The Ethics Of Online Retailing - Research Paper Example

The Ethics Of Online Retailing Introduction New technology brings with it new ways of making life better for the consumer. Unfortunately, it also entices unscrupulous new practices to take advantage of the same consumer. Web marketing is such a development. The principles defining fair substantive information practices are familiar to all; they espouse notice, choice, acceptance, and security (Milne p.1) in favor of the consuming public. But gray areas abound, and defining lines are vague, where concrete practice is concerned. Classes of commercial transactions over the Internet Milne (2000) undertook a study of ethical and privacy issues on interactive marketing. As framework for his study, he developed a framework by which interaction on the internet may be classified. There are four categories of such interactions. The first involves disclosure statements and requests for information issued by marketers to prospective customers. These are legitimate statements and requests that aim to help businesses better tailor their products and services to their customers’ needs. Secondly, there are exchanges of information voluntarily undertaken by consumers, with the expectation that they will be subsequently contacted by the respective marketer. Third, there is the capture of information not volunteered by the consumer. Not all information gathered this way is unethical, because there is much that marketers may observe concerning consumers during the course of their transaction, but such capture must not be intrusive against the privacy of the consumer. The fourth aspect concerns information practices, or the manner by which the gathered information (from both marketers and consumers) may be used by both parties. Ethical concerns of consumers concerning internet marketing The past two decades of computer technology application has triggered a flurry of academic research concerning the proper use and abuse of the new medium. Internet capability has presented so many enticing prospects for business and especially its marketing function that, as is often the case, potential for use is accompanied with potential for abuse. Roman and Cuestas (2008) polled web consumers for their views about which unethical acts they have the greatest concern over. There are four such types of abusive practices, namely: security, privacy, deception and fulfilment or reliability. In the study, Roman and Cuestas (2008, p. 648) described each of the issues in the following manner: The researchers developed a rating scale by which they sought to measure the relative degree of consumers’ concern. Among the four, the issue about which most consumers were concerned was “Fulfillment/reliability” with a rating of 3.96. This is followed closely by “Security” (3.84), “Privacy” (3.68), and finally “(Non) Deception” (2.41) The four issues will be examined more closely: Security of transaction. Oftentimes, even in academic studies, the issues of security and privacy are jointly taken. Roman et al., however, provides a distinction. They distinguish security as those issues that involve and actual and malicious breach of a computer’s protective systems with the aim of gaining access to its owners confidential information, or otherwise use his computer resources without his permission. (Sabadash, 2004) Consumers refer in particular to the integrity of payment methods used in internet transactions, to avoid monetary losses due to an illicit use of the customer’s financial data. However, security issues also include the intrusion of worms, viruses, and other such programs. (Roman et al, 2008, pp. 1-2) “Cookies”, which are also program files, may be included in this definition, but will be best described later on the basis of its purpose. Computer hacking, likewise, is a threat to security, but because of its illegal nature it will be discussed in the next section. Illegal activities. These are acts that are against the law and, at times, are felonies or crimes for which the penalty is a fine or imprisonment. Under this classification are hacking, phishing, and other types of computer fraud. Computer hacking was originally a legitimate undertaking by expert programmers who break into a system or network as a means to test its security measures. Done with authorization from the computer’s owner, hacking is not unethical. However, a malicious form of hacking better known as “cracking” is done without the knowledge of the owner and usually aims to steal information, subvert data, or similar destructive intentions. This is not only unethical but is downright illegal, a felony for which federal law prescribes a 20-year jail term (Sabadash, 2004). Phishing is another criminal act, wherein the felon sends an email representing himself to the prospective victim as a legitimate business in order to steal vital personal information to be used in identity theft. The usual scam is to require the user to visit a website in order to “update” his information with that company with which he has an existing account. However, the website is a bogus one, and so the user is tricked into giving up information that the felon could use to steal his finances, identity, and so forth. According to the Computer Crime Research Center, every internet user has by now already received a phishing email. There are other forms of retail fraud, the most popular ones being email messages that inform the user that he has won a contest (such as an international lottery), for which he has to reply to the email with his personal information. Privacy and honesty issues. There are activities which may or may not be illegal, but are nevertheless against morals. These include the unauthorized sharing by a firm of information given to it by its customers. The information is acquired legitimately and in the normal course of business; however, for some reason or another the company allows a third party to gain access to it. Case in point is Toysmart, a popular online toy marketer. Toysmart solicited detailed personal data from its customers, with the promise of keeping it confidential. When the company had financial troubles, it offered its assets for sale, including its customer database. For this they were brought to court, and eventually went bankrupt. (Roman et al, 2008, p. 641) Privacy issues also cover the secret tracking of customer’s shopping habits. Strangely enough, studies have determined that, as long as customers are convinced that providing the information will redound to their benefit and that the necessary controls are instituted, they do