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The Interactive Services Association and the North Securities Administrators Association are currently drafting rules that may restrict this sort of illegal activity. Investors should be especially careful about their reaction to such tips.

The Internet is especially vulnerable to credit card fraud. Kevin Mitnick, who was arrested by FBI agents in February, 1995, was able to steal thousands of credit-card numbers from an Internet service provider. Ivy James Lay, an MCI employee in North Carolina, programmed a microcomputer to capture more than 50,000 credit card numbers. He sold the numbers to a network of dealers, resulting in more than $50 million in fraudulent charges.13

Organizations must take specific steps to safeguard computers that are connected to the Internet. Firewall software screens outside requests for information so that only certain, registered computers can access the internal network through the Internet. Although firewalls are not hacker-proof, they do offer substantial protection. In addition, encryption techniques can be used when sensitive information must be sent outside the internal network.

SOFTWARE PIRACY

Computer networks make it easy to copy programs and store them on computer bulletin boards. Bulletin board subscribers can then download these programs without paying for them. Many of these programs are freeware (i.e., programs donated by their creators) or shareware (i.e., programs available on a trial basis to potential users, who are expected to pay for the software if they choose to continue using it). Often, however, downloaded software is copyrighted material.

More than $1 billion worth of software is illegally downloaded every year. In one case, Windows 95 software was available for downloading nine months before it was released to the public. In another incident, David LaMacchia, a student from the Massachusetts Institute of Technology, was indicted for conspiracy to commit wire fraud after he allegedly established a bulletin board containing copyrighted versions of Excel 5.0 and WordPerfect for Windows 6.0.14

On Dec.28, 1994, the federal court dismissed the indictment, basing the decision on two factors. LaMacchia did not make a profit on his actions, as required under the copyright act. Further, his actions did not constitute wire fraud, which would have required a fiduciary relationship between LaMacchia and the copyright owner. The court was extremely critical of his actions and called for congressional action to remedy the problem.15

Software developers and their trade group, the Software Publishers Association, have prosecuted several individuals, bulletin boards, and companies for illegally copying software. The federal government has indicted several bulletin board operators in the past for charging users to download pirated software. Successful prosecution is often difficult because bulletin board operators are often young students who do not charge customers and simply cannot afford to pay more than a token judgment. Most judges or juries would simply not punish operators severely. Organizations and individuals should avoid potential liability by avoiding the use of copyrighted, downloaded software.

FLAMING

Computer users express various opinions on the Internet. On occasion, the anonymity of the network encourages vulgar, verbal tirades known as flaming. For some users flaming is simply a harmless method of self-expression. Most recipients ignore such messages; however, operators occasionally remove an offensive user from the bulletin board. A set of standards (known as netiquette explains what is considered acceptable behavior for Internet users.16

What happens when flaming goes beyond any decent standards of proper behavior? In San Jose, a pedophile made contact on a bulletin board with a police detective posing as a young teenage boy. When they arranged to meet, the pedophile was arrested. More than 100 similar incidents have occurred.17

As one system operator said, “the Internet is expanding at logarithmic rates. A million new users will bring a few sociopaths. Until recently, [there was] complete anarchy with self-regulation. Now some human will have to look at everything and decide what to post.”18 Unfortunately, even a single flamer can destroy the good nature and style of a bulletin board. A single individual with criminal intent can cause tremendous problems. A bulletin board operator is often forced to censor or eliminate messages from a particularly annoying or offensive user.

From a legal standpoint, a bulletin board operator has the absolute right to censor message or ban a user for any reason or even for no reason. Just as a newspaper is not required to print every opinion, a bulletin board or network operator is not required to allow all opinions.

FREE SPEECH

Individuals log on to bulletin boards to obtain information or simply to talk to others. It is often difficult to control access to the bulletin board. This has led to several cases in which the limits of free speech as they relate to cyberspace have been challenged.

Ohio police confiscated a $3,000 computer belonging to Mark Lehrer, charging that children had seen pornography on his bulletin board. Lehrer did have pornographic files available, but he restricted access to users over 18 and required that users send a copy of their driver’s license. A few explicit photos were in the nonrestricted area because of a filing error. Local police recruited a 15-year-old to gain access to the files and then arrested the operator. Lehrer entered a guilty plea to a misdemeanor charge of possessing a criminal tool, specifically his computer.

In a similar matter, an uninvited Tennessee hacker broke into a California bulletin board that featured pornographic materials. The operator was charged with violation of obscenity laws, not by lenient California standards but in accordance with standards established in Tennessee. For the first time, a bulletin board operator was prosecuted where the obscene material was received instead of at its point of origin. The operator was convicted and the case is currently on appeal.19

The concept of free speech on the Internet, especially when users in different states are involved, will eventually be decided by the courts. At issue is a 1973 Supreme Court ruling20 that states obscenity must be judged by local community standards. Should alleged obscenity on a California bulletin board be judged by the standards of another state, which may be much stricter than in California? This is typical of the type of problem that can develop in cyberspace, in which state borders are essentially meaningless.

Internet users have all types of political beliefs; some users are libertarian in their views regarding the Internet (i.e., they believe in keeping the government out of cyberspace). This viewpoint is in opposition to the common belief that children should not be exposed to pornography. An early solution to this dilemma is not likely.21


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