SOCIAL, ETHICAL, AND LEGAL ISSUES

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  SOCIAL, ETHICAL,
 AND LEGAL ISSUES
          MIS 503
Management Information Systems
       MBA Program
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THE LEGAL ENVIRONMENT
•   Purpose of law is to constrain
    behavior within a society so that its
    needs are satisfied and harm is prevented
•   Law is related to, not the same as, ethics
•   IT impact has:
    –   Made new forms of crime possible
    –   Changed mechanisms for reproducing material,
        photos, art, and music
•   Legal system has lagged behind technology
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ETHICS FRAMEWORKS

Why discuss ethics?
  – IT is having a growing effect on our lives
  – Managers determine how IT is used
  – Managers are responsible for ethical
    implications of effects of using IT
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ETHICS FRAMEWORKS

•   To act ethically requires that we take
    responsibility for our actions
•   Careers as managers and professionals
    are in jeopardy if unethical
•   Consider Enron and what happened to
    its managers!
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ETHICS FRAMEWORKS
    Identifying Ethical Problems

•      First step: recognize that a decision or
       action has ethical implications
•      Ask these questions to identify
       potential ethical problems:
      –   Is this fair to everyone that will be affected?
      –   Would I want my mother to know about this?
      –   Would I care if everyone knew about this?
      –   What would be the result if everyone did
          this?
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 ETHICS FRAMEWORKS
Analyzing Ethical Problems

 •   Code of ethics for software
     engineering profession
 •   Recognizes that managers and
     organizations have special
     responsibilities
 •   Developed jointly by IEEE and ACM
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Figure 16.2 Section 3 of the ACM
            Code of Ethics
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ETHICS FRAMEWORKS
    Analyzing Ethical Problems

•      Basic principles to guide ethical behavior
       come from:
      –   Religious traditions
      –   Philosophers
•      Two basic ethical theories:
      –   Deontologism
      –   Consequentialism
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ETHICS FRAMEWORKS
    Analyzing Ethical Problems

•         Deontologism – action is ethical or unethical
          based only upon the action itself without regard
          to its consequences in the particular case
•         It is our intent, not the actual result, that
          determines whether an action is ethical or
          unethical
•         In the Western world rules by which actions are
          judged have roots in Judeo-Christian tradition
•         Problems:
      –     Rules are absolutes
      –     Different cultures have different rules
      –     Ignores the consequences that come from a specific action
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ETHICS FRAMEWORKS
    Analyzing Ethical Problems

•      Consequentialism – judges an action by
       evaluating all the consequences that it produces
       – if consequences good then action is ethical
•      Similar to “the ends justify the means”
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ETHICS FRAMEWORKS
    Analyzing Ethical Problems

•         Utilitarianism – one type of consequentialism
          where all parties who will be affected by the
          action must be identified and consequences
          delineated and quantified, with beneficial results
          measured on a positive scale and harmful results
          measured on the negative scale
•         Problems:
      –     Quantification – how to assign numerical values and
            probabilities
      –     What happens when all benefit is to one and all harm is
            to another, with net zero?
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ETHICS FRAMEWORKS
    Analyzing Ethical Problems

•      IT Management topics with ethical implications:
     –   Computer crime
     –   Cyberattacks on computers
     –   Identity theft
     –   Impact of IT on privacy
     –   Access to the technology and freedom of speech
         issues
     –   Intellectual property issues
     –   Hazards of inaccuracy
     –   Impact of IT on workers

                             Topics addressed in chapter
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ETHICS FRAMEWORKS
    Analyzing Ethical Problems

•      Other social issues with ethical implications that
       managers need to be aware of:
     –   Hate e-mail
     –   Cyberstalking
     –   Sexual abuse via the Internet
     –   Pornography




                              Topics not addressed in chapter
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COMPUTER CRIME
•   Computer crime is big business
    and is growing rapidly
•   Alarming statistics:
    –   85-97% of computer intrusions never detected
    –   10% of detected are reported, and only a few of
        reported are solved
    –   FBI estimates computer crime losses in 1999 as
        much as $10 billion
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COMPUTER CRIME
Forms of computer crime:
  –   Financial crimes
  –   Businesses stealing competitors’ secrets
  –   Espionage agents stealing military intelligence
  –   Attacks on computers by terrorists
  –   Grudge attacks by disgruntled employees
  –   Attacks by “hacker” for fun
  –   Use of IT by criminals to run criminal businesses
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COMPUTER CRIME
Financial Crimes

Forms of financial crime:
•    Embezzlements
•    Sabotage as a way of “getting back” at an
     employer
    – Logic bomb – a program designed to destroy
        data at a specified date and time
•    Fraud on the Web
    – Spoofing – setting up a Web site that mimics a
        legitimate site
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COMPUTER CRIME
    Cyberattacks on Computers

