Block 07 Lagal & Ethical Issues

1. MayAllah’s mercybeonhimwhois lenientin
his buying, selling, andin demandingbackhis
money[ordebts]. (Bukhari, No: 1934)
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BLOCK # 7
LEGAL , ETHICAL & SOCIAL ISSUES
PRESENTATION
BY
SAIQA RABBANI HASHMI
AW-565146
ALLAMA IQBAL OPEN UNIVERSITIE
ISLAMABAD

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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

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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

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Sequence

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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

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I have been s ent f or t he
purpos e of perf ect i ng good
moral s .
(I bn Hambal [,
No: 8595)
 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

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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

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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

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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
You are the best nation that has been raised up for mankind;
You enjoin right conduct, forbid evil and believe in Allah.
(3:110)

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Ethics
The Moral Dimensions of an Internet Society

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And gi ve f ul l meas ure when
you meas ure, and wei gh wi t h a
j us t bal ance. That i s good and
bet t er i n t he end. (17:35)
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

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

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 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
Ethics

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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.

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………………………….continu
ed
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

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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

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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

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

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Recommendation: on line profiling
Principle Recommendation
Notices 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.
Choices 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.
Access Reasonable provisions to allow inspection and correction.
Security Reasonable efforts to secure information from loss, misuse, or
improper access.
Enforcement Done by independent third parties, such as seal programs and
accounting firms
Restricted collection 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

25. 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
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26. Do not devour another’s property wrongfully –
unless it be by trade based on mutual consent.
(AlQuran 4:29)
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
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…………………………..contin
ued
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

28. …………………………
continued
Copy right law
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29. ……………………………
continued
Copy Right Act
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30.
o not devour one another’s property wrongfully, nor
throw it before the judges in order to devour a portion of
other’s property sinfully and knowingly. (2:188)
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
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31. 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
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32. ...And do not commi t abus e
on t he eart h, s preadi ng
corrupt i on." Qur'an, 2:60
 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
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33. 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
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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.

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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

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I have been s ent f or t he
purpos e of perf ect i ng good
moral s ”.
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

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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

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……………………………
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

39. 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
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40. O you who believe! intoxicants and gambling [dedication of] stones and [divination
by] arrows are an abomination of Satan’s handiwork: so avoid it in order that you
may prosper. (5:90)
 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
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41. 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.
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42. 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.
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43. O you believers! Do not betray Allah and the Messenger, nor
knowingly, betray your trusts. (AlQuran - 8:27)
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.
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44. 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
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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.

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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

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Marketing
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
 Cyber squatting
 Anti cyber squatting Consumer
 Protection Act (ACPA)
 Cyber piracy
 Typo-squatting
 Meta-tagging
 Key wording
 Deep linking
 Framing

48. …………………………..contin
ued
Explanation of terms
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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

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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

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…………………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

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…………………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.)

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…………………continued

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…………………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

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…………………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

56. 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
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57. Thank you