Understanding Business Ethics

Stanwick and Stanwick

3rd Edition

Chapter 9
Ethics and Information Technology
 Ethical Thoughts

“Computes are like Old Testament gods, lots of rules and no mercy.”

Joseph Campbell

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 Learning Objectives

After reading and studying this chapter, students should be able to:
1.Explain the types of critical analysis that can be used to evaluate
information technology.
2.Discuss the issues associated with the privacy of employees.
3.Describe the issues associated with the privacy of customers.
4.Identify ethical issues facing Internet usage.
5.Discuss areas for technology fraud, including those associated with the
Internet.

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 Information Technology Ethical Issues
Importance can be seen through American Management
Association (AMA)/ePolicy Institute survey on electronic
monitoring and surveillance:

30% of firms reported they had fired workers due to misusing the
Internet with the following causes:

Violation of Company Policy 64%

Inappropriate or Offensive Language 62%

Excessive Personal Use 26%

Breach Of Confidentiality Rules 22%

Others 12%
Information Technology Ethical Issues

28% reported they had fired employees for misuse of their corporate
email accounts with the following causes:

Viewing, Downloading, or Uploading

84%
Inappropriate/Offensive Content
Violation of Company Policy 48%

Excessive Personal Use 34%

Others 9%

6% of the respondents reported that they had fired employees for

misuse of the corporate telephone.
 Information Technology Ethical Issues

Precautionary Measures for Misuse of Information Technology:

• 66% reported they had monitored employees’ computers to determine
which Web sites had been selected.

• 65% of the firms stated they used software to block connections to

inappropriate websites.

• 45% monitored the content, the keystrokes and amount of time spent
on the computer by their employees.
 Information Technology Ethical Issues

Precautionary Measures for Misuse of Information Technology:

• 81% had a personal Internet use policy.

• 43% saved and reviewed computer files of their employees.

• 86% told employees that their email was being monitored.

• 73% of the firms notify the employees that they are monitoring the
employees’ voice mail.

• 84% notified their employees they were monitoring the phones.

 Information Technology Ethical Issues

Precautionary Measures for Misuse of Information Technology:

• 55% retained and reviewed email messages sent and received by their
employees.

• 24% have had email subpoenaed for legal cases.

• 15% had to address workplace lawsuits that were the result of employee
email.

• 84% of the firms had a formal email policy in place

 Information Technology Ethical Issues

Precautionary Measures for Misuse of Information Technology:

• 12% of the firms track blogs to see what was written about the
company, and 10% monitor social networking sites.

• 89% told their employees that access to certain Web sites was
blocked.

• 82% told the employees they were saving and receiving their
computer files.

• 42% had a personal instant messenger use policy.

 Information Technology Ethical Issues

Precautionary Measures for Misuse of Information Technology:

• 34% had a policy that explained when employees could access the
Internet for personal use during company time.

• 23% of the firms had a policy pertaining to the use of personal postings
on corporate blogs.

• 20% had a policy pertaining to the use of personal blogs during

company time.
 Information Technology Ethical Issues

Precautionary Measures for Misuse of Information Technology:

• 48% of the firms in the survey reported using video monitoring to
deter theft, violence, and sabotage.

• 7% of the firms reported using video surveillance to monitor the

actions of their employees.

• 3% of the firms used global positioning systems (GPS) to track cell

phones, 8% used to track company vehicles and less than 1% used
GPS to track employees via the employees’ corporate identifications
or Smartcards.
 Management Issues for Information
Technology
• As an agent for the stockholders, the manager must try to use information
technology to enhance the level of competition of the firm.
• Ensure rights and needs of other stakeholders are not sacrificed to
maximize the firm’s level of profitability.’
• A manager has to consider following factors when understanding the
potential ethical issues related to information technology.
o Privacy of the stakeholders
o Ownership of the information
o Control over information flow
o Accuracy of the information
o Security of the stakeholders
 Policy Areas to Address Technology
Management Issues
Data Policy:
• The company must establish a data policy to ensure that every employee
understands what is acceptable and what is unacceptable in releasing information.
• A data policy is a declaration to the firm’s stakeholders of its commitment to being
good stewards of the data
• An effective data policy need to address the issues of privacy, control, accuracy
and security.

Intellectual Rights Policy:

• Clearly spells out what intellectual property is owned by the employee and what is
owned by the firm.
• Since the employee is using assets of the firm, any intellectual property developed
in the workplace belongs to the firm.

Workers’ Rights Policy:

• Managers of the firm must explain the conditions, the employees may be
answerable to, during their employment with the firm.
• Issues that need to be addressed in the workers’ rights policy include type of
monitoring, type of information collected pertaining to the employee and
identification of private and public information.
 Critical Analysis to Assist in Decision
Making
Managers should do following types of critical analysis to
assist in their decision-making processes:
• Stakeholder Analysis
• Utilitarian Goal - Based Analysis
• Rights - Based Analysis
• Duty - Based Analysis
 Critical Analysis to Assist in Decision
Making
1. Stakeholder Analysis:
Managers need to identify stakeholders affected by an information
technology-based decision, such as which stakeholders will be
affected, what is at risk for each stakeholder, how decision options
will affect their interests, and whether certain stakeholders should be
considered a high priority.

