The Challenge of the Law to Electronic Commerce

In the Communication on Electronic Commerce of 19971 , the European Commission stressed that “in order to allow electronic commerce operators to reap the full benefits of the Single Market, it is essential to avoid regulatory inconsistencies and to ensure a coherent legal and regulatory framework for electronic commerce.” The electronic marketplace has a crucial need to know “the rules of the game”2 in order to carry out electronic commerce. Therefore, the regulatory framework has to be clear, stable and predictable, both to enable e-commerce operators to face all challenges raised by the development of new products and services and to ensure the trust and confidence of consumers in the new electronic supermarket. These are the main objectives of the legislative action of the European Commission3 which has, in recent years, laid the foundations for a consistent setting of the legal scene for electronic commerce in Europe. It is worth recalling that the action of the Commission has been and should be guided by the key principles of the EC Treaty, particularly by the concern for the Internal Market and the enhancement of the circulation of products and services. A clear consequence is that any regulatory intervention of the Commission should be directed to a further harmonization or clarification of the existing rules in order to lift the uncertainties and discrepancies in national policies which might impede the free circulation of electronic goods and services. Other key concerns of the European Commission are to refrain from over-regulating electronic markets and businesses and to remain open to a self-regulatory approach and alternative dispute resolution. This last guideline is particularly followed in the recent Draft Directive on electronic commerce4 .

The Design and Architecture of a Secure Agent Transport Protocol for E-Commerce

With the proliferation of Internet, electronic commerce (e-commerce) is beginning to take the center stage in the commerce world. Transactions via electronic means have been growing rapidly over recent years, both in terms of turnover amount and volume. It is estimated that the trend will continue, as more and more businesses have already started or have plans to put their products/services online. However, the development of e-commerce is hindered by several factors. One of them is the lack of intelligence. Today, there is little intelligence in the World Wide Web. Users cannot delegate jobs to ‘agents’ that autonomously perform the desired tasks for their owners. One way to resolve this is through the introduction of ‘smart software programs’, or intelligent agents. With an agent architecture in place, users can delegate tasks to agents. An agent can help its owner to search for and filter information, negotiate with other agents, and even perform transactions on behalf of its owner. It is predicted that agent usage will become the mainstream in the future, not just in the field of e-commerce, but in the World Wide Web as well (Guilfoyle, 1994; Corley, 1995). Due to the nature of e-commerce, security becomes a primary concern for any architecture under this category. In fact, the threats to e-commerce come mostly from the area of security. Credit card companies lose billions of dollars every year on card frauds. Bank networks are broken into and millions are transferred out without the administration’s immediate knowledge. In order to fight against these electronic crimes, it is necessary to protect our architecture with a solid security framework. Besides the security needs, it is desirable for agents to have roaming capability as well. Roaming extends the agent’s capability well beyond the limitations imposed by its owner’s computer. Agent operations should not be affected by factors such as the availability of network, the limitation on bandwidth, or the lack of computing resources. Roaming agents should be able to physically leave their owners’ machines and perform their operations using the computing resources on hosting machines.

A Model of Internet Commerce Adoption (Mica)

The commercialisation of the Internet has led to widespread usage of on-line services and being connected to the Internet has become a high priority for both large and small to medium size enterprises (SMEs) (Wai-Pun, Farhoomard and Tunnainen, 1997). Internet usage around the world is doubling every 10 days, with the number of people on the Internet expected to increase ten-fold from 100 million to 1 billion by 2005 (Network Wizards, 1995). The biggest transformation is in the area of e-commerce, which is expected to boom from (US) $6 billion in 1997 to more than $300 billion in 2002 (NOIE, 1998b). There is no doubt that it will be an imperative for any business to be part of the global Internet commerce community. Doing business online provides new opportunities for business, as well as presenting new business opportunities, facilitating new forms of e-commerce across industries in both the business to consumer and business to business context. It also provides new one-one as well as the more traditional one-many customer relationships and greater opportunities for customer-supplier interaction (Rayport and Savioka, 1995). The result will be more open economies and a levelling of opportunities for all businesses. This will enable small companies to overcome the main advantages (such as economies of scale and greater access to resources) of their larger counterparts. The proliferation of e-commerce and the exponential growth of the Internet as a commercial medium has resulted in the development of a number of frameworks that seek to enable a better understanding of what businesses are doing on the Web.

