social, legal and ethical issues of e-commerce..

Basic Ethical Concepts

1. May Allah’s mercy be on him who is lenient in his buying, selling, and in demanding back his money [or debts]. ( Bukhari , No: 1934) 1

2. LEGAL , ETHICAL & SOCIAL ISSUES PRESENTATION BY SAFAL RAFIQ MCS-011R17-25 INSTITUTE OF SOUTHERN PUNJAB, MULTAN 3

3. Focus of this chapter • • • • • • Ethical issues and how to improve the ethical climate in e- commerce Legal issues in terms of liability, warranties, copyrights, trademarks, and trade names Taxation issues, and domain name disputes Encryption laws & their description Marketing Ethics, guidelines and legal issues Intellectual property and its laws

4. OBJECTIVES  Learning why E-Commerce raises Legal, Ethical & Social issues  Recognize the Legal & Ethical Issues  Identify process of analyzing Ethical Dilemmas  Understand basic concepts related to Privacy  Identify the practices of E-Commerce companies that threaten Privacy  Describe the different methods used to protect on line privacy  Understand the various forms of Intellectual Property and the challenges involved in protecting it  Understand how governance of the internet has evolved over time  Explain why taxation of e commerce raises governance and jurisdiction issues  Identify major public safety and welfare issues raised by E-Commerce 5

5. Sequence  Introduction to Intellectual Property  Free Speech and Censorship  Taxation  Encryption & Security  Emerging Legal Issues  Contracts  Online Sales  Form of on line Contracts  Requirement of Signature  Terms of Contracts  Status of Electronic Contract 7

6.  Limitations of Liability  Payment procedures  Tax Issues  Marketing  Protection of personal data  Advertising guidelines  Restrictions on advertising  Trade Marks, Domain Names & Copy Rights  Registration of Trade Marks  Domain Names 8

7. Sequence  Dispute Resolution  Jurisdiction  Civil liability  Social Issues  Social Enablers of E-Commerce  Access to the Digital Economy  Network Availability  Connectivity  Business Connections  Skills and Digital Literacy  Confidence and Trust 9

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9. Basic Ethical Concepts  Principles used to determine right and wrong courses of action (cultural/religious differences)  These are the rules by which one makes decisions about right and wrong, should and should not do, good and bad  These are moral, ethical practices, professional attributes of characters - certain core values that must be instilled in e -commerce 11

10. (3:110) Ethics are …………………  Study of principles used to determine right and wrong courses of action  Responsibility  Individuals, Organizations, and societies are responsible for actions they take  Accountability  Individuals, Organizations, and Societies should be held accountable to others for the consequences of their actions  Liability  Laws permitting individuals to recover damages  Due process  Laws are known, understood  Ability to appeal to higher authorities to ensure laws applied 12

11. Ethics The Moral Dimensions of an Internet Society 13

12. Four major categories of issues:  Information rights - individual rights to their personal info in public market place and rights to access info about business and other organizations  Property rights - enforcement of traditional intellectual property rights in Internet world where perfect copies can be made and distributed worldwide within seconds  Governance - public laws to govern Internet and e- commerce, and the law- making bodies (state, federal, international) who have jurisdiction  Public safety and welfare - to ensure equitable access to Internet and e- commerce channels by schools and colleges, or to determine if pornography and gambling are threat to public safety and welfare 14

13. Over view of Ethical Issues Privacy Issues Kind/nature of information required to be given Nature/ appropriateness of surveillance to staff Kind of information remain private to people? Extent of security of information from unauthorized access/use? what kind of information be maintained in data base? How secure the information from unauthorized access Property Who owns the data? Are there fair price paid to data? Who owns communication channels? How are copy rights issues are resolved? Can company machine be used for private purpose? How to control access to information channels Accuracy Issues Determination of Responsibility for the accuracy of information How can we know that information is correctly compiled and presented? Who is responsible for the accuracy of the system? What compensation is due when information is misused? Accessibility Who has access to the data? How much should be charged for access? Should disabled workers be given their own means of access to computers? Who provides the means of permitted access to information? What ,when, and how does the organization have to demand /require information? What safety measures should accompany this? 15

