ECT250

Ethical, Social, and Political

Issues in E-commerce

Copyright © 2002 Pearson Education, Inc. Slide 9-1

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
 Identify the practices of e-commerce companies
that threaten privacy
 Understand basic concepts related to privacy

Copyright © 2002 Pearson Education, Inc. Slide 9-2

Learning Objectives
 Describe the different methods used to protect
online privacy
 Understand the various forms of intellectual
property and the challenge of 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 © 2002 Pearson Education, Inc. Slide 9-3

Unique Features of E-commerce Technology
and Their Potential Ethical, Social, and/or
Political Implications
Page 456,
Table 9.1

Copyright © 2002 Pearson Education, Inc. Slide 9-4

Ethical, Social, and Political
Issues
 Information Rights
 What rights to their own personal
information do individuals have in a
public marketplace, or in their private
homes, when Internet technology
makes information collection so
pervasive and efficient?
 What rights do individuals have to
access information about business
firms and other organizations?

Copyright © 2002 Pearson Education, Inc. Slide 9-5

Ethical, Social, and Political
Issues
 Property Rights
 How can traditional intellectual property rights
be enforced in the Internet world where perfect
copies of protected works can be made and
easily distributed worldwide in seconds?
 Governance
 Should the Internet and e-commerce be
subject to public laws?
 If so, what law-making bodies have jurisdiction
-- state, federal, and/or international?

Copyright © 2002 Pearson Education, Inc. Slide 9-6

Ethical, Social, and Political
Issues
 Public Safety and Welfare
 What efforts should be undertaken to ensure
equitable access to the Internet and e-commerce
channels?
 Should governments be responsible for ensuring
that schools and colleges have access to the
Internet?
 Is certain online content and activities -- such as
pornography and gambling -- a threat to public
safety and welfare?
 Should mobile commerce be allowed from moving
vehicles?

Copyright © 2002 Pearson Education, Inc. Slide 9-7

The Moral Dimensions of an
Internet Society
Page 458,
Figure 9.1

Copyright © 2002 Pearson Education, Inc. Slide 9-8

Basic Ethical Concepts

 Ethics is the study of principles that

individuals and organizations can use to
determine right and wrong courses of
action
 Responsibility means that as free moral
agents, individuals, organizations, and
societies are responsible for the actions
they take

Copyright © 2002 Pearson Education, Inc. Slide 9-9

Basic Ethical Concepts

 Accountability means that individuals,

organizations, and societies should be
held accountable to other for the
consequences of their actions
 Liability is a feature of political systems in
which a body of law is in place that
permits individuals to recover the
damages done to them by other actors,
systems, or organizations

Copyright © 2002 Pearson Education, Inc. Slide 9-10

Basic Ethical Concepts

 Due process is a feature of law-governed

societies and refers to a process in which
laws are known and understood and there
is an ability to appeal to higher authorities
to ensure that laws have been applied
correctly

Copyright © 2002 Pearson Education, Inc. Slide 9-11

Analyzing Ethical Dilemmas

 Dilemma is a situation is which there are

at least two diametrically opposed actions,
each of which supports a desirable
outcome
 Use a five-step process to analyze a
dilemma

Copyright © 2002 Pearson Education, Inc. Slide 9-12

Analyzing Ethical Dilemmas
 Identify and describe clearly the facts
 Find out who did what to whom, and
where, when, and how.
 Define the conflict or dilemma and identify
the higher-order values
 Ethical, social, and political issues
always reference higher values
 The parties to a dispute all claim to be
pursuing higher values

Copyright © 2002 Pearson Education, Inc. Slide 9-13

Analyzing Ethical Dilemmas

 Identify the stakeholders

 Every ethical, social, and political
issues has stakeholders: players in the
game who have an interest in the
outcome, who have invested in the
situation, and usually have vocal
opinions
 Find out the identity of these groups
and what they want

Copyright © 2002 Pearson Education, Inc. Slide 9-14

Analyzing Ethical Dilemmas
 Identify the options that you can
reasonably take
 None of the options may satisfy all
interests involved
 Some options do a better job than
others
 Arriving at a “good” or ethical solution
may not always be a balancing of
consequences to stakeholders

