2. E-Marketing Ethical and Legal Issues
Privacy on the Internet
• Right to Privacy
– Individual privacy vs. meeting consumer needs
– Financial Services Modernization Act of 1999 establishes a
set of regulations concerning the mgmt of consumer info
• Network Advertising Initiative (NAI) July 1999
– NAI represents 90% of Web advertisers
– Established to determine the proper protocols for managing
a Web user’s personal info on the Internet
R'tist @ Tourism
3. • Employer and Employee
– Businesses monitoring employee activities on corporate and
communications equipment
– Keystroke software is used to monitor productivity and the abuse
of company equipment
– Issue of company time and company equipment vs. employee’s
right of expression
– Notice of Electronic Monitoring Act proposed in 2000 – requires
employers to notify employees of telephone, email, and Internet
surveillance
• Cookies
– “…bits of info collected and stored by a Web browser
when a person navigates the Web.”
• Online Profiling
– “…aggregating data about customers by tracking their
clickstream.”
R'tist @ Tourism
4. • Protecting the business
– Privacy policy on the Web site
– Platform for Privacy Preferences (P3P) – industry
standard to allow Web users to gain more control
over the personal info being collected on the Web and
to make privacy policies easier to find and
understand; determine if Web site privacy policies
match users’ privacy needs
• Consumer Privacy Act of 2000
– Must give notice, obtain consent, etc., when collecting
personally identifiable information
• Online Privacy and Disclosure Act of 2000
– Display seal on website when comply with the
Principles for Fair Personal Information Practice
R'tist @ Tourism
5. • Privacy of Consumer Financial Information Act
(GLB Act) :
– U.S. financial institutions must provide its customers
with a notice of its privacy policies and practices.
– It prohibits a financial institution from disclosing
nonpublic personal info about a consumer to a
nonaffiliated third party unless the institution
satisfies various disclosures and opt-out requirements
and the consumer has not elected to opt-out of the
disclosure.
R'tist @ Tourism
6. – Federal Trade Commission (FTC) established 5 Core
Fair Info Practices:
1.Consumers should be aware that personal info will be
collected
2.Consumers should have a say in how this info will be used
3.Consumers should have the ability to check the info
collected to ensure that it is complete and accurate
4.Info collected should be secure
5.Web site should be responsible for seeing that these
practices are followed
R'tist @ Tourism
7. Other Legal Areas of Concern
• Defamation
– Injuring another’s reputation, honor or good name through
false written or oral communication
– Good Samaritan provision, Section 230 of the
Telecommunications Act protects ISPs from defamation
lawsuits
• Children and the Internet
– Younger Internet audiences are able to gain access to the same info as
adults without the constraints that might be found in real space
– Communications Decency Act of 1996 (CDA) and Child Online Protection
Act of 1998 (COPA) were designed to restrict pornography on the
Internet, particularly in the interest of children
– Children’s Online Privacy Protection Act of 2000 (COPPA) prohibits Web
sites from collecting personal info from children under the age of 13
without parental consent
R'tist @ Tourism
8. • Intellectual property
– Copyright – “…protection given to the author of an original
piece, including ‘literary, dramatic, musical, artistic and
certain other intellectual works,’ where the work has been
published or not.”
– To have a copyright, creators must only fix their creation in
a “tangible medium,” such as paper or magnetic disk.
Authors DO NOT have to add their names, dates, or
copyright sign on the medium to have a copyright.
– Napster ?
– Digital Millennium Copyright Act of 1998 (DMCA)
represents the rights of creative bodies to protect their
work, as well as the rights of educators and resource
providers to receive access to the work
R'tist @ Tourism
9. • Trademark and domain name registration
– Distinctive symbol, word or phrase used to identify a
business’s products and distinguish them from other
business’s products
– Parasite – selects a domain name based on common typos
made when entering a popular domain name
– Cybersquatting – buys an assortment of domain names that
are obvious representations of the brick-and-mortar
companies
– Anticybersquatting Consumer Protection Act of 1999 (ACPA)
– protects traditional trademarking in cyberspace
R'tist @ Tourism
10. • Spam
– Unsolicited email
– Unsolicited Electronic Mail Act of 1999 – protects against spam (must be
able to get off of email list)
– Unsolicited Commercial Electronic Mail Act of 2001 – “protects
individuals, families, and Internet service providers from unsolicited and
unwanted electronic mail”
– Mail Abuse Prevention System (MAPS) – takes consumer complaints and
places address on a list of offenders who are then blocked
• Online contracts
– Electronic Signatures in Global and National Commerce Act of 2000 (E-
Sign bill) promotes online commerce by legitimizing online contractual
agreements
• User agreements
– Click-Throughs – must agree to before proceeding
R'tist @ Tourism
11. Internet Taxation
• Use Tax
– If vendor and consumer are located in the same state, then a sales tax
can be imposed
– If vendor and consumer are not located in the same state, then the sale is
subject to a use tax
• Internet Tax Commission recommendation in April 2000
• Streamlined Sales Tax Project designed to resolve Internet
taxation issues – suggests that taxation should occur in the state
where a product is delivered and that the state should
determine the percentage taxed
• The National Academy of Science’s National Research Center
suggests a flat tax rate should be collected by the vendor and
returned to the state in which the vendor resides
R'tist @ Tourism
12. Accounting Issues
• Revenue Recognition
– Net vs. Gross
– Barter – counted as revenue but should be treated as “fair
value”
– Coupons, Discounts, Loss Leaders – putting sales at full price
and deferring costs
– Fulfillment Costs – are being classified as a marketing
expense instead of cost of sales (which hides operational
expenses amongst huge marketing costs)
• Auctions – are recognizing revenues immediately, but
should be recognizing them over the period that the
item is on the block
R'tist @ Tourism
