The Boundary-Less-Ness of Virtual Business Organizations in Terms of Geographical Space - Coursework Example

Applying E-Commerce in Business Introduction The boundary-less-ness of virtual business organisations in terms of geographical space has promised online shoppers an individual autonomy, a sense of liberty and a form of convenience. However, with the emergence of virtual spaces, various concerns have been raised in regards to consumer privacy, consumer rights and confidentiality of data. Hence, various laws have been affected by e-commerce activities, such as privacy laws, commercial laws and consumer laws. The use of information and communication technologies (ICTs) in trade has spread internationally including the United Kingdom. Electronic commerce or what is usually known as e-commerce involves the exchange of commodities or services and involves the purchase and sale, the marketing and the distribution, as well as the servicing of products or services over the internet or other open networks of ICT (Qin 2008, p.7). With technology making e-commerce easier to access, there are new challenges that have come with it and one serious problem is the legal implications of e-commerce. This is partly because many countries including the United Kingdom do not have a legal foundation for it or if any weaker systems for regulatory control. To make matters trickier is the fact that contracts made through e-commerce at times involve parties in different countries and questions may arise in terms of the law to be applied in interpreting them or how to enforce them. Moreover, the uncertainty with regard to the legal validity or compliance with the regulatory laws of contracts that are not based on paper may be a barrier to the enforcement of electronic commerce transactions. Applying E-Commerce in Business Transactions involving electronic commerce are an important element of the British economy and business environment and the government has taken an active role in the determination of the regulatory framework concerning its development and implementation in order to protect both vendors and the consumers. This is because of the desire that the national government has a justifiable role to play in the growth and development of strategies that support electronic commerce and how its regulation should be implemented and enforced. This paper therefore will seek to explore the complexity of developing a regulatory environment for e-commerce as has been witnessed in the development of the UK Regulation of Investigatory Powers that governs e-commerce (Hosein and Whitley 2002, p.32). It will address the legal implications and legislative concerns of e-commerce, which deserve a greater attention from business regulators and law legislators with much emphasis on regards to consumer privacy, consumer rights and confidentiality of data. Consumer Privacy Consumer privacy is a significant matter when it comes to electronic commerce as at times information available in the internet may at times be used for the wrong reasons or used unwisely (Fisher 2000, pp.20-21). Therefore, consumers always call for the regulation of how personal information is collected and utilized which raises concerns on consumer privacy and essential elements of fair information practices made worse by the combination of the business practices, consumer fears and pressure by the media. Tackling privacy which most people consider to be a fundamental right however is a big problem and businesses involved in e-commerce as well as the regulatory authorities should strive to make it an important part of the transactions. Both the consumers and the businesses that are involved in e-commerce usually have legitimate concerns on privacy though they might be conflicting from a personal or business point of view respectively. From the e-commerce point of view, privacy may be defined as the ability of a person to have total control over the terms under which personal information is both acquired, utilized, and must be looked at in conjunction with the capabilities of others to transact a business as well as control that privacy. Nonetheless, the consumers involved in e-commerce still wish to have total control over their personal information as against being known by other parties and find it disconcerting when e-commerce make it impossible for some level of privacy (Culnan 2000, pp.20-26). In the United Kingdom, the privacy rules concerning privacy provide that the citizens must unambiguously give consent after being informed as to why the information is required and how it will be used. Therefore the consumers must be informed that the entity collecting the data is the right one, the purposes of the processing, the recipients of the data and any rights that the customers may have as well as any sensitive information (Shapiro and Varian 1999, p.2). Consumer Rights The consumer rights are a paramount aspect for the successful implementation of e-commerce in that the consumers must be able to transact business in a safe and attractive environment (Walden and Hornle 2001, p.16). The consumers must be assured that their personal information are protected and kept private and that the payments are secured as well as being informed of the choice of jurisdiction whenever there is a transaction or a dispute. This is partly because at certain moments, a consumer may find it difficult to establish the reliability of the person who has placed a product or service for sale electronically and the quality. There should therefore minimum standards concerning the rights of the consumers that must be adhered to in order to ensure that they are not vulnerable to the risks associated with electronic contracting. The risks may include accuracy and accessibility of information, the contacts of the merchant, its marketing practices as well as a disclosure of the features of the product or the service and the terms and conditions. It should also include the prices, the policies for refund, opportunities to review, the record of the transaction, programs for regulating self-regulating, means or resolving disputes and more importantly security and privacy. Confidentiality of Data Security and the confidentiality of data is usually a major concern for the sites providing e-commerce as well as the consumers who use them to obtain the products or services. The consumers usually fear the loss of data especially the financial data which may lead to financial