Electric commerce chapter 17 legal ethical and social impacts of EC

Legal Issues Versus Ethical Issues• The Major Ethical and Legal Issues Discussed in this Chapter – Privacy – Intellectual property rights and online piracy – Unsolicited electronic ads

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Chapter 17

Legal, Ethical, and Social Impacts of EC

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Learning Objectives

1 Describe the differences between legal and

ethical issues in EC.

2 Understand the difficulties of protecting privacy

in EC.

3 Discuss issues of intellectual property rights in

EC.

4 Describe unsolicited ad problems and remedies.

5 Understand the conflict between free speech

and censorship on the Internet.

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Learning Objectives

6 Describe major legal issues in EC.

7 Describe the types of fraud on the Internet and

how to protect against them.

8 Describe representative societal issues in EC.

9 Describe the role and impact of virtual

communities on EC.

10 Describe the future of EC.

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Legal Issues Versus Ethical Issues

ethics

The branch of philosophy that deals with what is considered to be right and wrong

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• The Major Ethical and Legal Issues Discussed in

this Chapter

– Privacy

– Intellectual property rights and online piracy

– Unsolicited electronic ads and spamming

– Free speech versus censorship

– Consumer and merchant protection against fraud

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• EC Ethical Issues

– Non-Work-Related Use of the Internet

• Employees are tempted to use e-mail and the Web for

non-work-related purposes

• In some companies, this use is tremendously out of

proportion with its work-related use

• The utility of monitoring employee usage can be

considered “one of the most controversial EC issues”

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– Codes of Ethics: Useful guidelines for a corporate

Web policy:

• Issue written policy guidelines about employee use of the

Internet

• Make it clear to employees that they cannot use

copyrighted trademarked material without permission

• Post disclaimers concerning content, such as sample

code, that the company does not support

• Post disclaimers of responsibility concerning content of

online forums and chat sessions

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• Codes of Ethics: Useful guidelines for a corporate Web

policy:

– Make sure that Web content and activity comply with the laws in

other countries – Make sure that Web content and activity comply with the laws in

other countries – Make sure that the company’s Web content policy is consistent

with other company policies – Appoint someone to monitor Internet legal and liability issues.– Have attorneys review Web content to make sure that there is

nothing unethical, or illegal, on the company’s Web site

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privacy

The right to be left alone and the right to be free of unreasonable personal intrusions

• Collecting Information about Individuals

– Web Site Registration

– Cookies

– Spyware and Similar Methods

– RFID’s Threat to Privacy

– Privacy of Employees

– Privacy of Patients

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• Protection of Privacy

– Notice/awareness

– Choice/consent

opt-out clause

Agreement that requires computer users to take

specific steps to prevent the collection of personal

information

opt-in clause

Agreement that requires computer users to take

specific steps to allow the collection of personal

information

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• The USA Patriot Act

– E-mail and Internet searches

– Nationwide roving wiretaps

– Requirement that ISPs hand over more user

information– Expanded scope of surveillance based on new

definitions of terrorism– Government spying on suspected computer

trespassers with no need for court order– Wiretaps for suspected violations of the Computer

Fraud and Abuse Act

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• The USA Patriot Act

– Dramatic increases in the scope and penalties of the

Computer Fraud and Abuse Act– General expansion of Foreign Intelligence

Surveillance Act (FISA) authority– Increased information sharing between domestic law

enforcement and intelligence– FISA detours around federal domestic surveillance

limitations; domestic surveillance detours around FISA limitations

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• Privacy Protection in Other Countries

– In 1998, the European Union passed a privacy

directive (EU Data Protection Directive) reaffirming the principles of personal data protection in the

Internet age– The directive aims to regulate the activities of any

person or company that controls the collection, storage, processing, or use of personal data on the Internet

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Intellectual Property Rights

intellectual property

Creations of the mind, such as inventions,

literary and artistic works, and symbols, names, images, and designs, used in commerce

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copyright

An exclusive grant from the government that allows the owner to reproduce a work, in whole or in part, and to distribute, perform, or display it to the public in any form

or manner, including over Internet

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• Copyrights

– Piracy of Software, Music, and Other Digitizable

Material– Copyright Protection Approaches

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trademark

A symbol used by businesses to identify their

goods and services; government registration of the trademark confers exclusive legal right to its use

– Domain Name Disputes and Resolutions

cybersquatting

The practice of registering domain names in order

to sell them later at a higher price

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patent

A document that grants the holder exclusive

rights to an invention for a fixed number of years

• Fan and Hate Sites

cyberbashing

The registration of a domain name that criticizes an organization or person

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Unsolicited Electronic Ads:

Problems and Solutions

• E-Mail Spamming

unsolicited commercial e-mail (UCE)

The use of e-mail to send unwanted ads or correspondence

– What Drives UCE?

Many spammers are just trying to get people’s financial information

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– Why It Is Difficult to Control Spamming

• Spammers send millions of e-mails, shifting Internet

accounts to avoid detection

• Spammers use different methods to find their victims– Solutions to Spamming

• Junk-mail filters

• Automatic junk-mail deleters

• Blocking certain URLs and e-mail addresses

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Exhibit 17.1 How Spam Blockers Work

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• E-Mail Spamming

– Anti-spam Legislation

• Do-not-spam lists

• Protecting employees

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• Protecting against Pop-Up Ads

– Pop-Up stoppers

• Concluding Remarks

– The spam situation has not yet been resolved

However, it seems that both e-mail spamming and pop-ups are not increasing, and they may even be declining

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Free Speech Versus Censorship

and Other Legal Issues

• On the Internet, censorship refers to

government’s attempt to control, in one way or another, the material that is presented

• “Donham’s First Law of Censorship.” This

semiserious precept states: “Most citizens are implacably opposed to censorship in any form— except censorship of whatever they personally happen to find offensive.”

