More Related Content Similar to 08 Ethics, Law and E-commerce (20) More from monchai sopitka (11) 08 Ethics, Law and E-commerce1. e-commerce
business. technology. society.
eighth edition
Kenneth C. Laudon
Carol Guercio Traver
Copyright © 2012 Pearson Education
Chapter 8
Ethics, Law and E-commerce
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2. Discovering Law and Ethics in a Virtual World
Class Discussion
Why is “mischief” in virtual worlds more difficult to stop?
What constitutes mischief in Second Life?
It’s in virtual world; Selling brand-name goods, conducting gambling, selling
simulated prostitution service
Which behaviors have been banned in Second Life?
Intolerance, harassment, assault, disclosure of information about other people’s
real-world lives, indecency sexual behavior, and disturbing the peace
Is there a consensus regarding whether or not in-game
gambling and other virtual crimes are also actual crimes?
What is Second Life’s stance?
No. They prohibited all forms of gambling in July 2007
How faithfully do you believe the law should be enforced in
virtual worlds?
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Copyright © 2006
Pearson Education,
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3. Learning Objectives
Understand why e-commerce raises ethical, social, and political issues
Recognize the main ethical, social, and political issues raised by e-
commerce
Identify a process for analyzing ethical dilemmas
Understand basic concepts related to privacy
Identify the practices of e-commerce companies that threaten privacy
Describe the different methods used to protect online privacy
Understand the various forms of intellectual property and the
challenges involved in protecting it
Understand how governance of the Internet has evolved over time
Explain why taxation of e-commerce raises governance and
jurisdiction issues
Identify major public safety and welfare issues raised by e-commerce
Copyright © 2012 Pearson Education
Understanding Ethical, Social, and
Political Issues in E-commerce
Internet, like other technologies, can
(see next Fig.):
Enable new crimes
Affect environment
Threaten social values
Costs and benefits must be carefully
considered, especially when there are
no clear-cut legal or cultural guidelines
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4. Copyright © 2010
Pearson Education,
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A Model for Organizing the Issues
Issues raised by Internet and e-commerce can be
viewed at individual, social, and political levels (see
next Fig.)
Four major categories of issues:
Information rights– individual rights to their personal info in
public marketplace and rights to access info about business
and other organizations
Property rights – enforcement of traditional intellectual
property rights in Internet world where perfect copies can
be made and distributed worldwide within seconds
Governance – public laws to govern Internet and e-
commerce, and the law-making bodies (state, federal,
international) who have jurisdiction
Public safety and welfare – to ensure equitable access to
Internet and e-commerce channels by schools and colleges,
or to determine if pornography and gambling are threat to
public safety and welfare
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5. The Moral Dimensions of an
Internet Society
Figure 8.1, Page 538
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Basic Ethical Concepts
Ethics
Study of principles used to determine right and wrong courses of
action
Responsibility
individuals, organizations, and societies are responsible for actions
they take
Accountability
individuals, organizations, and societies should be held accountable to
others for the consequences of their actions
Liability
Laws permitting individuals to recover damages done to them
Due process
Laws are known, understood
Ability to appeal to higher authorities to ensure laws applied correctly
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6. Analyzing Ethical Dilemmas
Dilemma
A situation where there are at least two diametrically
opposed actions, each of which supports a desirable
outcome
Process for analyzing ethical dilemmas:
1. Identify and clearly describe the facts: Find out who
did what to whom, and where, when, and how
2. Define the conflict or dilemma and identify the higher-
order values involved: E.g., advertising networks
(DoubleClick) increases market efficiency at the price
of individual privacy
3. Identify the stakeholders
4. Identify the options that you can reasonably take
5. Identify the potential consequences of your options :
Ask yourself “What if I choose this option consistently
over time?”
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Candidate Ethical Principles
Help determine actions when confronted with an ethical
dilemma:
Golden Rule – Do unto others as you would have them do unto you.
Universalism – If an action is not right for all situations, then it is not
right for any certain situation.
Slippery Slope – If an action can’t be taken repeatedly, then it is not
right to take at all.
Collective Utilitarian Principle – Take the action that achieves the
greater value for all of society.
Risk Aversion – Take the action that produces the least harm, or the
least potential cost.
No Free Lunch – If something someone else has created is useful to
you, it has value and you should assume the creator wants
compensation for this work.
The New York Times Test (Perfect Information Rule) – Given your
decision on a matter, will the reaction of readers be positive or
negative?
The Social Contract Rule – Would you live in a society where the
principle you are supporting would become an organizing principle of
the entire society?
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7. Privacy and Information Rights
Privacy
Moral right of individuals to be left alone, free from
surveillance, or interference from other individuals or
organizations
Information privacy
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
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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
norms
Major political issue:
Development of statutes that govern relations between
recordkeepers and individuals
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8. Information Collected at
E-commerce Sites
Data collected includes
Personally identifiable information (PII) - Data that can be
used to identify, locate, or contact an individual (see next
Fig.)
