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Ecommerce Chap 10
1.
Chapter 10
Public Policy: From Legal Issues to Privacy © Prentice Hall, 2000 1
2.
Learning Objectives List and
describe the major legal issues related to electronic commerce Understand the difficulties of protecting privacy and describe the measures taken by companies and individuals to protect it Describe the intellectual property issues in EC and the measures provided for its protection Describe some of the ethical issues in EC and the measures taken by organizations to improve ethics © Prentice Hall, 2000 2
3.
Learning Objectives (cont.) Understand
the conflict between Internet indecency and free speech, and the attempts to resolve the conflict Describe the issues involved in imposing sales tax on the Internet Discuss the controls over exporting encryption software and the issues of government policies Differentiate between contracts online and offline Describe the measures available to protect buyers and sellers on the Internet © Prentice Hall, 2000 3
4.
Legal and Ethical
Issues: an Overview Privacy Intellectual Property Difficult to protect since it is easy and inexpensive to copy and disseminate digitized information Free Speech Internet provides the largest opportunity for free speech Taxation Illegal to impose new sales taxes on Internet business at the present time Consumer Protection Many legal issues are related to electronic trade © Prentice Hall, 2000 4
5.
Ethical Issues What is
considered to be right and wrong? What is unethical is not necessarily illegal. Whether these actions are considered unethical depends on the organization, country, and the specific circumstances surrounding the scenarios. © Prentice Hall, 2000 5
6.
Ethical Issues (cont.) Code
of Ethics Many companies and professional organizations develop their own codes of ethics A collection of principles intended as a guide for its members A guide for members of a company or an association © Prentice Hall, 2000 6
7.
Organize IT Ethical
Issues into a Framework Privacy Property Collection, storage, Ownership and value of information and and dissemination of intellectual property information about individuals Accuracy Accessibility Authenticity, fidelity, and accuracy of information collected and processed Right to access information and payment of fees to access it © Prentice Hall, 2000 7
8.
Protecting Privacy Privacy
The right to be left alone and the right to be free of unreasonable personal intrusions Information Privacy The “claim of individuals, groups, or institutions to determine for themselves when, and to what extent, information about them is communicated to others” © Prentice Hall, 2000 8
9.
Protecting Privacy (cont.) Two
rules The right of privacy is not absolute. Privacy must be balanced against the needs of society. The public’s right to know is superior to the individual’s right of privacy. © Prentice Hall, 2000 9
10.
How is Private
Information Collected? Reading your newsgroups’ postings Finding you in the Internet Directory Making your browser record information about you Recording what your browsers say about you Reading your e-mail © Prentice Hall, 2000 10
11.
Web-Site Self-Registration Registration Questionnaires
type in private information in order to receive a password to participate in a lottery, to receive information, or to play a game Uses of the Private Information collected for planning the business may be sold to a third party used in an inappropriate manner © Prentice Hall, 2000 11
12.
From the Eighth
User Survey by GVU (1988) 40% of all users have falsified information when registering online 66% of all U.S. and European respondents don’t register as they don’t know how the information is going to be used 63% don’t feel that registration is worthwhile considering the content of the sites 58% don’t trust the sites collecting this information from them © Prentice Hall, 2000 12
13.
Cookies Piece of information
that allows a Web site to record one’s comings and goings Web sites can ‘remember’ information about users and respond to their preferences on a particular site, process is transparent to users Web sites can maintain information on a particular user across HTTP connections © Prentice Hall, 2000 13
14.
Cookies (cont.)
Cook Reasons for using cookies to personalize information to improve online sales/services to simplify tracking of popular links or demographics to keep sites fresh and relevant to the user’s interests to enable subscribers to log in without having to enter a password every visit to keep track of a customer’s search preferences personal profiles created are more accurate than self-registration Solutions to cookies users can delete cookie files stored in their computer use of anti-cookie software (e.g. Cookie Cutter and Anonymous Cookie) © Prentice Hall, 2000 14
15.
Privacy Protection 5 basic
principles Notice/Awareness— Customers must be given notice and be able to make informed decisions. Choice/Consent— Customers must be made aware of their options as to how their personal information may be used. Consent may be granted through ‘opt-Out’ clauses requiring steps. Access/Participation— Consumers must be able to access their personal information and challenge the validity of the data. Integrity/security— Consumers must be assured that the data is secure and accurate. Enforcement/Redress— There must always exist a method of enforcement and remedy. The alternatives are government intervention, legislation for private remedies, or self-regulation. © Prentice Hall, 2000 15
16.
