"Liquid" information in the wild west of e-Commerce.

• Author: Moss, Mark Richard
• Position: Cover Story

Is it fair to compare e-commerce to the Wild West, where anything goes?

Al Segars, a professor of information technology at the University of North Carolina-Chapel Hill, thinks so. "If you're the sheriff coming into town, it's very difficult to get your arms around some of the issues," he says.

Internet regulations seem as palpable as clouds floating overhead, and when they do gather to cause rain, it is a brief shower of legalities that don't always do the job.

The truth is that the same laws that govern the operations of brick-and-mortar businesses apply to Internet commerce. But the Internet, just past its infancy, continues to offer a novel approach to reaching consumers, and there are operators who are willing to push the legal envelope.

Actions to stop Internet fraud absorbed "considerable resources" at the Federal Trade Commission during its fiscal year 2001, according to the agency's Fiscal Year 2002 Congressional Budget Justification report. The laws the commission used to back its actions were already on the books.

What remains the top issue for Internet consumers, and what has spawned, so far, limited federal legislation, is privacy. The other major concern, engendered by the Internet's ease in transferring data, is copyright protection. The controversial Digital Millennium Copyright Act was enacted -- hastily, some claim -- to address a broad range of concerns.

Privacy is "the Internet regulatory issue that is most real for most businesses," says Jeremy Sharrard, an associate policy analyst at Forrester Research. The only privacy laws that exist on the national level, unique to the Internet, are those targeted to financial services, the healthcare industry, and to Web sites which collect information from children under 13, Sharrard explains.

In January, the FTC's Division of Financial Practices announced that it had sent to about 200 firms notices that their practices of obtaining financial information were not in compliance with the Gramm-Leach-Bliley Act (GLB). Enacted in 1999, the GLB prohibits "individuals from obtaining a customer's information from a financial institution or directly from the customer using false representations, fictitious documents, or forgery." The notices were sent after the FTC surveyed more than 1,000 Web sites and reviewed more than 500 print advertisements for firms offering to conduct financial services.

Congress also enacted the Children's Online Privacy Protection Act (COPPA) of 1998, which is...