2. Utilitarian Goal – Based Analysis:

 Utilitarian goal-based analysis helps managers determine a decision
that will produce the greatest good to the greatest number of
stakeholders, considering both the financial and nonfinancial impacts
of their decision.
 It also attempts to determines the maximum benefits to all the
stakeholders not just the stockholders.
 Critical Analysis to Assist in Decision
Making
3. Rights-Based Analysis:
Rights-based analysis is a process of considering how potential decisions
may affect the rights of different types of stakeholder, such as human
rights, privacy rights, individual freedoms, and institutional rights.

4. Duty – Based Analysis:

Duty-based analysis focuses on assessing the ethical duties of a manager,
such as honesty, fairness, and truthfulness, without causing any harm to
any people.
 Privacy of Employees
E-Mail:
•The Electronic Communications Privacy Act of 1986 allows employers
to monitor e-mail messages sent through the computer systems, allowing
for the transfer of data.
•Under certain conditions, such as when emails are kept private and
confidential, employees may have recourse against an employer who
monitors them.
•Employees need to be reminded, through an email policy distributed and
signed by all employees, that their accounts and emails are not private.
•Many companies have turned to monitoring the email of their employees,
and e-mails can be subpoenaed and made public through court
proceedings.
•The user may not understand or realize that e-mail can be retrieved even
after it has been deleted from the hard drive and thus it can be used against
the employees.
•It is becoming common for the companies to monitor and fine employees
for misuse of e-mail especially if the use is illegal or degrading to the
company.
 Benefits and Costs of Using Email
Benefits:
•Cost-benefits – e-mail is cheaper than other mediums of communication like fax,
telephone, post mail etc.
•Efficiency – e-mail allows communication to a large population quickly
•Documentation – e-mail is a written document that can be stored and retrieved.
•Access to resources – e-mail allows for easy access to information and people
•Monitoring – employers can monitor the activities of the employees

Costs:
•Offensive communications – e-mail may relay inappropriate and/or offensive
behavior.
•Frivolous use – e-mail can take a disproportionate amount of time relative to its
real value.
•Information overload – e-mail can become the dominant form of communication
within an organization; the sheer volume of e-mail may, at times, overwhelm the
user.
 Types of Computer Monitoring

• The Privacy Rights Clearinghouse suggests that there are two main types
of computer monitoring that take place in companies:

1. Software that allows employers to see what is on the computer

screen in an employee's office or view information stored on the
hard drives. This makes it easy for employers to monitor internet
use and e-mail use.
2. A second kind of computer monitoring is to determine how long a
computer has been idle, suggesting that the employee is not
actually doing their job.
 Is an invasion of privacy justifiable by an
employer?
Six criteria to help determine whether an invasion of privacy is justifiable
by an employer:

1. For what purpose is the undocumented personal knowledge

sought?
2. Is this purpose a legitimate and important one?
3. Is the knowledge sought through invasion of privacy relevant to
its justifying purpose?
4. Is invasion of privacy the only or the least offensive means of
obtaining the knowledge?
5. What restrictions or procedural restraints have been placed on the
privacy-invading techniques?
6. How will the personal knowledge be protected once it has been
acquired?
 Telephone Monitoring

• The Electronic Communications Privacy Act of 1986 allows monitoring

of business-related phone calls.
• If the phone call is personal in nature, the monitoring must cease, but if
employees are explicitly told that personal calls are prohibited, the calls
can be monitored.
• Employers may also have to legally register a lost of phone numbers and
length of calls as an effort to monitor phone usage.
• Cell phones create even further complications like call tapping, change of
cellphone into a microphone and cloning or stealing the electronic serial
number and mobile identification number.
 Privacy of Customers

• Companies employ technology that allows them to make more inferences

about customers. This has led to ethical issues related to computer
technology, as customers may not be aware of the company's intentions.
• Companies use intelligence systems to monitor customer behavior and
preferences. They can adjust marketing plans to target specific customers
and their preferences of ordering and spending. However, many
consumers are unaware of the systems.
• Although Companies have an ethical responsibility to provide safeguards
for the information they gather, but customers must also employ
safeguards to protect their own information.
 Privacy of Customers
Consumer Protection Tactics:
Many consumers feel that Electronic monitoring is an invasion of privacy,
something that should be avoided at all costs. Following are some
consumer protection tactics identified by the Federal Trade Commission
(FTC):

1. Watch for catchwords and phrases.

2. Protect your private information.
3. Don’t download files sent electronically by strangers.
4. When you buy items online, pay with a credit card.
5. Never give your password to anyone.
6. Pay attention
7. When in doubt, check it out.
8. Use your common sense.
9. Don’t be afraid to file a complaint.
 Privacy of Customers

Customer Satisfaction about their Privacy:

