Artificial Intelligence Enabled Cyber Fraud: A Detailed Look into Payment Diversion Fraud and Ransomware - Alana Maurushat, Abubakar Bello and Braxton Bragg
Cyber fraud is rampant. The recent Covid 19 pandemic is a good example of the same. Domain Tools in April 2020 identified over 65,000 websites have been identified as fraud scams related to Covid-19. Organisations have lost billions of money in online scams, and in particular with payment diversion fraud (‘PDF’) and ransomware. PDF is a type of cyber-attack where an entity is tricked into making a direct payment from its account to a false supplier/entity often using real-time payment methods. Ransomware is a type of malicious software that prevents users from accessing their system or personal files usually by locking them through encryption, and demands ransom payment in order to regain access. Based on the professional experience of the authors, coupled with current literature, there is a growing trend of automation, with the use of machine-learning and artificial intelligence. This article discusses PDF and ransomware in the context of mechanics and emerging trends for systematic attacks and response by private industry. These case studies illustrate the limited role that the law plays in the investigation and response to cyber fraud.
Hitting the White Ball: The Technology Neutrality Principle and Blockchain-Based Applications - Anne Veerpalu & Eduardo da Cruz Rodrigues e Silva
This article provides a legal analysis model for legislators to employ in order to identify non-compliance with the technology neutrality principle in cases of use of blockchain technology. The principle of technology neutrality is aimed at supporting innovation and competition. The article uses the treatment of an application called CUBER in Estonia as early as in 2014 as an example for such analysis. The CUBER mobile application used blockchain technology to execute payment transactions for goods and services. The article first portrays the challenges that the technology neutrality principle poses on existing regulation. It then explores whether technology discrimination took place against CUBER and how this could have been avoided through compliance with the technology neutrality principle. Through this analysis, the article maps the challenges that all start-ups encounter when initiating the use of a new technology aiming to innovate an existing process.
It’s Raining Crypto: The Need for Regulatory Clarification When it Comes to Airdrops - Carol R. Goforth
Worldwide regulatory restrictions have pushed crypto entrepreneurs to take creative and novel approaches in their struggle to create viable user networks for new tokens. One of the most interesting vehicles for dispersing tokens is the ‘airdrop’, a process by which a developer essentially ‘gives away’ tokens. The developers’ motives in these airdrops are typically not completely altruistic. Instead, the goal is to increase the ‘buzz’ about new forms of crypto, and to encourage recipients to voluntarily promote the token that they now also own. The regulatory reaction to this technique has been mixed. A few nations, most notably China, have banned airdrops. Most other countries, however, have been less drastic and more ambiguous in their responses. This article lays out some of the current reactions to crypto airdrops and explains why it generally does not make sense not to treat them as involving the distribution of a security. Only where the airdrop crosses the line and requires more than a token effort (no pun intended) is regulation warranted. Where that line should be drawn is left to individual nations.
Regulators Nurturing Fintech Innovation: Global Evolution of the Regulatory Sandbox as Opportunity-Based Regulation - Deirdre Ahern
The regulatory sandbox is a real-world alternative to regulatory lag. Its emergence as a novel regulatory development responds to challenges faced by FinTech innovators in navigating an unwieldy regulatory landscape not designed with FinTech in mind. Regulatory sandboxes are in operation in developed countries including Australia, Canada, Denmark, Hong Kong, Singapore, Switzerland, the Netherlands, the United Arab Emirates, the United Kingdom, and the United States. Within the European Union they are seen in Denmark, Hungary, Lithuania, Poland and the Netherlands. The concept has also gained traction with regulators in developing countries such as India, Indonesia, Malaysia, Mauritius and Thailand. Not only is the regulatory sandbox an experimental space for firms testing innovative FinTech products and services, it is also a novel regulatory experiment for regulators. This article advances the available literature through focusing on the contradictions inherent in the role of the regulator in administering a regulatory sandbox. It characterises the regulatory sandbox as a form of agile, opportunity-based regulation, distinguished by a regulatory approach that is concerned with actively supporting innovators in nurturing cutting-edge innovation to benefit innovators, consumers, investors, and the wider economy. This is path-breaking regulatory territory. In its provision and design, a regulatory sandbox performs a crucial signalling function in relation to a given financial system’s receptivity to FinTech business. An economic, pro-innovation agenda is at work. Distinct policy questions are therefore raised regarding the legitimate role of public gatekeeper financial services regulators operating regulatory sandboxes. The role of a regulatory sandbox in nurturing and expanding competition suggests a public interest role in the interests of consumer choice, price and efficiency rather than simply on risk minimisation. However, pressure on regulators to produce sandbox successes and to compete with other sandboxes may influence the exercise of regulatory discretion and produce regulatory distortions that affect competition in FinTech markets.
