LEGAL AND ETHICAL ISSUES

IN E-COMMERCE By Prof. Harman Mangat

LESSON PLAN LESSON TIME DISTRIBUTION REFERENCE PAGES ASSOCIATED CASES

Major ethical issues 5 min

Privacy issues

25 min

Taxation

5 min

M-commerce 10 min

L-commerce

10 min

Gps

5 min

Benefits & Advantages 10 min 2

OBJECTIVES

To understand ethical and legal issues

To understand the security concerns

To know about L-commerce

MAJOR LEGAL AND ETHICAL ISSUES IN

ELECTRONIC COMMERCE

Privacy

Intellectual Property

Free Speech

Taxation

Computer Crimes

Consumer Protection

Miscellaneous

LEGALITY VS. ETHICS

Illegal acts break the law while unethical acts may not be illegal

Ethics

Branch of philosophy that deals with what is considered right or wrong

Right and wrong not always clear

Consider

Company sells profiles of customers with information collected through cookies

Company allows personal use of Web but secretly monitors activity

Company knowingly sells tax software with bugs

PRIVACY ISSUES

Information privacy: claim of individuals, groups, or

organizations to determine when and to what extent

information about them is disseminated.

Right to privacy is not absolute

Public’s right to know superceded individuals right to

privacy

HOW IS PRIVATE INFORMATION COLLECTED?

Reading your newsgroup postings

Finding you in an Internet Directory

Making your browser collect information about you

Recording what your browser says about you

Reading your email

Most common methods are cookies and site registration

WEB SITE REGISTRATION

Must fill in registration to get to site

Sometimes sold to third parties

User survey found (Eighth User Survey, 1998)

40% users falsify information

Nearly 67% (US and Europe) don’t register because

of privacy concerns

Nearly 57% say they don’t trust sites collecting

information

Only 6% will always register when asked

COOKIES

Help maintain user status A temporary passport Used for

Customizing sites (Yahoo) Improve online services (Amazon) Collect demographics and usage statistics (Double-click)

Protection Delete cookies Anti-cookie software

PGP’s Cookie Cutter Luck man's Anonymous Cookie Cookie Crusher Cookie Monster

FIVE PRINCIPLES OF PRIVACY PROTECTION

Notice/Awareness

Notice of collection practices prior to collecting information

Choice/consent

Consumers to be made aware of options and give consent

Access/participation

Must be able to access and challenge information

Integrity/Security

Must be assured data is secure

Enforcement/Redress

Government legislation or legal remedies

PRINCIPLES OF SAFE HARBOR

Companies must tell consumers how and why personal data is collected and who it's shared with

Consumers must be able to request their data not be shared

Companies must provide notice and choice before data is given to third parties

Consumers must have access to data about them and have the ability to correct mistakes

Companies must take reasonable measures to protect data

Personal data must be relevant to its intended purpose

Procedures must be in place to settle complaints and resolve disputes

INTELLECTUAL PROPERTY

In E-Commerce

Copyrights

Patents

Trademarks

COPYRIGHTING

Protects expression of idea – not the idea itself

Example , pull-down menus cannot be copyrighted

Confers owner exclusive right to

Copy the work

Distribute to the public

Expires after certain number of years after death of copyright holder

28 years in the US

50 years in UK

Generally, contents of websites are copyrighted

COPYRIGHTS PROTECTION

Digital Watermarks

Embedded invisible bits in the digital content

Cannot prevent copying but helps identify who is

doing it

Validation codes

Activation or deactivation of software

PATENTS

Grants holder exclusive rights on inventions for fixed time

17 years in US

20 years in UK

Innovation must be

Novel

Sufficiently inventive step (not trivial)

Capable of industrial application

Amazon sued Barnes and Noble for patent infringement (1-click ordering)

Priceline has patent on reverse-auction model – sued Expedia

TRADEMARKS

Graphical sign used by business to identify their goods

and services

Type of IP

Must meet criteria of distinctive, original, and not

deceptive

Domain names can be trademarked if they meet

above criteria

WWF won first ever ruling against man who filed for

worldwrestlingfederation.com

FREE SPEECH, INTERNET DECENCY, SPAMMING,

AND CENSORSHIP

Censorship – attempts to control material on the Web

Communications Decency Act (CDA) was passed by Congress but later ruled unconstitutional

Protecting Children

Parental control

Governmental control

ISP accountability

AOL does not allow hate sites

CompuServe was forced by Germany to shut down 200 newsgroups related to sex – CompuServe forced to shut them down worldwide

SPAMMING

Indiscriminate distribution of messages

without permission of receiver

Some legislation out there

Unsolicited Commercial Electronic Mail Act

Requires all spam to start with word

“advertisement”

Includes name and address of sender

TAXATION

Internet Tax Moratorium Act (1998-2001)

Prohibits states from taxing the fees that Internet service providers collect for providing Internet service and from collecting Internet-specific taxes on e-commerce transactions

President George W. Bush signed into law a bill from Congress proposing a new two-year moratorium extension (starting Nov. 29, 2001)

OTHER ISSUES

Consider on your own

Electronic contracts

Online Gambling

Validity of electronic documents

Time and date on documents across borders

Which country has jurisdiction over E-Commerce

transaction

Can web site link to another without permission

Example Ticketmaster vs. Microsoft

21

TAXATION ISSUES

Controversial

Different jurisdiction

Consumers’ reaction

Legal

Internet Tax Freedom Act

No taxes till 2001

Internet Nondiscrimination Act of 2000

No taxes till 2006 (5 year extension)

NEW FRONTIERS IN E-COMMERCE: M-COMMERCE AND L-COMMERCE

MOBILE VIGNETTES

Bus riders in San Francisco can find when the next bus is due from their cell phone or Palm VII – Next Bus tracks in real time

Dine One One – uses AT&T Pocket Net service to link driver cell phones to central network.

