e-

commerce



Kenneth C.
Laudon
Carol Guercio
Traver
business. technology.
society.
eighth edition
Copyright 2012 Pearson Education, Inc.
Chapter 8
Ethical, Social, and Political Issues in E-
commerce
Class Discussion
iscovering La! and Ethics in a
"irtual #orld

#hy is $mischie%& in virtual !orlds more di'cult

to sto() #hat constitutes mischie% in Second
Li%e)

#hich behaviors have been banned in Second

Li%e)

Is there a consensus regarding !hether or not in-

game gambling and other virtual crimes are also
actual crimes) #hat is Second Li%e*s stance)

+o! %aith%ully do you believe the la! should be

en%orced in virtual !orlds)
Copyright 2012 Pearson Education, Inc. Slide 8-3
,nderstanding Ethical, Social,
and Political Issues in E-
commerce

Internet, li-e other technologies,

can.

Enable new crimes

Afect environment

Threaten social values

Costs and bene/ts must be

care%ully considered, es(ecially
!hen there are no clear-cut legal
or cultural guidelines
Copyright 2012 Pearson Education, Inc. Slide 8-4
0 1odel %or 2rgani3ing the
Issues

Issues raised by Internet and

e-commerce can be vie!ed
at individual, social, and (olitical
levels

4our ma5or categories o% issues.

Information rights

Property rights

Governance

Public safety and welfare

Copyright 2012 Pearson Education, Inc. Slide 8-5
The 1oral imensions o% an
Internet Society
4igure 6.7, Page 899
Copyright 2012 Pearson Education, Inc. Slide 8-6
:asic Ethical Conce(ts

Ethics

Study of principles used to determine right and wrong courses

of action

;es(onsibility

0ccountability

Liability

Laws permitting individuals to recover damages

ue (rocess

Laws are nown! understood

Ability to appeal to higher authorities to ensure laws applied

correctly
Copyright 2012 Pearson Education, Inc. Slide 8-7
0naly3ing Ethical ilemmas

Process %or analy3ing ethical

dilemmas.
"# Identify and clearly describe the facts
$# %e&ne the con'ict or dilemma and identify the
higher(order values involved
)# Identify the staeholders
*# Identify the options that you can reasonably
tae
+# Identify the potential conse,uences of your
options
Copyright 2012 Pearson Education, Inc. Slide 8-8
Candidate Ethical Princi(les

Golden ;ule

,niversalism

Sli((ery Slo(e

Collective ,tilitarian Princi(le

;is- 0version

<o 4ree Lunch

The New York Times Test

The Social Contract ;ule

Copyright 2012 Pearson Education, Inc. Slide 8-9
Privacy and In%ormation ;ights

Privacy

-oral right of individuals to be left alone! free from

surveillance! or interference from other individuals or
organi.ations

In%ormation (rivacy

Subset of privacy

Includes/

The claim that certain information should not be collected at all

The claim of individuals to control the use of whatever

information is collected about them
Copyright 2012 Pearson Education, Inc. Slide 8-10
Privacy and In%ormation ;ights
=cont.>

1a5or ethical issue related to e-

commerce and (rivacy.

0nder what conditions should we invade the privacy

of others1

1a5or social issue.

%evelopment of 2e3pectations of privacy4 and

privacy norms

1a5or (olitical issue.

%evelopment of statutes that govern relations

between recordeepers and individuals
Copyright 2012 Pearson Education, Inc. Slide 8-11
In%ormation Collected at
E-commerce Sites

ata collected includes

Personally identi&able information 5PII6

Anonymous information

Ty(es o% data collected

7ame! address! phone! e(mail! social security

8an and credit accounts! gender! age!

occupation! education

Preference data! transaction data! clicstream

data! browser type
Copyright 2012 Pearson Education, Inc. Slide 8-12
Social <et!or-s and Privacy

Social net!or-s

Encourage sharing personal details

Pose uni,ue challenge to maintaining privacy

4aceboo-*s %acial recognition

technology and tagging

Personal control over (ersonal

in%ormation vs. organi3ation*s
desire to moneti3e social
net!or-
Copyright 2012 Pearson Education, Inc. Slide 8-13
Pro/ling and :ehavioral
Targeting

Pro/ling

9reation of digital images that characteri.e online

individual and group behavior

Anonymous pro&les

Personal pro&les

0dvertising net!or-s

Trac consumer and browsing behavior on :eb

%ynamically ad;ust what user sees on screen

8uild and refresh pro&les of consumers

Google*s 0d#ords (rogram

Copyright 2012 Pearson Education, Inc. Slide 8-14
Pro/ling and :ehavioral
Targeting =cont.>

ee( (ac-et ins(ection

:usiness (ers(ective.

Increases efectiveness of advertising!

subsidi.ing free content

Enables sensing of demand for new products

and services

Critics* (ers(ective.

