Business Ethics, Government and Society EXAM #3
devil07
BUS_166_slides_week_12.pdf
1. Technological and social change
2. Rights of consumers
3. Four methods of protecting consumers
4. Business response to the consumer movement
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Technological and social change
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Loss of privacy
• Individuals are under a technology microscope with vast amounts of data collected each minute and available to be analyzed in great detail.
• In 2014, a law was introduced in the U.S. that would require car owners to control the data collected on the device called the event data recorder, commonly known as a black box.
• Smartphones are another common device that can capture vast amounts of information.
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Technology and social change
• While scientists and technicians keep technology moving quickly, governments must try to keep pace, ensuring that the public is protected.
• One of the major obstacles to achieving the right balance between the enjoying the benefits of information technology and controlling its potential threats is that government and business o ten do not understand each other very well.
• Cooperation will be necessary if society is to able to reap the full benefits of technology without threat to people’s security and safety.
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Technology and social change
Are technological changes transforming society too quickly?
Two different questions, each from a different perspective:
• Can we develop and offer the new application?
• Should we develop and offer the new application?
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Government protection
Government acquisition of information to protect the public good:
• Does the government protect individuals’ right to personal information?
• Does the government acquire massive amount of personal information, o ten held by technology or social media companies, to protect the public?
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Government protection
Governments have stepped in to protect individuals and their personal information:
• Right to be forgotten: Ask to remove from internet search results some personal information which is believed was damaging.
• Issue arose a ter a man sought to delete an auction notice of his repossessed home dating from 1998 on the website of a mass circulation newspaper in Spain. Google has since received 650,000 requests.
• Codified in the European Union’s General Data Protection Regulation (GDPR) https://eugdpr.org
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Access to personal information
Big data: Technology gives businesses access to a great deal of information.
• Consumers’ shopping habits are a rich source of data for businesses.
• Companies tracking big data, sometimes called meta-data, can pick out specific details about an individuals’ shopping habits, preferences or tendencies.
• Managers o ten find that their strong attraction to using big data can be at odds with the protection of individuals’ rights to their own information.
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Access to personal information
• How much information should companies collect about their stakeholders?
• To what extent do consumers benefit from the collection of their information?
• Have businesses adequately built protections against unwanted invasions of consumer privacy and breaches of information security?
• What rights do you think consumers should be entitled to?
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Rights of consumers
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Rights of consumers
1. The right to be informed • Protection against misleading advertising, labeling and to be given the facts to make an informed purchasing decision.
2. The right to safety • Protection against the marketing of goods that are hazardous to health or life.
3. The right to choose • Assurance of access to a variety of products and services at competitive prices.
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Rights of consumers
4. The right to be heard • Assurance that consumer interests will receive fair consideration in government policy and courts.
5. The right to privacy • Assurance that information disclosed in a commercial transaction is not shared with others.
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Four methods of protecting consumers
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Four methods of protecting consumers
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Consumerism
What kinds of research, if any, do you perform before purchasing a good or service?
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Consumer movement
Consumerism/consumer movement = collective efforts by consumers in many countries to safeguard their own rights.
• As long as business has existed, consumers have tried to protect their interests when they go to the marketplace to buy goods and services.
• Example: Consumer Reports https://www.consumerreports.org
• Product testing • News and analysis • Advocacy and standard-setting
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Reasons for a consumer movement
• Consumers struggle to evaluate the quality of complex products (e.g., smartphones).
• More specialized services and products are difficult to judge (e.g., health plans; credit cards).
• Advertising may contain inflated claims or appeals to emotion.
• Technology has permitted businesses to learn more than ever about their customers.
• Some businesses have ignored product safety.
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How government protects consumers Taken together the consumer protection laws are safeguards that reflect the goals of government policymakers and regulators in the context of the 5 rights of consumers.
• Information protections—labeling and disclosure requirements; prohibition of false or misleading advertising.
• Direct hazard protections—motor vehicle safety standards; product recalls.