System locates and notifies driver to get to restaurant

Emails order to restaurant

Food ready to be delivered

DOCOMO I-Mode in Japan offers wireless services that include shopping guides, maps, ticketing, news, gambling, dining and reservations

WHAT IS M-COMMERCE?

Also known as pervasive computing

E-commerce done in a wireless environment

Any transaction with a monetary value that is

conducted via a mobile telecommunications

network.

ATTRIBUTES OF M-COMMERCE

M-Commerce

Mobility

Reachability

Product

personalization

Product and service

localization

Ubiquity

Instant connectivity

Convenience

Characteristics

Value-Added

Attributes

OTHER DRIVERS OF E-COMMERCE

Widespread availability of devices

No need for PC

Cell phone culture

Vendors push

Declining prices

Improvement in bandwidth

E-commerce growth in general

Digital divide (more cell phones in developing countries)

GENERATIONS OF MOBILE NETWORKS

First Generation (1G)

1979-1992

Analog cell communications

Second Generation (2G)

Digital Technology in place today

Mostly text

2.5G

Interim technology based on standards (GPRS and EDGE) that can accommodate graphics

Third Generation (3G)

Non-IP based interface

Supports rich multimedia

2001 – introduced in Japan

2002 – introduced in Europe

2003 – Verizon introduces 3G in US

3G COMMUNICATIONS

Global wireless communication technology that makes possible packet-based transmission of digitized voice, data and video

ITU Guidelines from 2000

2Mbits/s for fixed position

144Kbits/sec in moving vehicles

Allow global roaming

Race for spectrum

1710 to 1855 MHz and 2520 to 2670 MHz

1.7GHz currently used by military for satellite control

Billions of $ plus a decade to change

WHERE ARE WE TODAY?

The first 3G network released in Japan, Oct. 1, 2001.

This new service will allow users to receive data at six

to 40 times faster than current speeds, making fast

mobile Internet access and video downloads possible.

HOW ABOUT 3G IN THE US?

On January 28, 2002, Verizon Wireless rolled out its 3G “Express Network” along the nation’s east coast, thus making it the first US carrier to offer such services to the public (Computerworld, Jan 29, 2002).

The same day, Cingular Wireless and AT&T Wireless announced a joint-venture project to make wireless web access available along 3000 miles of interstate highways in Arizona, Colorado, Kansas, Minnesota, New Mexico, Nebraska, Oklahoma, Texas and Utah (AT&T Wireless News Release, Jan 28, 2002).

A QUOTE FROM THE 3G FORUM

The Promise of 3G technologies is a combination of high-speed wireless access w/ internet protocol(IP) Based services will bring the world to your fingertips. It is a world in which we will be able to check emails, book holidays, organize share portfolios, hold video conferences or download video clips of the latest film, instantly & simply from our mobiles. The capability of mobile networks to pinpoint a mobile user’s location opens opportunities for the creation of new situational information on, and directions to, the nearest restaurant or hotel.”

10 KEY TRENDS IN M-COMMERCE

M-Commerce hype will peak

Over 1 billion phone worldwide capable of Internet access in 2003

Enterprise Applications Will Become the White Hot Center of Mobile eBusiness

Wireless CRM

Consumer Use of Mobile Will Revolve Around Information, Not Transactions

Embedded Barcode Readers in Phones

Sidesteps problem of data entry

KEY TRENDS

Smart Handheld Displays Will Show Some

Improvement

Mobile Security Will Become a Hot Issue

Voice Navigation Will Remain a Work in Progress

Convergence Will Continue, but It Will Still Be a

Multiple-Device World

Advertising Will Continue to Expand to Wireless

Devices

Carriers Must Shift Their Distribution Strategies

• Shift from end users to enterprise

L-COMMERCE

“location, location, location”

Satellite-based location technology that is capable of finding people on foot or in vehicles

General Motors Corp. in Detroit has installed over 1 million of its OnStar GPS-enabled systems in vehicles

FCC sets 2005 deadline for E911

Location-tracking technology also creates potential Big Brother issues

GLOBAL POSITIONING SYSTEM

GPS-enabled devices allow exact identification of location

Supported by 24 US government satellites

Orbits earth every 12 hours

10,900 miles altitude

Satellite transmits position and time signal from onboard atomic clock

Receivers have synchronized clock

Using speed of signals (~186,000 mps), possible to pinpoint location to within 50 feet.

See www.trimble.com/gps for a tutorial

OBSTACLES TO M-COMMERCE AND L-COMMERCE

Usability issues

Effectiveness, efficiency, satisfaction

Lack of standardized security protocol

Insufficient bandwidth

3G licenses

Transmission limitations

GPS does not work in cities with skyscrapers

Power consumption

Wireless and Health hazards

REVIEW QUESTIONS

What key terms have been explained in the lecture?

What do you understand by l-commerce

What is the future of L-commerce?

Explain the major drivers behind e-commerce

Differnce between legal and ethical issues

What are the other legal and ethical issues in e-commerce?

What is the recent development in taxation issue.