Anonymous information - Demographic and behavioral
information that does not include any personal identifiers
(e.g., age, occupation, income, zip code, ethnicity)
Types of data collected
Name, address, phone, e-mail, social security
Bank and credit accounts, gender, age, occupation, education
Preference data, transaction data, clickstream data, browser
type
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10. Social Networks and Privacy
Social networks
Encourage sharing personal details
Pose unique challenge to maintaining privacy
Facebook’s facial recognition
technology and tagging
Personal control over personal
information vs. organization’s desire to
monetize social network
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Profiling and Behavioral Targeting
Profiling
Creation of digital images that characterize online individual and
group behavior
Anonymous profiles
Identify people as belonging to very specific and targeted groups
E.g., 20-30-yr-old males, with college degrees and income >$30,000/yr, and
interested in high-fashion clothing
Personal profiles
Add personal identifiers (email, postal address, phone number) to behavioral data
Advertising networks can
Track consumer and browsing behavior on Web
Dynamically adjust what user sees on screen
Build and refresh profiles of consumers
Google’s AdWords program
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11. Profiling and Behavioral Targeting (cont.)
Deep packet inspection
Records every keystroke at ISP level of everyone and uses
information to make suggestions and target ads
Business perspective:
Increases effectiveness of advertising, subsidizing free content
Enables sensing of demand for new products and services
Critics’ perspective:
Undermines expectation of anonymity and privacy
Consumers
show significant opposition to unregulated collection of
personal information
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The Internet and Government
Invasions of Privacy
Various laws strengthen ability of law enforcement
agencies to monitor Internet users without knowledge
and sometimes without judicial oversight
CALEA, USA PATRIOT Act, Cyber Security Enhancement Act,
Homeland Security Act
Government agencies are largest users of private sector
commercial data brokers, e.g., Experian and TransUnion
Retention of individual’s online behavior data by ISPs
raises privacy concern
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12. Legal Protections
In United States, privacy rights explicitly
granted or derived from:
Constitution
First Amendment—guarantees freedom of speech
and association
Fourth Amendment—protects against unreasonable
search and seizure of one’s personal documents or
home
Fourteenth Amendment—guarantees due process
Specific statutes and regulations (federal and
state)
Common law – court decisions involving
wrongful acts or personal injuries
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14. Informed Consent
U.S. firms can gather and redistribute
transaction information without individual’s
informed consent
Illegal in Europe
Informed consent:
Opt-in – requires affirmative action by consumer to allow
collection and use of information
Opt-out – default to collect information unless consumer
takes affirmative action to prevent collection of data by
checking a box or filling out form
Many U.S. e-commerce firms merely publish information
practices as part of privacy policy without providing for any
form of informed consent
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The FTC’s Evolving Privacy Approach
Fair Information Practice principles (1998)
Notice
Choice
Access
Security
Enforcement
Restricted collection
New privacy framework (2010)
Privacy by design
Simplified choice
Greater transparency
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Notification and Choice
Strengthen the FIP’s
Added to
the FIP’s
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17. The European Data
Protection Directive
Privacy protection much stronger in Europe than
United States
European approach:
Comprehensive and regulatory in nature
European Commission’s Directive on Data
Protection (1998):
Standardizes and broadens privacy protection in European Union
countries
Department of Commerce safe harbor program:
For U.S. firms that wish to comply with directive
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Private Industry Self-Regulation
Safe harbor programs:
Private, self-regulating policy mechanism to meet objectives
of government regulations without government involvement
e.g., Privacy seal programs
Industry associations include:
Online Privacy Alliance (OPA)
Encourages self-regulation as a reaction to growing public
concerns
Developed online “seals” that attest to privacy policies on a site
E.g., privacy seal programs (TRUSTe, BBB Reliability Seal)
Network Advertising Initiative (NAI)
Formed by advertising network industry
Developed privacy principles in conjunction with FTC
Members include DoubleClick, Advertising.com, and 24/7 Real
Media
CLEAR Ad Notice Technical Specifications
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18. Private Industry Self-Regulation
Privacy advocacy groups
Monitor developments in privacy
Emerging privacy protection business
E.g., reputation.com, SocialShield, Abine
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Technological Solutions
Spyware blockers
Pop-up blockers
Secure e-mail
Anonymous remailers, surfing
Cookie managers
Disk/file erasing programs
Policy generators
Privacy Policy Reader/P3P
Public key encryption
(see next Fig.)
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How P3P Works
Figure 8.2(A), Page 522 SOURCE: W3C Platform for Privacy Preferences Initiative, 2003.
