15 December 2006
Key Points:
Geo-identification technology is becoming part of the toolkit of online business as it can help manage - but not completely fix - some common legal problems.
If you visit the Absolut vodka website, you will be asked to verify that you are of legal drinking age for the country where you live. For our Australian readers, the Absolut vodka website will assume you are from Australia. How does it know this? It uses geo-identification technology.
Geo-identification technology uses information about Internet users to make an educated guess about their location, and block content or give different content based on a user's location. There are a range of techniques which geo-identification technologies may adopt such as utilising databases that map IP addresses to geographic locations, matching a domain name with a known IP address (reverse domain name lookup), analysing details provided by the user (such as a credit card number) or even simply asking the user where he or she is from. Website operators may use one or more of these techniques.
Geo-identification technologies are generally accurate down to the country and, to a lesser extent, the major city level, but not much beyond that. For example, Digital Element claims that its NetAcuity product achieves accuracy rates of over 99 percent at a country level and 94 percent at a city-level worldwide.
Geo-identification technology is becoming an important risk management tool for companies doing business on the Internet. It allows them to improve their compliance with foreign and local laws, minimise their exposure to civil liability claims, and identify the location of people they are doing business with. In this article we’ll look at how geo-identification technology can help online businesses manage three legal problems.
Complying with local and overseas laws
The Absolut vodka website is one example of a company using geo-identification technology to improve its level of compliance with foreign laws. There are a range of other laws that vary between countries, such as consumer protection and advertising, privacy and defamation. Geo-identification technology is one way of addressing the problem of complying with differing foreign laws.
It is not only compliance with foreign laws that companies need to be concerned with. In some countries, local laws and regulations, or permits and licences issued under them, may restrict a company from dealing with people in other countries. The United States' trade embargo against Cuba is an example of this. Geo-identification technology could be used to prevent persons from such countries from buying products and services online.
Controlling intellectual property
Another area where geo-identification technology is being used is to limit the availability of information, products or services to persons in certain countries. This might be done to segregate markets to maintain regional pricing levels, or to comply with a licence which allows distribution only within a certain geographical region. This application of geo-identification technologies is being used by online music providers, where access to content may be limited or different (eg. Apple iTunes), or the sound quality varied (eg. Yahoo! Music), based on the user's location.
Combating fraud
Finally, geo-identification technology can assist in fraud prevention. An example of this is MaxMind's minFraud application which is aimed at mitigating online credit card fraud. minFraud uses information supplied by an Internet user (including their IP address and credit card number) to determine the level of risk associated with a transaction. The country of the issuing bank of a credit card can be determined from a credit card number. If the country of the issuing bank does not match the user's location as determined from the user's IP address by geo-identification technology, then the transaction is rated as higher risk. A company can use this, as well as other information about the user, to create an overall risk profile for the transaction, and then decide whether to approve it. A difficult challenge in dealing with people on the Internet is authenticating them - or knowing who you are dealing with. Geo-identification technology is becoming part of the toolkit in managing this risk.
But will geo-identification solve everything?
Geo-identification technologies are not perfect and it is unlikely they will ever be. Currently, these technologies are only as good as the data they rely on. There are also ways to cloak a user's identity using an anonymiser service, such as www.anonymouse.org. These services hide the user's real IP address, rendering some geo-identification technology virtually useless (unless of course it is sophisticated enough to also detect the use of an anonymiser service, in which case it can block or restrict content to those users). Geo-identification technologies are being used to manage legal risks, and as the technology improves, their use (and probably the courts' expectation that they will be used) is likely to increase. While geo-identification technologies are not a stand alone solution, they do provide another tool to use as part of a robust risk management strategy.
For further information, please contact Cameron Gascoyne and Simon Newcomb.