The Use of the Internet by Terrorists and Its Impact Upon Electronic Commerce

In the developed world, the influence of information systems can now be seen in most operational areas of business. A significant result of these advances is that organizations have become increasingly dependent upon the availability of systems and reliant upon the data that they hold. In recent years the Internet has grown from a solely military/academic network to one that can be used by business or individuals. In the years since the first WWW applications were developed, there has been an explosion in the global use of the Internet. With this growth has come an increasing usage of the medium by criminal and terrorist groups (Rathmell, 1997). The term terrorist or terrorism is a highly emotive term. Generally it is used to denote “revolutionaries who seek to use terror systematically to further their views or to govern a particular area” (Warren, 1998). ‘Cyber-terrorism’ is a different form of terrorism since physical systematic terror does not usually occur (although it can if it causes disruption to a critical system), but a widespread destruction of information resources can. The problem of defining the term ‘terrorist’ relates to the fact that a terrorist group could easily be perceived as a resistance group carrying out lawful or morally legitimate actions. In the context of the chapter the term cyber-terrorist/terrorism will refer to all terrorist/resistance groups in order to give a neutral perception of their activities and aims. Another new term related to the Information Society is ‘electronic commerce.’ The notion of ‘electronic commerce’ is proposed as a means of drawing together a wide range of business support services. It includes such elements as inter-organizational e-mail; on-line directories; trading support systems for commodities, products, customised products and custom-built goods and services; ordering and logistic support systems; settlement support systems; and management information and statistical reporting systems (Warren et al, 1999). Business around the world has become more of a target of cyber terrorism due to the fact that they are increasingly dependent upon information technology (Howard, 1997). Therefore there are many more high technology targets to prey upon. Increasingly in the future, businesses will use electronic commerce and on-line systems as a method of conducting trade. These on-line methods are very vulnerable to attacks. In a recent, informal survey of Australian IT managers (Hutchinson and Warren, 1999), 80% of replies said that their sites had never been attacked, 66% do not feel their competitors would attack their site, and 66% had no policy about dealing with an attack. This chapter will explain why and how cyber-terrorists attack these services. The aims of the chapter are to: • describe the background of cyber-terrorism; • describe what cyber-terrorism is; • describe the vulnerabilities of electronic commerce to cyber-terrorism; • discuss the future of electronic commerce and cyber-terrorism.

Electronic Commerce Based on Software Agent

Because electronic commerce provides customers with more convenient and more money-saving services than conventional trading, it has seen explosive growth in recent years and will have a major impact in shaping future markets. Certainly, it will be very advantageous for customers if electronic commerce is capable of being more automated and secure than is currently the case, since the time and energy they spend will be dramatically reduced. This paper focuses on applying software agent technology together with cryptographic technology to automating and securing the information gathering, and payment procedures, which are the principal and most time-consuming steps in electronic commerce, especially on the Internet.

Internet-enabled Smart Card Agent Environment and Applications

The introduction of smart card technology offers an alternative for user authentication and storage medium for data that require both high security as well as location transparency. With a considerably large storage that can be protected from unauthorized access and tampering, and the ability to compute custom software routines including cryptographic algorithms, smart card represents a trusted medium for self-identification and secured information storage that we can carry around with us (Effing and Rankl, 1996). On the other hand, intelligent software agents represent a new software methodology that starts to gain wide acceptance. While they are possibly the best candidates as an end user’s personal assistant in the computer world, they usually are not designed with high security and location transparency in mind. This has greatly limited their ability to function as ‘personal representatives’ in the world of the Internet. The proposed smart card agent environment is an effort to bridge these two technologies to produce a viable solution for personalized Internet-based services and solutions. Introduction of software agent technology into traditional smart card applications will bring in new intelligence to make it smarter. The level of security and location transparency in the smart card technology will greatly enhance the usability of agents in the Internet world. With the combination of these two technologies, many Internet-based applications can provide a personalized services with minimum user interactions. This will promote the utilization of Internet-based services and solutions.

Promoting Electronic Commerce in the Defense Industry

Beginning in 1993, when the U.S. Federal Government proposed the “framework of electronic commerce (EC),” the call went out for the wide-scale deployment of EC solutions in government. The Department of Defense immediately became the center of attention since it has the largest procurement budget of all. Initiatives were launched to move from a paper-driven procurement process to an electronic, on-line concept satisfying federal mandates. However, the defense industry consists of thousands of small and medium sized enterprises (SMEs) that were far from ready to conduct business with the government electronically. In order to help the Department of Defense (DoD) and its suppliers to comply with the EC mandates, 17 Electronic Commerce Resource Centers (ECRCs) were established across the U.S. to transfer process improving and enabling EC technologies to small and medium sized businesses and government agencies. Each ECRC comprises business partners (and several university partners) that provide EC outreach, training and technical support to DoD supply chains. The goal of the nationwide network of centers is to facilitate the transition from paper-dependent supply chains to fully electronic-based procurement environments. In order for SMEs to do business with the U.S. government electronically, the mission of the ECRC must grow beyond training and outreach to hands-on implementation and intervention in SMEs. In this chapter, the key issues, approaches and challenges of bringing EC to defense supply chains are described. The chapter first discusses the complexity of defense supply chains and the efforts underway to make the procurement processes EC compliant. The related government laws and regulations are outlined to set the legal foundation for EC implementation. Then, the elaboration of the ECRC model provides a detailed view of the collaboration between industry, academia, and government to improve defense industry supply chains. Details of a local ECRC’s operations are provided to demonstrate its functions and accomplishments. Case examples of the center’s operations and technical support are provided to show how the technology is transferred to the SMEs. The chapter concludes with a description of future directions in EC promotion, education and support necessary for the defense industry to change and to do business electronically

