Chapter 17
Legal, Ethical, and Social Impacts of EC
Legal Issues Versus Ethical Issues
ethics
The branch of philosophy that deals with what is
considered to be right and wrong
The Major Ethical and Legal Issues Discussed in this
Chapter
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Privacy
Intellectual property rights and online piracy
Unsolicited electronic ads and spamming
Free speech versus censorship
Consumer and merchant protection against fraud
Legal Issues Versus Ethical Issues
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EC Ethical Issues
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Non-Work-Related Use of the Internet
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Employees are tempted to use e-mail and the Web for nonwork-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”
Legal Issues Versus Ethical Issues
Codes of Ethics: Useful guidelines for a corporate Web policy:
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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
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
Privacy
privacy
The right to be left alone and the right to be free of
unreasonable personal intrusions
Collecting Information about Individuals
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Web Site Registration
Cookies
Spyware and Similar Methods
RFID’s Threat to Privacy
Privacy of Employees
Privacy of Patients
Privacy
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Protection of Privacy
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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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Access/participation
Integrity/security
Enforcement/redress
Privacy
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The USA Patriot Act
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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
Privacy
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The USA Patriot Act
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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
Privacy
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Privacy Protection in Other Countries
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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
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
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
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Literary works
Musical works
Dramatic works
Artistic works
Sound recordings, films, broadcasts, cable programs
Intellectual Property Rights
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Copyrights
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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
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
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Domain Name Disputes and Resolutions
cybersquatting
The practice of registering domain names in order to sell
them later at a higher price
Intellectual Property Rights
patent
A document that grants the holder exclusive rights to an
invention for a fixed number of years
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Fan and Hate Sites
cyberbashing
The registration of a domain name that criticizes an
organization or person
Unsolicited Electronic Ads:
Problems and Solutions
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E-Mail Spamming
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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
Unsolicited Electronic Ads:
Problems and Solutions
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Why It Is Difficult to Control Spamming
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Spammers send millions of e-mails, shifting Internet
accounts to avoid detection
Spammers use different methods to find their victims
Solutions to Spamming
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Junk-mail filters
Automatic junk-mail deleters
Blocking certain URLs and e-mail addresses
Exhibit 17.1 How Spam Blockers Work
Unsolicited Electronic Ads:
Problems and Solutions
E-Mail Spamming
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Anti-spam Legislation
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Do-not-spam lists
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Protecting employees
Protecting against Pop-Up Ads
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Pop-Up stoppers
Concluding Remarks
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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
Free Speech Versus Censorship
and Other Legal Issues
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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
Free Speech Versus Censorship
and Other Legal Issues
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Electronic Contracts
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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
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Intelligent Agents and Contracts
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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
Free Speech Versus Censorship
and Other Legal Issues
The Tax-Exemption Debate
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The Internet Tax Freedom Act 1(998) sought to promote ecommerce 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
Proposed Taxation in the United States
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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
EC Fraud and
Consumer and Seller Protection
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Fraud on the Internet
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Online Auction Fraud
Internet Stock Fraud
Other Financial Fraud
EC Fraud and
Consumer and Seller Protection
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Fraud on the Internet
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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.
EC Fraud and
Consumer and Seller Protection
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Consumer Protection
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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
EC Fraud and
Consumer and Seller Protection
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Seller Protection
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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
EC Fraud and
Consumer and Seller Protection
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What can Sellers Do?
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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
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
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Other Societal Issues
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Education
Public safety, criminal justice, and homeland security
Health aspects
Virtual (Internet) Communities
virtual (Internet) community
A group of people with similar interests who interact with
one another using the Internet
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Characteristics of Communities
One possibility is to classify members as traders,
players, just friends, enthusiasts, or friends in need
Virtual (Internet) Communities
Commercial Aspects of Communities
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Search communities
Trading communities
Education communities
Scheduled events
communities
Subscriber-based
communities
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Community consulting firms
E-mail-based communities
Advocacy communities
CRM communities
Mergers and acquisitions
activities
Virtual (Internet) Communities
Types of Virtual Communities
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Transaction
Purpose or interest
Relations or practice
Fantasy
Financial Viability of Communities: Revenue model of
communities can be based on:
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Sponsorship
Membership fees
Sales commissions
Advertising
Combination of these
Exhibit 17.5 Value Creation in
Electronic Communities
Virtual (Internet) Communities
Eight critical factors for community success:
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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
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6.
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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
Virtual (Internet) Communities
Key Strategies for Successful Online Communities
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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
The Future of EC
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Nontechnological Success Factors
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Internet Usage
Opportunities for Buying
M-Commerce
Purchasing Incentives
Increased Security and Trust
Efficient Information Handling
Innovative Organizations
Virtual Communities
The Future of EC
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Nontechnological Success Factors
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Payment Systems
B2B EC
B2B Exchanges
Auctions
Going Global
E-Government
Intra-business EC
E-Learning
EC Legislation
The Future of EC
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EC Technology Trends
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Clients
Embedded Clients
Wireless Communications and M-Commerce
Pervasive Computing
Wearable Devices
RFID
Servers and Operating Systems
Networks
The Future of EC
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EC Technology Trends
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EC Software and Services
Search Engines
Peer-to-Peer Technology
Integration
Web Services
Software Agents
Interactive TV
Tomorrow’s Internet
The Future of EC
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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-youuse basis, dynamically scaled, self-healing, and easy to manage
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Grid Computing coordinates the use of a large
number of servers and storage, acting as one
computer
The Future of EC
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Integrating the Marketplace with Marketspace
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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