Copyright © 2002 Pearson Education, Inc. Slide 9-15

Candidate Ethical Principles

 The Golden Rule

 Do unto others as you would have them
do unto you.
 Putting yourself in place of others and
thinking of yourself as the object of the
decision can help you think about
fairness in decision making

Copyright © 2002 Pearson Education, Inc. Slide 9-16

Candidate Ethical Principles

 Universalism
 If an action is not right for all situations,
then it is not right for any specific
situation
 Ask yourself, “If we adapted this rule in
every case, could the organization, or
society, survive?”

Copyright © 2002 Pearson Education, Inc. Slide 9-17

Candidate Ethical Principles
 Slippery Slopes
 If an action cannot be taken repeatedly,
then it is not right to take at all
 An action may appear to work in one
instance to solve a problem, but if
repeated, would result is a negative
outcome
 “Once started down a slippery path, you
may not be able to stop.”

Copyright © 2002 Pearson Education, Inc. Slide 9-18

Candidate Ethical Principles

 Collective Utilitarian Principle

 Take the action that achieves the
greater value for all of society
 This rule assumes you can prioritize
values in a rank order and understand
the consequences of various courses of
action

Copyright © 2002 Pearson Education, Inc. Slide 9-19

Candidate Ethical Principles
 Risk Aversion
 Take the action that produces the least harm,
or the least potential cost.
 Some actions have extremely high failure
costs of a very low probability or extremely
high failure costs of moderate probability
 Avoid high-failure cost actions and choose
actions whose consequences would not be
catastrophic, even if there were a failure

Copyright © 2002 Pearson Education, Inc. Slide 9-20

Candidate Ethical Principles

 No Free Lunch
 Assume that virtually all tangible and
intangible objects are owned by
someone else unless there is a specific
declaration otherwise
 If something someone else has created
is useful to you, it has value and you
should assume the creator wants
compensation for this work

Copyright © 2002 Pearson Education, Inc. Slide 9-21

Candidate Ethical Principles
 The New York Times Test (Perfect Information
Rule)
 Assume that the results of you decision on a
matter will be the subject of a lead article in
the New York Times the next day
 Will the reaction of readers be positive or
negative?
 Would you parents, friends, and children be
proud of your decisions

Copyright © 2002 Pearson Education, Inc. Slide 9-22

Candidate Ethical Principles
 The Social Contract Rule
 Would you like to live in a society where the
principle you are supporting would become an
organizing principle of the entire society?
 You might think it is wonderful to download
illegal copies of music tracks, but you might
not want live in a society that did not respect
property rights, such as your property rights to
the car in your driveway, or your rights to a
term paper or original art

Copyright © 2002 Pearson Education, Inc. Slide 9-23

Information Collected at E-
commerce Sites

 Personally identifiable Information (PII) is

any data that can be used to identify,
locate, or contact an individual
 Anonymous information is demographic
and behavioral information that does not
include any personal identifiers

Copyright © 2002 Pearson Education, Inc. Slide 9-24

Profiling: Privacy and
Advertising Networks

 Profiling is the creation of digital images

that characterize online individual and
group behavior
 Anonymous profiles identify people as
belonging to highly specific and targeted
groups
 Personal profiles add a personal e-mail
address, postal address, and/or phone
number to behavioral data

Copyright © 2002 Pearson Education, Inc. Slide 9-25

Personal Information Collected by E-
commerce Sites
Page 463, Table 9.2

Copyright © 2002 Pearson Education, Inc. Slide 9-26

The Internet’s Major Personally
Identifiable Information Gathering Tools
Page 464, Table 9.3

Copyright © 2002 Pearson Education, Inc. Slide 9-27

The Concept of Privacy
 Privacy is the moral right of individuals to
be left alone, free from surveillance or
interference from other individuals or
organizations, including the state
 Information privacy includes both the
claim that certain information should not
be collected at all by governments or
business firms, and the claim of
individuals to control the use of whatever
information that is collected about them