Protecting Your Privacy Think
before you give out personal information on a site Track the use of your name and information Keep your newsgroups’ posts out of archives Use the Anonymizer when browsing Live without cookies Use anonymous remailers Use encryption Reroute your mail away form your office Ask your ISP or employer about a privacy policy © Prentice Hall, 2000 16
17.
Legislation The Consumer Internet
Privacy Act The Federal Internet Privacy Protection Act The Communications Privacy and Consumer Empowerment Act The Data Privacy Act © Prentice Hall, 2000 17
18.
Electronic Surveillance -
Monitoring Computer Users Tens of millions of computer users are monitored, many without their knowledge Employees have very limited protection against employers’ surveillance Personal Information in Databases Databases of banks and financial institutions; cable TV; telephone ; employers; schools; insurance companies; and online vendors Concerns Under what circumstances will personal data be released? Do you know where the records are? How are the data used? © Prentice Hall, 2000 18
19.
Privacy Policy Basics
Data Collection Data Accuracy Data Confidentiality Sensitive data gathered on Data should be Computer security procedures individuals should be verified collected on individuals should be implemented to provide before it is entered into the only to accomplish a reasonable assurance against database. legitimate business unauthorized disclosure of data. Data should be accurate objective. Third parties should not be and, where and when Data should be given access to data without the necessary, kept current. adequate, relevant, and individual’s knowledge or The file should be made not excessive in relation permission, except as required by available so the individual can to the business objective. law. ensure that the data are Individuals must give Disclosures of data, other than correct. their consent before data the most routine, should be noted If there is disagreement pertaining to them can be and maintained for as long as the about the accuracy of the gathered. data are maintained. data, the individual’s version Data should not be disclosed should be noted and included for reasons incompatible with the with any disclosure of the business objective for which they file. © Prentice Hall, 2000 are collected. 19
20.
Protecting Intellectual Property Copyright
A statutory grant that provides the creators of intellectual property with ownership of it for 28 years Trade Secret Intellectual work such as a business plan, which is a company secret and is not based on public information Patent A document that grants the holder exclusive rights on an invention for 17 years © Prentice Hall, 2000 20
21.
Copyright Protection Techniques
Digital watermarks embedding of invisible marks can be represented by bits in digital content hidden in the source data, becoming inseparable from such data © Prentice Hall, 2000 21
22.
Legal Perspectives Electronic Theft
(NET) Act imposed criminal liability for individuals who reproduce or distribute copies of copyrighted works even if no commercial advantage or financial gain exists Digital Copyright Clarification and Technology Education Act limits the scope of digital copyright infringement by allowing distance learning exemptions Online Copyright Liability Limitation Act seeks to protect Internet access providers from liability for direct and vicarious liability under specific circumstances where they have no control or knowledge of infringement © Prentice Hall, 2000 22
23.
Legal Perspectives (cont.) Digital
Millennium Copyright Act reasserts copyright in cyberspace makes illegal most attempts to defeat anti-copying technology requires the National Telecommunications and Information Administration to review the effect the bill would have on the free flow of information and makes recommendations for any changes two years after it is signed into law lets companies and common citizens circumvent anti- copying technology when necessary to make software or hardware compatible with other products, to conduct encryption research or to keep personal information from being spread via Internet “cookies” or other copy-protection tools forbids excessive copying of databases, even when those databases contain information already in the public domain © Prentice Hall, 2000 23
24.
International Aspects of
Intellectual Property The World Intellectual Property Organization more than 60 member countries to come up with an international treaty part of the agreement is called the ‘database treaty’ its aim is to protect the investment of firms that collect and arrange information © Prentice Hall, 2000 24
25.
Domain Names Two controversies
Whether top-level domain names (similar to com, org and gov) should be added The use of trademark names by companies for domain names that belong to other companies © Prentice Hall, 2000 25
26.
Domain Names (cont.) Network
Solutions Inc. Contracted by the government to assign domain addresses Increase Top Level Names Idea is that an adult only top-level name will be created to prevent pornographic material getting into the hands of children Trade Name Disputes Companies are using trade names of other companies as their domain address to help attract traffic to their Web site © Prentice Hall, 2000 26
27.
Defining Freedom of
Speech The Bill of Rights First Amendment to the Constitution of the U.S. of America reads “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” © Prentice Hall, 2000 27
28.
Defining Freedom of
Speech (cont.) The united nations Universal Declaration of Human Rights in 1948 addresses the right of freedom of expression “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive, and impart information and ideas through any media and regardless of frontiers.” © Prentice Hall, 2000 28
29.
