Chapter 17
Legal, Ethical, and Social Impacts of EC
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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Legal Issues Versus Ethical Issues
•
The Major Ethical and Legal Issues Discussed in
this Chapter
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–
–
–
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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
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Legal Issues Versus Ethical Issues
•
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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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
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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 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
•
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
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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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Privacy
•
Protection of Privacy
–
–
–
Access/participation
Integrity/security
Enforcement/redress
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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
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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
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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
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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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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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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
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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
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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
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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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Unsolicited Electronic Ads:
Problems and Solutions
–
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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Unsolicited Electronic Ads:
Problems and Solutions
•
E-Mail Spamming
–
Anti-spam Legislation
• Do-not-spam lists
• Protecting employees
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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 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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Free Speech Versus Censorship
and Other Legal Issues
–
–
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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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
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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
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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
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EC Fraud and
Consumer and Seller Protection
•
Fraud on the Internet
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–
–
Online Auction Fraud
Internet Stock Fraud
Other Financial Fraud
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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.
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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
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EC Fraud and
Consumer and Seller Protection
•
Seller Protection
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–
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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
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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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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
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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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Virtual (Internet) Communities
Commercial Aspects of Communities
1. Search communities
2. Trading communities
3. Education
communities
4. Scheduled events
communities
5. Subscriber-based
communities
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6. Community consulting
firms
7. E-mail-based
communities
8. Advocacy communities
9. CRM communities
10.Mergers and
acquisitions activities
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Virtual (Internet) Communities
•
Types of Virtual Communities
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–
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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
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Exhibit 17.5 Value Creation in
Electronic Communities
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Virtual (Internet) Communities
Eight critical factors for community success:
1.
2.
3.
4.
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
Electronic Commerce
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 high
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Virtual (Internet) Communities
Key Strategies for Successful Online Communities
1.
2.
3.
4.
5.
6.
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
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The Future of EC
•
Nontechnological Success Factors
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–
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–
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–
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Internet Usage
Opportunities for Buying
M-Commerce
Purchasing Incentives
Increased Security and Trust
Efficient Information Handling
Innovative Organizations
Virtual Communities
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The Future of EC
•
Nontechnological Success Factors
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–
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Payment Systems
B2B EC
B2B Exchanges
Auctions
Going Global
E-Government
Intra-business EC
E-Learning
EC Legislation
Electronic Commerce
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The Future of EC
•
EC Technology Trends
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–
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–
Clients
Embedded Clients
Wireless Communications and M-Commerce
Pervasive Computing
Wearable Devices
RFID
Servers and Operating Systems
Networks
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The Future of EC
•
EC Technology Trends
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–
–
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–
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EC Software and Services
Search Engines
Peer-to-Peer Technology
Integration
Web Services
Software Agents
Interactive TV
Tomorrow’s Internet
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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
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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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Summary
1.
2.
3.
4.
5.
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.
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Summary
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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