UCITA threatens rights of consumers in the new age of electronic commerce

ONE OF THE basic principles of propaganda is that if you repeat something often enough, people will eventually believe the most outrageous canard to be true. Thus it is that the Uniform Computer Information Transaction Act's (UCITA's) proponents have adopted "a vote against UCITA is a vote against e-commerce" as their mantra in pushing the proposed law through state legislatures.

The truth is quite the opposite, of course. UCITA poses some grave perils for the future of electronic commerce. Commentators -- ranging from a member of the UCITA drafting committee and a group of state attorneys general to associations representing technical and IT professionals -- have frequently said UCITA will make the Internet a scary place for customers to do business.

Nonetheless, at the recent prelegislative hearings in Virginia, it was clear that proponents of the bill have adopted a strategy of positioning UCITA primarily as an e-commerce bill; and it's a strategy that, so far at least, seems to be working in Virginia. (As feared, the advisory committee considering UCITA for the Virginia Joint Commission on Technology and Science approved the bill to continue along what could be a very fast track toward enactment.) The basic argument offered for the e-commerce benefits of UCITA, as can be seen by a press release issued by the Business Software Alliance (BSA) announcing the Virginia hearings, is that there is a crying need for uniformity across the states in the laws that govern electronic transactions.

"This proposed law [UCITA] will establish rules that govern e-commerce transactions, creating uniformity across the country and facilitating agreements between consumers and businesses," the BSA press release reads. "UCITA will allow small businesses to conduct business in all 50 states without having to research electronic contract laws that may vary from state to state."

One can see how that might sound good to state legislators who have only the vaguest idea of what UCITA is, or, for that matter, what electronic commerce is all about. Sure, a uniform law would be nice if it was one we could all agree was fair to all parties. But how fair is a law that goes about letting businesses arbitrarily dictate and even modify terms that they are allowed to hide from their customers?

Far from bringing uniformity to the laws governing electronic transactions, UCITA's existence guarantees that there will be confusion and uncertainty for years to come about what's legal on the Internet. Part of this is because the law itself is so confusing and self-contradictory that it would require decades of expensive court cases before there was any uniformity in how it's interpreted, even if it were passed in every state. And it won't be. From what readers tell me who have checked with their state legislators, for every state such as Virginia where it's being seriously considered for introduction, there are several others where it's already seen as being too controversial to touch. Because it is not part of the Uniform Commercial Code, as Article 2B (UCITA's previous incarnation) would have been, those states that do consider it seriously will also likely feel free to make amendments of their own.

There are plenty of small companies conducting business via the Internet right now without being compelled to research the laws in all the states where they have customers. If UCITA does pass in a few states, however, small companies and big companies alike are going to have to start keeping track of where UCITA is or isn'tt the law for their "computer information" purchases. Do you want to do business with a company whose contracts are governed by a state law that gives them the right to remotely disable your software?

The silliest part of the "UCITA is good for e-commerce" argument is the inescapable observation that the lack of UCITA sure doesn't seem to have slowed e-commerce down much so far. E-commerce has been growing in spite of the fact that legal standing of electronic contracts are still far from clear. In this it has followed the growth path of the software industry, which has prospered in spite of the fact that the legal validity of its shrinkwrap licenses have always been uncertain. Developed for the bygone days of the software retail store, the shrinkwrap concept is itself a dinosaur, and yet UCITA proponents insist it's the way we should do business on the Internet.

I don't know of any electronic businesses that have suffered serious harm because UCITA is not yet the law. On the other hand, I can point to a number of companies we've discussed here (@home and Buy.com, as two prominent examples) that have been guilty of very dubious e-commerce practices that UCITA would endorse. I'll take legal uncertainty over the kind of uniformity UCITA provides any day, and I hope enough state legislators will be wise enough to do the same.

» posted by ITworld staff

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