The Law vis-à-vis Electronic Commerce

A great deal of uncertainty surrounds the impact of the continuing growth of electronic commerce (e-commerce) on existing law. While commercial law has evolved over the centuries in response to the development of trade in goods and services, within or across nations,1 the emergence of an electronic medium (‘cyberspace’) as an additional avenue for trade has pushed to the fore many questions: whether and how an adaptation of existing law would be possible, appropriate or sufficient to catch up with the problems thrown up by the new medium. For one thing, the nature and effects of transactions that would ordinarily have been taken for granted had they occurred on non-electronic media confound established notions of commercial law. Secondly, the unpredictability of the ultimate consequence of such transactions to the respective trading partners, who would be more likely to come from different jurisdictions, prompts scrutiny of pre-existing, widely accepted formulations in domestic trade law, custom and treaty among nations. A major feature of the emergent situation is that the impact of e-commerce on the law has not been across the board, simply because e-commerce has not been developing evenly. Most transactions to date relate to the purchase of computer hardware or software or the supply of information of various types: plain news, financial data, entertainment, education, travel, advertisements, health and DIY tips. These items have one characteristic, namely the buyers’ lack of interest in, or disregard of, any need to have to conduct checking or inspection prior to purchase or, at any rate, before delivery. In light of the general uncertainty surrounding the status of the online buyer and seller, the relevant law and of how it might be applied on behalf of a buyer claiming redress, the purchase of “safe” items acquires a precautionary significance. In other words, the very nature of the items involved in the transactions seems to rule out any fundamental failure that could surface at a later stage and necessitate the intervention of the law to resolve the consequences of that failure. Obviously, once money has passed from the buyer to the seller, the path to recovery of that money, let alone further damages as would be expected under normal contract law, could be too complicated for the buyer to understand or pursue. What makes the plight of an on-line buyer who seeks redress intractable is that solutions to on-line legal disputes are only just evolving in bits and pieces. New rules have begun to emerge in the form of statutory reforms in single jurisdictions or through case decisions on disputes arising from on-line transactions. However, the ambit and applicability of the evolving laws tend to be subject to time, the nature of the concrete problems they are meant to address, as well as the diverse contexts. Consequently, pre-existing laws have not undergone modification or replacement by the emergence of e-commerce in all respects, to the same extent, nor in every jurisdiction. This chapter explores the nature of legal changes that have been propelled by the onset of e-commerce and the likely course of future developments. First, we present a brief summary of the impacts on contract law followed by a discussion on the liabilities arising from on-line transactions. Then, the focus is on issues of security and privacy of transactions. Finally, we cover the incipient forms of dispute resolution in e-commerce. The conclusion affirms that the law as applied to e-commerce is still in continuous flux and will take more time to acquire a definite shape. In particular, it underscores the urgency of meeting with the ever-apparent demand for an international treaty or agreement, at least parallel to existing treaties in contracts or sales.

Consumer Motivations for Commercial Web Site Use

The purpose of this chapter is to explore theoretical background and previous research on new media uses and motivations as an avenue to understanding consumer motivations to use commercial Internet resources. This chapter will explore the communications theory of uses and gratifications, and will report and discuss the implications of a descriptive research process that establishes the domain of consumer motivations for Web site use. Building from a series of on-line focus groups conducted with the HotWired Internet site, the research discussed in this chapter includes the construction of an inventory of descriptive terms used to indicate the various areas of utility and enjoyment represented by the on-line experience. The objective of the chapter is to expose the reader to a theoretical perspective that is useful for understanding how consumers are motivated to use the Internet, by exploring and describing what consumers enjoy and seek in the on-line experience of Web sites. Knowledge of what consumers seek from a medium (uses), and what they enjoy about a medium (gratifications) prepares the reader to understand and utilize the tremendous communications and marketing resource represented by the World Wide Web. Research from previous studies of new media introductions provides a unique historical perspective available for grounding the conceptualization of the Web as a communications and marketing channel. The theoretical perspective developed from this research has been robust – applied over time to the introduction of television in the late 1940s and early 1950s, as well as to the innovations of video recording and time-delayed media exposure and media control through electronic remote devices.

Electronic Commerce Contracting for Open EDI

Open EDI is a concept appropriate to address the needs of commercial business-to-business relationships in an open environment. While open EDI, an open electronic commerce technology, can be used for ad hoc commercial transactions, delivering it over public open networks poses a challenge that contains a substantial legal component. How can the pre-transaction delay time be shortened in a way that allows for the speedy conclusion of the commercial part of the deal? Legal shortcomings can pose a potential danger for trading partners if not properly underpinned before initiating business transactions. Dynamic contracting procedures preceding the endorsement of an interchange agreement are a viable alternative to face-to-face negotiations. Recon is an on-line system to make available such a functionality over an open network by means of a repository of negotiated legal terms.