Copyright © 2002 Pearson Education, Inc. Slide 9-28

The Concept of Privacy
 Informed consent is consent given with
knowledge of all material facts needed to
make a rational decision
 Opt-in requires and affirmative action by
the consumer to allow collection and use
of consumer information
 Opt-out -- the default is to collect
information unless the consumer takes
and affirmative action to prevent the
collection of data

Copyright © 2002 Pearson Education, Inc. Slide 9-29

Excerpts from
KMart’s
BlueLight.com
Privacy Policy
Page 469, Table 9.4

Copyright © 2002 Pearson Education, Inc. Slide 9-30

Federal Trade Commission Fair
Information Practice Principles
Page 472, Table 9.6

Copyright © 2002 Pearson Education, Inc. Slide 9-31

FTC Recommendations
Regarding Online Profiling
Page 473,
Table 9.7

Copyright © 2002 Pearson Education, Inc. Slide 9-32

Summary of Proposed e-commerce Privacy
Legislation in 2001
Page 474, Table 9.8

Copyright © 2002 Pearson Education, Inc. Slide 9-33

Private Industry Self-Regulation

 Safe harbor is a private self-regulating

policy and enforcement mechanism that
meets the objectives of government
regulators and legislation but does not
involve government regulations or
enforcement

Copyright © 2002 Pearson Education, Inc. Slide 9-34

A Summary of DoubleClick’s
Privacy Policy

Page 477, Table 9.9

Copyright © 2002 Pearson Education, Inc. Slide 9-35

Intellectual Property Rights

 Congress shall have the power to

“promote the progress of science and
useful arts, by securing for limited times
to authors and inventors the exclusive
right to their respective writing and
discoveries.”

Copyright © 2002 Pearson Education, Inc. Slide 9-36

Copyright: The Problem of Perfect
Copies and Encryption

 Copyright law protects original forms of

expression such as writings, art,
drawings, photographs, music, motion
pictures, performances, and computer
programs from being copied by others for
a minimum of 50 years
 “Look and feel” copyright infringement
lawsuits are precisely about the
distinction between and idea and its
expression

Copyright © 2002 Pearson Education, Inc. Slide 9-37

Copyright: The Problem of Perfect
Copies and Encryption

 Doctrine of fair use permits teachers and

writers to use copyrighted materials with
permission under certain circumstances
 Digital Millennium Copyright Act (DMCA)
of 1998 is the first major effort to adjust
the copyright laws to the Internet age

Copyright © 2002 Pearson Education, Inc. Slide 9-38

Fair Use Considerations to
Copyright Protection
Page 486, Table 9.12

Copyright © 2002 Pearson Education, Inc. Slide 9-39

The Digital Millennium
Copyright Act
Page 487, Table 9.13

Copyright © 2002 Pearson Education, Inc. Slide 9-40

Patents: Business Methods and
Processes
 “Whoever invents or discovers any new
and useful process, machine,
manufacture, or composition of matter, or
any new and useful improvement thereof,
may obtain a patent therefore, subject to
the conditions and requirements of this
title.”
 Patent grants the owner an exclusive
monopoly to the ideas behind an invention
for 20 years

Copyright © 2002 Pearson Education, Inc. Slide 9-41

Explosion of Internet and E-
commerce Patents
Page 490, Figure 9.4

Copyright © 2002 Pearson Education, Inc. Slide 9-42

Selected E-commerce Business Methods
Patents

Page 492,Table 9.14

Copyright © 2002 Pearson Education, Inc. Slide 9-43

Trademarks: Online
Infringement and Dilution

 Trademark is “any work, name, symbol, or

device, or any combination there of …
used in commerce … to identify and
distinguish … goods … from those
manufactured or sold by others and to
indicate the source of the goods.”