14. Ethics  Ethics are important if you want people to trust you and to do business with you Because the Internet is constantly changing, adherence to an ethical framework is more important than ever.  While there may not be written laws governing every e-business situation, an ethical person will do the right thing in these circumstances.  Consumers and sellers who participate in e-commerce transactions have ethical responsibilities  There are limited amounts of laws online so enforcement is done by a community of people that use the internet.  The government has some programs to monitor how online businesses are doing e-commerce,  Steps to gain customers trust .  Post Your Business Policies  Honor Your Policies  Protect Your Buyer ’s Privacy and Security 16

15. Ethics Unethical policies used by some online business  Spam - Email that is sent to thousands of random email addresses for a purpose. Some business will send their ads to people ’s emails to gain new customers and increase sales.  Typo Squatting - Purchasing a domain name that is a variation on a popular domain name with the expectation that the site will get traffic off of the original sight because of a user's misspelling of the name. For example, registering the domain names webapedia.com or yahooo.com in the hopes that someone making a typo will get to that site unexpectedly.  Adware - A form of spyware that collects information about the user in order to display advertisements in the Web browser based on the information it collects from the user's browsing patterns. 17

16. ………………………… .continued To earn your trust, a business can voluntarily post a Privacy Policy on its Web site Privacy Policy a written, legally binding statement informing users about how their personal information will be managed and maintained 18

17. Protection of Privacy  Moral right of individuals to be left alone, free from surveillance, or interference from other individuals or organizations  The claim that certain information should not be collected at all  The claim of individuals to control the use of whatever information is collected about them  Its expensive to invade privacy due to expanded computer power and powerful software can detect fraud, tax evasions/monitoring of communication / traceability of people 19

18. Information Information Collected at E-Commerce Sites  Personally identifiable information (PII)  Anonymous information Types of data collected  Name, address, phone, e-mail, social security  Bank & credit accounts, gender, occupation ,  Preference data, transaction data, click stream data, browser type 20

19. ………………………… continued Information gathering tools 21

20. ………………………… continued Information gathering tools 22

21. Information Cookies Collection  “… bits of info collected and stored by a Web browser when a person navigates the Web.” Online Profiling/ Registration  “… aggregating data about customers by tracking their click stream.” Profiling - Creation of digital images that characterize online individual and group behavior  Anonymous profiles  Personal profiles Advertising networks  Track consumer and browsing behavior on Web  Dynamically adjust what user sees on screen  Build and refresh profiles of consumers  Google ’s Ad Word program 23

22. Recommendation: on line profiling Principle Notices Choices Access Security Enforcement Restricted collection Recommendation Complete transparency to user by providing disclosure and choice options on the host Web site. “Robust” notice for PII (time/place of collection; before collection begins). Clear and conspicuous notice for non-PII. Opt-in for PII, opt-out for non-PII. No conversion of non-PII to PII without consent. Opt-out from any or all network advertisers from a single page provided by the host Web site. Reasonable provisions to allow inspection and correction . Reasonable efforts to secure information from loss, misuse, or improper access. Done by independent third parties, such as seal programs and accounting firms Advertising networks will not collect information about sensitive financial or medical topics, sexual behavior or sexual orientation, 9-33 or use Social Security numbers for profiling 24

23. Intellectual Property Intellectual property  Encompasses all tangible and intangible products of human mind Major ethical issue  How should we treat property that belongs to others? Major social issue  Is there continued value in protecting intellectual property in the Internet age? Major political issue  How can Internet and e-commerce be regulated or governed to  protect intellectual property? Three main types of protection  Copyright  Patent  Trademark law 25

24. Goal of intellectual property law:  Balance two competing interests —public and private  Maintaining this balance of interests is always challenged by the invention of new technologies 26

25. ………………………… .. continued Copyright law protects most text, photos, sounds, software, logos, images, and videos on the Web. For works copyrighted after 1978, copyright protection generally lasts for the life of the author plus 70 years copyright a form of protection provided by U.S. law that grants exclusive rights for the original works of an author 27

26. continued Copy right law 28

27. continued Copy Right Act 29

28. Copyright law:  Protects original forms of expression (but not ideas) from being copied by others for a period of time  Look and feel copyright infringement lawsuits  Fair use doctrine  Digital Millennium Copyright Act, 1998  First major effort to adjust copyright laws to Internet age  Implements WIPO treaty that makes it illegal to make, distribute, or use devices that circumvent technology-based protections of Copyrighted materials 30

