Differences In Ethical, Legal, Regulatory Issues In B2b Vs. B2c Environment

Differences in Ethical, Legal, and Regulatory Issues in

Business-to-Business and Business-to-Consumer Web Sites

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.

Ethical Considerations

Ethics are part of a moral code that deems actions right or wrong. Businesses often strive to conduct operations in a professional, ethical, and legal manner. Schneider (2004) comments that, "companies using Web sites to conduct electronic commerce should adhere to the same ethical standards that other businesses follow...if they do not, they will suffer the damaged reputation and long-term loss of trust that can result in loss of business" (p. 306). Since businesses abide by similar ethical standards, both B2B and B2C Web sites prove similar in terms of expectations of desired ethical conduct.

In the B2B realm, ethical considerations exist between businesses (Schneider, 2004). An example of an ethical situation in the B2B relationship might be one business taking a kickback from another. Schneider (2004) discussed the issue of Amazon.com taking payments from book publishers. Another situation that falls under the B2B relationship regards the resolution of potential issues or problems with a business partner. For example, in Lane's Gifts v. Google, Google established a "cost per click" program for advertisers, and Lane's Gifts did not want Google to charge for invalid clicks (Wong, 2006, p. 1). Lane's Gifts sued Google, and Google agreed to investigate alleged invalid clicks and reimburse advertisers if billed improperly (Wong, 2006, p. 1). It would be unethical for Google to continue billing advertisers for fraudulent clicks. Luckily, Google recognized the potential problem and resolved the issue so the false billing did not create a strain between Google and any other advertising agents.

The business-to-consumer sites operate as online retailers (Schneider, 2004). An example of an ethical situation in the B2C environment is adult sites containing sexually explicit material. Even if adult sites warn that consumers entering the site must be 18 years or older via a disclaimer, an underage child could click the button, agree to the terms of the site, and view, access, or even purchase information. In a brick-and-mortar environment, the store sales clerk could ask for identification, which could help cut down on underage children viewing or purchasing inappropriate information. Part of the dilemma is that the adult business has the right to operate as a retailer online, just as any other establishment, but is also responsible for making sure that adults, not children are the consumers. Schneider (2004) also notes that, "collecting information and tracking consumer habits led to questions of ethics regarding online privacy" (p. 316).

Legal Issues

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-tailers 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.

Regulatory