Chapter 17
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
ethics
The 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‖
Electronic Commerce Prentice Hall? 2006 7
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
Electronic Commerce Prentice Hall? 2006 8
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
Electronic Commerce Prentice Hall? 2006 9
Privacy
privacy
The 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
– RFID’s Threat to Privacy
– Privacy of Employees
– Privacy of Patients
Electronic Commerce Prentice Hall? 2006 10
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
Electronic Commerce Prentice Hall? 2006 11
Privacy
Protection of Privacy
– Access/participation
– Integrity/security
– Enforcement/redress
Electronic Commerce Prentice Hall? 2006 12
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
Electronic Commerce Prentice Hall? 2006 13
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
Electronic Commerce Prentice Hall? 2006 14
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 15
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
Electronic Commerce Prentice Hall? 2006 16
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
Electronic Commerce Prentice Hall? 2006 17
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
Electronic Commerce Prentice Hall? 2006 18
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
Electronic Commerce Prentice Hall? 2006 19
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
Electronic Commerce Prentice Hall? 2006 20
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
Electronic Commerce Prentice Hall? 2006 21
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
Electronic Commerce Prentice Hall? 2006 22
Exhibit 17.1 How Spam Blockers Work
Electronic Commerce Prentice Hall? 2006 23
Unsolicited Electronic Ads,
Problems and Solutions
E-Mail Spamming
– Anti-spam Legislation
Do-not-spam lists
Protecting employees
Electronic Commerce Prentice Hall? 2006 24
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 25
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
Electronic Commerce Prentice Hall? 2006 26
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
Electronic Commerce Prentice Hall? 2006 27
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
Electronic Commerce Prentice Hall? 2006 28
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 29
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 30
EC Fraud and
Consumer and Seller Protection
Fraud on the Internet
– Online Auction Fraud
– Internet Stock Fraud
– Other Financial Fraud
Electronic Commerce Prentice Hall? 2006 31
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.
Electronic Commerce Prentice Hall? 2006 32
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
Electronic Commerce Prentice Hall? 2006 33
EC Fraud and
Consumer and Seller Protection
Seller Protection
– 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
Electronic Commerce Prentice Hall? 2006 34
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 Prentice Hall? 2006 35
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
Electronic Commerce Prentice Hall? 2006 36
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
Electronic Commerce Prentice Hall? 2006 37
Virtual (Internet) Communities
1,Search communities
2,Trading communities
3,Education
communities
4,Scheduled events
communities
5,Subscriber-based
communities
6,Community consulting
firms
7,E-mail-based
communities
8,Advocacy communities
9,CRM communities
10.Mergers and
acquisitions activities
Commercial Aspects of Communities
Electronic Commerce Prentice Hall? 2006 38
Virtual (Internet) Communities
Types of Virtual Communities
– Transaction
– Purpose or interest
– Relations or practice
– Fantasy
Financial Viability of Communities,Revenue model of
communities can be based on:
– Sponsorship
– Membership fees
– Sales commissions
– Advertising
– Combination of these
Electronic Commerce Prentice Hall? 2006 39
Exhibit 17.5 Value Creation in
Electronic Communities
Electronic Commerce Prentice Hall? 2006 40
Virtual (Internet) Communities
1,Increase traffic and
participation in the community
2,Focus on the needs of the
members; use facilitators and
coordinators
3,Encourage free sharing of
opinions and information—no
controls
4,Obtain financial sponsorship,
This factor is a must,
Significant investment is
required
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
Eight critical factors for community success:
Electronic Commerce Prentice Hall? 2006 41
Virtual (Internet) Communities
Key Strategies for Successful Online Communities
1,Handle member data sensitively
2,Maintain stability of the Web site with respect to the
consistency of content,services,and types of
information offered
3,Provide fast reaction time of the Web site
4,Offer up-to-date content
5,Offer continuous community control with regard to
member satisfaction
6,Establish codes of behavior (netiquette/guidelines) to
contain conflict potential
Electronic Commerce Prentice Hall? 2006 42
The Future of EC
Nontechnological Success Factors
– Internet Usage
– Opportunities for Buying
– M-Commerce
– Purchasing Incentives
– Increased Security and Trust
– Efficient Information Handling
– Innovative Organizations
– Virtual Communities
Electronic Commerce Prentice Hall? 2006 43
The Future of EC
Nontechnological Success Factors
– Payment Systems
– B2B EC
– B2B Exchanges
– Auctions
– Going Global
– E-Government
– Intra-business EC
– E-Learning
– EC Legislation
Electronic Commerce Prentice Hall? 2006 44
The Future of EC
EC Technology Trends
– Clients
– Embedded Clients
– Wireless Communications and M-Commerce
– Pervasive Computing
– Wearable Devices
– RFID
– Servers and Operating Systems
– Networks
Electronic Commerce Prentice Hall? 2006 45
The Future of EC
EC Technology Trends
– EC Software and Services
– Search Engines
– Peer-to-Peer Technology
– Integration
– Web Services
– Software Agents
– Interactive TV
– Tomorrow’s Internet
Electronic Commerce Prentice Hall? 2006 46
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
Electronic Commerce Prentice Hall? 2006 47
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
Electronic Commerce Prentice Hall? 2006 48
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?
Electronic Commerce Prentice Hall? 2006 49
Summary
1,Differences between legal and ethical issues.
2,Protecting privacy in EC.
3,Intellectual property rights in EC.
4,Unsolicited ads and spamming.
5,Conflict between free speech and censorship.
Electronic Commerce Prentice Hall? 2006 50
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.
