1. Legal, Ethical, and Social Impacts of EC
Chapter 17
Legal, Ethical, and Social Impacts of EC

2. Learning Objectives
Describe the differences between legal and ethical issues in EC.
Understand the difficulties of protecting privacy in EC.
Discuss issues of intellectual property rights in EC.
Describe unsolicited ad problems and remedies.
Understand the conflict between free speech and censorship on the Internet.
Electronic Commerce
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3. Learning Objectives Describe major legal issues in EC.
Describe the types of fraud on the Internet and how to protect against them.
Describe representative societal issues in EC.
Describe the role and impact of virtual communities on EC.
Describe the future of EC.
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4. Legal Issues Versus Ethical Issues
ethics
The branch of philosophy that deals with what is considered to be right and wrong
Electronic Commerce
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5. 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 and spamming
Free speech versus censorship
Consumer and merchant protection against fraud
Electronic Commerce
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6. Legal Issues Versus Ethical Issues
EC Ethical Issues
Non-Work-Related Use of the Internet
Employees are tempted to use 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”
Electronic Commerce
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7. Legal Issues Versus Ethical Issues
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
Electronic Commerce
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8. Legal Issues Versus Ethical Issues
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 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
Electronic Commerce
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9. Privacy privacy Collecting Information about Individuals
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
Electronic Commerce
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10. 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
Electronic Commerce
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11. Privacy Protection of Privacy Access/participation Integrity/security
Enforcement/redress
Electronic Commerce
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12. Privacy 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
Electronic Commerce
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13. Privacy 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
Electronic Commerce
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14. Privacy 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
Electronic Commerce
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15. Intellectual Property Rights
Creations of the mind, such as inventions, literary and artistic works, and symbols, names, images, and designs, used in commerce
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16. Intellectual Property Rights
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
Literary works
Musical works
Dramatic works
Artistic works
Sound recordings, films, broadcasts, cable programs
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17. Intellectual Property Rights
Copyrights
Piracy of Software, Music, and Other Digitizable Material
Copyright Protection Approaches
digital watermarks
Unique identifiers embedded in digital content that make it possible to identify pirated works
Digital Rights Management
Electronic Commerce
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18. Intellectual Property Rights
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
Electronic Commerce
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19. Intellectual Property Rights
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
Electronic Commerce
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20. Unsolicited Electronic Ads: Problems and Solutions
Spamming
unsolicited commercial (UCE)
The use of to send unwanted ads or correspondence
What Drives UCE?
Many spammers are just trying to get people’s financial information
Electronic Commerce
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21. Unsolicited Electronic Ads: Problems and Solutions
Why It Is Difficult to Control Spamming
Spammers send millions of s, 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 addresses
Electronic Commerce
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22. Exhibit 17.1 How Spam Blockers Work
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23. Unsolicited Electronic Ads: Problems and Solutions
Spamming
Anti-spam Legislation
Do-not-spam lists
Protecting employees
Electronic Commerce
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24. Unsolicited Electronic Ads: Problems and Solutions
Protecting against Pop-Up Ads
Pop-Up stoppers
Concluding Remarks
The spam situation has not yet been resolved. However, it seems that both spamming and pop-ups are not increasing, and they may even be declining
Electronic Commerce
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25. 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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26. Free Speech Versus Censorship and 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
Electronic Commerce
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27. Free Speech Versus Censorship and Other Legal Issues
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
Electronic Commerce
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28. Free Speech Versus Censorship and Other Legal Issues
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
Electronic Commerce
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29. Free Speech Versus Censorship and Other Legal Issues
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
Electronic Commerce
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30. EC Fraud and Consumer and Seller Protection
Fraud on the Internet
Online Auction Fraud
Internet Stock Fraud
Other Financial Fraud
Electronic Commerce
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31. EC Fraud and Consumer and Seller Protection
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.
