Ethical issues in electronic commerce


The tremendous growth of the Internet has triggered concerns about security and ethical issues. The popularity of electronic commerce according to research plays an important role in existence of those issues. “A recent study (Stead & Gilbert, 2001) points out the key issues affecting electronic commerce. The misuse of technology presents an irony. On the one hand it gives people the ability to access information rapidly for all kinds of purposes; on the other hand, that same technology can be used to create spamming, stealing of identity, and violation of privacy.”

Some of the issues that the authors have identified need to be considered and mitigated by Zenten. The ethical issues that we need to look at in more detail for our e-commerce business include:

  • “Privacy: It is defined as “the condition of not having undocumented personal knowledge about one possessed by others”. In other words, it deals with the collection of information without one’s knowledge and consent.
  • “Spamming: It occurs when “e-mails users are flooded with unsolicited information about products and services”.
  • “Online marketing to children: Occurs when children are asked to give their personal information online to make a purchase.”
  • “Cybersquatters: Occurs when a non-legitimate business entity registers familiar name of organization or celebrities as his or own domain names. Then that particular company has to pay a fee for using the Internet address.”
  • “Communicating Policies, Terms of Use in way that the customer understands to what he agrees to”

The following chapters will point out on what Zenten needs to consider in each of these topics and how we want to ensure, that we have the necessary monitors and controls in place to recognize new potential ethical issues and how to react on those.

Zentens major ethical Concerns


Zenten will primarily targets very young set of clientele in the age group of 12-24 years. With such a young group of customers, Zenten will be walking a very tight rope in regards to maintaining privacy in general and information privacy in particular given that most of our customers are not of legal age to provide information freely. We are a pure click and mortar e-commerce business and information is the cornerstone of our business growth and eventual survival. As we plan to use several industry standard data collection tools such as cookies, monitoring tools, shopping carts, search engines, digital wallets and site transaction logs, Zenten will be in essence entrusting itself with enormous volume of information, most of which constitutes of personal profiles with identifiable information such as personal email address, postal address and telephone numbers. A great challenge is maintaining privacy of our customers such that we do not lose their trust.

One of the greatest challenges we foresee for Zenten’s information gathering activities for its marketing campaigns and other business undertakings would be in maintaining a clear ethical standard in respect of how information gathering methods and usage will be handled, taking into account that data protection policies must be compliant to the best practices, standards and regulations that are applicable within the European Union & Switzerland (where our headquarters is located).

In addition, privacy concerns comprise of concerns with the difficulty of securely conveying the information required for online transactions i.e. securing communication with our customers. Zenten must ensure that our business practices in compliance with EU laws on privacy. We intent to achieve this, by having our company audited once a year by an external auditing / certification body for e-businesses to ensure potential future risk, and changing laws impacting our way of doing business is recognized and needed change implemented.

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Zenten must also take into consideration, that we have internal procedures to ensure that our employee are trained on our standards and don’t give out customer information to third parties. Also our buyer network and our suppliers with access to our systems and some or all customer data, must have legally binding non-disclosure and privacy agreements signed before getting their login data.

However, our biggest concern though is in respect to gathering online information from minors (i.e. under 18 years). We are a special e-commerce venture whose 95% of our clientele is under 24 years and about 65% under 18 years of age. We need to consider working with special government agencies in Switzerland to ensure we have in place adequate information gathering tools that provide for informed consent by our customer. EU data protection laws require that an opt-in approach be used by default. The other important aspect of customer privacy affecting Zenten is in regard to the whole marketing strategy that is based on niche segmentation. Further, profiling and behavioural targeting, both approaches (usually done without the express consent of the information owner) will give us an edge in shaping our advertising strategy, yet this is in contradiction with privacy laws.

We need to be more responsible in relation to our customers; in particular re-assuring parents whose children will be Zenten members, that we are a responsible business that takes privacy seriously. Our marketing campaigns can be aggressive without appearing intrusive; our data collection methods can be thorough wile respecting fair information practices principle and probably look at the possibility of creating a safe harbour.

Marketing To Children

As our company is based in Switzerland, Swiss law must be applied. In Switzerland a person under the age of 18 can not commit contracts. Buying an item is considered a contract. However Swiss law, foresees that under age persons can commit buys up to amount of their monthly income (allowance from parents) without the consent of their parents. Further, if the transaction amount is to high, then the contract is not valid and goods and money must be returned. As one part of our target group is the teenager as of the age of 13, we might run into a conflict or risk there.

Zenten will implement account authorization mechanisms, that allow under-aged customers to open a profile but will not be able to receive email, or buy with us until their parents have authorized their account. This parental authorization will be collected by collecting parental information during the registration. By postal mail, the parents will receive and letter indicating that their child has registered with us and that they can approve their child account by going to our webpage and entering a code that was sent to them in the letter. By this we can also verify the address of auf future customer. As soon as the parent confirm, the customers account will be authorized and have full rights. Parents will at any time have the possibility to cancel or restrict the account of their kids. This way we do not have to request authorization for all.