losses that may be due to financial break-ins or hacking that result in bad publicity for both the consumer and the business. This requires that the sites providing e-commerce judge the security vulnerabilities and assess the possible technical solutions as well as evaluation of the risks involved in order to resolve them. There are usually security vulnerabilities for example by merely contacting a website and giving out credit card details for a shipping purchase may put one at a risk of losing the confidentiality of the data. Also, after the identification of a website and authenticating it may pose a security problem as the data obtained may be used to cause or steal the data from the consumer’ accounts. Legal Implications and Legislative Concerns Jurisdiction and Applicable Law E-commerce is usually independent of the geographical boundaries and this confers upon it very many economic advantages but at the same time makes it difficult to determine the jurisdiction and applicable law. Jurisdiction brings a problem in the choice of forum and at the same time the choice of the law or simply put jurisdiction and applicable law respectively (Campbell and Woodley 2004, p.91; York and Chia, 2000, p.259). Once the forum is chosen, the judge determines the applicable law and it usually becomes a key subject when a commercial argument rises between two parties that have contracted over a cross-border electronic agreement. The question usually becomes whether a merchant has established a virtual store in the consumer’s jurisdiction to make a sale or has the purchaser travelled virtually to the vendor’s jurisdiction to make a purchase. In such scenarios, the ultimate incapability for nationwide jurisdictions to implement judgment that may have been made in a foreign land may cause a serious complication with regard to jurisdiction and applicable law. Closely related to the matter of jurisdiction is the matter of taxation in e-commerce, which addresses the question of which government entity shall have the legal power to tax a transaction that spans numerous or multiple jurisdictions. A comprehensive taxation policy should therefore aim at avoiding double-taxation or non-taxation and must not disparately treat the online as compared to the offline purchasers of products and services in e-commerce. In United Kingdom, the applicable law to address this is The Electronic Commerce (EC Directive) Regulations 2002, which addresses the matter of jurisdiction by applying the “country of origin” principle. The implication of this principle is that as long as a business located in the UK complies with the regulations, it can ignore or don’t take into consideration the laws of other states that touch upon the same subject matter. These regulations will look at where the business is established and will make them apply irrespective of whether the information is provided in another country though at times this regulation may be qualified for it to be effective. It should be noted that this Directive and Regulations, which applies in the United Kingdom, do not address where a party can sue or be sued but only offers the applicable law and neither does it apply on matters taxation. Electronic Contracting In the normal circumstances, a contract usually comes into existence if an offer is made and it is unequivocally accepted and there is an intention to create legal relations and agreed upon by the parties through a symbolic gesture such as a signature. In electronic commerce, the contract elements such as the offer and acceptance are usually communicated through electronic means. This raises many questions of whether an electronic contract is binding on the parties and to what sense in the strictest legal terms and whether it can be used in the event that there is a dispute in the execution of the contract. The Electronic Commerce (EC Directive) Regulations 2002 which is applicable in the United Kingdom requires that all member states of the EU to ensure that the legal system allows contracts to be concluded on an online platform and this will not deprive them of their validity by the mere fact that the contracts were concluded electronically (Wild 2011, p.6). Further, the Report on e-commerce by the Law Commission for England and Wales concluded that the statutory requirements for "writing" and a "signature" in transactions involving guarantees and sales of property can be satisfied through emails or trading online. Electronic signature/Digital signature A signature or a moniker is usually used in the identification of a person or an individual to provide certainty or assurance as to the personal involvement and connection of that person in the real act of signing and associate the specific person to the content and the terms of the signed document. Electronic signature or what is known as the e-signature is any method that is used to ‘sign’ an electronic document for instance the name of the sender may be typed at the end of a document or a secret code or PIN as well as an image on the document. A digital signature however a type of e-signature that involves the use of Public Key Cryptography or Infrastructure (PKI) whereby the messages are encrypted with specific keys and can only be decrypted through the use of a second specific key and are more secure than the electronic signatures (Adams et al 2001, p.3029). The e-signatures raise questions as to whether they comply with the traditional legal requirements of a person and to what extent are they admissible incase a dispute arises as to the enforceability of a contract. Electronic Payment and Security As already noted, individual customers can only buy commodities and services over the internet if they are sure that the purchases that they are making or of the proper quality, the financial transactions are secure and the personal data will be kept private and ability to obtain redress. Some regulatory factors may hold back the confidence of the consumer that all border on matters of payment and security as money is usually involved and transmitted electronically. An important requirement of electronic commerce is the development of a more secure and efficient electronic payment system. There is that chance that with new technologies coming up every time, there may be little control over the transmission of transactions over the internet thus making the financial system susceptible to a security breach. Security in electronic commerce may come