious app behavior or transactions immediately.

Example

A user downloads a budget shopping app that offers steep discounts. They make a purchase using their debit card. A week later, they notice multiple unauthorized transactions.

Steps the consumer should take:

Immediately block the debit card through mobile banking or by calling the bank helpline.

Report the fraud to the bank and request reversal or investigation.

File a complaint on cybercrime.gov.in.

Uninstall the suspicious app and scan the device for malware.

Change passwords and enable 2FA on all linked accounts.

In the future, download only verified apps from trusted developers.

Answer By Law4u Team

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