Ethical Issues in E-Commerce

There are many ethical issues relative to e-commerce like:

Channel Conflict 

Channel conflict refers to any situation in which the online marketing channel upsets the traditional channels due to real or perceived damage from competition. 

When any two members of a channel or two different channels fail to reach an agreement regarding selling practice and cach feels that the other prevents it to reach its goal, channel conflict arises. Channel conflict is mainly of three types: 

• 1) Vertical Channel Conflict: Here conflict exists between two members of different levels of a same distribution channel. 
• 2) Horizontal Channel Conflict: Here conflict exists between two members of the same channel level. 
• 3) Multi-Channel Conflict: Here conflict exists between members of two different channels. 

Channel conflict may also occur among various segments of corporate departments, such as the sales channel. For example, the direct contact component of the sales department may have to compete with other sales channels, such as telephone, online and mail campaigns. 

To prevent channel conflict, partners sometimes enact agreements such as deal registration.

Pricing Conflict 

Pricing a product or service on the Internet, especially by a click and mortar company, is complicated. 

On one hand, prices need to be competitive on the Internet. Today's comparison engines will show the consumer the prices at many stores, for almost all commodity products. 

On the other hand, prices should be in line with the corporate policy on profitability and in a click-and-mortar company, in line with the off-line channel's pricing strategy. To avoid price conflict, some companies have created independent online subsidiaries. 

Disintermediation and Reintermediation 

Intermediation is one of the most important and interesting e-commerce issue related to loss of jobs. The services provided by intermediaries are: 

• 1) Matching and providing information. 
• 2) Value added services such as consulting.

The first type of service (matching and providing information) can be fully automated, and this service is likely to be in e-market-places and portals that provide free services. The value added service requires expertise and this can only be partially automated. The phenomenon by which Intermediaries, who provide mainly matching and providing information services, are eliminated is called Disintermediation. 

The brokers who provide value added services or who manage electronic intermediation (also known as infomediation), are not only surviving but may actually prosper, this phenomenon is called Reintermediation. 

The traditional sales channel will be negatively affected by disintermediation. The services required to support or complement e-commerce are provided by the web as new opportunities for reintermediation. The factors that should be considered here are the enormous number of participants, extensive information processing, delicate negotiations, etc. They need a computer mediator to be more predictable.

Trust 

Trust is the psychological status of involved parties who are willing to pursue further interactions to achieve a planned goal. When people trust each other, they have confidence that as transaction partners they will keep their promises. 

However, both parties in a transaction assume some risk. In the marketplace, sellers and buyers do not meet face to face. The buyer can see a picture of the product but not the product itself. Promises of quality and delivery can be easily made - but will they be kept? To deal with these issues, electronic commerce vendors need to establish high levels of trust with current and potential customers. 

Trust is particularly important in global electronic commerce transactions due to the difficulty in taking legal action in cases of a dispute or fraud and the potential for conflicts caused by differences in culture and business environments.

Non-Work-related Use of Internet 

Employees are tempted to use e-mail and the web for non-work-related purposes. In some companies this use is tremendously out of proportion with its work related use. The problem has various dimensions. For example, email can be used for threatening, illegal betting, advertise own business. 

Codes of Ethics 

Without a formal policy, it is much more difficult to enforce desired behavior and deal with violators. Some companies send monthly reminders on the intranet about the usage policy. Others tell employees that their movement may be monitored and that their e-mail may even be read. Such notification can be a part of a code of ethics.

Corporate codes of ethics express the formalization of rules and expected behavior and action. Typically, the ethics code should address offensive content and graphics, as well as proprietary information. It should encourage employees to think about who should and who should not have access to information before they post it on the website. 

The code should specify whether the company allows employees to set-up their own web pages on the company intranet and about private e-mail usage and non- work-related surfing during working hours. A company should formulate a general idea of the role it wants websites to play in the workplace. This should guide the company in developing a policy, and providing employees with a rationale for that policy.

Guidelines for Corporate Web Policy 

• 1) Issue written policy guidelines about employee use of the Internet. 
• 2) Make it clear to employees that they cannot use copyrighted trademarked material without permission. 
• 3) Post disclaimers concerning content, such as sample code, that the company does not support. 
• 4) Post disclaimers of responsibility concerning content of online forums and chat sessions. 
• 5) Make sure that web content and activity comply with the laws in other countries, such as those governing contests. 
• 6) Make sure that the company's web content policy is consistent with other company policies. 
• 7) Appoint someone to monitor Internet legal and liability issues. 
• 8) Have attorneys review web content to make sure that there is nothing unethical, or illegal, on the company's website. 

Privacy 

Privacy is derived from Latin word privatus that is who is separated from the rest, deprived of something, esp. office, participation in the government, from privo "to deprive".

It is the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively. The boundaries and content of what is considered private differ among cultures and individuals, but share basic common themes. 

