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Chapter 6 Business Ethics and Ethical Decision-Making 159

Table 6.2 indicates how occupational fraud is committed by employees. Misappropriation of assets represents the greatest source of fraud.39

Privacy The final category of ethical issues relates to privacy, especially within the healthcare and internet industries. Some privacy issues that busi- nesses must address include the monitoring of employees’ use of available technology, consumer privacy, and online marketing. Companies often use cookies or other devices to engage in online tracking, and many websites use consumer information to improve services. Although this can benefit consumers in the form of better marketing and tailored searches, it is also controversial because many consumers do not want their information being tracked. Others are still willing to provide personal information despite the potential risks.40 The challenge for today’s firms is balancing their need for consumer or employee informa- tion with the desire for privacy. In terms of employees, there are few legal protections for their right to privacy, giving businesses flexibility in establishing policies regarding employee privacy while using company equipment on company property. Some common ways that an employer might track employee use of equipment is through computer monitoring, telephone monitoring, video surveillance, and global positioning system (GPS) satellite tracking. Although employers have the right to make sure that their resources are being used for appropriate purposes, the ability to gather and use data about employee behavior creates the need for trust and responsibility.

The use of biometric data, including fingerprints and facial scans, is creating ethical issues. It is used as a common method for companies with warehouses to verify employee hours and check workers in and out of their facilities. Lawsuits have been filed by employees regarding how firms use and store their personal biometric data. Illinois is regarded as having stringent privacy protection laws. According to their Biometric Information Privacy Act, companies that collect this data must first obtain user consent and notify the individuals about why, how, and how long their data will be used and stored. The risks involved with biometric data is that privacy could be compromised and ultimately lead to identity theft. This could occur if the data were subject to data breaches or if access was incorrectly given to a third party.41

There are two issues involving consumer privacy: consumer awareness of information collection and growing lack of consumer control with respect to how organizations use personal information. For example, many are not aware that Google reserves the right to track each time they click on a link from one of their searches.42 Data tracking of information about consumers without their knowledge or consent occurs daily. Cookies are a common way for websites to track users, but third-party trackers use more sophisticated tracking methods to collect personal data on visitors. This nonconsensual collection of personal data has led to such regulatory measures as the passage of the General Data Protection Regulation (GDPR) in Europe. The GDPR will be discussed in more detail in Chapter 11.43

Consumer information is valuable not only to businesses, but also to crimi- nals. An identity is stolen approximately once every two to three seconds in the United States.44 Criminals may try to steal personal consumer information and sell it online. Some of this information comes from publicly accessible sources, such as social networking profiles, but poorly protected corporate files are another major source for criminals. Recently, Marriott International had a privacy breach that

privacy issues issues that businesses must address that include the monitoring of employees’ use of available technology, consumer privacy, and online marketing

biometric data digital data used for personal verification or identification that includes fingerprints, facial scans, retina scans, voice, and DNA

Table 6.2 How Is Occupational Fraud Committed? Corruption 38%

Conflicts of interest

Purchasing schemes

Sales schemes

Bribery

Invoice kickbacks

Bid rigging

Illegal gratuities

Economic extortion

Asset Misappropriation 89%

Theft of cash on hand

Theft of cash receipts

Skimming

Cash larceny

Fraudulent disbursements

Billing schemes

Payroll schemes

Expense reimbursement schemes

Check tampering

Register disbursements

Inventory and all other assets

Misuse

Larceny

Financial Statement Fraud 10%

Net worth/net income overstatements

Net worth/net income understatements

Source: Association of Certified Fraud Examiners, Report to the Nations 2018 Global Study on Occupational Fraud and Abuse, 2018 https://www. acfe.com/report-to-the-nations/2018/ (accessed July 15, 2019).

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160 Business and Society

resulted in the exposure of the personal information of 500 million people. The hackers who accessed the information stole a great deal of data, including people’s full names, addresses, passport numbers, and date of birth.45

To reassure consumers that their information will be protected, an increasing number of companies are displaying an online seal from the Better Business Bureau (BBB), which is available to websites that subscribe to certain standards. A similar seal is provided through the TRUSTe certification program from TrustArc. These seals assure customers that the websites adhere to certain policies meant to protect their privacy.

AI and Ethics: An Emerging Issue Emerging technologies are disrupting the workplace and creating new challenges to ethical decision-making. Transformative technology such as three-dimensional (3D) printing, the Internet of Things (IoT), drones, and robotics are enabled by artificial intelligence (AI). All of these developments need oversight to monitor, audit, and ensure accountability for ethical decisions.46

AI involves machine learning that can simulate some aspects of human behav- ior. AI can exhibit cognitive functions associated with humans, as well as problem solving and learning at a complexity beyond what a human being can process. The ability of AI to incorporate ethical decision-making has been challenged. The important question is how AI should make ethical decisions. What is a responsible role for AI in our society? Big data enables AI to engage in advanced analytics combined with cloud computing to create “smart” systems to interact and provide information and solutions in business. There is the potential for AI to disrupt and change all aspects of business.

Introducing AI requires public safety, security, and privacy, as well as building trust and understanding. Values, norms, and behavior relate to social and cultural human decisions. As AI systems become more complex, there is a need to explore the ethics-related impact and develop ethics components to machine learning. Ethical concerns exist because of the ability to make autonomous decisions. AI can make decisions and implement actions based on the algorithms or rules provided by the programmers. In addition, an AI program will need oversight to monitor and access outcomes that result from decisions or directions from machine learning.47

There is evidence that AI systems have been involved in accidental or in some cases intentional ethical dilemmas that could have major consequences. Targeting markets based on demographics could even result in discrimination. Predictive analytics can target market segments, but it can also involve data privacy issues.

For example, Facebook is facing backlash for allowing companies to target consum- ers via sharing private data without con- sumers’ permission. A code of ethics has become increasingly important as data breaches and unauthorized data sharing have grown. This will require the design of AI systems that are programmed with an ethical decision-making component, as well as transparency with the public on the algorithms used to ensure ethical decision-making. AI machines will require complex algorithms that are similar to the ethical decision-making of their human partners. In the future, humans will be working alongside AI-enabled robots, Sh

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