in the form of privacy or protection from eavesdropping, authenticity or the identification of a message and its integrity and non-repudiation which basically means prevention of later denying that one transacted over the internet. Resolution of Disputes Through technology, commercial relationships have transcended borders and the geographic locations of both the consumers and the vendors involved in electronic commerce are dispersed. This raises the legal question of where and how disputes may be resolved in a scenario where the vendor and the consumer of the product or the service are located in distant places. In such a case, there always present three possibilities of resolving that dispute and may include having a court case, arbitration or alternative dispute resolution with the latter two the preferred means, as they are more fast and effective. This is an important legal concern as the offered dispute resolution mechanism largely influences the attitudes of the merchants or the consumers and determines or affects future claims or litigation in dispute resolution on matters concerning e-commerce. Cybercrime Cybercrimes are the criminal acts that are carried out using a computer or that the computer acts as the field of activity of the criminal acts and may include such acts as software piracy, economic espionage or online trafficking and may include theft of IDs, credit and debit cards amongst others. The mere fact that the internet is an open forum, the absence of identification and the low level of understanding of the security implications by the users of the internet makes it difficult to control cybercrimes. In many countries, the criminal laws do not adequately address cybercrimes and to meet these threats of electronic crimes, the countries are just forced to create positive environments such as technical standards, law enforcement and cybercrime reporting and other relevant policies for curbing or preventing cyber crimes. In the United Kingdom, the government has embarked on addressing harmful content associated with cybercrime and ensuring that the vendors conform to principles of good business ruling as set by the Cabinet Offices Better Regulation Task Force. The government is also leading a coordinated action, which involves liaison with the e-commerce industry against hacking and denial of service attacks, which usually harms innocent consumers. With the development of the internet and digital technology, there is an increased digitization of intellectual property rights. While it is prudent and almost easy to protect the ‘physical’ work of a vendor through copyright laws and patents, the nature of the digital technology in the current world encourages the breach of intellectual property rights through virtual means without any change in the quality. To make matters worse, everything is now almost easily accessible virtually through the internet at no fee and this poses a serious legal concern to intellectual property rights of mostly the vendors who get affected by e-commerce. Harmonization For a viable e-commerce to be efficient in practice, a certain level of interoperability of systems in the world must seem to exist in that legal systems must be able to compliment each other to give effect to the intention of the parties involved in e-commerce. For instance, there must be mutual recognition of digital signatures as well as the data messages for e-commerce transactions that are carried out across borders in order to give them effect. To cure this, many nations in the international business arena have drafted legislations or made laws concerning electronic commerce and most of these only address domestic concerns of e-commerce as opposed to cross-border e-commerce. Conclusion E-commerce is widely thought to have been a revolutionary aspect of transacting business and consumerism and that is the reason the European Union and in particular has enacted regulations that protect the consumers. The United Kingdom has adopted the EU E-Commerce Directives, which has ensured that electronic purchases, sales or contracts are legally binding and that the consumers have value for money in all their purchases. Therefore, the businesses that fall under the jurisdiction of the E-Commerce Regulations and Directives must comply with a certain level of information sharing on products and services with the consumers. The information may include the pricing policy that the vendors adopt and must include any hidden charges if any while the contracts formed electronically must have all the relevant information such as terms and conditions, the ability to repudiate the contract and the manner of resolving disputes amongst other facets of e-commerce. Whether a business is trading on the online platform or not, it is certainly affected by the electronic commerce-trading regime and the accompanying regulations, which mainly address the issues such as consumer rights protection, privacy and data security. The regulations known in the United Kingdom as the Electronic Commerce (EC Directive) Regulations 2002 clarifies and harmonizes the concerns and the rules for conducting electronic trading and endeavours to make some pertinent issues clear. For instance, there have been recent profound consequences of privacy and security in e-commerce for the vendors and the consumers as well as the regulators. There have also been important technical developments and regulations that have been applied in the past to help control and secure electronic trading thus making it popular. The future of e-commerce in the United Kingdom can be enhanced through realization for the productivity of the e-commerce environments especially online shoppers. This calls on vendors to develop and adapt to new conditions and meet the demands and expectations of consumers in the market, which may include an expansion of the product or service varieties on offer. However, this will be impossible if there is stunted growth of the e-commerce trading regime exhibited through poorly designed websites with glaring imperfections on security, and authentication of information. References Adams, C., P. Sylvester, M. Zolotarev, and R Zuccherato. 2001. Internet X.509 Public Key Infrastructure data validation and certification server protocols. Internet RFC 3029. Campbell, D., & Woodley, S. 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E-commerce: a guide to the law of electronic business. London, Butterworths. Read More