Doing commerce over electronic systems that is selling or buying products and services with the help of computer and other computer networks are generally known as e-commerce. Rather than only buying and selling the products, it involves an entire process of developing, marketing, selling of products and the subsequent delivery and servicing etc and computer and internet are the two most important aspects of the process. With the increasing use of internet through out the World, e-commerce has grown up in an extraordinary speed.
A large percentage of the e-commerce is generally done for virtual items like the general access to the secured contents of a website, or the exclusive membership of an website etc, and in some cases the transportation of the physical items are also included in the process. The type of electronic commerce that is conducted between businesses is called as B2B or business-to-business which can be opened to all the interested parties or might be limited to some interested parties. Amazon.com, eBay.com etc are some sites where e-commerce is conducted for general goods and these websites play the role of an intermediary.
In United States of America, E-commerce is controlled by the Federal Trade Commission or the FTC. The activities that are controlled by FTC are the commercial use of e-mail, the online advertising process and most importantly, consumer privacy. In the aspect we can mention the CAN-SPAM Act of 2003, and this act has established a national standard over the e-mail based marketing. As per the guidelines of the FTC, like all the advertising online advertising must be truthful and non-deceptive.
Equity and Efficiency:
There are some specific investigating powers of the FTC and these powers are discussed in details in the Sections 6,9 and 20 of the FTC Act. It authorizes different investigations and various forms of the general compulsory process. Along with that the premerger notification in the Section 7A of the Clayton Act prohibits the consummation of the different covered acquisitions until the requested information is provided to the customer.
In a general word we can term FTC as an enforcing authority, who, following an investigation can start an enforcement action if the agency has enough reasons and proofs to believe that the laws are being violated by any means. Here the power can be enforced in the case of both consumer protection and anti-trust laws.
The most important of the consumer protection statute by the FTC is the Section 5(a) of the FTC act. The law says that "unfair or deceptive acts or practices in or affecting commerce..are...declared unlawful" (Sirgy & Bae, 2006).
Here if the business involves any type of foreign commerce that can cause some injury in the jurisdiction of the United States Government it will carry penalty for the firm that is doing that commerce.
There is a definition in the law that clearly states the unfair practice; it is those practices that can cause substantial injury to the consumers and the type of injuries that the consumers can not avoid themselves. Along with it there are several other types of consumer protection statuses that are mentioned in the rules.
If the commission can prove that an unfair practice is happening some where after they have given a final cease and desist report, they can penalize the person or company. And as per the rules the penalty can be up to $11000 per violation.
If looked at the laws from a neutral point of view, we can see that the laws are equitable for both consumers and business owners, as they try to make the process safer. In recent times the numbers of cyber crimes are increasing in a huge way and it is believed to be the only way to be safe as per the administrative ways. And laws are economically efficient as the penalty is high so that the offender will be afraid to break the laws in the first times.
Three Case Files:
There have been several cases that dealt with the internet laws violation and most of them have been punished by the Supreme Court of the United States of America. Here we discuss three very important cases in this regard. All the three cases were started as a violation of the FTC rule and in all the cases the defendants had to pay heavy financial penalties.
The first internet case of the commission was named as FTC vs. Corzine (Sirgy & Bae, 2006), which was filed on Sept 12 of the year 1994. The defendant was Brian Corzine who was also known as Brian Chase and ran a company called Chase Consulting. He used to show advertisements on America Online in which he used to offer a credit repairing kit. Many of the people who saw the advertisement had lent money from many places, and they believed that it could be a potential solution for their problems. As per the advertisement, the Credit Repair Kit would be able to help the purchasers to establish a new credit file. And every credit repair kit was priced at $99.
The FTC filed a complaint against the defendant that he had violated the Section 5 of the FTC Act. As per the proceedings the court issued a temporary restraining order against Brian Corzine, and it also ordered to freeze all the assets of the person. At last on November 21, 1994, the court ordered that the defendant had violated the general rules by misinterpreting them and ordered him to pay the $ 1917 in consumer redress. This is the first listed court case of the FTC.
FTC's first big internet case was against Fortuna Alliance (Sirgy & Bae, 2006). The defendants of the case were Fortuna Alliance, Augustine Delgado, Libby Gustine Welch, Donald R. Grant and Monica Delgado. These defendants had marketed a pyramid investment scheme through a website created by them. Word of mouth was one of the big promotional aspects of the company. As per their claims, the consumers of the website would be able to earn an amount of $5000 per month if they invest $ 250 per month. Along with that they owners pushed the investors to set up their own web sites to promote the scheme.
To set up the web sites they helped the investors with both advice and technical expertise. As per records around 25000 people put up their money in the scheme. On May 23, 1996, FTC filed a complaint against the corporation under the Section 5 of the FTC Act. As per the rules the FTC ordered a temporary restraining order of freezing all the accounts of the defendants, they also appointed a receiver to manage the company and to ensure that all the funds that were transferred overseas to return. Along with these, they also ordered to remove all the promotional materials from the website of the company.
As per the scheme the company took around $ 11 million from the customers and transferred around $ 5 million to different offshore accounts. Most of the money was traced to an account of a bank in Antigua. The commission ordered that the defendants return around $2 million to the consumers which had not been deposited to any bank account at that time. Alter the court ordered the defendants to pay back the money to the customers. And as per the final verdict, the court issued a final contempt order which completely banned the defendants from entering into any marketing program until they pay off the last $2,2 million.15,622 customers from the United States and 70 foreign national received payments from the defendants as per the court orders. This was considered as one of the biggest cases of FTC till date (Forman, 2005).
In another case, FTC had penalized an organization named Global Assistance Network for Charities (Sirgy & Bae, 2006). The organization was alleged to operate a pyramid scheme to raise money for different charities. In the case, the consumers initially paid an amount of $ 70 and later they had to donate $ 50 monthly for the membership. The defenders claimed that after the filling of the matrix, the consumers will receive around $ 89000 per month, and 10% to 100% as per the choice of the consumer would be directed donated to charities. They had advertised about the scheme in website and as well as in different media. Around 200 people were taken as member as per the scheme. As per the rules the FTC filed a case against the company. As the investigation was carried out the court asked to freeze the accounts of all the defendants and issued a preliminary injunction order too. On 24th April, 1997, the final order came out and the defendants were asked to pay around $ 4900 to redress the consumers.
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