Ethical Social Political Issues

Chapter 8Ethical, Social, and Political Issues in E-commerce

Copyright 2012 Pearson Education, Inc.

Class Discussion

Discovering Law and Ethics in a Virtual WorldWhy is mischief in virtual worlds more difficult to stop? What constitutes mischief in Second Life?Which behaviors have been banned in Second Life?Is there a consensus regarding whether or not in-game gambling and other virtual crimes are also actual crimes? What is Second Lifes stance?How faithfully do you believe the law should be enforced in virtual worlds?Copyright 2012 Pearson Education, Inc.Slide 8-*


Understanding Ethical, Social, and Political Issues in E-commerceInternet, like other technologies, can:Enable new crimesAffect environmentThreaten social valuesCosts and benefits must be carefully considered, especially when there are no clear-cut legal or cultural guidelinesCopyright 2012 Pearson Education, Inc.Slide 8-*


A Model for Organizing the IssuesIssues raised by Internet and e-commerce can be viewed at individual, social, and political levelsFour major categories of issues:Information rightsProperty rightsGovernancePublic safety and welfareCopyright 2012 Pearson Education, Inc.Slide 8-*


Basic Ethical ConceptsEthicsStudy of principles used to determine right and wrong courses of actionResponsibilityAccountabilityLiabilityLaws permitting individuals to recover damagesDue processLaws are known, understoodAbility to appeal to higher authorities to ensure laws applied correctlyCopyright 2012 Pearson Education, Inc.Slide 8-*


Analyzing Ethical DilemmasProcess for analyzing ethical dilemmas:Identify and clearly describe the factsDefine the conflict or dilemma and identify the higher-order values involvedIdentify the stakeholdersIdentify the options that you can reasonably takeIdentify the potential consequences of your optionsCopyright 2012 Pearson Education, Inc.Slide 8-*


Candidate Ethical PrinciplesGolden RuleUniversalismSlippery SlopeCollective Utilitarian PrincipleRisk AversionNo Free LunchThe New York Times TestThe Social Contract RuleCopyright 2012 Pearson Education, Inc.Slide 8-*


Privacy and Information RightsPrivacyMoral right of individuals to be left alone, free from surveillance, or interference from other individuals or organizationsInformation privacySubset of privacyIncludes:The claim that certain information should not be collected at allThe claim of individuals to control the use of whatever information is collected about themCopyright 2012 Pearson Education, Inc.Slide 8-*


Privacy and Information Rights (cont.)Major ethical issue related to e-commerce and privacy: Under what conditions should we invade the privacy of others?Major social issue: Development of expectations of privacy and privacy normsMajor political issue: Development of statutes that govern relations between recordkeepers and individualsCopyright 2012 Pearson Education, Inc.Slide 8-*


Information Collected at E-commerce SitesData collected includesPersonally identifiable information (PII)Anonymous informationTypes of data collectedName, address, phone, e-mail, social securityBank and credit accounts, gender, age, occupation, educationPreference data, transaction data, clickstream data, browser typeCopyright 2012 Pearson Education, Inc.Slide 8-*


Social Networks and PrivacySocial networksEncourage sharing personal detailsPose unique challenge to maintaining privacyFacebooks facial recognition technology and taggingPersonal control over personal information vs. organizations desire to monetize social networkCopyright 2012 Pearson Education, Inc.Slide 8-*


Profiling and Behavioral TargetingProfilingCreation of digital images that characterize online individual and group behaviorAnonymous profilesPersonal profilesAdvertising networksTrack consumer and browsing behavior on WebDynamically adjust what user sees on screenBuild and refresh profiles of consumersGoogles AdWords programCopyright 2012 Pearson Education, Inc.Slide 8-*


