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SOCIAL, ETHICAL,
AND LEGAL ISSUES
MIS 503
Management Information Systems
MBA Program

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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


THE LEGAL ENVIRONMENT
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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
ETHICS FRAMEWORKS
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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!
ETHICS FRAMEWORKS
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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?
ETHICS FRAMEWORKS
Identifying Ethical Problems
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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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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





COMPUTER CRIME
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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
Drivers Privacy Protection Act
Health Insurance Portability and Accountability Act
Childrens 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
Use of Internet has led to
renewed controversy
between our right to
freedom of speech and the
right of society to protect
itself
Freedom of Speech
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PRIVACY
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 citys water supply?
Child pornography?

Freedom of Speech
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PRIVACY
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

Page 625-626
Freedom of Speech
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PRIVACY
Page 626
Intellectual Property Rights
Due to technological advances, sharing intellectual
property is easy, rapid, and inexpensive
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
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PRIVACY
Page 626
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
Page 627
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 vendors
permission
There are severe penalties for violation
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PRIVACY
Page 627
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
Page 628
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
Page 628-629
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
Page 630
Ethical Questions
Is it ethical to download copyrighted music or
movies from the Internet, and not pay for
them?

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ACCURACY
Page 631
National Crime Database
FBIs 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
Page 631-632
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
Page 632
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
Page 632-633
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
Page 633
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?