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Ethical, legal, and regulatory issues differ on a B2C site compared to a B2B site

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Ethical, legal, and regulatory issues differ on a B2C site compared to a B2B site

Post  Pete2002 on Mon Jan 25, 2010 3:13 am

Like traditional brick-and-mortar establishments, business-to-business (B2B) and business-to-consumer (B2C) Web sites face ethical, legal, and regulatory concerns. Although both B2B and B2C sites share similarities in web-based jurisdictional issues and general ethical considerations, each site has its own specific concerns due to the end-user relationship of the consumer versus business (Schneider, 2004). Whether the end-user is a business or consumer, there is usually a transaction or sale of a particular product or service. Since the Internet launches online business into the global marketplace, businesses should be aware of different ethical, legal, and regulatory issues to avoid potential e-commerce liability.

B2B enables or improves organizational relationships within companies and between two or more companies. B2B is based on using private networks and Electronic Data Interchange (EDI) and the Internet. Examples of B2B Internet use are product catalogues searches, ordering from suppliers, receiving invoices and remitting electronic payments. B2B includes collaborative design and engineering, and managing the logistics of supply and delivery (Cheshire Henbury, 2008).

B2C is Internet retailing – selling end products to consumers – involves electronic shopping and information searching. Among popular items purchased are airline tickets and other travel products and services, books, computers, videotapes, and music (Cheshire Henbury, 2008).

Ethics are especially important in the B2B framework because businesses selling to other businesses treat their customers more as partners and rely on reciprocal information sharing for developing mutually beneficial partnerships (Pepper, 2004). Because the relationship is more extensive, every time there is an exchange of information or data, it must be meticulously tracked and labeled as general business or confidential as appropriate (Dada, 2004).

B2B merchants must prevent unauthorized access to customer information on their Web sites, and protect the privacy of their customers / partners both technically and legally. Businesses such as Adobe software, many of whose customers are other businesses, accomplish this by having customized pages for each partner which are accessible only through login/password combinations issued by Adobe (Pepper, 2004).
In the B2C framework, ethics are important in that they establish and promote the credibility of the business to its online customers. B2C merchants, therefore, also must safeguard their customers’ information, but without the level of customization offered by B2B businesses. for example asks for a username and password each time a site visitor asks for any type of customer account information, but they do not offer customized pricing for each customer as a B2B site would.

Part of the issue in the legal realm is that the Internet makes it difficult to determine areas of jurisdiction (Schneider, 2004). Laws differ all over the world making it tough for authorities to discern what state or nation would have jurisdiction to enforce or prosecute violators. The B2B environment might have concerns such as non-disclosure agreements with vendors, electronic copyright issues, and vendor agreements. Since the business might have a vendor in another country, it would also be important for the business to be cognizant of international business laws. Both businesses involved in the B2B relationship might also want to ensure that business contract language establishes which laws will govern any issues concerning jurisdiction in case of litigation. Schneider (2004) also notes that international business confuses the tax laws for many organizations conducting business on the Web (p. 316).

Unlike the B2B relationship, B2C e-retailers would not likely have concern regarding contracts as consumers purchase product directly from a business. Many business Web sites contain information for consumers to peruse such as privacy policy information, a disclaimer, or terms and conditions for using the site. Privacy also falls under legal issues for the B2C relationship and some countries are far more restrictive than others in terms of what type of information collection is acceptable and legal (Schneider, 2004, p. 316). Consumers enter credit card and other personal information through electronic retail sites, so it is essential for the site to be secure. Other legal issues that might arise in the B2C relationship include misrepresentation of company products or services.
When dealing with regulatory issues on B2B and B2C sites, the organization needs to be aware of all legal ramifications if information happens to be misused. The largest controversy in the U.S. today is the opt-in vs. opt-out issues. Many organizations feel they should be able to use any information gathered for doing business. For example, some organizations would like to be able to sell or rent that information to other organizations. However, U.S. law currently places limits or regulations on organizations and use of the information. Organizations today offer consumers the option to opt-in or opt-out. If the consumer chooses to opt-in, the company collecting the information does not use the information for any other purpose unless the customer specifically chooses to allow that us (that is, to opt in and grant permission for the use) or if the consumer chooses to opt-out, the company collecting the information assumes that the customer does not object to the company’s use of the information unless the customer specifically chooses to deny. (Schneider, 2004).

It is evident that companies using Web sites to conduct business whether it is B2C or B2B, the organization/company needs to adhere to the same ethical, legal and regulatory standards that other businesses follow. If the organization/company chooses to ignore the standards that are set forth, the organization/company will suffer from reputation damage, consumers will loose trust, which will result in a loss of business.

Schneider, G. (2004). Electronic commerce: the second wave. University of Phoenix Custom
Edition e-text. Retrieved June 25, 2008, from University of Phoenix rEsource
Cheshire Henbury (2008). E-Business Definitions (B2B, B2C, etc.). Copyright
2001, Cheshire Henbury, Created by Paul T. Kidd, Revised November 2001
Pepper, T (2004, May). Retrieved June 26, 2008, from online:
Dada, G. (2004, May). Retrieved June 26, 2008, from online:
Schneider, G. (2004). Electronic commerce: the second wave. University of Phoenix Custom
Edition e-text. Retrieved June 29, 2007, from University of Phoenix rEsource https://emapus,

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