Electronic Commerce
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32. EC Fraud and Consumer and Seller Protection
Consumer Protection
Third-Party Assurance Services
TRUSTe’s “Trustmark”
Better Business Bureau
WHICHonline
Web Trust Seal and Others
Online Privacy Alliance
Evaluation by Consumers
Authentication and Biometric Controls
Electronic Commerce
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33. EC Fraud and Consumer 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
Electronic Commerce
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34. EC Fraud and Consumer and Seller Protection
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
Electronic Commerce
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35. 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 in particular
Other Societal Issues
Education
Public safety, criminal justice, and homeland security
Health aspects
Electronic Commerce
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36. 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
Electronic Commerce
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37. Virtual (Internet) Communities
Commercial Aspects of Communities
Search communities
Trading communities
Education communities
Scheduled events communities
Subscriber-based communities
Community consulting firms
-based communities
Advocacy communities
CRM communities
Mergers and acquisitions activities
Electronic Commerce
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38. Virtual (Internet) Communities
Types of Virtual Communities
Transaction
Purpose or interest
Relations or practice
Fantasy
Financial Viability of Communities: Revenue model of communities can be based on:
Sponsorship
Membership fees
Sales commissions
Advertising
Combination of these
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39. Exhibit 17.5 Value Creation in Electronic Communities
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40. Virtual (Internet) Communities
Eight critical factors for community success:
Increase traffic and participation in the community
Focus on the needs of the members; use facilitators and coordinators
Encourage free sharing of opinions and information—no controls
Obtain financial sponsorship. This factor is a must. Significant investment is required
Consider the cultural environment
Provide several tools and activities for member use; communities are not just discussion groups
Involve community members in activities and recruiting
Guide discussions, provoke controversy, and raise sticky issues. This keeps interest high
Electronic Commerce
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41. Virtual (Internet) Communities
Key Strategies for Successful Online Communities
Handle member data sensitively
Maintain stability of the Web site with respect to the consistency of content, services, and types of information offered
Provide fast reaction time of the Web site
Offer up-to-date content
Offer continuous community control with regard to member satisfaction
Establish codes of behavior (netiquette/guidelines) to contain conflict potential
Electronic Commerce
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42. The Future of EC Nontechnological Success Factors Internet Usage
Opportunities for Buying
M-Commerce
Purchasing Incentives
Increased Security and Trust
Efficient Information Handling
Innovative Organizations
Virtual Communities
Electronic Commerce
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43. The Future of EC Nontechnological Success Factors Payment Systems
B2B EC
B2B Exchanges
Auctions
Going Global
E-Government
Intra-business EC
E-Learning
EC Legislation
Electronic Commerce
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44. The Future of EC EC Technology Trends Clients Embedded Clients
Wireless Communications and M-Commerce
Pervasive Computing
Wearable Devices
RFID
Servers and Operating Systems
Networks
Electronic Commerce
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45. The Future of EC EC Technology Trends EC Software and Services
Search Engines
Peer-to-Peer Technology
Integration
Web Services
Software Agents
Interactive TV
Tomorrow’s Internet
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46. The Future of EC EC Technology Trends
utility computing
Computing resources that flow like electricity on demand from virtual utilities around the globe—always on and highly available, secure, efficiently metered, priced on a pay-as-you-use basis, dynamically scaled, self-healing, and easy to manage
Grid Computing coordinates the use of a large number of servers and storage, acting as one computer
Electronic Commerce
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47. 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
Electronic Commerce
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48. Managerial Issues
What sorts of legal and ethical issues should be of major concern to an EC enterprise?
What are the most critical ethical issues?
Should we obtain patents?
What impacts on business is EC expected to make?
Do we have a community?
Electronic Commerce
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49. Summary Differences between legal and ethical issues.
Protecting privacy in EC.
Intellectual property rights in EC.
Unsolicited ads and spamming.
Conflict between free speech and censorship.
Electronic Commerce
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50. Summary Legal issues. Protecting buyers and sellers online.
Societal issues and EC.
The role of virtual communities.
The future of EC.
Electronic Commerce
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