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20. Intellectual Property Rights
Intellectual property:
Encompasses all tangible and intangible products of
human mind
Major 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?
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Intellectual Property Protection
Three main types of protection:
Copyright
Patent
Trademark law
Goal of intellectual property law:
Balance two competing interests—public and private
Maintaining this balance of interests is
always challenged by the invention of new
technologies
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21. Copyright
Protects original forms of expression (but not ideas) from
being copied by others for a period of time
E.g., writings, art, drawings, and music
95-year protection for corporate-owned works, or life + 70-
year protection of individual’s works
“Look and feel” copyright infringement lawsuits involve
distinction between an idea and its expression
E.g., Apple sued Microsoft and HP for infringing Apple’s
copyright on Macintosh interface
Fair use doctrine : Under certain circumstances, permits use
of copyrighted materials without permission (see next Fig.)
Digital Millennium Copyright Act, 1998
First major effort to adjust copyright laws to Internet age
Implements WIPO treaty that makes it illegal to make, distribute, or
use devices that circumvent technology-based protections of
copyrighted materials
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Patents
Grant owner 20-year monopoly on ideas behind an
invention
Different from copyrights since patents protect idea and not just
expression of idea
Four types of inventions: Machines, Man-made products,
Compositions of matter, Processing methods
Invention must be new, non-obvious, novel
Benefits
Encourages inventors
Promotes dissemination of new techniques through licensing
Danger
Stifles competition by raising barriers to entry
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23. E-commerce Patents
1998 State Street Bank & Trust vs. Signature Financial
Group
Business method patents
U.S. Patent Office, European Patent Convention hold
different standards
Most European patent laws do not recognize business
methods unless based on technology
Patent reform
Patent trolls: companies that buy patents on a speculative basis
and then use them to threaten other companies violating the patent
2011 America Invents Acts
Switch from “first-to-invent” to “first-to-file” system
New ways to challenge patents out of court
Allow startup firms to get fast-track consideration of their patent
applications, within 12 months, rather than 30-plus months
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Internet and E-commerce Business Method Patents
Figure 8.2, Page 576 SOURCE: Based on data from United States Patent and Trademark Office, 2010.
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25. Trademarks
Identify, distinguish goods, and indicate their source
Purpose
Ensure consumer gets what is paid for/expected to receive
Protect owner against piracy and misappropriation
Infringement
Market confusion: creating confusion with existing marks, causes
consumers to make market mistakes
Bad faith: intentional misuse of words and symbols to extort
revenue from legitimate trademark owners
Dilution
Behavior that weakens connection between trademark and product
Blurring – weakening connection between trademark and goods
Tarnishment – using trademark in a way that makes underlying
products appear unsavory or unwholesome
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Trademarks and the Internet
Cybersquatting
Anticybersquatting Consumer Protection Act (ACPA)
Cyberpiracy
Typosquatting
Metatagging
Keywording
Deep linking
Framing
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26. Copyright © 2012 Pearson Education Slide 8-55
Governance
Primary questions
Who will control Internet and e-commerce?
What elements will be controlled and how?
Stages of governance and e-commerce
Government Control Period (1970–1994)
Privatization (1995–1998)
Self-Regulation (1995–present)
Government Regulation (1998–present)
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Who Governs E-commerce
and the Internet?
Currently: Mixed mode environment
Self-regulation, through variety of Internet policy
and technical bodies, co-exists with limited
government regulation
ICANN : Domain Name System
Internet could be easily controlled,
monitored, and regulated from a central
location , e.g., network access points,
routers, and servers (e.g., China, Singapore,
Thailand etc.)
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28. Taxation
E-commerce taxation illustrates complexity of
governance and jurisdiction issues
U.S. sales taxed by states and local government
MOTO retailing
E-commerce benefits from tax “subsidy”
October 2007: Congress extends tax moratorium for
an additional seven years
Unlikely that comprehensive, integrated rational
approach to taxation issue will be determined for
some time to come
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Net Neutrality
Neutrality: All Internet traffic treated
equally—all activities charged the same rate, no
preferential assignment of bandwidth
Backbone providers vs. content providers
December 2010 FCC approved “compromise” net
neutrality rules; prohibit ISPs from blocking traffic
such as Skype on wired networks, and prohibit
“unreasonable” discrimination on such networks
Telecom providers adopting compromise position
between wired and mobile wireless access: maintain
existing rules for land lines, but implement
differential pricing for mobile wireless networks, e.g.,
$15/month for 200MB of data to $45/month for 4GB
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29. Public Safety and Welfare
Protection of children and strong
sentiments against pornography
Passing legislation that will survive court
challenges has proved difficult
Efforts to control gambling and restrict
sales of drugs and cigarettes
Currently, mostly regulated by state law
Unlawful Internet Gambling Enforcement Act
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