ELC 200
Day 17
Copyright © 2007
2010 Pearson Education, Inc.
Slide 1-1
Agenda
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Questions?
Assignment 5 graded
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Assignment 6 posted
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Due Nov 10 @ 11:05 AM
ELC 200 assignment 7.pdf
Exam 2 will be Nov. 10
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Due Nov 3 @ 11:05 AM
Assignment6.pdf
Assignment 7 posted
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6 A’s, % B’s and 2 non-submit
Chaps 6,7, 8
20 M/C, 4 Short essay, 1 bonus question
Ethical, Social, and Political Issues in E-commerce
Possible Bonus Points Questions
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Name and origin of 
 What does his name mean?
 What does he look like all “grown up”?
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Web Cookies
 What is the origin of the term “cookies”?
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SuperBowl ads
 One company -> One ad/year
 Another Company -> after many years stopped
putting ads on SB in favor of social networking
Copyright © 2010 Pearson Education, Inc.
Slide 1-3
Chapter 8: Ethical, Social, and
Political Issues in E-commerce
Chapter 8
Ethical, Social, and Political Issues
in E-commerce
Copyright
Copyright
©©
2011
2010
2011
Pearson
Pearson
Pearson
Education,
Education,
Education,
Inc.
Inc.
Inc.
Slide 8-4
Chapter Objectives
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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.
Copyright © 2011 Pearson Education, Inc.
Slide 8-5
Understanding Ethical, Social, and
Political Issues in E-commerce
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Internet, like other technologies, can:
 Enable new crimes
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“I rob banks because that's where the money is.” – Willie Sutton
 Affect environment
 Threaten social values
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Costs and benefits must be carefully
considered, especially when there are no
clear-cut legal or cultural guidelines
Copyright © 2011 Pearson Education, Inc.
Slide 8-6
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Slide 8-7
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
Copyright © 2011 Pearson Education, Inc.
Slide 8-8
The Moral Dimensions of an
Internet Society
Figure 8.1, Page 498
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Slide 8-9
Basic Ethical Concepts
 Ethics

Study of principles used to determine right and wrong courses of
action
 Responsibility
 Accountability
 Liability
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Laws permitting individuals to recover damages
 Due process
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Laws are known, understood
Ability to appeal to higher authorities to ensure laws applied correctly
Copyright © 2011 Pearson Education, Inc.
Slide 8-10
Ethical Dilemmas
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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?
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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)
Copyright © 2011 Pearson Education, Inc.
Slide 8-11
Analyzing Ethical Dilemmas
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Process for analyzing ethical dilemmas:
1.
Identify and clearly describe the facts
2.
Define the conflict or dilemma and identify the
higher-order values involved
3.
Identify the stakeholders
4.
Identify the options that you can reasonably
take
5.
Identify the potential consequences of your
options
Copyright © 2011 Pearson Education, Inc.
Slide 8-12
Candidate Ethical Principles
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Golden Rule
 Do onto others as you would have them do onto you.
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Universalism
 If action is not right for all situations then it not for any.
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Slippery Slope
 If an action can not be taken repeatedly than it not right to
take at all.
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Collective Utilitarian Principle
 The greater good
Copyright © 2010 Pearson Education, Inc.
Slide 8-13
Candidate Ethical Principles
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Risk Aversion
 Do the least harm
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No Free Lunch
 Unless things are declare as “free”, all tangible and
intangible objects are “owned”
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The New York Times Test
 Post decision on front page and see what others thinks
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The Social Contract Rule
 Ethical decisions and principles should become organizing
principles.
Copyright © 2010 Pearson Education, Inc.
Slide 8-14
Where does each fit?
 Downloading illegal copies of music
 Plagiarizing
 Theft
 War
 Racial discrimination
Copyright © 2010 Pearson Education, Inc.
Slide 8-15
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
Copyright © 2011 Pearson Education, Inc.
Slide 8-16
Privacy and Information Rights (cont.)
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Major ethical issue related to e-commerce
and privacy:
 Under what conditions
should we invade the
privacy of others?
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Major social issue:
 Development of “expectations of privacy” and
privacy norms
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Major political issue:
 Development of statutes that govern relations
between recordkeepers and individuals
Copyright © 2011 Pearson Education, Inc.
