From daemon Mon Jun 12 09:45 EDT 1995 Received: from dcez.com (jamosele@dcez.com [198.6.197.1]) by town.hall.org (8.6.12/941123.08ccg) with ESMTP id JAA29966 for ; Mon, 12 Jun 1995 09:32:04 -0400 Received: (from jamosele@localhost) by dcez.com (8.6.10/8.6.9) id JAA12995 for jec@town.hall.org; Mon, 12 Jun 1995 09:32:39 -0400 From: Jonathon Moseley Message-Id: <199506121332.JAA12995@dcez.com> Subject: Need Legal Protections on Internet To: jec@town.hall.org Date: Mon, 12 Jun 1995 09:32:38 -0400 (EDT) X-Mailer: ELM [version 2.4 PL24] Content-Type: text Content-Length: 7372 Status: RO Dear Senator Connie Mack, FIRST, Hello! I worked in your office in 1985 as an intern and have followed your activities in the Congress with great interest and pride. SECOND, I was just ripped off for $200 purchasing services over the "information super highway" of the Internet. I paid for advertising services to the Huntington Company in Beverly Hills, California (I am in Virginia), and then the company just vanished off the face of the Earth. In order to consider the prospects of economic growth, progress, and advancement of economic sophistication, we must be prepared to provide a supporting legal environment for doing business. The new economy involves increasing transactions between STRANGERS widely separated by thousands of miles, through electronic means. This means that more and more routine transactions will occur between people who have NEVER met and probably NEVER will. Face-to-face transactions are being replaced by nameless, faceless, long-distance electronic exchange of messages..... which ADD UP to a business deal. Not a word may ever be spoken! The PROBLEM is that researching a potential business partner or tracking someone down and taking them to court is increasingly difficult in a distant city. -------------------------------- 1) A great many changes should be considered, especially private or public/private clearinghouses to check whether a business is honest before sending money and report rip-offs (the clearinghouse would have to verify and give the business a chance to show the charge is false). This would also provide a mechanism for dispute resolution because it would give businesses an incentive to work it out, rather than just "blow off" a disgruntled customer. It would also discourage and deter scams on the Internet, knowing that there are ways to deal with them rapidly. --------------------------------- 2) Ways to SUE and COLLECT against business deals over long distances with total strangers should be explored: Service of process across State borders (paying the Sheriff of a distant State, just as one would in one's own State), maybe some form of national or electronic small claims court, etc. etc. (I mean think about it: If both sides consent, WHY wouldn't submission of documents be adequate? Why go to the added expense of appearing in person? Again, assuming the dollar amounts involved are of small claims court levels.) --------------------------------- 3) Delivering products by mail is a crucial part of business on the Internet, and will be important in many other modern forms of business (FAX, 800 #, etc.) The U.S. POSTAL SERVICE must modify it's rules for C.O.D. service. C.O.D. is an EXCELLENT process, which is little- understood and associated too much with cheesy products advertised on late-night TV. In fact, C.O.D. is a miniature version of the sophisticated TRADE ACCEPTANCES and the like used in International Import/Export Transactions. C.O.D. allows someone to send a product WITHOUT the risk that someone will keep the product and NOT pay for it. It allows the buyer to NOT have to give any money until the product is IN HAND. Thus, the buyer does not send money and risk having the "seller" keep the money without sending the product. However, there is still a hole: A dishonest con-artist can send a BOX that contains junk rather than the product being offered. The U.S. Postal Service should allow recipients to OPEN the box and VERIFY that it contains the product ordered BEFORE paying for it (but in the presence of the post office staff, so that the recipient MUST pay before getting the product). For these valuable services, a $3 C.O.D. fee is probably exceedingly generous of the Post Office, and should be made higher to cover the cost of providing this valuable procedure. (Recommend $3 for items priced up to $100 value; $9 for items up to $200; and $15 for items priced over $200.) In addition, the MAXIMUM price for products allowed to be charged should be raised from $600 to $1,000. Insurance coverage for those products should be modified to properly reassure those doing business this way. (I don't know that it isn't adequate, but it is crucial!) --------------------------------- 4) The banking rules must be slightly modified to prevent the use of "electronic checks" -- artificially created copies of checks WITHOUT a signature -- unless there are some additional safeguards, such as clear identification of the name, business, address, and bank account of the cashing person. That will allow tracing of any fraudulent business performed this way. These new "electronic checks" are proliferating over the Internet and on-line services, as ways to pay for any products or services. One of the great risks for FRAUD is that once someone orders a product using an "electronic check" without any signature, they can collect and hoard banking account information and then issue a swarm of additional, fraudulent checks all at once and then abscond with the money. Because there is NO signature on the checks, these checks are very dangerous. The BEST approach would be to require a PHONE CALL or FORM LETTER to the account holder to APPROVE the check IN LIEU OF the signature normally required on a check. --------------------------------- 5) The banking rules should eventually upgrade banks and/or the Federal Reserve check clearing process to allow an account holder to BLOCK artificial checks WITHOUT a signature, in the event that account holders don't want to be at risk in this way. Why? This would normally occur when someone has been RIPPED OFF by such a company, and wants to block FURTHER withdrawals. --------------------------------- BACKGROUND/THEORY: Yes, we want to limit government regulation. But we often forget: The government's legal support makes business POSSIBLE: Retail stores can exist because it's against the law to steal the products off the shelves without paying for it. Complex business deals can be developed and implemented because a broken contract can be taken into the courts to prevent cheating and to enforce voluntary agreements. In the former Soviet Union and Eastern Europe, where I have been teaching business, the lack of these legal supports has kept business at a PRIMITIVE level. Interest rates for borrowing money was around 140% a year in Latvia a few years back! That's because Latvia had NO LAWS to enforce payment of a loan by permitting foreclosure, etc. When there are no laws to allow enforcement of business deals, it becomes extremely difficult to put together modern, sophisticated, complicated business transactions. The proper question is APPROPRIATE types and levels of government SUPPORT, not government interference and strangulation of the business world. Without the government's provision of courts and basic commercial law, the business world would collapse into a primitive level of barter. Sincerely, Jonathon Moseley 4417 N. Fourth Road #6 Arlington, VA 22203 (703) 527-5938