29. Free Speech & Censor ship  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 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 exemplifies the protective approach 31

30.  Protection of children and strong sentiments against pornography  Passing legislation that will survive court challenges has proved difficult  Efforts to control gambling and restrict sales of drugs and cigarettes  Currently, mostly regulated by state law  Unlawful Internet Gambling Enforcement Act 32

31. Taxation E-commerce taxation illustrates complexity of governance / jurisdiction issues  U.S. sales taxed by states and local government  MOTO retailing  E-commerce benefits from tax “subsidy”  Unlikely that comprehensive, integrated rational approach to taxation issue will be determined for some time to come Neutrality: All Internet traffic treated  Equally —all activities charged the same rate, no preferential assignment of bandwidth  Backbone providers vs. content providers  December 2010 FCC approved “compromise” net neutrality rules  Telecom providers adopting compromise position between wired and mobile wireless access 33

32. Encryption & Security  The failure of e-businesses to adequately protect consumer data has led to an increase in identity theft .  Identity theft is the practice of running up bills or committing crimes in someone else ’s name. 34

33. Encryption & Security  E-businesses are connected to the Internet 24 hours a day, seven days a week.  Maintaining the security of corporate data is one of the highest priorities of any e-commerce business.  All Internet users, including minors, need to be assured of their privacy and the safety of their personal information online.  When you shop online, you are asked to provide personal data, including your address, phone number, e-mail address, and credit-card information 35

34. E-commerce sites use Encryption to secure credit-card data transmitted by customers. Encryption the scrambling of data from plain text into code once it is sent from a computer 36

35. Emerging legal issues Laws are necessary in all segments of society, e-commerce is no exception. Those in the online world should recognize that copyright, patent, and trademark laws protect much of the material found on the Internet. In addition, they should be aware that there are other types of laws they must follow 37

36. continued Just as the real world requires rules and regulations to keep things running smoothly, the Internet has given birth to Cyber law . Cyber law an evolving legal framework that governs Internet activities; covers topics ranging from copyright infringement to e-mail privacy, identity theft, and interstate e-commerce 38

37. A sale is a sale only if it is made through mutual consent. ( Ibn Majah , No: 2176) 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 39

38.  Interaction of electronic agents or between electronic agent and individual can result in a valid contract.  Contract might be formed by the operations of the electronic agent. ”  “ A person that uses an electronic agent is bound by the operations of the electronic agent, even if no individual was aware of or reviewed the agent’s operation.” Consideration  Can be anything of value  Delivery of goods  Delivery of services  Payment  Return promise 40

39. O you who believe! Fulfill [your] obligations(5:1) Terms of Contract  Online contracts must meet the same requirements as normal contracts:  There must be an agreed set of terms  Both parties must intend to enter into a legally binding agreement . Incorporation of terms  The terms and conditions on which the parties are contracting must be agreed by both parties and incorporated into the contract between them.  Simply placing terms and conditions on a website is not enough to incorporate them into a contract  The parties must agree that they contract on the stated terms, and they must do so before (or at the same time as) becoming contractually bound.  When dealing with customers of a website the seller must ensure that the ordering process requires the customers to read and agree to the seller's terms and conditions. 41

40. Contract Status of Contract  Electronic contracts and electronic signatures are just as legal and enforceable as traditional paper contracts signed in ink Current UCC (Uniform Code of Commerce): Writing  “ printing, typewriting, or any other intentional reduction to tangible form” Signature  Signature may be “any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of a signer.”  When electronic signatures are used, contracts created online areas legal as those on paper. Cryptographic Signatures (PKI)  Cryptography is the science of securing information. It is most commonly associated with systems that scramble information and then unscramble it. Security experts currently favor the cryptographic signature method known as Public Key Infrastructure (PKI) as the most secure and reliable method of signing contracts online. 42

41. Limitation of Liability  The limitation of liability clause restricts the amount and type of damages that one party can recover from another. The thing to remember is that vendor forms almost always contain clauses that favor the vendor rather than the CIO's company.  You may have seen a limitation of liability that looks like this: "In no event shall either party be liable for any consequential damages, even if either party knew or should have known of the possibility hereof."  This clause prevents one party from recovering certain types of damages -- consequential, or "indirect" damages -- from the other party . 43

