1. ELC 200 Day 17 Copyright © 2007 Pearson Education, Inc.

2. Agenda Ethical, Social, and Political Issues in E-commerce Questions?
Assignment 5 graded
6 A’s, % B’s and 2 non-submit
Assignment 6 posted
Due Nov 3 @ 11:05 AM
Assignment6.pdf
Assignment 7 posted
Due Nov 10 @ 11:05 AM
ELC 200 assignment 7.pdf
Exam 2 will be Nov. 10
Chaps 6,7, 8
20 M/C, 4 Short essay, 1 bonus question
Ethical, Social, and Political Issues in E-commerce

3. Possible Bonus Points Questions
Name and origin of 
What does his name mean?
What does he look like all “grown up”?
Web Cookies
What is the origin of the term “cookies”?
SuperBowl ads
One company -> One ad/year
Another Company -> after many years stopped putting ads on SB in favor of social networking
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4. Chapter 8: Ethical, Social, and Political Issues in E-commerce
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5. Chapter Objectives
Explain why e-commerce raises ethical, social and political issues.
Identify the main ethical, social, and political issues raised by e-commerce.
Identify a process for analyzing ethical dilemmas.
Explain basic concepts related to privacy.
Identify the practices of e-commerce companies that threaten privacy.
Describe the different methods used to protect online privacy.
Explain the various forms of intellectual property and the challenges involved in protecting it.
Explain how the 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.
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6. Understanding Ethical, Social, and Political Issues in E-commerce
Internet, like other technologies, can:
Enable new crimes
“I rob banks because that's where the money is.” – Willie Sutton
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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7. Copyright © 2010 Pearson Education, Inc.

8. A Model for Organizing the Issues
Issues raised by Internet and e- commerce can be viewed at individual, social, and political levels
Four major categories of issues:
Information rights
Property rights
Governance
Public safety and welfare
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9. The Moral Dimensions of an Internet Society
Figure 8.1, Page 498
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10. Basic Ethical Concepts
Ethics
Study of principles used to determine right and wrong courses of action
Responsibility
Accountability
Liability
Laws permitting individuals to recover damages
Due process
Laws are known, understood
Ability to appeal to higher authorities to ensure laws applied correctly
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11. Ethical Dilemmas
Two men are arrested, but the police do not possess enough information for a conviction. Following the separation of the two men, the police offer both a similar deal- if one testifies against his partner (defects / betrays), and the other remains silent (cooperates / assists), the betrayer goes free and the cooperator receives the full one-year sentence. If both remain silent, both are sentenced to only one month in jail for a minor charge. If each 'rats out' the other, each receives a three-month sentence. Each prisoner must choose to either betray or remain silent; the decision of each is kept quiet. What should they do?
Poundstone, W. (1992) Prisoner's Dilemma Doubleday, NY NY.
A trolley is running out of control down a track. In its path are five people who have been tied to the track by a mad philosopher. Fortunately, you could flip a switch, which will lead the trolley down a different track to safety. Unfortunately, there is a single person tied to that track. Should you flip the switch or do nothing?
Philippa Foot, The Problem of Abortion and the Doctrine of the Double Effect in Virtues and Vices (Oxford: Basil Blackwell, 1978)
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12. Analyzing Ethical Dilemmas
Process for analyzing ethical dilemmas:
Identify and clearly describe the facts
Define the conflict or dilemma and identify the higher-order values involved
Identify the stakeholders
Identify the options that you can reasonably take
Identify the potential consequences of your options
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13. Candidate Ethical Principles
Golden Rule
Do onto others as you would have them do onto you.
Universalism
If action is not right for all situations then it not for any.
Slippery Slope
If an action can not be taken repeatedly than it not right to take at all.
Collective Utilitarian Principle
The greater good
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14. Candidate Ethical Principles
Risk Aversion
Do the least harm
No Free Lunch
Unless things are declare as “free”, all tangible and intangible objects are “owned”
The New York Times Test
Post decision on front page and see what others thinks
The Social Contract Rule
Ethical decisions and principles should become organizing principles.
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15. Downloading illegal copies of music Plagiarizing Theft War
Where does each fit?
