Ethical issues in Electronic Commerce: Focus on Privacy

Ethical issues in Electronic Commerce: Focus on Privacy


According to Irtaimeh and Al-Hawary (2011), e-commerce is a revolutionary addition to the strategic imperatives in the modern-day marketplace. Industries have found it necessary to employ this strategy in gaining a competitive edge. Ultimately, the manner in which e-commerce is applied determined the competitiveness of the firms. It is expected that e-commerce will become an integral part of the global market place. As a result, Zainul, et al. (2004) proposed that it is apparent that the use of IT has metamorphosed the manner in which businesses emerge, operate and compete. These elements of e-commerce have a multiplicity of effects on the long-standing social and cultural relationships in business. The shift in the primary set up of business necessitates careful consideration of ethical aspects. This study is directed towards identifying what ethical concerns are pertinent to privacy in the process of carrying out electronic commerce.

Problem Statement

Cheng et al (2011) indicated that ethics are an integral part of the establishment and sustenance of the long-term consumer-suppler relationship. Both the transaction-process and transaction-systems propagate a foundation for ethical concerns in the business place. The apparent differences between e-commerce and traditional shopping exist in the tangibility of the parties to the business. E-commerce presents a novel environment for ethical conduct, especially for the individuals who are not well-versed with the implications. Numerous studies have tied customer loyalty to the manner in which sales persons and customer care agents handle their clients. In the absence of any specific research on e-commerce, through deductive reason, it is reasonable to associated unethical conduct in e-commerce with low adoption rates among consumers.

In spite of all the efficiency and effectiveness originating from the use of e-commerce, privacy still remains a major issue among the many setbacks. Absolute privacy is impossible when interfacing trade through the internet. As a result, the trade-off between privacy and the efficiency of the platform is what users have to establish in order to ensure that they draw maximum benefits. However, the existing approaches to upholding the desired levels of privacy are sometimes out of reach of the regular shoppers, thereby making it necessary to assign responsibilities for ensuring that privacy rights are not infringed upon.

Background of the Research

Numerous studies have focused on the ethical issues relating to e-commerce. Most of the researchers focus on a converging array of factors including reliability (Nardal and Sahin, 2011), privacy (Nardal and Sahin, 2011 and Cheng, et al, 2011) and security (Peslak, 2006). Nardal and Sahin (2011) indicated that the rapid absorption and adoption of e-commerce propagated immeasurable opportunities and challenges for the economic efficiency of entities and value creation for customers. Kaapu and Tiainen (2009) observed that the growing preference for e-commerce among consumers is commensurate to the concerns relating to ethical factors. Ethics are associated with the acceptable and recognized modes of operation, conduct and relationships between individuals and persons in the same environment. The multiplicity of differences between individuals and the persons enhances the challenges in establishment of common grounds, thereby amplifying the chances of discontent and unrealized expectations.

Trends in e-commerce

Irtaimeh and Al-Hawary (2011) noted that the expansion of the market place from local to global standards plays an imperative and significant role. The speed and reliability of the internet has made it possible for suppliers and consumers to avert the time, distance and form barriers to satisfaction of human needs. The delivery of differentiated value to consumer through the combination of processes and systems tied to the core elements of business is the main source of the convenience. As individuals move to enhance the processes and systems, it is important to recognize the need for organization, standardization and stabilization of the benefits across the e-commerce life cycle.

E-commerce has continuously played a central role business to business transactions, business to customer relationships and emergence of organizations. In a nutshell, the increased consumption of IT in business has made it imperative for harmonization of expectations and outcomes. Odu (2001) indicated that ever IT “user has concerns and needs answers to several questions including: access to and use of personal information; the rights of Internet users; laws that protect those rights; unauthorized access to e-mails and the possibility of sending e-mails mistakenly to unintended persons.”

Ethical Issues in E-commerce

According to Cheng, et al (2011), “According to some studies of EC ethics, the most often mentioned ethical issues are privacy, security, fraud, access, intellectual property, unsolicited e-mail, trustfulness, targeting children, false advertising, pornography, product warranty, plagiarism, cyber-squatters, and judgment by same standard as other media”. Ethics provides the foundation for success in business. Although it ranks as an auxiliary aspect, it is necessary for every organization to maintain ethical standards in order to achieve the mainstream objectives. As a market-wide strategic imperative, it is the role of every organization to propel the popularity and reliability of e-commerce as an important part of the modern-day strategies.

Issues related to privacy are most prominent when it comes to e-commerce. Studies by Ackerman, Cranor, and Reagle, (1999), revealed that such fears have become amplified over the past. Westein (1998) established that over 80% of individuals using the internet were concerned about their privacy. Although the internet users have different conceptualizations regarding safety, it is important to appreciate the fact that web-based transactions are slightly different from the brick-and-mortar set up.

Research Questions

The primary research question for this project entails establishment of the privacy concerns with regard to e-commerce. Specifically, the research question is: ‘What aspects of privacy influence the strategic imperativeness of e-commerce in the modern day business?’ The pertinent research questions for this research include the following.

  • What are the factors that contribute to infringement of privacy rights in e-commerce?

  • Who is responsible for preventing this infringement among all the parties to e-commerce?

  • Can parties to e-commerce relate without infringing on privacy rights?

Research Objectives

The research objectives identify the purpose of the research. In this project, the applicable objectives include the following.

  • Identify the factors that contribute to infringement of privacy rights in e-commerce transactions

  • Identify ways through which the infringement can be eliminated

  • Identify the roles of parties to e-commerce in reducing infringement on privacy.