Firms can take five steps to ensure that customers are satisfied with how a
firm uses customer information:
1. Establish a clear process by which privacy complaints by
customers can be addressed.
2. Establish an easy-to-understand privacy policy for customer
information.
3. Identify the constraints of transferring customer information.
4. Establish an opt-in and opt-out customer policy for information
sharing.
5. Establish a branding competitive strategy that includes privacy
commitments.
 The Challenge of Technology - Ethical
Issues Facing Internet Usage
Following ethical issues are identified with internet usage that raise
concerns in consumers’ minds:

• Security transactions
• Illegal activity (fraud, hacking, etc.)
• Privacy
• Honesty/truthfulness
• Judged by same standards as other mediums
• Pornography
• Product warranty
• Plagiarism
• Targeting children
• Unsolicited email
• False advertising
 The Role of Government Regulations
• From an ethical perspective, There is a debate over whether there should
be a government agency charged with policing the Internet.
• It is unclear how the Internet should be regulated in one country if other
countries fail to provide adequate Internet regulation.

Global Government Regulations:

• Sarbanes Oxley Act 2002
• The World Intellectual Property Organization – WIPO (Digital
Millennium Copyright Act)
• The European Union’s Electronic Commerce Directive
• The European Union’s Rome II Directive
 The Volunteer Censoring of Internet
Search Information
• Google, Microsoft, and Yahoo! were all sold Internet search technology to the
Chinese government in February 2006, allowing the government to monitor all
activities on the Internet system and block user access to information.
• All agreed to provide data that was then sold to the Chinese government counter
to the public beliefs that all information on the Internet should be available to
anyone in the world who seeks to find it.
• Google allowed Chinese government to block results from search terms such as
Freedom, Microsoft agreed to censor the software, and Yahoo! agreed to provide
government information leading to arrests of government “dissidents.”
• Google had to decide whether to serve their mission in China or compromise
their mission and complying with Chinese laws. The officials concluded that a
censored version of Google was the best solution, so they decided to launch the
Google.cn service. However, self-censoring is something that conflicts with
Google's core principles.
• Microsoft also sold software that censored searches such as “democracy” and
“freedom”. Microsoft's justification for this action was to comply with the laws
and regulations of each country.
• Yahoo! China was asked why it gave the Chinese government information to lead
to the arrest of dissidents. The senior vice president and general counsel stated
that they had no choice but to comply with Chinese law enforcement. Failure to
comply could lead to criminal charges, including imprisonment, and U.S.
companies in China face a choice: “comply with Chinese law or leave.”
 Technology – Based Fraud
Internet technology increases the risk of fraudulent activities, as evidenced
by following table, which identifies some of the most common types of
fraud:
Types of Fraud Description
Schemes offering high-value items to attract many consumers
Auction and Retail
by inducing them to send money but then deliver nothing or a
Schemes
lower-value item than promised.
Business Schemes advertising business opportunities allowing individuals
Opportunity or “Work to earn thousands of dollars a month but requiring the individual
at Home” Schemes to pay an upfront fee.
Identity Theft and Obtaining and using someone else’s personal data in a
Fraud fraudulent or deceptive way.
Spreading false and fraudulent information to cause increase in
Market Manipulation
thinly traded stocks then selling off the stocks before the price
Schemes
falls back to its usual low level to cause a price decrease,
Using unlawfully obtained credit card numbers to order goods or
Credit Card Schemes
services online.
 Technology – Based Fraud
Phishing:
•Use of email to try to mimic a legal, legitimate company to ‘fish’ for
personal or financial information from individuals
•Phishing and other forms of technology fraud are used to gain personal
information for illegal activities.
•May even contain computer viruses in the emails.
•The participants in phishing schemes may be committing:
o Identity Theft
o Wire Fraud
o Credit Card Fraud
o Bank Fraud
o Computer Fraud
 Technology – Based Fraud
Operation Web Snare:
•Operation Web Snare was an initiative by the FBI and other government
agencies to help target and convict cybercriminals.
•Operating between June 1, 2004, and August 26, 2004, officials sought to
convict those operating criminal schemes online. These frauds included the
following:

 Criminal spam  Intellectual Property Rights Fraud

 Phishing  Computer Intrusions or Hacking
 Spoofed or Hijacked Accounts  Economic Espionage or Theft or Trade
 International Reshipping Schemes Secrets
 Cyber Extortion
  International Money Laundering
Auction Fraud
 Credit Card Fraud  Identity Theft

There were more than 100 arrests and convictions through this program and
represented more than $210 million lost by more than 870,000 victims.
 Internet Attacks
• Cyber terrorism is the use of computer technology to
commit terrorism crimes
• Cyber terrorism crimes such as e-mail crimes, identity theft,
viruses, and spyware on computers, can cause harm through
computers.
• Spyware is a software that can be loaded onto a computer so
the computer operations can be monitored by an outside
party without the consent of the computer user.
• Vulnerable industries: defense contractors, medical and
health care companies, pharmaceutical companies, financial
institutions.
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Printed in the United States of America.

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