not mind releasing such information (Milne, 2000, p. 2). Studies have also determined that as many as half of all users provide the wrong information at least once in four times such information is solicited, mainly because they want to avoid being spammed (Milne, 2000, p. 4) Certain websites obtain information surreptitiously by recording “clickstream” information on a user’s navigation on the net – for instance, the browsers used and the frequency a website is visited. It is also common for websites to embed cookies in visitors’ computers. Cookies are files that identify the user to the firm without his knowledge. Some organizations have the capability of merging cookies so that a complex profile of the user’s surfing habits may be drawn. (Milne, 2000, p. 4) Since cookies are embedded and thus are capable of relaying information without the user’s knowledge, they are considered to be privacy violations, even if the information relayed is not used in a wrong way. Again, polls sponsored by the industry found that online shoppers are indifferent to whether their behaviour is being profiled, if such could customize their shopping and as long as their permission is first secured (Milne, 2000, p. 5). However, such “weblining” is prone to mischief and should thus be discouraged. Another term used for the concealed extraction of information is called “data mining”. In a legitimate business context, data mining could be very helpful in marketing research. However, to date, there is no effective way of regulating data mining techniques to ensure that they are not used for reasons undisclosed to the user. (Van Wel and Royakkers, 2004, p. 130). Truthfulness of the information on the internet. Almost everything that appears on the net has the appearance of legitimacy and truthfulness, which sadly is not always the case. A particularly timely topic on this issue is the paid use of persons to post testimonials in favour of certain products, giving the impression of unsolicited endorsement, but in truth is paid advertising. Drumwright (2009, p. 88) calls this “paid viral marketing and product placement.” Weblogging, also fondly called blogging, used to be a means by which random individuals may spontaneously express their sentiments online concerning particular products, personalities, or issues. On the other hand, “paid” blogging, or flogging, while not forbidden by any law or ethical code, is deceptive and manipulative. With ordinary advertising, a consumer knows he is being made a pitch, and could filter out the commercial message he is being given (the so-called “intelligent consumer” defense). On the other hand, a paid advertisement delivered as testimonial by a random individual, supposedly free of ulterior motive, has the effect of letting the consumer’s guard down, thus he could not “filter” the message (Drumwright, 2009, p. 88-89). Resolving the issue of ethics online There are many ways that have been suggested in order to curb the proliferation of unethical marketing practices on the web. For one, there have been several institutions of repute who issue third-party seals-of-approval for websites and online products. Some of these are TRUSTe, BBBOnline, and Online Privacy Alliance (Milne, 2000, p.3). The industry could also undertake self-regulation, but leading to this the players should get together and come to a consensus on a code of ethics which they may enforce upon their ranks. For instance, the Word-of-Mouth Marketing Association (WOMMA), which is directly adverse to flogging, advocates the formulation and enforcement a code of ethics throughout the industry, by industry members. Another possible measure would be the publication of best and worst practices by an oversight committee that will act as watchdog over it. Technology may also provide solutions to the eradication of these unethical practices, such as the creation of programs or devices to protect the consumer identity, and help consumers gain better control of information leaving their computer systems. There is also a useful device known as a “honeypot”, which is “a trap set to detect, deflect or in some manner counteract attempts at unauthorized use of computer systems.” (Chawki, 2006) Stronger legislation could also be promulgated, but with the fast technological developments, new laws will always lag. However, there is no substitute for self-protection by means of self-education, understanding precautionary measures and vigilance. A consumer public enabled to deal with these practices is probably the most effective measure to stem unethical web marketing. REFERENCES Chawki, M. (2006). “Phishing in Cyberspace: Issues and Solutions”, Computer Crime Research Center. Retrieved April 21, 2009 from at . Drumwright, M. E. & Murphy, P. E. (2009). “The Current State of Advertising Ethics: Industry and Academic Perspectives”, Journal of Advertising, vol. 38, no. 1, pp. 83–107. Kallman, E. A. & Grillo, J. P. (2004). Ethical Decision Making and Information Technology: An Introduction with Cases, 2nd ed., McGraw Hill Milne, G. R. (2000). “Privacy and Ethical Issues in Database/Interactive Marketing and Public Policy: A Research Framework and Overview of the Special Issue”, Journal of Public Policy & Marketing, vol. 19 (1), Spring 2000, pp. 1–6 Moore, E. S. & Rideout, V. J. (2007). “The Online Marketing of Food to Children: Is It Just Fun and Games?” Journal of Public Policy & Marketing, vol 26 no. 2, pp. 202-220 Quinton, B. (2007), “Marketing Mercenaries”, Direct Magazine Feb. 2007, Prism Business Media. Retrieved April 21, 2009 from: Reynolds, G. (2006). Ethics in Information Technology, Thomson Learning Roman, S. (2007). “The Ethics of Online Retailing: A Scale Development and Validation from the Consumers’ Perspective”, Journal of Business Ethics, vol. 72, pp. 131–148 Roman, S. & Cuestas, P. J. (2008). “The Perceptions of Consumers Regarding Online Retailers’ Ethics and Their Relationship with Consumers’ General Internet Expertise and Word of Mouth: A Preliminary Analysis”, Journal of Business Ethics vol. 83 pp. 641–656 Sabadash, V. (2004) “What is hacking?” Computer Crime Research Center. Retrieved on April 21, 2009 from: Sherman, E. (2009) “Want to target online? You better build trust”, Advertising Age, Crain Communications, Inc. Van Wel, L. & Royakkers, L. (2004). “Ethical issues in web data mining”. Ethics and Information Technology archive, vol 6, issue 2, pp. 129 – 140, Kluwer Academic Publishers Hingham, MA, USA Warholic, J. A. (n.d.). “Importance of Ethics on the Internet”, Internet Marketing Ethics Web Issues. Retrieved on April 23, 2009 from Read More