0ndermines e3pectation of anonymity and

privacy

9onsumers show signi&cant opposition to

unregulated collection of personal information
Copyright 2012 Pearson Education, Inc. Slide 8-15
The Internet and
Government Invasions o%
Privacy

"arious la!s strengthen ability o% la!

en%orcement agencies to monitor
Internet users !ithout -no!ledge and
sometimes !ithout 5udicial oversight

9ALEA! 0SA PAT<I=T Act! 9yber Security

Enhancement Act! >omeland Security Act

Government agencies are largest users

o% (rivate sector commercial data
bro-ers

;etention by ISPs o% user data a concern

Copyright 2012 Pearson Education, Inc. Slide 8-16
Legal Protections

In ,nited States, (rivacy rights

e?(licitly granted or derived %rom.

9onstitution

?irst Amendment@freedom of speech and

association

?ourth Amendment@unreasonable search and

sei.ure

?ourteenth Amendment@due process

Speci&c statutes and regulations 5federal and

state6

9ommon law
Copyright 2012 Pearson Education, Inc. Slide 8-17
In%ormed Consent

,.S. /rms can gather and redistribute

transaction in%ormation !ithout
individual*s in%ormed consent

Illegal in Europe

In%ormed consent.

=pt(in

=pt(out

-any 0#S# e(commerce &rms merely publish

information practices as part of privacy policy without
providing for any form of informed consent
Copyright 2012 Pearson Education, Inc. Slide 8-18
The 4TC*s Evolving Privacy
0((roach

4air In%ormation Practice (rinci(les =7@@6>

7otice

9hoice

Access

Security

Enforcement

<estricted collection

<e! (rivacy %rame!or- =A979>

Privacy by design

Simpli&ed choice

Greater transparency
Copyright 2012 Pearson Education, Inc. Slide 8-19
The Euro(ean ata
Protection irective

Privacy (rotection much stronger in

Euro(e than ,nited States

Euro(ean a((roach.

9omprehensive and regulatory in nature

Euro(ean Commission*s irective on ata

Protection =7@@6>.

Standardi.es and broadens privacy protection in European 0nion

countries

e(artment o% Commerce sa%e harbor

(rogram.

?or 0#S# &rms that wish to comply with directive

Copyright 2012 Pearson Education, Inc. Slide 8-20
Private Industry Sel%-
;egulation

Sa%e harbor (rograms.

Private policy mechanism to meet ob;ectives of

government regulations without government
involvement

e#g#! Privacy seal programs

Industry associations include.

=nline Privacy Alliance 5=PA6

7etwor Advertising Initiative 57AI6

9LEA< Ad 7otice Technical Speci&cations

Privacy advocacy grou(s

Emerging (rivacy (rotection business

Copyright 2012 Pearson Education, Inc. Slide 8-21
Insight on Business: Class Discussion
Chie% Privacy 2'cers

#hat does a Chie% Privacy 2'cer do)

#hy do cor(orations need a CP2)

#hat is a $(rivacy audit&)

#hy did ChoicePoint hire a CP2)

+o! do %ederal la!s li-e Graham-Leach

:liley and +IPP0 inBuence cor(orate (rivacy
(ractices)

#hat is a $legalistic& a((roach to (rivacy as

o((osed to a $(ro-consumer& a((roach)
Copyright 2012 Pearson Education, Inc. Slide 8-22
Technological Solutions

S(y!are

Po(-u( bloc-ers

Secure e-mail

0nonymous remailers, sur/ng

Coo-ie managers

is-C/le erasing (rograms

Policy generators

Privacy Policy ;eaderCPDP

Public -ey encry(tion

Copyright 2012 Pearson Education, Inc. Slide 8-23
Insight on Technology: Class Discussion
The Privacy Tug o% #ar.
0dvertisers vs. Consumers

#hat are some o% the technologies being

used to invade (rivacy)

#hat are some o% the technologies being

used to (rotect (rivacy)

o you acce(t the tradeoE bet!een

(rivacy invasion and $%ree& #eb content)

Is a bro!ser*s $o <ot Trac-& %eature a

viable solution)
Copyright 2012 Pearson Education, Inc. Slide 8-24
Intellectual Pro(erty ;ights

Intellectual (ro(erty.

Encompasses all tangible and intangible products of

human mind

1a5or ethical issue.

>ow should we treat property that belongs to others1

1a5or social issue.

Is there continued value in protecting intellectual

property in the Internet age1

1a5or (olitical issue.

>ow can Internet and e(commerce be regulated or

governed to protect intellectual property1
Copyright 2012 Pearson Education, Inc. Slide 8-25
Intellectual Pro(erty
Protection

Three main ty(es o% (rotection.

9opyright

Patent

Trademar law

Goal o% intellectual (ro(erty la!.

