Introduction
Electronic Commerce (E-Commerce) refers to the buying and selling of goods and services through electronic means and primarily through the internet. It is a means of trading that has gained massive popularity due to expansion of technology. Globalization, which is characterized by increased human interactions, has prompted e-commerce as people seek versatile means of trading (Primobraga, 542). Some of the technologies involved in e-commerce include electronic funds transfers, internet marketing, mobile money transfers, internet based computer-to-computer trading companies such as e-bay, Olx among others, inventory management systems, online transaction processing, supply chain management, Electronic Data Interchange (EDI) among many others (Lin & Jou, 118). E-commerce is a multibillion-dollar trading avenue that needs regulation in order to guarantee its safety, reliance, expansion and growth for the future. In the US, the federal government has instituted several laws that are carried out under the Federal Trade Commission (FTC) - the primary federal agency regulating e-commerce activities (Lin & Jou, 118). Although many people have used e-commerce at some point, many people are still skeptical of this trading channel because of fraudulent activities. In response, governments have put in place strict laws to govern e-commerce. This essay examines the laws and the statutory regulations that govern e-commerce.
Summary of law on the topic
The need for statutory regulations on e-commerce is informed by the need to ensure its safety and compliance with normal business and trading regulations. Kumar asserts that this should be done with the aim of safeguarding all stakeholders in e-commerce; the state, companies that are involved in the trade, customers, suppliers and all other bodies affiliated to trade (34). The FTC regulates online advertising, commercial e-mails and consumer privacy among other issues. There are a number of laws and policies that are either restrictive or supportive that govern contacts and financial transactions and electronic data. Some laws recognize and enforce the validity of electronic documentation, digital signatures, contracts and the legal usage of security measures such as encryption.
It is important to distinguish some categories of e-commerce. E-commerce can entail; gathering of demographic data through social media and web contacts for commercial use, trading in websites and online marketplaces, Business-to-business exchange of data and EDI. Other forms of e-commerce include; Contacting clients through the internet e.g. through emails and sending of newsletters on products, Security of business transactions and Websites with online catalogues or “virtual storefronts” (Hamilton & Lorna, 330).
Some of the most common applications used in e-commerce include online shopping, teleconferencing, instant messaging, group buying, enterprise content management, electronic ticketing, online banking, online office suites, shopping cart software and social networking among others (Lin & Jou, 118). The nature of e-commerce is therefore much diversified and there regulations as are also divergent. For instance, banking acts regulate online banking issues, which are part of e-commerce while laws relating to retail businesses apply for online retail outlets with online presence.
E-commerce is a relatively new channel of trading and its laws are adapted to other existing commercial laws. The best to achieve this has been through contracts. The uniform law drafting process is coordinated by the National Conference of Commissioners on Uniform State laws (Uniform Law Commission-ULC) which is collaborative process involving all the states in the US (Primobraga, 543).
The basic laws regulating E-commerce in the US are contained in the CAN-SPAM Act
Of 2003. The law sets the rules for commercial emails and establishes requirements for commercial messages. The laws does not apply to commercial emails only but to any electronic mail message whose purpose is the promotion or commercial advertisement of a commercial product or service (Hamilton & Lorna, 330). CAN-SPAM Act’s main requirements are; commercial websites and electronic commerce traders should never use false or misleading header information for instance “from”, “to” or “reply to” or any other routing information which is not true. The Act also states that merchants must state where they are located, give recipients of certain commercial messages a way to opt out, indentify the messages sent via email as ads among other stipulations.
The Federal Trade Commission Act forms the Federal Trade Commission, FTC, which regulates all, forms of advertising and states that advertising must truthful non-deceptive. The Act has brought a number of cases, which bear on corporate privacy statements, which caters for the security of consumers’ personal information. Specific provisions of the Federal Trade Commission Act include prohibiting businesses using credit cards to settle payments with their clients from printing more than five digits of any customer number or the card expiration date on any receipt that may be issued for the transaction (Kumar, 35). Internationally, the International Consumer Protection and Enforcement Network (ICPEN) a body formed in 1991 is a network of customer fair trade organizations. ICPEN has regulations to safeguard consumer safety in e-commerce.
Laws on e-commerce are very strict to online retailers and other businesses that collect customer data as they perform transactions. These includes cases where people buy products online and they are required to submit names, residential addresses, credit card numbers and any other information that exposes the public to exploitation, fraud and theft in online platforms. The Electronic Communications privacy Act (ECPA) safeguards the privacy of communications that are conducted online. Exposure of private details to a third party by a company transacting online leads to a violation of provisions of the ECPA Act (Kumar, 37). Different states have also formulated laws to guarantee their state residents is California’s Online Privacy protection Act of 2003 (OPPA) from July 2004. The law regulates operators of commercial websites especially those that collect personally identifiable information from residents of California.