Downloading illegal copies of music
Plagiarizing
Theft
War
Racial discrimination
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16. Privacy and Information Rights
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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17. 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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18. Information Collected at E-commerce Sites
Data collected includes
Personally identifiable information (PII)
Anonymous information
Types of data collected
Name, address, phone, , social security
Bank and credit accounts, gender, age, occupation, education
Preference data, transaction data, clickstream data, browser type
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20. Social Networks and Privacy
Encourage sharing personal details
Pose unique challenge to maintaining privacy
However, use of personal information for monetizing social networks has met backlash
Facebook’s Beacon program (2007)
Facebook’s Terms of Service change (2009)
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21. Profiling and Behavioral Targeting
Creation of digital images that characterize online individual and group behavior
Anonymous profiles
Personal profiles
Advertising networks
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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22. Profiling and Behavioral Targeting (cont’d)
Deep packet inspection
Business perspective:
Web profiling serves consumers and businesses
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
Enables weblining
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23. 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, PATRIOT Act, Cyber Security Enhancement Act, Homeland Security Act
Government agencies are largest users of private sector commercial data brokers
Retention by ISPs of user data a concern
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24. In U.S., privacy rights explicitly granted or derived from
Legal Protections
In U.S., privacy rights explicitly granted or derived from
Constitution
First Amendment – freedom of speech and association
Fourth Amendment – unreasonable search and seizure
Fourteenth Amendment – due process
Specific statutes and regulations (federal and state)
Common law
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25. Definitions of 4 Privacy Torts:
Appropriation -- Use of a person's name, likeness or identity for trade or advertising purposes without consent.
Intrusion -- A physical, electronic or mechanical intrusion into someone's private space. This is an information-gathering, not a publication, tort. The legal wrong occurs at the time of the intrusion; no publication is necessary.
Public Disclosure of Embarrassing Private Facts -- Publication of non-newsworthy, private facts about an individual that would be highly offensive to a reasonable person (true defamation)(so intimate that outrage the public's sense of decency).
False light -- Publication of false, highly offensive (but not necessarily defamatory) information about an individual.
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26. Informed Consent
U.S. firms can gather and redistribute transaction information without individual’s informed consent
Illegal in Europe
Informed consent:
Opt-in
Opt-out
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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30. The FTC’s Fair Information Practices Principles
U.S. Federal Trade Commission:
Conducts research and recommends legislation to Congress
FTC Fair Information Practice Principles (1998):
Notice/Awareness (Core)
Choice/Consent (Core)
Access/Participation
Security
Enforcement
Guidelines, not laws
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31. FTC’s Fair Information Practice Principles
Notice/Awareness
Sites must disclose information practices before collecting data. Includes identification of collector, uses of data, other recipients of data, nature of collection (active/inactive), voluntary or required, consequences of refusal, and steps taken to protect confidentiality, integrity, and quality of the data
Choice/Consent
There must be a choice regime in place allowing consumers to choose how their information will be used for secondary purposes other than supporting the transaction, including internal use and transfer to third parties. Opt-in/Opt-out must be available.
Access/Participation
Consumers should be able to review and contest the accuracy and completeness of data collected about them in a timely, inexpensive process.
Security
Data collectors must take reasonable steps to assure that consumer information is accurate and secure from unauthorized use.
Enforcement
There must be in place a mechanism to enforce FIP
principles. This can involve self-regulation, legislation giving consumers legal remedies for violations, or federal statutes and regulation.
See Table 8.5, page 516
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32. FTC Recommendations: Online Profiling
Principle
Recommendation
Notice
Complete transparency to user by providing disclosure and choice options on the host Web site. “Robust” notice for PII (time/place of collection; before collection begins). Clear and conspicuous notice for non-PII.
Choice
Opt-in for PII, opt-out for non-PII. No conversion of non-PII to PII without consent. Opt-out from any or all network advertisers from a single page provided by the host Web site.
Access
Reasonable provisions to allow inspection and correction.
Security
Reasonable efforts to secure information from loss, misuse, or improper access.
Enforcement
Done by independent third parties, such as seal programs and accounting firms.
