How digital signatures and verification systems help us shop online

by The FindLaw Team

If you have paid attention to the news recently, chances are you would have come across items publicising the supposed deaths of the old brick and mortar stores due to the impact of online shopping. Sure, we here at FindLaw cannot speak on behalf of all our visitors, however, this writer most certainly has utilised internet shopping to such an extent, that visiting a store to purchase goods in person doesn’t hold the same appeal anymore.

The ease in which an individual can perform an online transaction is quite remarkable. However, have you ever stopped to think about how our online selves are verified when we’re conducting an internet purchase? Or how do e-commerce sites establish that we are indeed who we claim to be online? And on a related note, how does an e-commerce site establish trust and confidence that we are purchasing a product that will eventually materialise? It’s probably a fair assumption to say that the popularity of internet shopping is rising here in Australia, and there are laws and protocols in place to ensure that all parties involved in an online transaction, are as well protected as possible.

For anyone who wants to start an e-commerce site, or are just plain curious about online transactions, this piece will cover electronic signatures, online verification systems and the general laws that revolve around internet shopping.

How online authentication, transactions and legislation work

The most common electronic signature methods that are used in e-commerce transactions utilise public key cryptography, and mainly involve passwords, biometrics, and scanned or typed signatures.

Legislation exists at both the Federal and State levels outlining the requirements that e-commerce businesses must abide by if they are in conducting online transactions with customers. Using ss 10(1)(a) and 10(1)(b) of the Commonwealth, Electronics Transactions Act as an example, the Act states that the method used for electronic signatures must satisfy the following criteria:

• the method used to identify the person and indicate the person’s intention in respect of the information communicated
• the method used must be as reliable and appropriate for the purposes of the information communicated.

State and Federal legislation will have many similarities, and Australia’s Acts are generally derived from international laws, as well as Agreements that deal with how online transactions should operate on a universal scale.

How do businesses undertake e-commerce transactions?

Internet transactions rely on public key infrastructures that use cryptographic technologies to manage, and control electronic signatures. All e-commerce sites utilise the services of a Certification Authority, which then in turn issues a digital certificate to a person, or on an entity which informs the rest of the world that the public key belongs to the associated person or entity.

In Australia, it is the Gatekeeper Competent Authority which grants Gatekeeper Accreditation Certificates to a Certification Authority, which then allows online transactions to occur. It is mainly governmental bodies that have Certification Authority in Australia, however, VeriSign and Betrusted are two entities that can verify retail transactions in Australia.

Internet shopping is burgeoning, and will conceivably continue to grow. When you stop and think about how seamless the world of e-commerce appears to be, it’s rather amazing that protocols such as electronic signatures are in place, especially when you realise that the procedure operates on a global scale.

This piece only touches on one aspect of legal e-commerce practices. If you are considering an online shopping business, always seek the appropriate advice to help you get started.  


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