8alance two competing interests@public and private

1aintaining this balance o% interests

is al!ays challenged by the
invention o% ne! technologies
Copyright 2012 Pearson Education, Inc. Slide 8-26
Co(yright

Protects original %orms o% e?(ression =but

not ideas> %rom being co(ied by others %or a
(eriod o% time

$Loo- and %eel& co(yright in%ringement

la!suits

4air use doctrine

igital 1illennium Co(yright 0ct, 7@@6

?irst ma;or efort to ad;ust copyright laws to Internet age

Implements :IP= treaty that maes it illegal to mae!

distribute! or use devices that circumvent technology(
based protections of copyrighted materials
Copyright 2012 Pearson Education, Inc. Slide 8-27
Patents

Grant o!ner A9-year mono(oly on ideas

behind an invention

-achines

-an(made products

9ompositions of matter

Processing methods

Invention must be ne!, non-obvious, novel

Encourages inventors

Promotes dissemination o% ne! techniFues

through licensing

StiBes com(etition by raising barriers to

entry
Copyright 2012 Pearson Education, Inc. Slide 8-28
E-commerce Patents

7@@6 State Street :an- G Trust vs.

Signature 4inancial Grou(

8usiness method patents

1ost Euro(ean (atent la!s do not

recogni3e business methods unless
based on technology

Patent re%orm

Patent trolls

$A"" America Invents Acts

Copyright 2012 Pearson Education, Inc. Slide 8-29
Internet and E-commerce :usiness
1ethod Patents
4igure 6.A, Page 8D6
Copyright 2012 Pearson Education, Inc.
S2,;CE. :ased on data %rom ,nited States Patent and
Trademar- 2'ce, A979.
Slide 8-30
Trademar-s

Identi%y, distinguish goods, and indicate

their source

Pur(ose

Ensure consumer gets what is paid forBe3pected to receive

Protect owner against piracy and misappropriation

In%ringement

-aret confusion

8ad faith

ilution

8ehavior that weaens connection between trademar and

product
Copyright 2012 Pearson Education, Inc. Slide 8-31
Trademar-s and the Internet

CybersFuatting

Anticybers,uatting 9onsumer Protection Act 5A9PA6

Cyber(iracy

Typos,uatting

1etatagging

Key!ording

ee( lin-ing

4raming
Copyright 2012 Pearson Education, Inc. Slide 8-32
Governance

Primary Fuestions

:ho will control Internet and e(commerce1

:hat elements will be controlled and how1

Stages o% governance and e-

commerce

Government 9ontrol Period 5"CDAE"CC*6

Privati.ation 5"CC+E"CCF6

Self(<egulation 5"CC+Epresent6

Government <egulation 5"CCFEpresent6

Copyright 2012 Pearson Education, Inc. Slide 8-33
#ho Governs E-commerce
and the Internet)

1i?ed mode environment

Self(regulation! through variety of Internet

policy and technical bodies! co(e3ists with
limited government regulation

IC0<< . omain <ame System

Internet could be easily

controlled, monitored, and
regulated %rom a central location
Copyright 2012 Pearson Education, Inc. Slide 8-34
Ta?ation

E-commerce ta?ation illustrates com(le?ity o%

governance and 5urisdiction issues

,.S. sales ta?ed by states and local

government

12T2 retailing

E-commerce bene/ts %rom ta? $subsidy&

2ctober A99H. Congress e?tends ta?

moratorium %or an additional seven years

,nli-ely that com(rehensive, integrated

rational a((roach to ta?ation issue !ill be
determined %or some time to come
Copyright 2012 Pearson Education, Inc. Slide 8-35
<et <eutrality

<eutrality. 0ll Internet tra'c treated

eFuallyIall activities charged the same
rate, no (re%erential assignment o%
band!idth

:ac-bone (roviders vs. content (roviders

ecember A979 4CC a((roved

$com(romise& net neutrality rules

Telecom (roviders ado(ting com(romise

(osition bet!een !ired and mobile
!ireless access
Copyright 2012 Pearson Education, Inc. Slide 8-36
Public Sa%ety and #el%are

Protection o% children and strong

sentiments against (ornogra(hy

Passing legislation that will survive court

challenges has proved diGcult

EEorts to control gambling and

restrict sales o% drugs and
cigarettes

9urrently! mostly regulated by state law

0nlawful Internet Gambling Enforcement Act

Copyright 2012 Pearson Education, Inc. Slide 8-37
Insight on Society: Class Discussion
The Internet rug :a3aar

#hat*s !rong !ith buying (rescri(tion drugs online,

es(ecially i% the (rices are lo!er)

#hat are the ris-s and bene/ts o% online (harmacies)

Should online (harmacies reFuire a (hysician*s

(rescri(tion)

+o! do online (harmacies challenge the traditional

business model o% (harmacies and drug /rms)

#hat are the challenges in regulating online (harmacies)

#ho bene/ts and !ho loses %rom online (harmacies)

Copyright 2012 Pearson Education, Inc. Slide 8-38
Copyright 2012 Pearson Education, Inc. Slide 8-39