Solving the legal challenges of trustworthy online identity

Digital identity management is fundamental to the further development of the Internet economy. It is a foundational requirement for most substantive e-commerce transactions and other online activities.The critical importance of online identity management has led numerous governments, inter-governmental groups, and private organizations to begin work on development of viable and scalable business, technical, and legal frameworks to address the challenge of online identity. The focus of this work is on the emerging “federated” approach to identity, where an enterprise engages in online transactions in reliance on identity credentials issued by any one of several third parties, and individuals can use the same identity credential to engage in transactions with multiple organizations.This article examines this key requirement for online transactions, and explores the legal challenges that businesses must address to reap the benefits of federated identity. It begins with a general overview of digital identity management – what it is, why it is important, and generally how it works. Then, focusing on the federated identity approach, it examines the need for operating rules to ensure that such an identity system functions properly and in a manner deemed trustworthy by the participants. To that end, it identifies the key legal challenges that must be addressed to make identity systems work, and highlights some of the key issues of structuring an appropriate identity system legal framework.