Presentation is loading. Please wait.

Presentation is loading. Please wait.

Chapter 7 The environment of electronic commerce: legal, ethical, and tax issues Joseph Mitchum and TsunSheng, Tao.

Similar presentations


Presentation on theme: "Chapter 7 The environment of electronic commerce: legal, ethical, and tax issues Joseph Mitchum and TsunSheng, Tao."— Presentation transcript:

1 Chapter 7 The environment of electronic commerce: legal, ethical, and tax issues Joseph Mitchum and TsunSheng, Tao

2 The Legal Environment of Electronic Commerce Any business on the web is an international business and is subject to international laws Any business on the web is an international business and is subject to international laws

3 Borders and Jurisdictions Traditionally when a person travels from one country to another, they are made aware that certain laws are expected to be followed Traditionally when a person travels from one country to another, they are made aware that certain laws are expected to be followed On the internet however, it is difficult to make people aware of every law that they are to be responsible for following On the internet however, it is difficult to make people aware of every law that they are to be responsible for following

4 Jurisdiction on the internet Lines are not clearly drawn as to what kind of jurisdiction can be exercised regarding doing business on the web Lines are not clearly drawn as to what kind of jurisdiction can be exercised regarding doing business on the web Courts prefer to have executive branch of the government handle international diputes Courts prefer to have executive branch of the government handle international diputes

5 Contract enforcement in electronic commerce A written agreement on the web does not have to involve paper or pen to be considered a legally binding contract A written agreement on the web does not have to involve paper or pen to be considered a legally binding contract “Terms of service” serve as rules that the website visitor must follow “Terms of service” serve as rules that the website visitor must follow

6 Use and protection of intellectual property in online business Websites are subject to laws governing intellectual property rights that may be displayed on their website such as unauthorized content Websites are subject to laws governing intellectual property rights that may be displayed on their website such as unauthorized content

7 Web site content issues Most common concerns are patents, trademarks, and copyrights. Most common concerns are patents, trademarks, and copyrights. Napster is probably most well known for the issue of copyrights as far as music and file sharing over the web Napster is probably most well known for the issue of copyrights as far as music and file sharing over the web

8 Cyber squatting Cyber squatting is the most problematic on the web and occurs when someone uses current trademark in hopes that the owner will pay large sums of money for the domain. Additionally the squatter uses that recognizable name so to drive traffic to the site and receives compensation for advertisement Cyber squatting is the most problematic on the web and occurs when someone uses current trademark in hopes that the owner will pay large sums of money for the domain. Additionally the squatter uses that recognizable name so to drive traffic to the site and receives compensation for advertisement

9 Intellectual property online Although it is difficult to guarantee protection of intellectual property online, several methods are being developed to protect digital works Although it is difficult to guarantee protection of intellectual property online, several methods are being developed to protect digital works Digimarc is one company that offers a digital watermark that can be tracked across the web Digimarc is one company that offers a digital watermark that can be tracked across the web

10 Defamation While the US allows considerable leniency when it comes to satirical or expressions of opinions, many other countries do not. While the US allows considerable leniency when it comes to satirical or expressions of opinions, many other countries do not. Operators of websites with international audiences must be aware of the law as it applies to them Operators of websites with international audiences must be aware of the law as it applies to them

11 Deceptive trade practices Companies that have links on their website to other site must not imply that there is a relationship between that site unless a relationship actually exists. Companies that have links on their website to other site must not imply that there is a relationship between that site unless a relationship actually exists.

12 Advertising regulation The FDA is in charge of Regulation of advertising tobacco and alcoholic beverages in the United States. The FDA is in charge of Regulation of advertising tobacco and alcoholic beverages in the United States. However, this also gets more complicates as we move across international borders However, this also gets more complicates as we move across international borders

13 ONLINE CRIME, TERRORISM, AND WARFARE Some people have used the Internet as tool for perpetrating crimes, conducting terrorism, and waging war. Some people have used the Internet as tool for perpetrating crimes, conducting terrorism, and waging war.

14 ONLINE CRIME Types: Types: Theft Theft Stalking Stalking Distribution of pornography Distribution of pornography Gambling Gambling Commandeering one PC to attack other PCs Commandeering one PC to attack other PCs Law enforcement: difficult Law enforcement: difficult The issue of jurisdiction The issue of jurisdiction Laws were written before the Internet became prevalent Laws were written before the Internet became prevalent U.S. Department of Justice Cybercrime http://www.cybercrime.gov/ U.S. Department of Justice Cybercrime http://www.cybercrime.gov/ http://www.cybercrime.gov/

15 TERRORISM AND WARFARE Many Internet security experts believe we are at the dawn of a new age of terrorism and warfare. Factors: Factors: The Internet is an effective tool for communicating worldwide, but it is not easy to be monitored and secured. The Internet is an effective tool for communicating worldwide, but it is not easy to be monitored and secured. Since more business communication traffic moves to the Internet, the major transaction-processing center might be attacked by terrorist group. Since more business communication traffic moves to the Internet, the major transaction-processing center might be attacked by terrorist group.

