Ethical and Legal Issues Involved in E-Commerce Term Paper

Excerpt from Term Paper :

Ethical and Legal Issues in Ecommerce

A Concise Definition of ecommerce

Motivation for E-Commerce

Ethical and Legal Issues in E-Commerce

Enforcement of Legal Directives and Contracts

Collecting and Securing Consumer Information

Lack of Uniform Laws

Copyright and Patent Laws Violation


Other Issues: In Brief

Privacy and Security

'Extinction' of Some Small Businesses

Electronic Deception

Language Issues


During the last one decade, the internet has experienced unprecedented growth. Thanks to this increase in online activity, consumers and businesses from all over the world are becoming more appreciative of ecommerce. However, with the enhanced awareness of ecommerce, comes a wide range of ethical and legal implications.

It is important to note, from the onset, that governments and the relevant authorities have in the past found it easy to regulate traditional business enterprises. Indeed, some of the laws regulating businesses today (including ecommerce) were enacted in the pre-cyberspace times. From a legal perspective, electronic commerce brings with itself new complications and challenges. For instance, given the trans-border nature and application of ecommerce, which laws should apply in the regulation of ecommerce? Should each country enact unique ecommerce regulation laws or should we have a single body of laws and regulations governing ecommerce activities?

Ecommerce also brings along numerous challenges from an ethical perspective. Ethics, in basic terms, refers to the various rules or standards of behavior an individual elects to adhere to. Just as is the case in many other realms of business, ecommerce also has a number of ethical implications. For instance, can the collection of private information, especially with regard to an individual's browsing habits and preferences without the knowledge of the individual being targeted, be considered ethical? A paper seeking to explore the ethical and legal implications of ecommerce is not only timely but also relevant.


A Concise Definition of E-Commerce

Before discussing the various legal and ethical issues in relation to e-commerce, it would be prudent to first offer a concise and brief definition of e-commerce. In basic terms, "electronic commerce, or e-commerce, covers the range of online business activities for products and services, both business-to-business and business-to-consumer, through the Internet" (Rosen, 2002, p. 4). As the author in this case further points out, e-commerce can be divided into two, to include online shopping and online purchasing. While online shopping has got to do with all the information and activities that enable the client to conduct activities of a commercial nature with the seller, online purchasing in the words of Rosen (2002, p. 4) is made up of all the technology that facilitates "the exchange of data and the purchase of a product over the Internet."

Based on the definition offered above, ecommerce enables business entities to not only conduct business but also reach out to their customers, over an electronic platform -- i.e. The internet. It is important to note that essentially, ecommerce applies to all the key segments in the market. The said segments, as identified by Chesher, Kaura, and Linton (2002) include consumer to consumer, business to consumer, and business to business. Today, many businesses are increasingly embracing e-commerce in an attempt to remain relevant in a fast evolving marketplace. Entities that have successfully embraced ecommerce include but they are not limited to Target and Wal-Mart -- two very successful retailers. It should be noted that in addition to having physical locations, these two retailers have in the past developed online sites/stores from where customers from all over the world can make purchases, as if they were in a brick-and-mortar premises.

Motivation for E-Commerce

Businesses embrace ecommerce for a number of reasons. These reasons will be briefly highlighted in this section. To begin with, ecommerce brings about enhanced convenience when it comes to the conduction of business - both locally and internationally. As a matter of fact, thanks to ecommerce, businesses can conduct businesses on a 24-hour basis, 7 days a week. In addition to playing a significant role in profit maximization, this comes in handy as a cost reduction measure. When it comes to profit maximization, ecommerce avails to business entities a global audience that would have been otherwise difficult to attain. This is more so the case given that unlike brick-and-mortar premises, ecommerce does not suffer the same limitations of geographical and physical location. In terms of cost reduction, it is also important to note that businesses need not display goods and services in numerous brick-and-mortar facilities. A business can in this case simply maintain a warehouse from where it can
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dispatch products to clients from all over the world. Businesses also benefit from the significant reduction in overhead expenses, including but not limited to, rent, direct labor, insurance, etc. Customers also benefit immensely from ecommerce. For instance, thanks to the cost savings made, businesses can easily offer products to customers at a discount. Convenience on this front is also extended to customers as in addition to being able to select from a wide range of goods online, they can also be able to seamlessly and easily make price comparisons between various entities without having to visit any physical store locations (which in real life could be far-flung). Although the relevance of ecommerce in the facilitation of trade and commerce cannot be overstated, its very nature results in a number of ethical, moral, and legal issues. These issues will be addressed in the subsequent sections of this text.