Profiling and Behavioral Targeting (cont.)Deep packet inspectionBusiness perspective:Increases effectiveness of advertising, subsidizing free contentEnables sensing of demand for new products and servicesCritics perspective:Undermines expectation of anonymity and privacyConsumers show significant opposition to unregulated collection of personal informationCopyright 2012 Pearson Education, Inc.Slide 8-*


The Internet and Government Invasions of PrivacyVarious laws strengthen ability of law enforcement agencies to monitor Internet users without knowledge and sometimes without judicial oversightCALEA, USA PATRIOT Act, Cyber Security Enhancement Act, Homeland Security ActGovernment agencies are largest users of private sector commercial data brokersRetention by ISPs of user data a concernCopyright 2012 Pearson Education, Inc.Slide 8-*


Legal ProtectionsIn United States, privacy rights explicitly granted or derived from:Constitution First Amendmentfreedom of speech and associationFourth Amendmentunreasonable search and seizureFourteenth Amendmentdue processSpecific statutes and regulations (federal and state)Common lawCopyright 2012 Pearson Education, Inc.Slide 8-*


Informed ConsentU.S. firms can gather and redistribute transaction information without individuals informed consentIllegal in EuropeInformed consent:Opt-in Opt-outMany U.S. e-commerce firms merely publish information practices as part of privacy policy without providing for any form of informed consentCopyright 2012 Pearson Education, Inc.Slide 8-*


The FTCs Evolving Privacy ApproachFair Information Practice principles (1998)NoticeChoiceAccessSecurityEnforcementRestricted collectionNew privacy framework (2010)Privacy by designSimplified choiceGreater transparency

Copyright 2012 Pearson Education, Inc.Slide 8-*


The European Data Protection DirectivePrivacy protection much stronger in Europe than United StatesEuropean approach: Comprehensive and regulatory in natureEuropean Commissions Directive on Data Protection (1998): Standardizes and broadens privacy protection in European Union countriesDepartment of Commerce safe harbor program:For U.S. firms that wish to comply with directiveCopyright 2012 Pearson Education, Inc.Slide 8-*


Private Industry Self-RegulationSafe harbor programs: Private policy mechanism to meet objectives of government regulations without government involvemente.g., Privacy seal programsIndustry associations include:Online Privacy Alliance (OPA)Network Advertising Initiative (NAI)CLEAR Ad Notice Technical SpecificationsPrivacy advocacy groupsEmerging privacy protection businessCopyright 2012 Pearson Education, Inc.Slide 8-*


Insight on Business: Class Discussion

Chief Privacy OfficersWhat does a Chief Privacy Officer do?Why do corporations need a CPO?What is a privacy audit?Why did ChoicePoint hire a CPO? How do federal laws like Graham-Leach Bliley and HIPPA influence corporate privacy practices?What is a legalistic approach to privacy as opposed to a pro-consumer approach?Copyright 2012 Pearson Education, Inc.Slide 8-*


Technological SolutionsSpywarePop-up blockersSecure e-mailAnonymous remailers, surfingCookie managersDisk/file erasing programsPolicy generatorsPrivacy Policy Reader/P3PPublic key encryptionCopyright 2012 Pearson Education, Inc.Slide 8-*


Insight on Technology: Class Discussion

The Privacy Tug of War: Advertisers vs. ConsumersWhat are some of the technologies being used to invade privacy?What are some of the technologies being used to protect privacy?Do you accept the tradeoff between privacy invasion and free Web content?Is a browsers Do Not Track feature a viable solution?Copyright 2012 Pearson Education, Inc.Slide 8-*


Intellectual Property RightsIntellectual property:Encompasses all tangible and intangible products of human mindMajor ethical issue:How should we treat property that belongs to others?Major social issue:Is there continued value in protecting intellectual property in the Internet age?Major political issue:How can Internet and e-commerce be regulated or governed to protect intellectual property?Copyright 2012 Pearson Education, Inc.Slide 8-*