The Case for Regulating Crypto-Assets: A Constitutional Perspective - Jaideep Reddy
In July 2019, the Ministry of Finance, Government of India announced that an Inter-Ministerial Committee (the ‘Committee’) had submitted its report (the ‘Committee Report’) recommending that possessing or dealing with cryptocurrency be banned and made a criminal offence. This article examines whether such a ban is justified under our constitutional scheme. The article finds that the right to carry on various kinds of crypto-asset activities can be traced to various enumerated fundamental rights under the Constitution of India. Analyzing the Committee Report, the article finds that its recommendation of an outright ban is unlikely to be a reasonable restriction on these rights, as such a ban is likely arbitrary and excessive. Since crypto-assets are a value-neutral platform technology – akin in many ways to the Internet – the article recommends that an empirical approach be adopted towards studying any risks associated with crypto-assets, and that a regulatory approach be adopted to mitigate these risks rather than an outright prohibition. This would comport with the interests of liberty, innovation, and consumer protection.
Competition Law Limits on Ride Sharing Enterprises – Taking into Account the Experience in India - Max Huffman
New economy competition policy is on the forefront of enforcers’ minds across the globe, with numerous competition agencies engaged in competition advocacy efforts regarding the sharing economy generally or ride sharing specifically. In a sharing economy firm, extra-firm contracting may be as efficient as that occurring intra-firm. By reducing search and transaction costs, the sharing economy enables transactions that could not occur in a pre-internet economy. The sharing economy grew strongly in developed economies, all of which were burdened with legacy permitting systems such as taxicab medallions or zoning regulations and other oversight limiting public lodging. The promise in economies with substantial development ahead of them is much greater. However, with highly diffuse suppliers and consumers contracting through enterprises with substantial market presence, areas of competition policy concern include conspiracies, exercises of bargaining power, and productive agreements that may nonetheless limit competition and thereby require careful analysis of overall competitive effects. Finally, there is the possibility of an agreement creating both efficiencies and threatening competitive consequences, which must be evaluated holistically to appreciate its overall impacts. No clear competition law violation will exist in all cases. However, continual attention to areas of concern will be warranted for the foreseeable future.
Trust Me: Combining Online Dispute Resolution, Law and Blockchain Technology - Tina van der Linden
This piece focuses on the unsettled relationship between online dispute resolution, law and smart contracts (and the ‘trust’ provided by them). It first introduces the ways in which smart contract applications on a blockchain provide the trust required to deal with unknown business partners – trust in the network rather than in an old-fashioned trusted third party. A distinction is also drawn between calculated trust and institutional trust. The piece then attempts to reconcile the trust provided by smart contracts with the demands of business and concludes that some gaps remain. Finally, it examines what online dispute resolution and the law have to offer to deal with these gaps.
The Changing Landscape of Intermediary Liability for E-Commerce Platforms: Emergence of a New Regime - Vasundhara Majithia
As India becomes the fastest growing market for e-commerce in the world, it is also grappling with the issue of proliferation of counterfeits on e-commerce portals. India’s judicial system has awakened to this predicament and in a spate of judgements, has sought to evolve a mechanism balancing the rights of e-commerce platforms as intermediaries via-a-vis the rights of brand owners and public interest at large. This article explores the evolution of intermediary liability in India by examining its legal framework, as well as the jurisprudence developed by Indian courts in this regard. It traces the shift in this jurisprudence from the classical ‘free speech’ understanding to the ‘notice and takedown’ regime to a determination of whether e-commerce platforms qualified as ‘intermediaries’ in the first place. It concludes that while new jurisprudence evolved by Indian courts substantially clarifies the framework of intermediary liability vis-à-vis e-commerce platforms, several challenges lie ahead for both brand owners and e-commerce platforms in addressing this issue. It then seeks to understand these challenges in light of the policies proposed to regulate the e-commerce space, and finally recommends a self-regulatory mechanism to combat the online proliferation of counterfeits.
The Conundrum of ‘Relevant Market’: Market Definition in India’s Complex TV Distribution Business - Vibodh Parthasarathi
The universal problematic of market definition poses peculiar challenges in multi-lingual and fragmented media markets, like in India. This article engages with this problematic by taking up the case of the TV distribution market in India. Here, the rapidly expanding TV distribution business consists of two segments. The larger, wired Cable distribution segment, driven by over 1,000 large cable companies and over 50,000 last mile operators, accounts for 70 percent market share, or around 100 million TV homes. The rest 30 percent is occupied by the wireless segment, comprising 6 Direct to Home TV distributors. Amidst the heightened expansion of the TV distribution business during the last decade, we notice a series of cases at the Competition Commission of India (CCI) pertaining to ‘relevant market’. This paper provides a critical appraisal of CCI’s engagement with ideas of relevant geographical market and relevant product market during the first five years of such matters coming to it, i.e. between 2011 and 2015. Focussing on core concepts deployed in debating relevant markets, viz. substitutability and service area, the paper unravels conceptual and methodological challenges provoked by market definition in complex media landscapes such as India.