The Debate about
Free Speech on the Internet Free speech debate “Most citizens are implacably opposed to censorship in any form — except censorship of whatever they personally happen to find offensive.” What the boundaries are, and how they should be enforced Governments protective of their Citizen action groups desiring to role in society, parents protect every ounce of their concerned about exposing their freedom to speak, individuals children to inappropriate Web concerned about their right to pages and chat rooms, and information on the Internet, and federal agencies attempting to organizations seeking to empower deal with illegal actions the citizens of the earth © Prentice Hall, 2000 29
30.
The Debate about
Free Speech on the Internet (cont.) Provisions in law for 2 cases that limit free speech obscene material compelling government interest “Indecency” “any comment, request, suggestion, proposal, image, or other communication that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards, sexual or excretory activities or organs” © Prentice Hall, 2000 30
31.
Protecting Children 3 approaches
(regarding the protection of children from inappropriate material on the Internet) No information should be held back and parents should be responsible for monitoring their own children The government is the only one who can truly protect children from this material To hold the Internet providers responsible for all the material and information they provide © Prentice Hall, 2000 31
32.
Protecting Children (cont.) Parents
Governing Their Own Children Government Protecting the Children Responsibility for the Internet Providers Forcing Internet Providers to be Accountable © Prentice Hall, 2000 32
33.
Legal Perspectives in
the USA Child Online Protection Act Internet Tax Freedom Act Family Friendly Internet Access Act Internet Protection Act Internet School Filtering Act © Prentice Hall, 2000 33
34.
Controlling Spamming What is
spamming, why is it bad? Spamming “the practice of indiscriminate distribution of messages (for example junk mail) without permission of the receiver and without consideration for the messages’ appropriateness” Spamming’s negative impacts Spam comprised 30% of all mail sent on America Online slowing the Internet in general shutting ISPs down completely now less than 10% © Prentice Hall, 2000 34
35.
Controlling Spamming (cont.) Legislation,
Legal The Electronic Mailbox Protection Act The Unsolicited Commercial Electronic Mail Act The Netizens Protection Act The Telephone Consumer Protection Act © Prentice Hall, 2000 35
36.
Controlling Spamming (cont.) How
to cut spamming Tell users not to validate their addresses by answering spam requests for replies if they want to be taken off mailing lists Disable the relay feature on SMTP (mail) servers so mail cannot be bounced off the server Delete spam and forget it— it’s a fact of life and not worth wasting time over Use software packages, e.g. www.getlost.com and www.junkbusters.com © Prentice Hall, 2000 36
37.
Taxation Policies The Taxation
Exemption Debate Internet Tax Freedom Act (8 Oct,98) promotes electronic commerce through tax incentives by barring any new state or local sales taxes on Internet transactions during the next three years Electronic commerce industries Non-electronic commerce industries Applying existing law to new The Internet businesses must pay its fair mediums of exchange is far more share of the bill for the nation’s social difficult than ever imagined. The and physical infrastructure. They feel global nature of business today that the Internet industries are not pulling suggests that cyberspace be their own weight. These companies are considered a distinct tax zone unto screaming that the same situation exists itself with unique rules and in the mail order business and that there considerations befitting the stature are sufficient parallels to warrant similar of the environment. legal considerations. © Prentice Hall, 2000 37
38.
Taxation Policies (cont.)
Proposed Taxation Solutions in the USA The Internal Revenue Service might “come to the rescue” with a single and simplified national sales tax. This will reduce 30,000 different tax codes to ‘no more than 50”. Net sales would be taxed at the same rate as mail order or Main Street transactions. While states could set their one rate, each sale could be 38 taxed only once. 38 © Prentice Hall, 2000
39.
Encryption Policy The 128-BIT
Encryption Debate Export 128-bit encryption is 3.09X10 to the 26th power times more difficult to decipher than the preceding legally exportable technology. Secure e-commerce Government’s legal requirements For the past 20 years Recent legislation there was a limitation allows 128 bit in on exported encryption specific circumstances devices of 56 bit codes thus paving the way for the Compaq permit © Prentice Hall, 2000 39
40.
Encryption Policy (cont.) Data
Encryption Standard (DES) A published federal encryption standard created to protect unclassified computer data and communications Law Enforcement’s Plea Cryptographers would follow an audit trail to ensure that keys haven’t been released improperly, however, law enforcement does not trust that process First Amendment Right Technology can encrypt so thoroughly, that every computer on earth, working in tandem, would take trillions of years to decode the encryption Business View EFF (Electronic Frontier Foundation) believes that software, networked communications and cryptography industries are suffering © Prentice Hall, 2000 40
41.
