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Legal, Ethical, and Social Impacts of EC
Electronic Commerce Prentice Hall 2006 2
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.
Electronic Commerce Prentice Hall 2006 3
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.
Electronic Commerce Prentice Hall 2006 4
Legal Issues Versus Ethical Issues
ethicsThe branch of philosophy that deals with what is considered to be right and wrong
Electronic Commerce Prentice Hall 2006 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 Prentice Hall 2006 6
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 companys 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 companys Web site
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Privacy
privacyThe 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 RFIDs Threat to Privacy Privacy of Employees Privacy of Patients
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Protection of Privacy Notice/awareness Choice/consent
opt-out clauseAgreement that requires computer users to take specific steps to prevent the collection of personal informationopt-in clauseAgreement that requires computer users to take specific steps to allow the collection of personal information
Electronic Commerce Prentice Hall 2006 11
Privacy
Protection of Privacy Access/participation Integrity/security Enforcement/redress
Electronic Commerce Prentice Hall 2006 12
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 Prentice Hall 2006 13
Intellectual Property Rights
intellectual propertyCreations of the mind, such as inventions, literary and artistic works, and symbols, names, images, and designs, used in commerce
Electronic Commerce Prentice Hall 2006 14
Intellectual Property Rights
copyrightAn 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
Electronic Commerce Prentice Hall 2006 15
Intellectual Property Rights
Copyrights Piracy of Software, Music, and Other Digitizable
Material Copyright Protection Approaches
digital watermarksUnique identifiers embedded in digital content that make it possible to identify pirated works
Digital Rights Management
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Intellectual Property Rights
trademarkA 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 ResolutionscybersquattingThe practice of registering domain names in order to sell them later at a higher price
Electronic Commerce Prentice Hall 2006 17
Intellectual Property Rights
patentA document that grants the holder exclusive rights to an invention for a fixed number of years
Fan and Hate SitescyberbashingThe registration of a domain name that criticizes an organization or person
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Unsolicited Electronic Ads: Problems and Solutions
E-Mail Spammingunsolicited 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 peoples financial information
Electronic Commerce Prentice Hall 2006 19
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
Electronic Commerce Prentice Hall 2006 21
Free Speech Versus Censorship and Other Legal Issues
On the Internet, censorship refers to governments attempt to control, in one way or another, the material that is presented
Donhams First Law of Censorship. This semiserious precept states: Most citizens are implacably opposed to censorship in any formexcept censorship of whatever they personally happen to find offensive.
Childrens Online Protection Act (COPA) exemplifies the protective approach
Electronic Commerce Prentice Hall 2006 22
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 ContractsUniform 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 InternetThis 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
Electronic Commerce Prentice Hall 2006 25
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 Prentice Hall 2006 26
Societal Issues
digital divideThe 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 Prentice Hall 2006 27
Virtual (Internet) Communities
virtual (Internet) communityA group of people with similar interests who interact with
