Legal, Regulatory, and Ethical Issues

1. What are the 5 hottest topics today involving legal, regulatory and ethical issues impacting on operating a B2C ebusiness?

ECommerce has revolutionized the business world by expanding the marketplace and redefining the traditional organizational structure. Its economic influence has been considerable resulting in implications for politics, society and ethics. The future for eBusiness is bright. It will continue its rapid expansion and may eventually take over from traditional business practices however in today's society, there are very few laws enabling an effective transition. ECommerce is a global concept (Hill, 2003, p12). Society, on the other hand, believes in state sovereignty, patriotism and segregation. Political and social barriers continue to prevent effective online transactions and hinder the potential for growth in eBusiness.

Topics involving legal, regulatory, and ethical issues in B2C ebusiness are these:

1. One barrier to effective eCommerce is security. Author and eBusiness practitioner, Paul May (2000, p.35), describes the World Wide Web as being "inherently insecure" and this insecurity is a "fundamental drawback to its use in a commercial setting". The introduction of the Internet has encouraged growth in areas such as commerce and telecommunications however it has also enabled a new type of crime: computer crime. The infrastructure of the Internet and anonymity of its users make it ideal for offences such as money laundering, hijacking system accounts, piracy and computer viruses (Adam, Dogramaci, Gangopadhyay and Yesha, 1999, p.156). Intangible or intellectual property is highly valuable in the New Economy (Hartley, 2002, p. 162) but continual advances in piracy and computer virus technology makes it very difficult to protect.

Security Issues: E-Commerce Security also has some main issues. They are interception of data, redirection of data, identification of parties, exploitable program errors, and being the weakest point in security. When administrating a secure e-commerce site, it is important to remember that you are part of a link of systems. If you're security is weak, it may be possible that you are allowing criminals access to information they may not have had access too. This leads to ethical issues where weak security on your system led to dire consequences for other people or companies. Compare security issues over the Internet compared to real-life. Is it right to be protective of information over the Internet when people are not protecting that same information normally? Is it ethical to deliver different punishments to criminals who steal information over the Internet compared to those who steal information personally? (See # 3 on lack of regulations and the need for stricter laws)

Moving towards solutions: Methods of Online Security

o How to Bank Online Securely BankPulse.Com

o How Encryption Works, PC Magazine

o Internet-Commerce Security , Mark Carroll

o Secure Sockets Layer (SSL), Netscape Communications

o How SSL Works, Netscape Communications

o Digital Signatures, E-Commerce Webopedia

o More Bits, More Security, Thom Stark

2. Privacy of information about individuals, accuracy of information, ownership of information and intellectual property and accessibility of information held (see Mason 1986; Turban et al 2000) (See URL: http://66.102.7.104/search?q=cache:ILtqDpUkgmQJ:www.csulb.edu/web/journals/jecr/issues/20022/paper5.pdf+ethical+barriers+on+operating+a+B2C+ebusiness&hl=en for full article).

3. Ownership and accountability is another issue preventing eCommerce expansion. Currently, the Internet operates as a separate entity, not owned by an individual, company or state (Rowley, 2002, p.25). This independence allows for uninhibited access by every individual with a computer however it also makes accountability virtually impossible. What is socially, politically and ethically acceptable in one country might be illegal in another. For example, advertising cigarettes is legal in countries such as the United States however in Australia, there are severe penalties for companies that breach laws regarding cigarette promotion. If a cigarette company utilizes the World Wide Web for its marketing and advertising activities, they may reach Australian audiences yet they are not breaking any laws.

4. Lack of regulatory Laws When Tim Berners-Lee developed the World Wide Web in 1989, he wanted it to become a communications facilitator free from regulation (Berners-Lee, 1996). Unfortunately, this type of facility is just not commercially viable. If the World Wide Web is to be successfully utilized for eBusiness, regulatory bodies need to standardize practices across the globe. Although individual countries have implemented laws regarding computer crimes, these laws do not affect offenders outside of that sovereign state. International legislation must ensure security for all parties involved.

Moving towards a solution: Laws regarding intellectual property should be continuously updated and there must be tougher penalties for online crimes. This may mean the end of Berners-Lee's regulation-free vision, but it provides an opportunity for a new, eCommerce-friendly online environment.

5. Risk of Fraud Much debate about the risk of fraud in electronic B2C takes place without any clear understanding about who bears the corresponding risk in conventional commercial transactions. See full paper (URL: http://www.fipr.org/WhoCarriesRiskOfFraud.htm), which examines risk in the banking transactions, which underpin much of commerce, whether electronic or conventional. The authors compare traditional transactions such as payments by cheque or credit card with the use of newer remote voice and data systems. They then analyze who bears the risk of fraud, and explore measures used or needed to reduce it. These authors argue that the approach taken by banks is unfair to their customers in some cases, fails to encourage the development of adequate security measures, and prevents the banking system from playing its proper part in the development of electronic commerce... their analysis is based on English law except where otherwise stated: the law of other jurisdictions may not be the same. These authors address primarily the two main kinds of electronic commerce: electronic shopping with credit and debit cards, and online banking.

i.e. Study Finds Fraction