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)

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BLOCK # 7LEGAL , ETHICAL & SOCIAL ISSUES

PRESENTATION BY

SAIQA RABBANI HASHMIAW-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 sent for the purpose of perfecting good morals. (Ibn 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 actionResponsibility

Individuals, Organizations, and societies are responsible for actions they takeAccountability

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 give full measure when you measure, and weigh with a just balance. That is good and better in the 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 IssuesPrivacy 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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EthicsUnethical 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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………………………….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

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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

…………………………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 profilesAdvertising 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 andaccounting 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

Intellectual Property Intellectual property Encompasses all tangible and intangible products of human mindMajor 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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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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…………………………..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 forthe 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

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Copy right law

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……………………………continued

Copy Right Act

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 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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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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...And do not commit abuse on the earth, spreading corruption." 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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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 comeNeutrality: 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

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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 sent for the purpose of perfecting good morals”.

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

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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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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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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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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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 knownof 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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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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MarketingThe expansion of the World Wide Webhas led to increased trademarkinfringement claimsand lawsuits.Trademark infringement occurs when someoneuses a name or phrase thatis 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

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Explanation of terms

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Marketing A patent excludesothers from “making, using, offering for sale, or selling” aninvention 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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…………………continuedTechnological 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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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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…………………continuedSocial Enablers of E-CommerceThere 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

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 situations05/01/23 56

Thank you