42. The truthful merchant [is rewarded by being ranked] on the Day of Resurrection with prophets, veracious souls, martyrs and pious people. (Tirmidhi, No: 1130 ) E Payment Methods  Credit and Debit card  Digital Currency  E-Wallets  Peer-to-Peer Methods  Smart card  Micro-payments  B2B 44

43. Marketing Today ’s businesses realize that having a domain name that is the same as their company’s or product’s name can be extremely valuable. As a result, disputes over domain names have become more common  Domain-name disputes are generally settled in court.  Legal arguments are presented in court about why a domain name registered to one person or company should be canceled or transferred to another  Two options left  Attempt to buy the domain name from its owner.  Select another domain name . 45

44. Marketing The expansion of the World Wide Web has led to increased trademark infringement claims and lawsuits. Trademark infringement occurs when someone uses a name or phrase that is already trademarked trademark the use of a word, phrase, symbol, product shape, or logo by a manufacturer or business to identify its goods and to distinguish them from others on the market 46

45. Marketing  Cyber squatting  Anti cyber squatting Consumer  Protection Act (ACPA)  Cyber piracy  Typo-squatting  Meta-tagging  Key wording  Deep linking  Framing trademark the use of a word, phrase, symbol, product shape, or logo by a manufacturer or business to identify its goods and to distinguish them from others on the market 47

46. ………………………… .. continued Explanation of terms 48

47. Marketing A patent excludes others from “making, using, offering for sale, or selling” an invention or idea in the States or “importing” the invention into the States . patent a property right granted to the inventor of a product or process by the state Patent and Trademark Office 49

48. Marketing Patents  Grant owner 20-year monopoly on ideas behind an invention  Machines  Man-made products  Compositions of matter  Processing methods  Invention must be new, non-obvious, novel  Encourages inventors  Promotes dissemination of new techniques through licensing  Stifles competition by raising barriers to entry 50

49. ………………… continued Technological Solutions  Spyware  Pop-up blockers  Secure e-mail  Anonymous remailers, surfing  Cookie managers  Disk/file erasing programs  Policy generators  Public key encryption Privacy Policy Reader/Platform for Privacy Preferences (P3P)  Comprehensive technological privacy protection standard  Works through user ’s Web browser  Communicates a Web site ’s privacy policy  Compares site policy to user ’s preferences or to other standards Such as FTC’s FIP guidelines or EU’s Data Protection Directive 51

50. ………………… continued Governance of E- Commerce Laws  Currently: mixed mode policy environment  Self-regulation, through variety of Internet policy and technical bodies, co-exists with limited government regulation  ICANN in charge of Domain Name System  Internet can be very easily controlled, monitored, and regulated from a central location (e.g., China, Singapore, etc.) 52

51. ………………… continued 53

52. ………………… continued Public Safety and Welfare  Protection of children and strong sentiments against pornography  Passing legislation that will survive court challenges has proved difficult  Efforts to control gambling and restrict sales of drugs and cigarettes  Currently mostly regulated by state law  Unlawful Internet Gambling Enforcement Acte 54

53. ………………… continued Social Enablers of E-Commerce There is a relationship between data, information and knowledge. Knowledge is the “information that is relevant, actionable, and based at least partially on experience ” (Leonard & Sensiper, 1998). Knowledge provides a structure for interpreting information by assimilating and explaining variations over time and space (Gordon & Gordon, 2004). Knowledge Management provides an integrated approach to identifying, capturing, retrieving, sharing, and evaluating enterprises information assets. These information assets include databases, documents, policies, procedures, as well as the tacit knowledge and experience stored in individual's heads 55

54. The one who knowingly purchases a stolen good, is a partner to the act of sin and the shame. ( Kanz Al- ‘ Ammal , No: 9258) Conclusion The fundamental codes of moral behavior such as  Truthfulness,  Trustworthiness,  Generosity and leniency,  Adherence to business commitments and contracts,  Fair treatment of workers,  Avoidance of evil practices (such as fraud, cheating, deceit, hoarding of foodstuff, exploitations, giving short measures etc.) provide, to a large extent,  The general background of Islamic business ethics. I believe that there is a pressing need to study and implement Islamic moral values in the context of the present day business situations 56

55. Thank you