ECT 455/HCI 513

ECT 455/HCI 513

E-Commerce Web Site Engineering

Legal Issues

ECT 455/HCI 513

Consumer Trust and Privacy Consumer WebWatch Only 29% trust Web sites that sell products or services Sites for commerce: 95% disclosure of all fees; 93%

disclosure of the site’s policy on using personal information

News and information sites: 65% disclosure of privacy polices, 59% clear labeling of advertisement

Search engine sites: 60% don’t know about ad sponsorship, 80% want search engines to revel these practices.

57% read policies about credit cards; 35% privacy policies; 22% “About Us” Consumer WebWatch: “A Matter of Trust: What Users Want From Web Sites” 4/16/02

ECT 455/HCI 513

Internet and the Right to Privacy Self-regulated medium: The Internet industry governs itself Violation of Privacy Right or Better Service?

FTC Study: 97% collected personal information, only 62% informed the users about such practice; 57% contained 3rd party tracking devices

Privacy advocates argue that these efforts violate individuals’ privacy rights

Online marketers and advertisers suggest that online companies can better serve their users by recording the likes and dislikes of online consumers

Financial Services Modernization Act of 1999 Establishes a set of regulations concerning the management of

consumer information

ECT 455/HCI 513

Network Advertising Initiative (NAI)

Approved by the FTC in July 1999 to support self regulation

NAI currently represents 90 percent of Web advertisers

Determines the proper protocols for managing a Web user’s personal information on the Internet

Prohibits the collection of consumer data from medical and financial sites

Allows the combination of Web-collected data and personal information

ECT 455/HCI 513

DoubleClick: Marketing with Personal Information

Regulation of the Internet could limit a company’s efforts to buy and sell advertising

DoubleClick Advertising network of over 1,500 sites and 11,000 clients

Abacus Direct Corp Names, addresses, telephone numbers, age, gender,

income levels and a history of purchases at retail, catalog and online stores

Digital redlining Skewing of an individual’s knowledge of available

products by basing the advertisements the user sees on past behavior

ECT 455/HCI 513

Protecting Your Business: Privacy Issues

Privacy policy The stated policy regarding the collection and use of visitor’s

personal information Privacy policy services and software

PrivacyBot.com; TRUSTe Core Fair Information Practices by FTC

Consumers should be made aware that personal information will be collected have a say in how this information will be used have the ability to check the information collected to ensure that it is complete

and accurate The information collected should be secured The Web site should be responsible for seeing that these practices

are followed

ECT 455/HCI 513

Internet Taxation

The opposing arguments Permanent ban on Internet taxation Fair taxation of Internet sales

Taxation methods If both a vendor and a consumer are located in the

same state sales tax is applied If the vendor and the consumer are not located in the

same state, then the sale is subject to a use tax If the vendor has a physical presence, or nexus, then

it is required to collect the tax; otherwise the vendor must assess the tax and pay it directly to the state

ECT 455/HCI 513

Problems with Internet taxation

The definition of physical presence (location of the ISP, the location of the server or the location of the home page)

States vary according to what transactions are subject to taxation

Sales tax revenues are the largest single source of a state’s revenue

Infringement of state sovereignty7,500 taxation methods

ECT 455/HCI 513

Internet Taxation

Internet Tax CommissionReviewed the issue of Internet taxation Revision of state and local taxes to make

taxing a feasible process for Internet businesses

Establish clearer definitions on the meaning of “physical presence”

Define universal taxation exemptions