Intellectual Property ProtectionThree main types of protection:CopyrightPatentTrademark lawGoal of intellectual property law:Balance two competing interestspublic and privateMaintaining this balance of interests is always challenged by the invention of new technologies



CopyrightProtects original forms of expression (but not ideas) from being copied by others for a period of timeLook and feel copyright infringement lawsuitsFair use doctrineDigital Millennium Copyright Act, 1998First major effort to adjust copyright laws to Internet ageImplements WIPO treaty that makes it illegal to make, distribute, or use devices that circumvent technology-based protections of copyrighted materials Copyright 2012 Pearson Education, Inc.Slide 8-*


PatentsGrant owner 20-year monopoly on ideas behind an inventionMachinesMan-made productsCompositions of matterProcessing methodsInvention must be new, non-obvious, novelEncourages inventorsPromotes dissemination of new techniques through licensingStifles competition by raising barriers to entryCopyright 2012 Pearson Education, Inc.Slide 8-*


E-commerce Patents1998 State Street Bank & Trust vs. Signature Financial GroupBusiness method patentsMost European patent laws do not recognize business methods unless based on technologyPatent reformPatent trolls2011 America Invents ActsCopyright 2012 Pearson Education, Inc.Slide 8-*


TrademarksIdentify, distinguish goods, and indicate their sourcePurposeEnsure consumer gets what is paid for/expected to receiveProtect owner against piracy and misappropriationInfringementMarket confusionBad faithDilutionBehavior that weakens connection between trademark and productCopyright 2012 Pearson Education, Inc.Slide 8-*


Trademarks and the InternetCybersquattingAnticybersquatting Consumer Protection Act (ACPA)CyberpiracyTyposquattingMetataggingKeywordingDeep linkingFramingCopyright 2012 Pearson Education, Inc.Slide 8-*


GovernancePrimary questionsWho will control Internet and e-commerce?What elements will be controlled and how?Stages of governance and e-commerceGovernment Control Period (19701994)Privatization (19951998)Self-Regulation (1995present)Government Regulation (1998present)Copyright 2012 Pearson Education, Inc.Slide 8-*


Who Governs E-commerceand the Internet?Mixed mode environmentSelf-regulation, through variety of Internet policy and technical bodies, co-exists with limited government regulationICANN : Domain Name SystemInternet could be easily controlled, monitored, and regulated from a central locationCopyright 2012 Pearson Education, Inc.Slide 8-*


TaxationE-commerce taxation illustrates complexity of governance and jurisdiction issuesU.S. sales taxed by states and local governmentMOTO retailingE-commerce benefits from tax subsidyOctober 2007: Congress extends tax moratorium for an additional seven yearsUnlikely that comprehensive, integrated rational approach to taxation issue will be determined for some time to comeCopyright 2012 Pearson Education, Inc.Slide 8-*


Net NeutralityNeutrality: All Internet traffic treated equallyall activities charged the same rate, no preferential assignment of bandwidthBackbone providers vs. content providersDecember 2010 FCC approved compromise net neutrality rulesTelecom providers adopting compromise position between wired and mobile wireless accessCopyright 2012 Pearson Education, Inc.Slide 8-*


Public Safety and Welfare Protection of children and strong sentiments against pornographyPassing legislation that will survive court challenges has proved difficultEfforts to control gambling and restrict sales of drugs and cigarettesCurrently, mostly regulated by state lawUnlawful Internet Gambling Enforcement ActCopyright 2012 Pearson Education, Inc.Slide 8-*


Insight on Society: Class Discussion

The Internet Drug BazaarWhats wrong with buying prescription drugs online, especially if the prices are lower?What are the risks and benefits of online pharmacies?Should online pharmacies require a physicians prescription?How do online pharmacies challenge the traditional business model of pharmacies and drug firms?What are the challenges in regulating online pharmacies?Who benefits and who loses from online pharmacies?Copyright 2012 Pearson Education, Inc.Slide 8-*




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Ethical Social Political Issues