The OPPA can be used as a model for ensuring the security of clients using e-commerce platforms. The law requires website operators to post a distinct link that can be easily found by users of the site. The link titled “Your California Privacy Rights” should detail the kind of information that is to be collected from a potential client, how the information could be shared with other parties, how the user can makes changes to his/her stored information. A replication of this information by other related state laws can enhance safety of customers visiting commercial websites from unwarranted compromise of privacy.
There are several laws that govern e-commerce and its relations to the federal government. According to Lin and Jou, The Fair and Accurate Credit Reporting Transaction Act (FACTA) of 2003 and the Fair Credit Reporting Act (FCRA) all give provisions on how e-commerce establishments report their taxes to the government and how they are required to audit their returns. FACTA allows customers the right to request free credit report once per year from nationwide consumer credit reporting companies (TransUnion, Experian and Equifax) (119). The FTC coordinates the Act and it guarantees that companies operating in ordinary trade channels or e-commerce keep proper credit records and are accountable to the public and the government.
There are also several laws that protect traders in e-commerce. The Digital Millennium Copyright Act (DCMA) offers protection of information that is published online as well as other forms of electronic information. Some of the provisions are; limiting internet service providers from copyright infringement liability when they transmit information online. Service providers are expected to remove any information that infringes on the rights of anybody. The act also outlaws the manufacture and distribution of devices that are used to copy software illegally (Primobraga 548). The Act also outlaws piracy of products or software offered online as a measure to protect online traders.
The Federal Electronic Signatures, the Uniform Electronic Transactions Act and the National Commerce Act regulate contractual agreements in e-commerce. The three mechanisms have been very successful in regulating contractual issues because they address a narrow range of issues raised by the technological innovations in contracting practices. There have been efforts to codify the law on software licensing under the Uniform Computer Information Transactions Act (UCITA) to include it provisions to regulate software licensing through the electronic media (Hamilton & Lorna, 337). Some of UCITA’s provisions such as the one making enforcement of standard form contract terms easier as well as the post-payment disclosure of material terms in the consumer transactions.
There are myriad of potential legal disputes in issues relating to e-commerce. Some of the disputes relate to contractual disputes. There can be disputes between business enterprises and web hosting services provider or Internet Service Providers (ISPs) on breach of data security or interruption of service. There can also be Business-to-Business (B2B) disputes by the enterprise and its suppliers such as misrepresentations, non-performance of contractual obligations and complaints from clients about the services provided by suppliers (Hamilton & Lorna, 338)
. Business-to-Consumer disputes could result from non-payment of goods and services. Non-contractual disputes, which need legislations, include; copyrights, data protection, rights of free expression, domain name disputes and competition in e-commerce.
Conclusion
E-commerce is the buying and selling of goods and services through electronic means. It includes electronic funds transfer, internet marketing, and mobile money transfers among others. Since e-commerce is fast growing there is need to regulate the sector and ensure that all stakeholders are safe and that the trading channel is streamlined to align with government policies and societal needs. The laws that govern e-commerce include the CAN-SPAM Act Of 2003, which sets the rules for commercial emails and establishes requirements for commercial messages. The laws does not apply to commercial emails only but to any electronic mail message whose purpose is the promotion or commercial advertisement of a commercial product or service. The Federal Trade Commission Act forms the Federal Trade Commission, FTC, which regulates all, forms of advertising and states that advertising must truthful non-deceptive is also another law that regulates e-commerce. Other laws include the Electronic Communications privacy Act (ECPA) safeguards the privacy of communications that are conducted online. Some of the state laws regulating e-commerce include California’s Online Privacy protection Act of 2003 (OPPA) from July 2004. The law regulates operators of commercial websites especially those that collect personally identifiable information from residents of California. Others such as Fair and Accurate Credit Reporting Transaction Act (FACTA) of 2003 and the Fair Credit Reporting Act (FCRA) all give provisions on how e-commerce establishments report their taxes to the government and how they are required to audit their returns. As such, laws regulating e-commerce are increasingly providing the sector with the necessary mechanisms to guarantee sustainability.
Works cited
Hamilton, Jennifer, and Lorna E. Gillies. "The Impact of E-commerce Developments on Consumer Welfare - Information Disclosure Regimes." Journal of Financial Regulation and Compliance11.4 (2003): 329-348. Print.
Kumar, Krishna. Cyber laws: intellectual property and e-commerce security. New Delhi: Dominant Publishers and Distributors, 2001. Print.
Lin, J, and R Jou. "Financial E-commerce Under Capital Regulation and Deposit Insurance." International Review of Economics & Finance 14.2 (2005): 115-128. Print.
Primobraga, C. "E-commerce Regulation: New Game, New Rules?" The Quarterly Review of Economics and Finance 45.2-3 (2005): 541-558. Print.