Ethical and Legal Issues in E-Commerce


Within the last few years, businesses entering the ecommerce realm have had to contend with a wide range of ethical and legal issues. Most of the ethical and legal issues discussed herein come about as a consequence of the very nature of ecommerce. Essentially, illegal acts violate the legal provisions in place. It should, however, be noted that acts that are unethical may not necessarily be illegal. The reverse is true. Further, it should be noted that the standards of ethics are not necessarily universal. Indeed, what is regarded ethical in one culture could be totally unethical in another. Ethics according to Carroll and Buchholtz (2011, p. 23) "basically refers to issues of right, wrong, fairness, and justice." In that regard, therefore, ethics has got to do with that which is regarded right or wrong. Given that this text will largely concern itself with business ethics, a definition of ethics tailored to suit that particular realm would be appropriate. Business ethics in the words of Carroll and Buchholtz (2011) "focuses on ethical issues that arise in the commercial realm." As will be seen in this text, as far as ethics is concerned, there is often no clear cut line between that which is right and that which is wrong. As a matter of fact, the definition of right and wrong in ecommerce is in most cases unclear.

1. Enforcement of Legal Directives and Contracts

According to an AMR Research analyst by the name Louis Columbus, "trying to regulate and control the mechanisms by which people gamble or do other illegal, immoral acts with the aid of the Internet is like trying to regulate who uses what freeway at a given time of day" (Robinson, 2002). It is not hard to see why this argument is valid.

One of the legal issues entities conducting businesses online have to contend with has got to do with enforcement of legal directives and provisions that could otherwise be easily enforced within the traditional brick-and-mortar setup. For instance, with ecommerce, it is extremely difficult to regulate the sale of items ordinarily supposed to be sold to those who have attained the age of the majority. It is important to note that unlike was the case a few years ago; the internet is today increasingly being used by children. Those under the age of the majority typically use the internet for activities such as online gaming, social networking, entertainment, etc. Thanks to ecommerce, children are now exposed to new threats as they surf the net -- with the most serious threats being exposure of children to commercial content that that could be inappropriate. By inappropriate content, I mean such items as pornographic movies and pictures, weapons, adult literature, drugs and various chemicals. In the past, exposure (and purchase) of such content has been strictly under regulation. For instance, a business enterprise selling adult literature and operating in a brick-and-mortar address could easily regulate the sale of its merchandise to children simply by asking to see the suspected minor's identification documents to ascertain their age. With ecommerce, this is no longer possible. Children can now easily and effortlessly purchase products that are largely unsuitable through the utilization of their parent's credit cards, etc. It is important to note that quite a number of jurisdictions have in place rules and regulations that seek to minimize chances of children purchasing items online without the guidance of their parents. The only challenge that remains in this case is enforcement.

Further, many online businesses have since neglected their responsibility as far as the enforcement of legal standards…

Sources Used in Documents:


BBC. (2013). Sony Fined Over 'Preventable' Play Station Data Hack. BBC. Retrieved from

Carroll, A. & Buchholtz, A. (2011). Business and Society: Ethics, Sustainability, and Stakeholder Management (8th ed.). Mason, OH: Cengage Learning.

Chesher, M., Kaura, R. & Linton, P. (2002). Electronic Business & Commerce. London: Springer

Cross, F. & Miller, R. (2014). The Legal Environment of Business: Text and Cases (9th ed.). Mason, OH: Cengage Learning.

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