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Further, Zenten encourages parents to make use of our Zenten Card, a sort of wallet that parents can deposit pre-determined amount with Zenten such that a credit card verification is not necessary. However, Zenten will have to share with the parents all transaction or purchases made within an agreed specified period (option to be part of the opt-in process).

Further, our newsletter and couponing system must take age into consideration. As our main user group is very young, we will match content to this user group.


Cybersquatting could damage Zenten reputation and result in substantial business losses. We must do what we can to protect the brand to mitigate the risk of financial loses.

What is so damaging about cybersquatting? Well it is people intent on visiting your brand’s Web site but instead end up on a cybersquatter’s site and then redirected to a phishing site or a site with objectionable content or advertising that may link to competing products and services. At Zenten we must think ahead of the criminal as well as our competitors if we are to succeed in this competitive world of e-business.

The statistics are very compelling in which they demonstrate that the cybersquatting or the redirection because of cybersquatting is increases yearly.

“From 2007 to 2008:

  • Cybersquatting: 18%
  • Offensive content: 21%
  • Pay-per-click advertising: 24%
  • False association: 20%
  • E-commerce/counterfeit product sites: 46%”

Source: 2008 Brandjacking Index, MarkMonitor Inc., San Francisco

These are serious offences that are handled by the anticybersquatting Consumer Protection also know as the (ACPA). They are responding to the growing number of complaints from owners of famous and growing trademarks. The ACPA creates civil liabilities for anyone who attempts in bad faith to profit from an existing famous or distinctive trademark by registering an Internet domain that is identical or confusingly similar of that of the trademark. At Zenten we must take proactive measures by knowing what actions we can take to protect our reputation. It is a serious matter where we could find ourselves compromised by another organization extort profits from Zenten business model.

The trademark law was form to help organization like Zenten protect our intellectual property on the Internet and we must use it to advantage. On our website Zenten consumers will have an means to report abuse and concerns about potential privacy issue that have occurred in cyberspace. As part of this control Zenten, will have a response plan with a commuincation and marketing plan that be placed into action.

Understanding Zenten’s Policies and Terms of Use

Zenten has taken notice that computer and communication technologies have re-framed old ethical dilemmas and created new ones, and this has brought totally new challenges for e-commerce. In taking not, Zenten shall take a top-down planning approach combined with scenario refinement, identifying pertinent elements of all ethical problems and plan not just initial responses but branch out, to create hypothetical maps to guide decision making based on Liffick’s analytic method quoted in Adams A A & McCrindle R J (2008). Zenten shall make recognition that computer ethics by virtue of the nature of technology takes change for granted and expects circumstances to move swiftly and Zenten to move accordingly. The ever-increasing rate of computer technology development will require that Zenten has a flexible approach if ethical decisions are not to be overtaken by events.

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Zenten has to tap into the concepts grounded in ideas of moral philosophy bringing together concepts of voluntariness, comprehension of agreement, disclosure and competence. The idea of informed consent is grounded on voluntariness, were the user has a comprehension of the agreements/policies posted on the website and they consent to it. Zenten will take into stock when coming up with its policies that the lack of knowledge of computer operation and information theory presents significant difficulties in judging comprehension by Zenten users to what is proposed. That indeed long and poorly presented agreements produce user fatigue in reading agreements and legal conceptions of true contract negotiation are undermined by take-it-or-leave-it approaches of posted agreements.

Summary of actions Zenten will apply to mitigate ethical risks

Summary on how Zenten will mitigate concerns raised, to create a safe harbour and maintain adequate measure to protect our customer and ensure their privacy is assured.

  • Any information obtained and stored by Zenten will not constitute of personal data obtained secretly
  • All Zenten customers will have access to their personal information and be able to update it, and also know it is used
  • We will not share personal information obtained from a customer with any third party including our business partners without express written consent of the information owner
  • Zenten will at all times endeavour to assure the reliability of the data for their intended use and will take precautions to prevent misuses of the data.
  • Zenten will identify itself along with all advertisement sent to our customers
  • Children under the age of 18 may not submit information to a website without parental authorisation.
  • Zenten will NOT advertise any content that is identifiable as adult content
  • Zenten will not use E-mail advertising unless it has been solicited by the recipient (anti-spam).
  • Online advertising must not contain content that can offend the dignity of the person, or contain content that can be discriminatory.
  • Zenten advertising promotions will adhere to the rules governing advertising in general, especially those of legality, truthfulness and good faith.
  • Zenten will respect intellectual and industrial property rights and avoid unfair competition in all its dealings
  • Opt-in will be our default option for informed consent in information gathering
  • Obtain certification by external auditing and certification body and maintain certification in recommended interval
  • Obtain non-disclosure agreements from our buyers network, that work for our company in a freelance contract, and our supplier with access to some of the customer data.


  • Laudon K and Traver C (2009) e-Commerce 5th Ed. New Jersey: Pearson Education Inc
  • Stead, B. A., & Gilbert, J. (2001). Ethical issues in electronic commerce. Journal of Business Ethics, 34(2), 75
  • Source: 2008 Brandjacking Index, MarkMonitor Inc., San Francisco
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