E-Commerce: Kenneth C. Laudon Carol Guercio Traver

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
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

The 1oral imensions o% an
Internet Society
4igure 6.7, Page 899
: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
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
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

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
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
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
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-
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

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
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

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
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
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
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

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

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)
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

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)
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
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
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
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
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

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
Trademar-s and the Internet
CybersFuatting
Anticybers,uatting 9onsumer Protection Act 5A9PA6
Cyber(iracy
Typos,uatting
1etatagging
Key!ording
ee( lin-ing
4raming
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

#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
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
<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
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

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)


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e-

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

#hich behaviors have been banned in Second

Is there a consensus regarding !hether or not in-

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

Internet, li-e other technologies,

Enable new crimes

Threaten social values

Costs and bene/ts must be

Issues raised by Internet and

4our ma5or categories o% issues.

Public safety and welfare

Study of principles used to determine right and wrong courses

Laws permitting individuals to recover damages

Laws are nown! understood

Ability to appeal to higher authorities to ensure laws applied

Process %or analy3ing ethical

Collective ,tilitarian Princi(le

<o 4ree Lunch

The New York Times Test

The Social Contract ;ule

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

The claim that certain information should not be collected at all

The claim of individuals to control the use of whatever

1a5or ethical issue related to e-

0nder what conditions should we invade the privacy

1a5or social issue.

%evelopment of 2e3pectations of privacy4 and

1a5or (olitical issue.

%evelopment of statutes that govern relations

ata collected includes

Personally identi&able information 5PII6

Ty(es o% data collected

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

8an and credit accounts! gender! age!

Preference data! transaction data! clicstream

Encourage sharing personal details

Pose uni,ue challenge to maintaining privacy

4aceboo-*s %acial recognition

Personal control over (ersonal

9reation of digital images that characteri.e online

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

ee( (ac-et ins(ection

Increases efectiveness of advertising!

Enables sensing of demand for new products

0ndermines e3pectation of anonymity and

9onsumers show signi&cant opposition to

"arious la!s strengthen ability o% la!

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

Government agencies are largest users

;etention by ISPs o% user data a concern

In ,nited States, (rivacy rights

?irst Amendment@freedom of speech and

?ourth Amendment@unreasonable search and

?ourteenth Amendment@due process

Speci&c statutes and regulations 5federal and

,.S. /rms can gather and redistribute

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

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

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