About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

16 U.C. Davis Bus. L.J. 261 (2015-2016)
E-Commerce, Cyber, and Electronic Payment System Risks: Lessons from PayPal

handle is hein.journals/ucdbulj16 and id is 271 raw text is: E-COMMERCE, CYBER, AND ELECTRONIC PAYMENT SYSTEM RISKS: LESSONS FROM PAYPAL LAWRENCE J. TRAUTMAN* ABSTRACT By now, almost without exception, every business has an internet presence, and is likely engaged in e-commerce. What are the major risks perceived by those engaged in e-commerce and electronic payment systems? What potential risks, if they become reality, may cause substantial increases in operating costs or threaten the very survival of the enterprise? This article utilizes the relevant annual report disclosures from eBay (parent of PayPal), along with other eBay and PayPal documents, as a potentially powerful teaching device. Most of the descriptive language to follow is excerpted directly from eBay's regulatory filings. My additions include weaving these materials into a logical presentation and providing supplemental sources for those who desire a deeper look (usually in my footnotes) at any particular aspect. I've sought to present a roadmap with these materials that shows eBay's struggle to optimize its business performance while navigating through a complicated maze of regulatory compliance concerns and issues involving governmental jurisdictions throughout the world. First, a brief look is provided at the SEC's disclosure requirements. Second, a description of the eBay and PayPal history and business models is presented. Next, is a discussion of risk factors: credit cards; U.S. state money transmission laws; online and mobile growth; and reliance on internet access. International issues follow, with an examination of anti-money laundering, counter-terrorist, and other potential illegal activity laws. The author estimates that PayPal's cost of accounting and legal fees and management time devoted to the discovery, examination and documentation of the perceived enterprise risk associated with e-commerce, cyber, information technology and electronic payment system risks may aggregate in the range of tens-of-millions of dollars a year. The value proposition offered here is disarmingly simple: at no out-of-pocket cost, the reader has an opportunity to invest probably less than an hour to read and reflect upon eBay and PayPal's multiple-million-dollar research, investment and documentation of perceived e- *BA, The American University; MBA, The George Washington University; J.D., Oklahoma City University School of Law. Mr. Trautman is Assistant Professor of Business Law and Ethics at Western Carolina University. He may be contacted at Lawrence.J.Trautman@gmail.com. The author wishes to extend particular thanks to Alvin Harrell for his assistance in the research and preparation of this article. However, all errors and omissions are my own.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most