Privacy is sometimes related to anonymity, the wish to remain unnoticed or unidentified in the public realm. When something is private to a person, it usually means there is something within them that is considered inherently special or personally sensitive. The degree to which private information is exposed therefore depends on how the public will receive this information, which differs between places and over time. 

Privacy is broader than security and includes the concepts of appropriate use and protection of information. The right against unsanctioned invasion of privacy by the government, corporations or individuals is part of many countries privacy laws. Almost all countries have laws which in some way limit privacy.

Collecting Information about Individuals 

In the past, the complexity of collecting, sorting, filing, and accessing information manually from several different government agencies was, in many cases, a built- in protection against misuse of private information. It was simply too expensive, cumbersome, and complex to invade a person's privacy. The Internet, in combination with large-scale databases, has created an entirely new dimension of accessing and using data. The inherent power in systems that can access vast amounts of data can be used for the good of society. 

The Internet offers a number of opportunities to collect private information about individuals. Here are some of the ways that the Internet can be used to find information about an individual: 

• 1) By reading an individual's newsgroup postings. 
• 2) By looking-up an individual's name and identity in an Internet directory. 
• 3) By reading an individual's e-mail. 
• 4) By conducting surveillance on employees. 
• 5) By wiretapping wire-line and wireless communication lines and listening to employees. 
• 6) By asking an individual to complete a registration form on a website. 
• 7) By recording an individual's actions as they navigate the web with a browser, usually using cookies. 
• 8) By using spyware and similar methods.

Among above the three are the most common ways of gathering information on the Internet: 

• 1) Website Registration: Virtually all B2C and marketing websites ask visitors to fill-out registration forms. During the process, customers voluntarily provide their names, addresses, phone numbers, e-mail addresses, sometimes their hobbies and likes or dislikes, and so forth in return for information, for the chance to win a lottery, or for some other item of exchange. There are few restraints on the ways in which the site can use this information. The site might use it to improve customer service. Or, the site could just as easily sell the information to another company, which could use it in an inappropriate or intrusive manner. 
  

• 2) Cookies: Another way that a website can gather information about an individual is by using cookies. A cookie is a small piece of data that is passed back and forth between a website and an end-user's browser as the user navigates the site. Cookies enable sites to keep track of users without having to constantly ask the users to identify themselves. Users can protect themselves against cookies: They can delete them from their computers or they can use anti-cookie software such as Pretty Good Privacy's. Anti-cookie software disables all cookies and allows the user to surf the web anonymously. The problem with deleting or disabling cookies is that the user will have to keep re-entering information, and in some instances may be blocked from viewing particular pages. 
  

• 3) Spyware and Similar Methods; Spyware is a tool that some merchants use to spy on users without their knowledge. Spyware (also known as spybots or tracking software) is a software program that secretly collects information about the user and relays it to advertisers. It may enter the user's computer as a virus or as a result of the user clicking an option in a deceptive pop-up window. Sometimes, when users download and install legitimate programs, they get spyware as well. 
  

• Spyware is very effective in tracking users' web surfing habits. It can scan computer hard drives for sensitive files, and send the results to hackers or spammers. Spyware is clearly a violation of the computer user's privacy. It cans also slow-down computer performance. Spyware writers are getting more innovative, and are trying to avoid detection.

Protecting against Privacy 

 Antivirus software and Internet firewalls cannot 'see' spyware; special protection is needed. Many anti-spyware software packages are on the market. Many are free. Representative free programs are Ad-Aware, Spybot, Spykiller and PestPatrol. For free programs include SpySubstract, SpySweeper, Ad-Aware Plus, and SpyWasher. 

Protecting Privacy 

The ethical principles commonly used when it comes to the collection and use of personal information also apply to information collected in e-commerce. These principles include the following: 

• 1) Notice/Awareness: Consumers must be given notice of an entity's information practices prior to the collection of personal information. Consumers must be able to make informed decisions about the type and extent of their disclosures based on the intentions of the party collecting the information.
  

• 2) Choice/Consent: Consumers must be made aware of their options as to how their personal information may be used, as well as any potential secondary uses of the information. Consent may be granted through opt-out clauses, which require steps to prevent collection of information. In other words, no action equals consent or, consumers may grant consent through opt-in clauses, which require steps to allow the collection of information. 
  

• 3) Access/Participation: Consumers must be able to access their personal information and challenge the validity of the data. 
  

• 4) Integrity/Security: Consumers must be assured that their personal data are secure and accurate. It is necessary for those collecting the data to take whatever precartions are required to ensure that data are protected from loss, unauthorized access, destruction, and fraudulent use, and to take reasonable steps to gain information from reputable and reliable sources. 
  

• 5) Enforcement/Redress: A method of enforcement and remedy must be available. Otherwise, there is no real deterrent or enforceability for privacy issues.