•      Cyberattacks do serious economic damage
•      Hackers originally motivated by
       technological challenge and intended no
       harm
•      Crackers use hacking techniques to steal
       information or wipe out hard drives
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COMPUTER CRIME




        Figure 16.2 Number of Cyberattack
                    Incidents Reported (in thousands)
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Figure 16.3 Techniques Used
            to Attack Computers
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COMPUTER CRIME
    Cyberattacks on Computers

•      Personal responsibility:
      –   Use antivirus software and keep up to date
      –   Make sure all operating system updates are
          installed
      –   Carefully protect passwords
      –   Carefully opening e-mail messages,
          especially attachments
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COMPUTER CRIME
Computer Crime Laws

Most important:
• The Computer Fraud and Abuse Act of
   1986 as amended (Title 18 United States
   Code, Chapter 47, Sections 1029 and 1030)
  – Section 1029 prohibits fraud and intrusion
     by use of counterfeit access devices
  – Section 1030 covers espionage, stealing
     financial information, knowingly damaging a
     computer or application by hacking, stealing
     passwords, and furthering a fraud by
     accessing a computer
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IDENTITY THEFT
 “someone appropriating your personal
 information without your knowledge to
 commit fraud or theft” (Federal Trade
 Commission)


 – Implications:
   •   Ruined credit rating
   •   Extreme effort to “clean up” the mess
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IDENTITY THEFT
    Impact of Identity Theft

•      Serious problem for businesses and
       individuals
•      According to FTC (2003), in 2002:
      –   10 million victims
      –   Loss of $48 billion for businesses
      –   Loss of $5 billion for consumers
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IDENTITY THEFT
Police and Bank Attitudes



Problem for victims:
• Police, banks, and merchants often
   reluctant to pursue identity thieves
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IDENTITY THEFT
Ethical Issues



   Are banks and merchants acting ethically
   when they ignore the crime rather than
   pursuing the thief?
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IDENTITY THEFT
Laws on Identity Theft



Summary:
• Law on identify theft is inadequate
• Enforcement of the law is poor
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PRIVACY
•   Privacy is difficult to define
•   Violating privacy generally includes:
    –   Unwanted access to your person
    –   Intruding into your home or office
    –   Observing you
    –   Obtaining information about you
•   Legally, our right to privacy is much
    weaker than our property rights and right
    to free speech
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PRIVACY
IT perspective:
•   Privacy – ability to control information about
    ourselves
•   Individual might give permission to collect
    and use certain personal information in
    exchange for some benefit or business
    transaction
•   Privacy is invaded when information used in
    ways never intended or agreed to
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PRIVACY
    Ethics of Invasion of Privacy

•      Kantian view:
      –   Invasion of privacy always unethical
      –   Treating person with disrespect
•      Utilitarian view:
      –   Whether unethical depends upon results of
          action
      –   Does total resulting good exceed harm
          caused?
      –   But how do you measure harm caused?
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PRIVACY
Laws on Privacy

U.S. Federal law:
  –   No comprehensive legal right to privacy
  –   Much legislation to offer some privacy:
      •   Fair Credit Reporting Act
      •   Privacy Act
      •   Family Education Rights and Privacy Act
      •   Electronic Communications Privacy Act
      •   Video Protection Privacy Act
      •   Driver’s Privacy Protection Act
      •   Health Insurance Portability and Accountability Act
      •   Children’s Online Privacy Protection Act
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PRIVACY
    Laws on Privacy

•      U.S. federal laws offer protection for:
      –   Student information
      –   Electronic medical information
      –   Electronic communications
•      Not well protected:
      –   Financial data
      –   Financial institutions often buy and sell
          information they collect on individuals
      –   Major concern: requirement that customer
          “opt-out” to obtain even limited protection
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PRIVACY
Laws on Privacy


•       Another concern is Patriot Act passed after 9-11:
    –      Purpose is to protect Americans against terrorism
    –      But weakens constitutional protection against
           unreasonable search and seizure by allowing FBI to
           force anyone to turn over records by telling judge its
           related to ongoing terrorism or foreign intelligence
•       Judging by their laws, many other countries seem
        to value privacy more highly than U.S.
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PRIVACY
    Privacy Problems

•      IT has radically affected our ability to control
       access to information about ourselves
•      Potential problems:
      –   Government agencies using online databases
          for official records containing private information
      –   Marketers increasingly value personal
          information
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PRIVACY
    E-Commerce Privacy Concerns

•      Many trusted businesses are collecting personal
       information about us and our shopping activities
       and selling them to others
•      Method: use of “cookies” when you visit Web
       sites
•      Cookie – a small record that identifies you to the
       Web site you visited and allows it to set up a file
       on its computer that can record information
       about the actions you take with that site
•      Except for the financial industry, no U.S. laws
       regulate collection and sharing of data
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PRIVACY
    Workplace Privacy

