Introduction to E-Commerce Law

Module 5 - Online Contracting, Commercial Online Laws, and Capital Rules

b. Global Commercial Online Laws

NARRATIVE

ASSIGNMENTS

SUPPLEMENTAL DOCUMENTS

IBLS ARTICLES

NARRATIVE

“How would you like to pay for this?” The question is a common one for bricks and mortar retail establishments. Cash, Check or Credit Card used to be the options. Smart cards and electronic payment systems are evolving, but it’s hard to see how the shakeout will affect these systems. For one thing, online banking options are viewed with caution, and for good reason. See the experience of NextCard and its affiliate NextBank for a cautionary tale.

In the U.S., the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporations and the National Bank Act are still a controlling influence in American financial services on the Internet. The US has adopted a Model Uniform State Law on Money Services (the “Uniform Money Services Act” or “UMSA”). The UMSA aims at promoting a consistent approach to the licensing and regulation of stored value and other forms of emerging Internet and electronic payment mechanisms. The UMSA includes such Internet payment mechanisms as online bill payment services, Internet funds transfer services as well as stored-value issuers (which sell stored value that can be used online or offline).

In the E.U., Directive 2000/46/EC (pdf) (the European Electronic Money Institutions Directive or “EMI Directive”) is aimed at ensuring consumer confidence by supervision of electronic money institutions. The EMI Directive defines “electronic money” and creates a specific regulatory regime for electronic money institutions.

In the UK, it is the Financial Services Authority (FSA), an independent non-governmental body, which implements the EU Directives under the umbrella legislation of the Financial Services and Markets Act 2000 (FSMA)

The FSA is responsible for regulating deposit taking, insurance and investment business. It is charged with tackling market abuse, promoting public understanding of the financial system and reducing financial crime in the U.K. For information regarding the regulation of electronic money issuers, see the Consultation Paper 117 (pdf).

Wandering further you may want to cruise over to the Global Banking Law Database.

Cross Border Transactions, as a subject matter, usually deals with tax and customs services. For our present purposes we will set aside the taxation part of the subject for module 11. Also for current purposes we will in the main, consider B2C (Business to Consumer) and SME (Small and Medium Enterprises) transactions, staying away from the arena of international mergers and consolidations. The primary question in this module is how an Internet shopkeeper can sell, ship, and be paid for goods or services. In the United States the regulation of cross-border transactions is divided among several branches of the federal government. Chief among the administrative agencies is the US Department of Commerce. Within the Department of Commerce are several entities, including:

At the Cabinet level there is the United States Trade Representative (USTR) who is the principle trade advisor of the President.

The final subject for this module is international antitrust. Anti-Trust seems to have been a particularly American concept. The extraterritorial applications of Anti-trust laws chaffed our international trading partners. Now, it seems that European regulators are catching up with the U.S. application of anti-trust concepts of anti competition policy. See for instance the various European Commission rulings affecting Microsoft Corp.

Competition policy is an extension of Anti-Trust enforcement and is aimed at ensuring that markets remain free, open, competitive, and robust. Why don't markets regulate themselves in line with demand and supply? The answer is rather obvious. If you have only two gas stations in a town, and they have to compete with each other, that could drive down prices pretty low. If there were no antitrust enforcement, the two gas stations could get together and say, “Look, we're operating on rather thin margins. There's not another gas station for 100 miles. Let's raise the price from $1.09 to $1.50, to $1.80,” or whatever. People who have market power want to increase their prices, want to make sure they get a monopoly profit. And that's what would happen without antitrust regulations.

Where will we be in a decade? Japan has passed legislation to evaluate the anti-competitive influences foreign corporations on Japanese companies. Cross-border scrutiny of mergers and consolidations will take an extraordinary amount of “positive comity” among international trading partners.

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ASSIGNMENTS

Discuss one or more IBLS Summaries on the topics in Module 8. Are there any new developments that should be noted.

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SUPPLEMENTAL DOCUMENTS

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IBLS ARTICLES

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