Protecting Intellectual Property Rights (IPR) 

According to the World Intellectual Property Organization (WIPO) intellectual property refers to "creations of the mind: inventions literary and artistic works, and symbols, names, images, and designs used in commerce". 

Whereas privacy protection is the major concern for individuals, intellectual property protection is the major concern of those who own intellectual property. Intellectual property rights are one of the foundations of modern society. Without these rights, the movie, music, software, publishing, pharmaceutical, and biotech industries would collapse. 

Types of Intellectual Property 

There are three main types of intellectual property in EC:

1) Copyrights: A copyright is an exclusive grant from the government that confers on its owner an essentially exclusive right to: 

• i) Re-produce a work, in whole or in part, and 
• ii) Distribute, perform, or display it to the public in any form or manner, including the Internet. 

In general, the owner also has an exclusive right to export the copyrighted work to another country.

Working having Copyrights 

i) Literary works (e.g., books and computer software), 

ii) Musical works (e.g., compositions), 

iii) Dramatic works (e.g., plays), 

iv) Artistic works (e.g., drawings, paintings).

v) Sound recordings, films, broadcast, cable programs. On the web, copyrights also can be used to protect images, photos, logos, text, HTML, JavaScript, and other materials. 

The greatest threat to intellectual property is wide-scale individual theft. Tens of millions of individuals are using the Internet to illegally download music, videos, games, software, movies, and other digital products. However, the theft of even an obscure piece of research in which only a few are interested is still theft.

A copyright owner may seek a court injunction to prevent or stop any infringement and to claim damages. Certain kinds of copyright infringements also incur criminal liabilities. These include: 

• i) Commercial production of infringing works, 
• ii) Selling or dealing in infringing works, 
• iii) Possessing infringing works for trade or business, and 
• iv) Manufacturing and selling technology for defeating copyright protection systems. 

Digital Rights Management 

Digital Rights Management (DRM) is an umbrella term for any of several arrangements that allow a vendor of content in electronic form to control the material and restrict its usage in various ways that can be specified by the vendor. Typically, the content is a copyrighted digital work to which the vendor holds rights. The actual arrangements are called technical protection measures.

In the past, when content was analog in nature, it was easier to buy a new copy of a copyrighted work on a physical medium (e.g., paper, film, tape) then to produce such a copy independently. The quality of most copies often was inferior, thus making the copy process less attractive, and in some cases, less effective. The situation changed with the introduction of digital technologies. It is now possible to produce an essentially perfect copy of any digital recording with minimal effort. The Internet has virtually eliminated the need for a physical medium to transfer a work-thus the need for strict the fair use of  effective DRM systems. However, DRM systems may material by individuals (use for non-commercial purposes). 

2) Trademarks: A trademark is a symbol used by businesses to identify their goods and services. The symbol can be composed of words, designs, letters, numbers, shapes, a combination of colors, or other such identifiers. Trademarks need to be registered in a country in order to be protected by law. To be eligible for registration, a trademark must be distinctive, original, and not deceptive. Once registered, a trademark can last forevèr, as long as a periodic registration fee is paid.

The owner of a registered trademark has exclusive rights to: 

• i) Use the trademark on goods and services for which the trademark is registered. 
• ii) Take legal action to prevent anyone else from using the trademark without consent on goods and services that are identical or similar to those for which the trademark is registered. 

On the Internet, fake brand names and products can be sold or auctioned from anywhere. Trademark infringement carries criminal liabilities. In particular, it is a crime for anyone to fraudulently use a registered trademark, including the selling and importing of goods bearing an infringing trademark, and to use or possess equipment for forging registered trademarks.

Domain Name 

A variation of a trademark is a domain name. Internet addresses are known as domain names. Domain names appear in levels. A top-level name is wiley.com, or stanford.edu. A second-level name will be wiley.com/turban or ibm.com.hk (for IBM in Hong Kong). Top-level domain names are assigned by central non-profit organizations that check for conflicts and possible infringement of trademarks. Obviously, companies who sell goods and services over the Internet want customers to be able to find them easily. So, the URL must match the company's name. Problems arise when several companies that have similar names compete over a domain name. 

For example, if you want to book reservations at a Holiday Inn hotel, and you go to holidayinn.com, you get the website for a hotel at Niagara Falls, New York; to get to the hotel chain's website, you have to go to holiday- inn.com. Several cases of disputed names are already in court. An international arbitration organization is available as an alternative to the courts. The problem of domain names was alleviated somewhat in 2001 after several upper-level names were added to "com" (such as "info" and "corp").

3) Patents: A patent is a document that grants the holder exclusive rights to an invention for a fixed number of years. Patents serve to protect tangible technological inventions, especially in traditional industrial areas. They are not designed to protect artistic or literary creativity. Patents confer monopoly rights to an idea or an invention, regardless of how it may be expressed. An invention may be in the form of a physical device or a method or process for making a physical device.