Other Legal Issues What
are the rules of electronic contracting, and whose jurisdiction prevails when buyers, brokers, and sellers are in different states and/or countries? How can gambling be controlled on the Internet? Gambling is legal in Nevada and other states. How can the winner’s tax be collected? When are electronic documents admissible evidence in the courts of law? What do you do if they are not? Time and place can carry different dates for the buyers and sellers when they are across the ocean. Is a digital signature legal? The use of multiple networks and trading partners makes the documentation of responsibility difficult. How is such a problem overcome? © Prentice Hall, 2000 41
42.
Electronic Contracts Uniform Electronic
Transactions Act Provides the means to effectuate transactions accomplished through an electronic medium Uniform Commercial Code (UCC) Provides a government code that supports existing and future electronic technologies in the exchange of goods or of services related to exchange of goods © Prentice Hall, 2000 42
43.
Electronic Contracts (cont.) Shrink-wrap
agreements (or box top licenses) The user is bound to the license by opening the package This has been a point of contention for some time The court felt that more information would provide more benefit to the consumer given the limited space available on the exterior of the package Click-wrap contracts The software vendor offers to sell or license the use of the software according to the terms accompanying the software The buyer agrees to be bound by the terms based on certain conduct © Prentice Hall, 2000 43
44.
Fraud on the
Internet Internet Stocks Fraud SEC brought charges against 44 companies and individuals who illegally promoted stocks on computer bulletin boards, online newsletters and investment Web sites Other Financial Fraud Selling bogus investments, phantom business opportunities, and other fraud schemes Other Fraud in EC Customers may receive poor quality products and services not get products in time be asked to pay for things they assume will be paid for by sellers © Prentice Hall, 2000 44
45.
Federal Trade Commission
(FTC) Consumer Alerts The “Dirty Dozen” Business opportunities Free goods Bulk mail solicitors Chain letters Investment opportunities Cable descrambler kits Work-at-home schemes Credit repair Health and diet schemes Vacation prize Effortless income promotions Guaranteed loans or credit, on easy terms © Prentice Hall, 2000 45
46.
Buyer Protection Tips for
safe electronic shopping Look for reliable brand names at sites. Search any unfamiliar site for address and phone and fax number. Call up and quiz a person about the sellers. Check the seller with the local Chamber of Commerce, Better Business Bureau, or TRUSTe as described later. Investigate how secure the seller’s site is and how well it is organized. © Prentice Hall, 2000 46
47.
Buyer Protection Examine the
money-back guarantees, warranties, and service agreements. Compare prices to those in regular stores; too- low prices may be too good to be true. Ask friends what they know. Find testimonials and endorsements. Find out what you can do in case of a dispute. Consult the National Fraud Information Center. Check www.consumerworld.org Do not forget the you have shopper’s rights. © Prentice Hall, 2000 47
48.
Third Party Service Public
organizations and private companies attempt to protect consumers TRUSTe’s “Trustmark” non-profit group to build user’s trust and confidence in the Internet by promoting the polices of disclosure and informed consent BBB (Better Business Bureau) private non-profit organizations supported largely by membership to provide reports on business firms that are helpful to consumers before making a purchase © Prentice Hall, 2000 48
49.
Authentication If authentication can
be solved ….. students will be able to take exams online fraud of recipients of government entitlements and other payments will be reduced to a bare minimum buyers will be assured who the sellers are and sellers will know who the buyers are with a very high degree of confidence arrangements will be made so that only authorized people in companies can place purchasing orders interviews for employment, possible marriage, and other matching applications will be accurate trust in your partners and in EC in general will increase significantly © Prentice Hall, 2000 49
50.
Biometrics Controls Photo of
face Fingerprints Hand geometry Blood vessel pattern in the retina of a person’s eye Voice Signature Keystroke dynamics y. ath C © Prentice Hall, 2000 50
51.
Seller Protection Sellers must
be protected against: Use of their names by others Use of their unique words and phrases, names, and slogans and their web addresses Dealing with customers that deny that they placed an order Several other potential legal issues are related to sellers’ protection Customers downloading copyrighted software and/or knowledge and selling it to others Not being properly paid for products and services provided © Prentice Hall, 2000 51
52.
Managerial Issues Multinational corporations
face different cultures in the different countries in which they are doing business Issues of privacy, ethics, and so on may seem to be tangential to running a business, but ignoring them may hinder the operation of many organizations The impact of electronic commerce and the Internet can be so strong that the entire manner in which companies do business will be changed, with significant impacts on procedures, people, organizational structure, management, and business processes © Prentice Hall, 2000 52
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