Slide 8-17
Information Collected at
E-commerce Sites
 Data collected includes
 Personally identifiable information (PII)
 Anonymous information
 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
Copyright © 2011 Pearson Education, Inc.
Slide 8-18
Copyright © 2010 Pearson Education, Inc.
Slide 8-19
Social Networks and Privacy
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Social networks
 Encourage sharing personal details
 Pose unique
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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)
Copyright © 2010 Pearson Education, Inc.
Slide 8-20
Profiling and Behavioral Targeting
 Profiling
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Creation of digital images that characterize online individual and
group behavior
 Anonymous profiles
 Personal profiles
 https://www.annualcreditreport.com/cra/index.jsp
 Advertising networks
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Track consumer and browsing behavior on Web
Dynamically adjust what user sees on screen
Build and refresh profiles of consumers
 Google’s AdWords program
Copyright © 2011 Pearson Education, Inc.
Slide 8-21
Profiling and Behavioral Targeting (cont’d)
Deep packet inspection
 Business perspective:
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 Web profiling serves consumers and businesses
 Increases effectiveness of advertising, subsidizing free
content
 Enables sensing of demand for new products and services
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Critics perspective:
 Undermines expectation of anonymity and privacy
 Consumers show significant opposition to unregulated
collection of personal information
 Enables weblining
Copyright © 2011 Pearson Education, Inc.
Slide 8-22
The Internet and Government
Invasions of Privacy
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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
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Government agencies are largest users of private
sector commercial data brokers
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Retention by ISPs of user data a concern
Copyright © 2011 Pearson Education, Inc.
Slide 8-23
Legal Protections
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In U.S., privacy rights explicitly granted or
derived from
 Constitution
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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
Copyright © 2011 Pearson Education, Inc.
Slide 8-24
Definitions of 4 Privacy Torts:
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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 nonnewsworthy, 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.
Copyright © 2010 Pearson Education, Inc.
Slide 8-25
Informed Consent
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U.S. firms can gather and redistribute
transaction information without individual’s
informed consent
 Illegal in Europe
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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
Copyright © 2011 Pearson Education, Inc.
Slide 8-26
Copyright © 2010 Pearson Education, Inc.
Slide 8-27
Copyright © 2010 Pearson Education, Inc.
Slide 8-28
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Slide 8-29
The FTC’s Fair Information Practices
Principles
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U.S. Federal Trade Commission:
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Conducts research and recommends legislation to Congress
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http://www.ftc.gov/privacy/
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http://www.ftc.gov/infosecurity/
FTC Fair Information Practice Principles (1998):
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Notice/Awareness (Core)
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Choice/Consent (Core)
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Access/Participation
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Security
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Enforcement
Guidelines, not laws
Copyright © 2010 Pearson Education, Inc.
Slide 8-30
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. Optin/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
Copyright © 2011 Pearson Education, Inc.
Slide 8-31
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
Copyright © 2011 Pearson Education, Inc.
Slide 8-32
The European Data
Protection Directive
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Privacy protection much stronger in Europe than U.S.
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European approach:
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European Commission’s Directive on Data Protection
(1998):
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Comprehensive and regulatory in nature
Standardizes and broadens privacy protection in European Union
countries
Department of Commerce safe harbor program:
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For U.S. firms that wish to comply with Directive
Copyright © 2011 Pearson Education, Inc.
Slide 8-33
Private Industry Self-Regulation
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Safe harbor programs:
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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)
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http://www.truste.com/
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Industry associations include:
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Online Privacy Alliance (OPA)
Network Advertising Initiative (NAI)
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CLEAR Ad Notice Technical Specifications
Privacy advocacy groups
 Emerging privacy protection business
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Copyright © 2011 Pearson Education, Inc.
Slide 8-34
Insight on Business
Chief Privacy Officers
Class Discussion
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What does a Chief Privacy Officer do?
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Why do corporations need a CPO?
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What is a “privacy audit?”
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Why did ChoicePoint hire a CPO?
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How do federal laws like Graham-Leach Bliley and
HIPPA influence corporate privacy practices?
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What is a “legalistic” approach to privacy as opposed
to a “pro-consumer” approach?
Copyright © 2011 Pearson Education, Inc.
