1. ECT 455/HCI 513 ECT 4 55/HCI 513 E-Commerce Web Site Engineering Legal Issues

2. ECT 455/HCI 513 Consumer Trust and Privacy Consumer WebWatch Only 29% trust Web sites that sell products or services Sites for commerce: 95% disclosure of all fees; 93% disclosure of the site’s policy on using personal information News and information sites: 65% disclosure of privacy polices, 59% clear labeling of advertisement Search engine sites: 60% don’t know about ad sponsorship, 80% want search engines to revel these practices. 57% read policies about credit cards; 35% privacy policies; 22% “About Us” Consumer WebWatch: “A Matter of Trust: What Users Want From Web Sites” 4/16/02

3. ECT 455/HCI 513 Internet and the Right to Privacy Self-regulated medium: The Internet industry governs itself Violation of Privacy Right or Better Service?  FTC Study: 97% collected personal information, only 62% informed the users about such practice; 57% contained 3 rd party tracking devices  Privacy advocates argue that these efforts violate individuals’ privacy rights  Online marketers and advertisers suggest that online companies can better serve their users by recording the likes and dislikes of online consumers Financial Services Modernization Act of 1999  Establishes a set of regulations concerning the management of consumer information

4. ECT 455/HCI 513 Network Advertising Initiative (NAI) Approved by the FTC in July 1999 to support self regulation NAI currently represents 90 percent of Web advertisers Determines the proper protocols for managing a Web user’s personal information on the Internet Prohibits the collection of consumer data from medical and financial sites Allows the combination of Web-collected data and personal information

5. ECT 455/HCI 513 DoubleClick: Marketing with Personal Information Regulation of the Internet could limit a company’s efforts to buy and sell advertising DoubleClick  Advertising network of over 1,500 sites and 11,000 clients Abacus Direct Corp  Names, addresses, telephone numbers, age, gender, income levels and a history of purchases at retail, catalog and online stores Digital redlining  Skewing of an individual’s knowledge of available products by basing the advertisements the user sees on past behavior

6. ECT 455/HCI 513 Protecting Your Business: Privacy Issues Privacy policy  The stated policy regarding the collection and use of visitor’s personal information Privacy policy services and software  PrivacyBot.com; TRUSTe PrivacyBot.com TRUSTe Core Fair Information Practices by FTC  Consumers should be made aware that personal information will be collected have a say in how this information will be used have the ability to check the information collected to ensure that it is complete and accurate  The information collected should be secured  The Web site should be responsible for seeing that these practices are followed

7. ECT 455/HCI 513 Internet Taxation The opposing arguments  Permanent ban on Internet taxation  Fair taxation of Internet sales Taxation methods  If both a vendor and a consumer are located in the same state sales tax is applied  If the vendor and the consumer are not located in the same state, then the sale is subject to a use tax  If the vendor has a physical presence, or nexus, then it is required to collect the tax; otherwise the vendor must assess the tax and pay it directly to the state

8. ECT 455/HCI 513 Problems with Internet taxation  The definition of physical presence (location of the ISP, the location of the server or the location of the home page)  States vary according to what transactions are subject to taxation  Sales tax revenues are the largest single source of a state’s revenue  Infringement of state sovereignty  7,500 taxation methods

9. ECT 455/HCI 513 Internet Taxation Internet Tax Commission  Reviewed the issue of Internet taxation  Revision of state and local taxes to make taxing a feasible process for Internet businesses  Establish clearer definitions on the meaning of “physical presence”  Define universal taxation exemptions