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
ethics
The 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‖
Electronic Commerce Prentice Hall? 2006 7
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
Electronic Commerce Prentice Hall? 2006 8
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
Electronic Commerce Prentice Hall? 2006 9
Privacy
privacy
The 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
– RFID’s Threat to Privacy
– Privacy of Employees
– Privacy of Patients
Electronic Commerce Prentice Hall? 2006 10
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
Electronic Commerce Prentice Hall? 2006 11
Privacy
Protection of Privacy
– Access/participation
– Integrity/security
– Enforcement/redress
Electronic Commerce Prentice Hall? 2006 12
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
Electronic Commerce Prentice Hall? 2006 13
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
Electronic Commerce Prentice Hall? 2006 14
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 15
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
Electronic Commerce Prentice Hall? 2006 16
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
Electronic Commerce Prentice Hall? 2006 17
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
Electronic Commerce Prentice Hall? 2006 18
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
Electronic Commerce Prentice Hall? 2006 19
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
Electronic Commerce Prentice Hall? 2006 20
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
Electronic Commerce Prentice Hall? 2006 21
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
Electronic Commerce Prentice Hall? 2006 22
Exhibit 17.1 How Spam Blockers Work
Electronic Commerce Prentice Hall? 2006 23
Unsolicited Electronic Ads,
Problems and Solutions
E-Mail Spamming
– Anti-spam Legislation
Do-not-spam lists
Protecting employees
Electronic Commerce Prentice Hall? 2006 24
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 25
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
Electronic Commerce Prentice Hall? 2006 26
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
Electronic Commerce Prentice Hall? 2006 27
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
Electronic Commerce Prentice Hall? 2006 28
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 29
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 30
EC Fraud and
Consumer and Seller Protection
Fraud on the Internet
– Online Auction Fraud
– Internet Stock Fraud
– Other Financial Fraud
Electronic Commerce Prentice Hall? 2006 31
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.
Electronic Commerce Prentice Hall? 2006 32
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
Electronic Commerce Prentice Hall? 2006 33
EC Fraud and
Consumer and Seller Protection
Seller Protection
– 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
Electronic Commerce Prentice Hall? 2006 34
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 Prentice Hall? 2006 35
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
Electronic Commerce Prentice Hall? 2006 36
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
Electronic Commerce Prentice Hall? 2006 37
Virtual (Internet) Communities
1,Search communities
2,Trading communities
3,Education
communities
4,Scheduled events
communities
5,Subscriber-based
communities
6,Community consulting
firms
7,E-mail-based
communities
8,Advocacy communities
9,CRM communities
10.Mergers and
acquisitions activities
Commercial Aspects of Communities
Electronic Commerce Prentice Hall? 2006 38
Virtual (Internet) Communities
Types of Virtual Communities
– Transaction
– Purpose or interest
– Relations or practice
– Fantasy
Financial Viability of Communities,Revenue model of
communities can be based on:
– Sponsorship
– Membership fees
– Sales commissions
– Advertising
– Combination of these
Electronic Commerce Prentice Hall? 2006 39
Exhibit 17.5 Value Creation in
Electronic Communities
Electronic Commerce Prentice Hall? 2006 40
Virtual (Internet) Communities
1,Increase traffic and
participation in the community
2,Focus on the needs of the
members; use facilitators and
coordinators
3,Encourage free sharing of
opinions and information—no
controls
4,Obtain financial sponsorship,
This factor is a must,
Significant investment is
required
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
Eight critical factors for community success:
Electronic Commerce Prentice Hall? 2006 41
Virtual (Internet) Communities
Key Strategies for Successful Online Communities
1,Handle member data sensitively
2,Maintain stability of the Web site with respect to the
consistency of content,services,and types of
information offered
3,Provide fast reaction time of the Web site
4,Offer up-to-date content
5,Offer continuous community control with regard to
member satisfaction
6,Establish codes of behavior (netiquette/guidelines) to
contain conflict potential
Electronic Commerce Prentice Hall? 2006 42
The Future of EC
Nontechnological Success Factors
– Internet Usage
– Opportunities for Buying
– M-Commerce
– Purchasing Incentives
– Increased Security and Trust
– Efficient Information Handling
– Innovative Organizations
– Virtual Communities
Electronic Commerce Prentice Hall? 2006 43
The Future of EC
Nontechnological Success Factors
– Payment Systems
– B2B EC
– B2B Exchanges
– Auctions
– Going Global
– E-Government
– Intra-business EC
– E-Learning
– EC Legislation
Electronic Commerce Prentice Hall? 2006 44
The Future of EC
EC Technology Trends
– Clients
– Embedded Clients
– Wireless Communications and M-Commerce
– Pervasive Computing
– Wearable Devices
– RFID
– Servers and Operating Systems
– Networks
Electronic Commerce Prentice Hall? 2006 45
The Future of EC
EC Technology Trends
– EC Software and Services
– Search Engines
– Peer-to-Peer Technology
– Integration
– Web Services
– Software Agents
– Interactive TV
– Tomorrow’s Internet
Electronic Commerce Prentice Hall? 2006 46
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
Electronic Commerce Prentice Hall? 2006 47
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
Electronic Commerce Prentice Hall? 2006 48
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?
Electronic Commerce Prentice Hall? 2006 49
Summary
1,Differences between legal and ethical issues.
2,Protecting privacy in EC.
3,Intellectual property rights in EC.
4,Unsolicited ads and spamming.
5,Conflict between free speech and censorship.
Electronic Commerce Prentice Hall? 2006 50
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.