• Children’s Online Protection Act (COPA)

exemplifies the protective approach

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– Other Legal Issues

– Electronic Contracts

• A legally binding contract requires a few basic elements:

an offer, acceptance, and consideration

• These requirements are difficult to establish when the

human element in the processing of the transaction is removed and the contracting is performed electronically

• Intelligent Agents and Contracts

Uniform Computer Information Transactions Act ( 2000), makes clear that contracts can be formed even when a human is not directly involved

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• Taxing Business on the Internet

This issue is extremely important because it is related

to global EC, as well as to fairness in competition when EC competes with off-line marketing channels, which requires the collection of taxes

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• The Tax-Exemption Debate

– The Internet Tax Freedom Act 1(998) sought to

promote e-commerce through tax incentives, by barring any new state or local sales taxes on Internet transactions until October 2001

– The U.S Congress extended the tax moratorium until

2006, giving it time to digest the contents of the report and hash out contentious tax issues

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• The Tax-Exemption Debate

– Proposed Taxation in the United States

• The National Governors’ Association, the National League

of Cities, and the U.S Conference of Mayors fought the Tax Free Bill for the Internet

• The U.S Congress blocked state and local governments

from taxing connections that link consumers to the Internet, at least until November 2007

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EC Fraud and

Consumer and Seller Protection

• Fraud on the Internet

– Online Auction Fraud

– Internet Stock Fraud

– Other Financial Fraud

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EC Fraud and

• Fraud on the Internet

– Identity Theft and Phishing

identity theft

A criminal act in which someone presents himself (herself) as another person and uses that person’s social security number, bank account numbers,

and so on, to obtain loans, purchase items, make obligations, sell stocks, etc

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• Web Trust Seal and Others

• Online Privacy Alliance

• Evaluation by Consumers– Authentication and Biometric Controls

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EC Fraud and

• Seller Protection

– Customers who deny that they placed an order

– Customers who download copyrighted software

and/or knowledge and sell it to others– Customers who give false payment (credit card or bad

checks) information in payment for products and services provided

– Use of their name by others

– Use of their unique words and phrases, names, and

slogans and their Web addresses by others

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EC Fraud and

• What can Sellers Do?

– Use intelligent software to identify possibly

questionable customers– Identify warning signals for possibly fraudulent

transactions– Ask customers whose billing address is different from

the shipping address to call their bank and have the alternate address added to their bank account

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Societal Issues

digital divide

The gap between those who have and those

who do not have the ability to access electronic technology in general, and the Internet and EC

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Virtual (Internet) Communities

virtual (Internet) community

A group of people with similar interests who

interact with one another using the Internet

• Characteristics of Communities

One possibility is to classify members as traders,

players, just friends, enthusiasts, or friends in need

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acquisitions activities

Commercial Aspects of Communities

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• Types of Virtual Communities

– Transaction

– Purpose or interest

– Relations or practice

– Fantasy

• Financial Viability of Communities: Revenue model of

communities can be based on:

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Exhibit 17.5 Value Creation in

Electronic Communities

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participation in the community

members; use facilitators and coordinators

opinions and information—no controls

This factor is a must

Significant investment is required

5 Consider the cultural environment

6 Provide several tools and activities for member use;

communities are not just discussion groups

7 Involve community members in activities and recruiting

8 Guide discussions, provoke controversy, and raise sticky issues This keeps interest highEight critical factors for community success:

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Key Strategies for Successful Online Communities

1 Handle member data sensitively

2 Maintain stability of the Web site with respect to the

consistency of content, services, and types of

information offered

3 Provide fast reaction time of the Web site

4 Offer up-to-date content

5 Offer continuous community control with regard to

member satisfaction

6 Establish codes of behavior (netiquette/guidelines) to

contain conflict potential

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– Increased Security and Trust

– Efficient Information Handling

– Innovative Organizations

– Virtual Communities

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– Grid Computing coordinates the use of a large

number of servers and storage, acting as one computer

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The Future of EC

• Integrating the Marketplace with Marketspace

– Probably the most noticeable integration of the two

concepts is in the click-and-mortar organization– A major problem with the click-and-mortar approach is

how the two outlets can cooperate in planning, advertising, logistics, resource allocation, and so on and how the strategic plans of the marketspace and marketplace can be aligned

– The impact of EC on our lives will be as much as, and

possibly more profound than, that of the Industrial Revolution

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Managerial Issues

1 What sorts of legal and ethical issues should be

of major concern to an EC enterprise?

2 What are the most critical ethical issues?

3 Should we obtain patents?

4 What impacts on business is EC expected to

make?

5 Do we have a community?

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1 Differences between legal and ethical issues.

2 Protecting privacy in EC.

3 Intellectual property rights in EC.

4 Unsolicited ads and spamming.

5 Conflict between free speech and censorship.

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6 Legal issues.

7 Protecting buyers and sellers online.

8 Societal issues and EC.

9 The role of virtual communities.

10 The future of EC.

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