Copyright © 2002 Pearson Education, Inc. Slide 9-44

Trademarks: Online
Infringement and Dilution

 Trademark -- a mark used to identify and

distinguish goods and indicate their
source
 Dilution is any behavior that would
weaken the connection between the
trademark and the product

Copyright © 2002 Pearson Education, Inc. Slide 9-45

Trademarks and the Internet

 Anticybersquatting Consumer Protection

Act (ACPA) creates civil liabilities for
anyone who attempts in bad faith to profit
from an existing famous or distinctive
trademark by registering an Internet
domain name that is identical, or
confusingly similar, or “dilutive” of that
trademark

Copyright © 2002 Pearson Education, Inc. Slide 9-46

Trademarks and the Internet

 Cybersquatting involves the registration

of an infringing domain name, or other
Internet use of an existing trademark, for
the purpose of extorting payments from
the legitimate owners
 Cyberpiracy involves the same behaviour
as cybersquatting, but with the intent of
diverting traffic from the legitimate site to
an infringing site

Copyright © 2002 Pearson Education, Inc. Slide 9-47

Internet and Trademark Law

Page 495,
Table 9.15

Copyright © 2002 Pearson Education, Inc. Slide 9-48

Trademarks and the Internet

 The use of trademarks in metatags is

permitted if the use does not mislead or
confuse consumers
 The permissibility of using trademarks as
keywords on search engines is also subtle
and depends both on the extent to which
such use causes “initial customer
confusion” and the content of the search
results

Copyright © 2002 Pearson Education, Inc. Slide 9-49

Trademarks and the Internet

 Linking refers to building hypertext links

from one site to another site
 Deep linking involves bypassing the target
site’s home page, and going directly to a
content page
 Framing involves displaying the content of
another Web site inside your own Web site
within a frame or window

Copyright © 2002 Pearson Education, Inc. Slide 9-50

Governance

 Governance has to do with social control:

Who will control e-commerce, what
elements will be controlled, and how will
the controls be implemented?

Copyright © 2002 Pearson Education, Inc. Slide 9-51

The Evolution of Governance of
E-commerce
Page 500, Table 9.16

Copyright © 2002 Pearson Education, Inc. Slide 9-52

Public Government and Law

 Taxation illustrates the complexity of

governance and jurisdiction of e-
commerce
 In both Europe and the United States,
governments rely on sales taxes based on
the type and value of goods sold
 There is no integrated rational approach to
taxation of domestic or international e-
commerce

Copyright © 2002 Pearson Education, Inc. Slide 9-53

Public Safety and Welfare

 Electronic media of all kinds have

historically been regulated by
governments
 Critical issues in e-commerce center
around the protection of children, strong
sentiments against pornography in public
media, efforts to control gambling, and the
protection of public health through
restricting sales of drugs and cigarettes

Copyright © 2002 Pearson Education, Inc. Slide 9-54

Protecting Children

 Communications Decency Act (1996)

makes it a felony criminal offence to use
any telecommunications device to
transmit “any comment, request,
suggestion, proposal, image or other
communications which is obscene, lewd,
lascivious, filthy, or indecent” to anyone,
and in particular, to persons under the age
of 18 years of age

Copyright © 2002 Pearson Education, Inc. Slide 9-55

Protecting Children

 Children’s Online Protection Act (1998)

made it a felony criminal offense to
communicate for “commercial purposes”
“any material harmful to minors”
 Private pressure from organized groups
has also been successful in forcing some
Web sites to eliminate the display of
pornographic materials

Copyright © 2002 Pearson Education, Inc. Slide 9-56

Gambling, Cigarettes, and
Drugs

 It is unclear if online gambling is illegal

under U.S. federal law
 Most online gambling sites are located
offshore in Costa Rica or Antigua
 Geolocation software attempts to identify
the geographical location of Web users

Copyright © 2002 Pearson Education, Inc. Slide 9-57

Equity and the Digital Divide
 The Digital Divide refers to the large
differences in Internet access and e-
commerce access among income, ethnic,
and age groups.
 Lack of such access affects the ability of
children to improve their learning with
educational software, of adults to acquire
valuable technology skills, and of families
to benefit from online connections to
important health and civic information

Copyright © 2002 Pearson Education, Inc. Slide 9-58