Slide 8-35
Technological Solutions
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Spyware, pop-up blockers
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Cookie managers
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Anonymous remailers, surfing
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Platform for Privacy Preferences (P3P):
 Comprehensive technological privacy protection standard
 Works through user’s Web browser
 Communicates a Web site’s privacy policy
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Compares site policy to user’s preferences or to other standards
such as FTC’s FIP guidelines or EU’s Data Protection Directive
Copyright © 2011 Pearson Education, Inc.
Slide 8-36
How P3P Works
Figure 8.2(A), Page 524
Copyright © 2011 Pearson Education, Inc.
SOURCE: W3C Platform for Privacy Preferences Initiative, 2003.
Slide 8-37
Insight on Technology
The Privacy Tug of War:
Advertisers Vs. Consumers
Class Discussion
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What are some of the technologies being used to
invade privacy?
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What are some of the technologies being used to
protect privacy?
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Do you accept the trade off between privacy invasion
and “free” Web content?
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Is a “Do Not Track” list a viable solution?
Copyright © 2011 Pearson Education, Inc.
Slide 8-38
Intellectual Property Rights
 Intellectual property:
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Encompasses all tangible and intangible products of human mind
 Major ethical issue:
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How should we treat property that belongs to others?
 Major social issue:
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Is there continued value in protecting intellectual property in the
Internet age?
 Major political issue:
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How can Internet and e-commerce be regulated or governed to
protect intellectual property?
Copyright © 2011 Pearson Education, Inc.
Slide 8-39
Intellectual Property Protection
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Three main types of protection:
 Copyright
 Patent
 Trademark law
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Goal of intellectual property law:
 Balance two competing interests
— public and
private
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Maintaining this balance of interests is always
challenged by the invention of new
technologies
Copyright © 2011 Pearson Education, Inc.
Slide 8-40
Copyright
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Protects original forms of expression (but not
ideas) from being copied by others for a
period of time
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http://www.copyright.gov/
Look and feel copyright infringement lawsuits
 Fair use doctrine
 Digital Millennium Copyright Act, 1998
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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
Copyright © 2011 Pearson Education, Inc.
Slide 8-41
Patents
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Grant owner 20-year monopoly on ideas behind an
invention
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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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Copyright © 2011 Pearson Education, Inc.
Slide 8-42
E-commerce Patents
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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
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 Amazon’s One-click purchasing
 DoubleClick’s dynamic delivery of online advertising
Copyright © 2011 Pearson Education, Inc.
Slide 8-43
Internet and E-commerce Business
Method Patents
Figure 8.3, Page 537
SOURCE: Based on data from United States Patent and Trademark Office, 2010
Copyright © 2011 Pearson Education, Inc.
Slide 8-44
Trademarks
Identify, distinguish goods and indicate their
source
 Purpose
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 Ensure
consumer gets what is paid for/expected to receive
 Protect owner against piracy and misappropriation
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Infringement
 Market confusion
 Bad faith
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Dilution
 Behavior that weakens connection between trademark
and product
Copyright © 2011 Pearson Education, Inc.
Slide 8-45
Trademarks and the Internet
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Cybersquatting
 Anticybersquatting Consumer Protection Act (ACPA)
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Cyberpiracy
 Typosquatting
Metatagging
 Keywording
 Deep linking
 Framing
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Copyright © 2011 Pearson Education, Inc.
Slide 8-46
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)
Copyright © 2011 Pearson Education, Inc.
Slide 8-47
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
Copyright © 2011 Pearson Education, Inc.
Slide 8-48
Taxation
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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
Copyright © 2011 Pearson Education, Inc.
Slide 8-49
Net Neutrality
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Currently, all Internet traffic treated equally –
all activities charged the same rate, no
preferential assignment of bandwidth
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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
Copyright © 2011 Pearson Education, Inc.
Slide 8-50
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
Copyright © 2011 Pearson Education, Inc.
Slide 8-51
Insight on Society
The Internet Drug Bazaar
Class Discussion
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What’s wrong with buying prescription drugs online,
especially if the prices are lower?
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What are the risks and benefits of online pharmacies?
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Should online pharmacies require a physician’s prescription?
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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?
Copyright © 2011 Pearson Education, Inc.
Slide 8-52
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permission of the publisher. Printed in the United States of America.
Copyright © 2011 Pearson Education, Inc.
Publishing as Prentice Hall
Copyright © 2011 Pearson Education, Inc.