• Pricing protections—monopolistic practices. • Liability protections—legal redress for injury. • Privacy protections—data on children.
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How government protects consumers
Consumer protection agencies. Examples:
• Food and Drug Administration https://www.fda.gov
• Interesting documentary on the safety of dietary supplements: https://www.pbs.org/wgbh/front line/film/supplements-and-safety/
• Consumer Financial Protection Bureau https://www.consumerfinance.gov
• National Transportation Safety Board https://www.ntsb.gov
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Consumer privacy in the digital age
As mentioned, rapidly evolving information technologies in the early 21st century have enabled businesses to collect and use vast amounts of personal data about their customers.
The dangers:
• Information might be used fraudulently.
• Unwarranted incursion into personal privacy.
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Consumer privacy in the digital age Behavioral advertising = advertising that is targeted to particular customers, based on their observed online behavior; intended to be tailored to a user’s interests and preferences.
• Benefits: • The buyer is more likely to receive messages that are relevant.
• The seller is more likely to reach prospective customers.
• Risks: • The consumer may be denied opportunities, such as credit, based on their online profiles.
• Information collected by behavioral advertisers may not be kept private and secure.
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Consumer privacy in the digital age Dilemma: how to protect consumer privacy while fostering internet commerce?
• Consumer self-help • Internet users should use technologies that enable them to protect their own privacy.
• Industry self-regulation • Internet-related businesses advocate being allowed to regulate themselves.
• Privacy legislation • Favor new government regulations protecting consumer privacy online. https://www.nytimes.com/2018/06/28/techno logy/california-online-privacy-law.html
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Using the courts
Product liability = the legal responsibility of a firm for injuries caused by something it made or sold.
In U.S. and some other countries, consumers have the right to sue and collect damages if harmed by unsafe products.
• Consumer advocates and trial attorneys have supported these legal protections.
• By contrast, some in the business community have argued courts and juries have unfairly favored plaintiffs and have called for reform.
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Using the courts
Strict liability = the legal standard applied to manufacturers in the United States; they are responsible for injuries resulting from use of their products, whether or not they were negligent or breached a warranty.
• May be held liable, whether or not they knowingly did anything wrong.
• Statistics show plaintiffs win about 34% of the cases filed for an average award of $201,000.
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Alternative Dispute Resolution (ADR)
An approach to settling disagreements between companies and consumers without going to court.
Can take the form of: • Mediation—a voluntary process to settle disputes using a third party neutral.
• Arbitration—the use of an impartial individual to hear and decide a case outside of the judicial system.
See “Payday” episode of the Netflix series, Dirty Money.
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Business response to the consumer movement
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Business response to consumer movement
Quality management = all the measures an organization takes to assure quality.
• Taking steps at all stages of the production process to ensure consistently high quality has many benefits.
• Building products right reduces the risk of liability lawsuits and builds brand loyalty.
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Business response to consumer movement
Voluntary codes of conduct:
• Businesses in some industries have banded together to agree on voluntary codes of conduct, spelling out how they will treat their customers.
• Example: The Western Growers Association adopted voluntary guidelines for growers and handlers of leafy green vegetables.
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Business response to consumer movement
Consumer affairs departments:
• Manage a complex network of contacts with customers.
• Handle consumer inquiries and complaints about a company’s products and services.
• Example: customer service at Camelbak https://www.camelbak.com/en/customer-s ervice/contact
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Business response to consumer movement
Product recalls—occurs when a company, either voluntarily or under an agreement with a government agency, takes back all items found to be dangerously defective.
Problem: the public may not be aware of them, so dangerous products continue to be used.
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Achievements of the consumer movement
Consumers today benefit from:
• Better information about the goods and services they purchase.
• Being more aware of their rights when something goes wrong.
• Being better protected against inflated advertising claims, hazardous or ineffective products, and unfair pricing.
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- Technological and social change
- Rights of consumers
- Four methods of protecting consumers
- Business response to the consumer movement