16 Companies using Web sites to conduct electronic commerce should follow the same ethical standards that other businesses follow. Companies using Web sites to conduct electronic commerce should follow the same ethical standards that other businesses follow. ETHICAL ISSUES

17 Ethics and web business policies Ethical issues are important to be considered when businesses are making policy decision. Ethical issues are important to be considered when businesses are making policy decision. How organizations limit the use of information collected from their Web site visitors. How organizations limit the use of information collected from their Web site visitors. ETHICAL ISSUES

18 Privacy rights and obligations Ethics issues are significant in the area of online privacy because laws have not kept pace with the growth of the Internet and the Web. Ethics issues are significant in the area of online privacy because laws have not kept pace with the growth of the Internet and the Web. The Electronic Communications Privacy Act of 1986 is the main law governing policy on the Internet today. The Electronic Communications Privacy Act of 1986 is the main law governing policy on the Internet today. No U.S. law currently places limits on companies’ use of the information collected from its customers. No U.S. law currently places limits on companies’ use of the information collected from its customers. One of the major privacy controversies in U.S. today is the opt-in vs. opt-out issue. One of the major privacy controversies in U.S. today is the opt-in vs. opt-out issue. ETHICAL ISSUES

19 The opt-in vs. opt-out issue The most common policy used in U.S. is an opt- out approach. The most common policy used in U.S. is an opt- out approach. The company assumes the customer does not object to the company’s use of the information unless the customer chooses to deny permission. The company assumes the customer does not object to the company’s use of the information unless the customer chooses to deny permission. The less common policy is an opt-in approach. The less common policy is an opt-in approach. The company does not use the information for any other purpose unless the customer chooses to allow that use. The company does not use the information for any other purpose unless the customer chooses to allow that use. ETHICAL ISSUES

20

21 Mark Van Name and Bill Catching outlined four principles for handling customer data in 1998. Use the data collected to provide improved customer service. Use the data collected to provide improved customer service. Do not share customer data with others outside your company without the customer’s permission. Do not share customer data with others outside your company without the customer’s permission. Tell customers what data you are collecting and what you are doing with it. Tell customers what data you are collecting and what you are doing with it. Give customers the right to have you delete any of the data you have collected about them. Give customers the right to have you delete any of the data you have collected about them. ETHICAL ISSUES

22 Communication with children Children are less capable than adults in evaluating information sharing and transaction risks and to make decision. Children are less capable than adults in evaluating information sharing and transaction risks and to make decision. In 1998, U.S. Congress enacted the Children’s Online Protection Act (COPA) to protect children from “material harmful to minors”. In 1998, U.S. Congress enacted the Children’s Online Protection Act (COPA) to protect children from “material harmful to minors”. Children’s Online Privacy Protection Act of 1998 (COPPA) provides restriction on data collection from children. Children’s Online Privacy Protection Act of 1998 (COPPA) provides restriction on data collection from children. In 2001, U.S. Congress enacted the Children’s Internet Protection Act (CIPA) which requires school to install filtering software on computers. In 2001, U.S. Congress enacted the Children’s Internet Protection Act (CIPA) which requires school to install filtering software on computers.

23 TAXATION AND ELECTRONIC COMMERCE Companies that do business on the Web are subject to the same taxes as any other company. Companies that do business on the Web are subject to the same taxes as any other company. An online business can subject to: An online business can subject to:  Income taxes  Transaction taxes  Property taxes

24 Nexus The connection between taxpaying entity and a government is called nexus. The connection between taxpaying entity and a government is called nexus. The activities that create nexus in U.S. are determined by state law and vary from state to state. The activities that create nexus in U.S. are determined by state law and vary from state to state. Companies that do business in more than one country face national nexus issues. Companies that do business in more than one country face national nexus issues. A company can void nexus by using a contract such as FedEx to deliver goods. A company can void nexus by using a contract such as FedEx to deliver goods. TAXATION AND ELECTRONIC COMMERCE

25 U.S. Income Taxes Any company whose U.S.-based Web site generates net income is subject to U.S. federal income tax. Any company whose U.S.-based Web site generates net income is subject to U.S. federal income tax. A Web site maintained by a company in U.S. must pay federal income tax on income generated outside of United States A Web site maintained by a company in U.S. must pay federal income tax on income generated outside of United States TAXATION AND ELECTRONIC COMMERCE

26 U.S. State Sales Taxes If a business ships goods to customers in other state, it is not required to collect sales tax from those customers unless the business has established nexus with the customer’s state. If a business ships goods to customers in other state, it is not required to collect sales tax from those customers unless the business has established nexus with the customer’s state. The sales tax collection process in U.S. is regarded as a serious problem. The sales tax collection process in U.S. is regarded as a serious problem. Some large online retailers have announced they will begin collecting and remitting sales tax on all sales. Some large online retailers have announced they will begin collecting and remitting sales tax on all sales. TAXATION AND ELECTRONIC COMMERCE

27 European union value added taxes (VAT) The VAT is the most common transfer tax used in EU. The VAT is the most common transfer tax used in EU. A VAT is assessed on the amount of value added at each stage of production. A VAT is assessed on the amount of value added at each stage of production. VAT is collected by the seller at each stage of transaction. VAT is collected by the seller at each stage of transaction. After mid-2003, non-EU companies that sell digital goods into the EU must levy, collect, and remit VAT. After mid-2003, non-EU companies that sell digital goods into the EU must levy, collect, and remit VAT. TAXATION AND ELECTRONIC COMMERCE


Download ppt "Chapter 7 The environment of electronic commerce: legal, ethical, and tax issues Joseph Mitchum and TsunSheng, Tao."

Similar presentations


Ads by Google