LEGAL AND ETHICAL GUIDELINES FOR E-

COMMERCE
INTRODUCTION
The vastness of internet advertising offers a solid platform for electronic commerce to explode.
E-commerce has the ability to provide secure shopping transactions coupled with instant
verification and validation of credit and transactions. It’s about doing business leveraging the
technology.
A technical innovation is followed by frequent incorporation of ethical standards into law. New
forms of e-commerce have many advantages but also numerous risks.
Objectives of the study
 To learn about the concept of e-commerce and business ethics
 To know of the importance and merits of e-commerce
 To understand the ethical and legal issues involved in e-commerce
 To learn of the various implications of e-commerce

Meaning of E-commerce
Refers to a means of conducting business transactions using one of many electronic methods
involving telephones, computers or both
In explanation; it’s the ability of a company to have a dynamic presence on the internet allowing
the company to conduct its business electronically

Benefits of E-commerce
Includes the following;
 Greater customer satisfaction
The E-Commerce website can be a powerful tool for building customer loyalty if its effective
enough, a well-designed website puts the customer in charge of the relationship.
They can browse, buy, ask for help and also track the progress of order they have placed, where
they want, when they want.
 Reduced market costs
Great achievements can be achieved through proper treating of customers, keeping them
informed about the business activities and benchmarking yourself against your competitors. Here
the customers can e-mail their recommendations and also the search engine rankings. And can
also optimize use of e-advertising as its cheap with a wide mass coverage.
 Better customer information
With E-commerce you can quickly and easily analyze your customers by their location as well as
through the products they consume as you’ll have to request a customer name and address from
them when processing a transaction. On E-Commerce sites there is more information on a
product including reviews to help customers choose the right products. This works for the best
interest for the site as it cuts down on the amount of returned goods.
 Convenience
It is efficient as no movement of customer is involved hence time and transport costs are evaded

Advantages associated with E-Commerce

 Access to a global market
Companies have access to a global market rather than just the potential customers in the region.
Due to the fact that the website is open 24hours a day, time differences between countries is no
longer a problem
 Cutting out the middleman
Businesses can sell directly to the consumer rather than having to use a distribution chain to get
to the the intended consumers. It means the company can now offer the product at a discount as
only one company makes profits
 A level playing field
A small company can compete and show itself as a professional company as much as large ones
as budgets for setting up a professional site is relatively cheaper to the amount of return got from
them.
 Open 24-hours a day
With full automated payment and other processing systems. The site need never to be closed as
orders can be dispatched during opening hours while orders can be taken 24hours a day. This
system cuts down on the amount of returned goods.
 Security
It is important for stakeholders to feel confident that online data collected by the company is safe
and every electronic transaction is secure. Taking into consideration integrity, authentication and
non-repudiation which guarantees that online customers and partners cannot be wrongly denied
accessing the data

Meaning of Business Ethics.

Ethics is the study of what is right and wrong. It encompasses the rules to follow in our
interactions with other people.
Business ethics is concerned with the numerous ethical question’s managers must confront as
part of their daily business decision making.
Important alternative theories used by managers include;
Stock holder theory- it holds that managers are agents of the stakeholders, their only ethical
responsibility is to increase the profits of the business, without violating law
Social contract theory – states companies have ethical responsibility to all members of society,
which allows corporations to exist based on social contracts.
Stakeholder theory – managers have an ethical responsibility to manage a firm for the benefits
of its stakeholders which are all individuals and groups that have a stake in or claim
to the company

Ethical Issues in E-Commerce

 Web spoofing
It’s an electronic deception relating to the internet. Occurs when the attacker sets up a fake
website almost similar to the original to lure consumers to give their financial details and
personal information. Example of www.amaz0n.com the attacker uses zero in place of letter o
which users might type by mistake giving their details.

 Cyber squatting
Involves activity in which a person or firm uses an existing domain name of a well-known
organization the purpose of infringing its trademarks. Extortion occurs when they they offer
price far greater than what they have paid to purchase the domain name
  Privacy invasion
This occurs when the personal details of the consumer are exposed to the unauthorized party. It
occurs in three ways
I. E-commerce businesses buy information about individuals through different computing
technologies aiding in marketing and selling of their products.
II. Personal information of consumers being transmitted may be intercepted by anyone other
than the intended person. It is technically and economically impossible to patch all holes
through which unauthorized intruders may gain access.
III. Malicious programs delivered quietly via web pages could reveal credit card numbers,
usernames and passwords frequently store in cookies.