•      75% of employers record employee Web
       use, voice mail, e-mail, or phone calls,
       review computer files, or videotape workers
       (American Management Association, 2000)

•      Up to 25% do not tell workers             (Associated Press,
       1997)

•      Ethical (and practical) implication: Is it
       important that company policies for
       monitoring employee activities and
       communications be clearly communicated
       to employees?
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PRIVACY
    Access

•      U.S. in reasonably good shape in regard to
       computer access and literacy
•      Europe and Japan lag somewhat behind U.S.
•      Developing countries lag far behind, but are
       making progress
•      Undeveloped world has no computer literacy, or
       literacy of any type
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PRIVACY
Freedom of Speech

• Use of Internet has led to
  renewed controversy
  between our right to
  freedom of speech and the
  right of society to protect
  itself
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PRIVACY
Freedom of Speech

• Use of Internet has led to
  renewed controversy
  between our right to
  freedom of speech and the
  right of society to protect
  itself
• Is there information so harmful that it should be
  banned from posting on the Internet?
    – Instructions for making a bomb?
    – How to poison a city’s water supply?
    – Child pornography?
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PRIVACY
Freedom of Speech

• Spam – unsolicited commercial e-mail
• ISPs spend a lot of money on anti-spam software
• Typical consumers still receive 110 unwanted e-mails a
  month
• Congress has attempted to write laws to outlaw spam
• Freedom of speech rights make anti-spam laws difficult
  to write, pass, and uphold in courts




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PRIVACY
Intellectual Property Rights

Intellectual property rights – any product of the
human mind, such as an idea, an invention, a
literary creation, a work of art, a business method,
an industrial process, a chemical formula, a
computer program, or a presentation

• Due to technological advances, sharing intellectual
  property is easy, rapid, and inexpensive




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PRIVACY
Intellectual Property Rights

• What property can be owned differs from one
  society to another
• Most societies value and reward intellectual
  property
• U.S. patent and copyright laws try to protect
  intellectual property




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PRIVACY
Software Piracy

• A serious problem for software industry
• 39% of software installed in 2002 was pirated,
  and cost software industry $13 billion
• Software piracy rate lowest in North America
  and highest in China
• U.S. copyright laws make it illegal to copy
  software and use it without vendor’s
  permission
   – There are severe penalties for violation



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PRIVACY
Software Piracy

• Software vendors prosecute large companies for
  violations, but not often individuals
• Ethical question: Is it right to copy software for
  personal use?
• Copyright protects against software piracy, but not
  against another creating the same thing
• Patent – gives creator exclusive right to manufacture
  and use for a specified period of time
• Computer programs are often patented




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PRIVACY
Digital Entertainment Piracy

• Laws are changing very rapidly
• Growing volumes of digital music, videos, and
  movies being pirated worldwide
• 28% of all CDs sold in 2002 worldwide were
  pirated (IFPA, 2003)




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PRIVACY
Internet File Sharing

• Greatest threat to recording industry
• Napster developed software to make MP3
  files, and maintained a Web site that enables
  sharing of MP3 files
• Courts eventually shut down Napster
• New sites spring up, such as Sharman
  networks with Kazaa service
• Many lawsuits still pending



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PRIVACY
Ethical Questions

Is it ethical to download copyrighted music or
movies from the Internet, and not pay for
them?




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ACCURACY
 National Crime Database
• FBI’s National Crime Information Center
  maintains an integrated, real-time transaction
  processing and online fingerprint-matching
  database
• Input comes from thousands of agencies across
  the country
• Law establishing system required FBI to ensure
  information was “accurate, relevant, timely and
  complete”
• March 2003, Justice Department eliminated
  requirement for FBI to ensure accuracy
• Outcome might be more innocent people
  identified as criminals
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ACCURACY
Credit Bureau Databases
• Three large credit reporting bureaus in U.S.
  maintain huge databases on 90% of Americans
• Credit reporting information is notoriously
  inaccurate
• Fair Credit Reporting Act required credit bureaus
  to maintain “reasonable” accuracy
• What is “reasonable”?
• Basic responsibility for accuracy remains with
  the individual rather than with collecting agencies




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ACCURACY
Other Business Databases
• Most businesses maintain databases used for
  decision making
• Accuracy of data might affect individual within
  and outside the company
• Ethical question: What responsibility does the
  individual manager have for accuracy of the
  data?




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IMPACT ON WORKERS
• IT can replace workers in some cases
• IT can potentially harm the quality of working life
   – Being on a computer terminal too long can cause
     repetitive stress injuries
   – Computerization of tasks can leave remaining manual
     tasks very dull and boring
• Often main objective of a computer system is to
  reduce costs by replacing people
• Ethical question: How do you balance
  organizational benefits with consequences to
  people who lose jobs?


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THE FUTURE
• What will individuals and organizations do with
  the increased IT power available for less and
  less money?
• What new social and ethical issues will the future
  bring?




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