E-commerce presents a world of opportunity for doing businesses, reaching global markets and purchasing without leaving the home or office. E-commerce can provide opportunities to improve business processes, just as phones, faxes and mobile communications have in the past. However, just as any new business tool has associated issues and risks so does e-commerce. It's important to understand the legal issues and potential risks to ensure a safe, secure environment for trading with customers and other businesses.
In traditional and online trading environments, consumers are entitled to have their privacy respected. Websites should provide the customers with choices regarding the use of their personal information, and incorporate security procedures to limit access to customer information by unauthorised parties. Privacy policies and procedures should be clearly explained to customers. Although respecting consumer privacy rights is a legal requirement, it also represents good business practice. If customers trust a site and business then they are more likely to trade with it.
E-Business and Legal Issues
The technological basis of e-commerce is basically Web client/server middleware, or what is called three-tier architectures. The client tier is the Web browser involving some type of form processing. The middle tier is the Web server, often with transaction processing. The Web server in turn links to the third tier, a database processing the order information. Some of the issues are strictly Internet-related, such as domain names and trademarks, linking and framing, clickware (and shrinkware), and metatag use. Others are traditional issues applied to the Internet, such as copyright, contracts, consumer protection, privacy, taxation, regulated industries and jurisdiction. E-commerce site development, its advertising, electronic transaction, money transactions and such involve many legal issues, which need to be taken into account step by step. Before developing an e-commerce site a registered domain and a registered trademark should be established. There must be some copyright protection on the site. The business must ensure that it displays the terms and condition/policies within its site. Security involving the privacy of a user's data is always one of the main concerns while doing business online. Defining rules and regulations for the advertisement of the site by placing banners on other known sites is another. It is of great value when dealing with such complex issues to consult an attorney who specializes in the issues of cyberspace.
B2B and B2C
The major difference between B2B (Business to Business) and B2C (Business to Customer) in internet terms is the role of the B2B website. B2B concerns itself primarily with supply chain management. These are portals that allow businesses to deal directly with their suppliers and distributors online, through electronic transfer of orders, invoicing and payments. Wholesalers, distributors and manufacturers fall in this category.
B2C websites are intermediary portals existing primarily on the internet to link customers to suppliers: some major example would be the online auction site, eBay.com, or online retailers Amazon.com.
There are many differences in ethical, legal, and regulatory concerns between B2B and B2C. B2C generally has a much more rigorous standard to ensure safety: for example, if you sell electrical fixtures B2C, you have to assume that a non-trained person may be installing it and need to make it extra safe and fool proof. But if you sell the same fixture for use in an Industrial Plant (B2B), it is safer to assume that a trained electrician will be installing it.
In the U.S., the regulations would change for these two cases. Consumer use would require UL (Underwriter's laboratories) listing, where the plant would require FM (Factory Mutual). Both these organizations perform similar functions, but because they target different areas (consumer versus plants), how they go about it is very different.
Legal follows a similar pattern. There would be less potential liability on the B2B side, as companies generally take more responsibility for their actions than consumers do (and correspondingly less lawsuits and damages on the B2B side).
The most significant legal issues that arise with regard to conducting business over the internet are those involving jurisdiction. A simple example: if Company A in Japan offers services over the internet to John Doe in America and a related dispute arises, which country's laws control and which country's courts have power over both parties? Jurisdictional questions also arise regarding the power to tax, whether it be taxing the buying customers, requiring selling companies to aid in tax collection, or taxing companies' and individuals' income. There are several types of jurisdictional issues, and jurisdictional issues are not the only ones that require rethinking as a result of the Internet revolution. A myriad of legal concerns related to Internet use have spawned numerous bills in the U.S. Congress as well as in legislative bodies around the globe.
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