Restricted Collection
Advertising networks will not collect information about sensitive financial or medical topics, sexual behavior or sexual orientation, or use Social Security numbers for profiling.
See Table 8.6, page 517
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33. The European Data Protection Directive
Privacy protection much stronger in Europe than U.S.
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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34. Private Industry Self-Regulation
Safe harbor programs:
Private policy mechanism to meet objectives of government regulations without government involvement
e.g. Privacy seal programs
E.g., privacy seal programs (TRUSTe, BBB Reliability Seal)
Industry associations include:
Online Privacy Alliance (OPA)
Network Advertising Initiative (NAI)
CLEAR Ad Notice Technical Specifications
Privacy advocacy groups
Emerging privacy protection business
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35. Insight on Business Chief Privacy Officers Class Discussion
What does a Chief Privacy Officer do?
Why do corporations need a CPO?
What is a “privacy audit?”
Why did ChoicePoint hire a CPO?
How do federal laws like Graham-Leach Bliley and HIPPA influence corporate privacy practices?
What is a “legalistic” approach to privacy as opposed to a “pro-consumer” approach?
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36. Technological Solutions
Spyware, pop-up blockers
Cookie managers
Anonymous r ers, surfing
Platform for Privacy Preferences (P3P):
Comprehensive technological privacy protection standard
Works through user’s Web browser
Communicates a Web site’s privacy policy
Compares site policy to user’s preferences or to other standards such as FTC’s FIP guidelines or EU’s Data Protection Directive
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37. How P3P Works Figure 8.2(A), Page 524
SOURCE: W3C Platform for Privacy Preferences Initiative, 2003.
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38. What are some of the technologies being used to invade privacy?
Insight on Technology The Privacy Tug of War: Advertisers Vs. Consumers Class Discussion
What are some of the technologies being used to invade privacy?
What are some of the technologies being used to protect privacy?
Do you accept the trade off between privacy invasion and “free” Web content?
Is a “Do Not Track” list a viable solution?
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39. Intellectual Property Rights
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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40. 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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41. Look and feel copyright infringement lawsuits Fair use doctrine
Protects original forms of expression (but not ideas) from being copied by others for a period of time
Look and feel copyright infringement lawsuits
Fair use doctrine
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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42. Patents Grant owner 20-year monopoly on ideas behind an invention
Machines
Man-made products
Compositions of matter
Processing methods
Invention must be new, non-obvious, novel
Encourages inventors
Promotes dissemination of new techniques through licensing
Stifles competition by raising barriers to entry
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43. E-commerce Patents
1998 State Street Bank & Trust v. Signature Financial Group
Business method patents
Led to explosion in application for e-commerce “business methods” patents
Most European patent laws do not recognize business methods unless based on technology
Examples
Amazon’s One-click purchasing
DoubleClick’s dynamic delivery of online advertising
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44. Internet and E-commerce Business Method Patents
Figure 8.3, Page 537
SOURCE: Based on data from United States Patent and Trademark Office, 2010
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45. Identify, distinguish goods and indicate their source Purpose
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
Bad faith
Dilution
Behavior that weakens connection between trademark and product
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46. Trademarks and the Internet
Cybersquatting
Anticybersquatting Consumer Protection Act (ACPA)
Cyberpiracy
Typosquatting
Metatagging
Keywording
Deep linking
Framing
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47. Stages of governance and e-commerce
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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48. Who Governs E-commerce and the Internet?
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
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49. 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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50. Net Neutrality
Currently, all Internet traffic treated equally – all activities charged the same rate, no preferential assignment of bandwidth
Backbone providers would like to charge differentiated prices and ration bandwidth
2010, U.S. appeals court ruled that FCC had no authority to regulate Internet providers
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51. 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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52. Insight on Society The Internet Drug Bazaar Class Discussion
What’s wrong with buying prescription drugs online, especially if the prices are lower?
What are the risks and benefits of online pharmacies?
Should online pharmacies require a physician’s prescription?
How do online pharmacies challenge the traditional business model of pharmacies and drug firms?
What are the challenges in regulating online pharmacies?
Who benefits and who loses from online pharmacies?
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53. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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Publishing as Prentice Hall
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