E-commerce

The world of electronic commerce is growing quickly in this day and age, with more and more firms jumping into the mix in order to take advantage of the global nature of the e-commerce world. With that said, not all companies can jump right into this brave new world, since there are some legal and security challenges that must be addressed in order to operate. Some of the legal challenges include avoiding copyright infringement and protecting all internet content that might be stolen or plagiarized by rival sites, difficulties with handling online payments, and how to best protect the identity and sensitive information of customers. Additionally, firms must address how they will handle the encryption aspect with their site, so that they can make and keep promises to their customers about the safety of doing electronic commerce on that particular website.

According to a U.S. Justice Department report, one of the most important issues facing companies today is how to deal with the security aspect of things. James Robinson wrote to the Justice Department that Still more recently, a survey by the Pew Research center found that 61 percent of those who had never made an online purchase cited credit card security as a reason (Robinson, 1999). Companies must come up with reliable ways to process and store credit card information, as well as bank account information if that is necessary. For some companies, this means using a third party processor, so that all of the responsibility is out of their hands. Though this may increase consumer confidence, it comes at a cost, since processors charge for their services.

Another legal issue that companies have to consider has everything to do with marketing and optimization. Sites must be optimized in order to attract customers, but they have to do so honestly. More and more companies are coming to realize that the risks of taking on a lawsuit are not worth the rewards of a few extra sales. According to an article by James A. Warholic, Consequences that at first glance may seem insignificant. People are getting more savvy online. They are starting to see the e business false advertising that is upon us. Beware, its just a matter of time until we hear more stories and legal action taken (Warholic). This is a very real concern that has been echoed by a number of companies, as the sheer logistics of the matter tend to get overlooked when companies put together an e-commerce approach.

Businesses must make decisions on incorporation, which can be a large legal hassle in some instances. Especially for small time businesses, incorporation can help eliminate some of the risks associated with going into business. It essentially distinguishes the business from the people running the business. On this subject, legal professional Judith Silver offered, Why Incorporate Incorporation means that your company is a separate legal and financial entity from yourself. It even has its own social security number for tax purposes, called a Federal Tax ID. Most people incorporate to limit their personal liability so that their personal assets are not at risk for debts of the corporation (Silver, 2002). Incorporation is a cost incurred only by new businesses, as most businesses with a previous offline presence have gone through the process already.

Copyright infringement is a huge issue at this point, since the rules for how the e-commerce world will run are still somewhat unclear. For firms looking to take the dive, a major issue will be avoiding doing what some other firm has already copyrighted. An article by Donald Kunz in The Detroiter speaks to this as it says, Beware of business-method patents. In recent years, the U.S. Patent Office has granted a number of business-method patents, covering e-commerce processes like Amazon.coms one-click checkout method, Priceline.coms reverse auction method and DoubleClicks banner advertising system. You may have a lot of difficulty determining which e-commerce tools are legally protected and which you are free to use (Kunz, 2002). Firms should recognize that the legal ramifications of such things can be intense from a financial standpoint, as well as a time cost standpoint. What this often leads to is a business taking a more conservative approach when building an e-commerce template. While this saves the legal hassle, it can have devastating consequences, with businesses not being able to fully mobilize and get the most out of their resources.

In all, the e-commerce world is completely full of potholes for firms that are not prepared. The challenges associated with intellectual property are profound, the questions over personal financial security are real, and the issues with false advertising continue to be in the forefront. A successful e-commerce site can be a boon to any businesss long-term financial prospectus, but getting started online is not as easy as it might seem at first glance.