 Online piracy
Refers to the unauthorized copyright of electronic intellectual property such as e-books, music or
videos. The unethical activity occurs when the users use the software and hardware technology
in an illicit manner to transfer the electronic intellectual property over the internet.

 Email spamming
Involves use of email to send or broadcast unwanted advertisements or correspondence over the
internet. Usually done by spammers who try to get peoples financial information such as credit
cards in order to defraud them. A technique called phishing.

 Disintermediation and Reintermediation

Is an issue related to the loss of jobs in that the slot for matching and providing information can
be automated hence those providing the service eliminated hence disintermediation? Brokers
providing value added services prosper hence the phenomenon called Reintermediation.

LEGAL ISSUES.
There is a chance of crime over the internet when the buyer and seller don’t know each other.
Legal rights include;
 Privacy and security
While shopping on the internet, most people typically don’t think about what is happening in the
background. Customer information has to pass through several hands so privacy and security of
the information are a major concern. Privacy policies and procedures should be clearly explained
to customers. Being a legal requirement, it’s also a good business practice.

 Copyright and trademark

It is essential that legal rules are set and applied appropriately to ensure digital technology does
not undermine the basic doctrines of copyright and related rights. It protects intellectual property
in its various forms, and cannot be used freely.
Trademarks are distinctive names and logo, that identifies a brand. If it is used by someone to
dilute the distinctive quality of the mark or trade on the owner’s reputation, the owner may seek
damages
 Online Terms, Conditions, policies and Law.
Most online privacy policies are produced by private business for individual companies.
Governments are developing legislation to support to strengthen and support the privacy
protection measures many businesses. These initiates regimes at regulating the storage, use and
disclosure by businesses of personal information. In applying terms and conditions in an
organization the organization should be cautious in electronic transactions for internet users, i.e.
ensure proper online contracts, import export regulation and man more.

 Fraud on the internet

Availability of emails and pop up ads has paved way for financial criminals to have access to
many areas especially the stock market, phantom business opportunities and bogus investments.

 Domain names
Internet addresses are known as domain names and appear in levels. Problems arise when several
companies having similar names competing over the same domain name.

Implications of E-Commerce
There are many legal, moral and ethical issues of e-commerce in regards to consumer protection.
 Ethical and moral implication
There are many ethical implications for businesses to run into that it is easy to be sidetracked in
the technical challenges of operation when doing business face to face. Example is selling
tobacco and alcohol to an underage minor over the internet. Its difficult to regulate as it would if
he walked into a store.
 Legal implications
Here development of e-commerce involves the role of consumer and regulations of e-commerce
in regards to consumer protection. As they use it as a tool of trade across the world, hence its
regulation is important for the cyberspace market and be able to protect the consumers in the
online market
 Security implications
Security measures that come about when setting an e-commerce website especially in handling
sensitive data like credit card information and address, many parts are protected well including
the communication between the customer and website server to the customer, the website server
and the server itself from any hacker trying to retrieve existing information from the database.

 Customer and server.

Data between the customer and webserver is secured by a system called Secure Socket Layer
(SSL), which encrypts the information between them hence unreadable. The data is encrypted
with a unique key for succession as it leaves, the server receives the data and encrypts it one
more time using its own unique session then it sends back the data which the user’s computer
unlocks using the key is locked with earlier and sends back to be encrypted by the server
 Server security
Servers have to be protected to withstand any hack attempts to retrieve stored information.
prevention measures like firewalls, checking for root kits, antivirus system and others should be
put into place.as well as data encryption to render it useless to the hacker if access is gained.
Conclusion
Most legal issues surrounding e-commerce are not new. Lawyers should, however, be able to
recognize increased significance of the online environment in understanding the technical,
contractual, intellectual property and regulatory issues which have enhanced importance in the
new economy. Before allocating resources to the initiative, it must be determined whether it is
legally possible to perform the business process electronically. Technology is the same time a
threat and as well as a solution, as it challenges existing legal and regulatory infrastructure and yet
offers solution to many threats, including security, integrity and authenticity.