Literature Review


This assertion is clearly represented by the prominence of e-commerce across the global jurisdiction where strict laws regarding usage of the internet exist. In addition, the prevalence of collapse of e-commerce ventures is lower nowadays, compared to when the strategy first came into operation. Although this may be due to the effects of the learning curve, e-commerce businesses have benefited from the existence of a considerable code of conduct, backed by legal provisions in some jurisdictions (Cheng et al, 2011). Velanzuela et al (2010) affirmed this assertion by indicating that the perception of the consumers regarding the ethical nature of an organization is crucial to the emergence of a strong relationship between the buyer and the seller.

Privacy in e-commerce

In the simplest sense, privacy entails the right to be left alone coupled with the freedom from intrusion into the personal space. Smith and Shao (2007) observed that the aspect of reasonable freedom from such interference becomes most pronounced with regard to e-commerce. The use of IT to access information about clients, attract such clients and present information in the name of advertising has become important (Ackerman, Cranor and Reagle, 1999). As a primary avenue towards determining what denotes value to the client, it is important for entities involved in e-commerce to collect information about their client. In most cases, collection of such information is done in a viral manner. Viral information sources make it impossible for direct contact with the ultimate consumer, thereby blurring the line between reasonable and unreasonable intrusions.

However, privacy is not just a concern exclusive to e-commerce. Ackerman, Cranor and Reagle (1999) indicated that it is virtually impossible for a buyer to interact with a seller without revealing personal information, even in the traditional system. However, certain aspects of IT make it highly likely that the information will be stored, retrieved and used, making buyers wary of revealing their shipping information, or even browsing online.

Privacy issues are common especially with regard to access to web content, considering that most websites use cookies and online registration. Although terms and conditions are normally attached, it is impossible to rule out the misuse of such information for personal gain. Other illegal approaches include the use of spyware to collect information about clients

Leitch and Warren (2001) pointed out the case where an individual instituted legal proceedings against an advertisement firm for alleged use of private information. The advertising firm, DoubleClick, was accused of illegal access to consumer information. The access to information was done in a bid to attract and retain customers. The ethical concerns arise out of the need to establish acceptable ways of accessing information about potential clients, even in the steepening competitive stance in the market.

Novel technologies have created a path way for unprecedented privacy, while exposing the same individuals to unparalleled infringements in privacy. Although advances in technology are amorphous in nature, efforts to attain access to information deemed private seem to grow at a higher rate (Smith and Shao, 2007).

Cookies, Spamming and Clickstreams and Privacy

Intrusions into private space include spamming, Clickstreams and cookies, most which are regular aspects when using the internet. The use of cookies makes it possible for subsequent user to access information about elementary aspects of the reasons why the previous users were utilizing the internet. This information can be combed to provide profiles about consumers’, health status and even online preferences as observed by Cranor (2003).

Geo-Location Systems and Privacy

Udo (2001) postulated that the invention of geo-location systems amplifies the set of ethical aspects associated with e-commerce. Geo-locating applications use personal information sourced from the internet to pinpoint the geographical location where the individuals is. According to Ackerman and Davis (2006), depending on the type of information used, it is possible to establish the socio-economic status of the individuals and assign preferences and lifestyles. As a result, for competitive advantage purposes, such applications are beneficial. However, access to such information presents large scale security risk to the range of clients. Although businesses may collect such information for perfectly legal reasons, it is impossible to assure safety of identities of the individuals.

Privacy and Intellectual Property 18336125036

Management of intellectual property presents challenges due to intangibility of the human mind (Chapter 7, 2008). Protection is mostly accorded through patents and copyrights (Smith and Shao, 2007). In some instances, registration of the relevant trade and service marks makes it possible for protection to be accorded. The existence of intellectual property is attains tangibility in the traditional business approaches, since the owners of the property had the opportunity to meet and control access to such elements. In the advent of e-commerce, it is highly challenging to differentiate between deceptive operational standards, malicious advertisements, defamatory posts and the unauthorized use of web content.

The existence of automatic copyright laws for every webpage is sufficient protection for owners in the US (Zainul, et al. 2004). Any unauthorized use of graphics, words or tags on the page is prohibited. However, there exist differences in the manner and strictness of the protection across the states and the global consumers of such content. As a result, it becomes challenging for action across jurisdictions which have different provisions. The extent to which copyright infringement is defined also becomes an issue when it comes to e-commerce. The fact that there is no alternative form of contact for the individuals conducting business implies that a huge compromise has to made, thereby legalizing some form of infringement.

The existence of intellectual property in electronic form presents challenges in the form of hackers who prey on such information. Hackers sometimes pose as the authentic sellers of such information through ‘phising’, thereby stealing information from unsuspecting individuals and compromising the availability of such information. Customers who are subject to such

Privacy and Consumer Protection

Protection of consumers on the electronic market place is an important step in enhancing the reliability of this strategy. Consumers are keen on getting value for their money. Integrity and authenticity of information and products exchanged in this market are the foundation for protecting consumers. Contemporary organizations have adopted IT as an integral and core aspect of their business place. As a result, the synergistic outcome of the interaction must be positive in order to avoid security concerns for any of the consumers.

The most prominent ethical aspects are unsolicited marketing and delivery of related information through electronic means (Cranor, 2003). Consumers are keen on determining what kind of information to receive from marketers and sellers. If the information received varies from expectations, there is a high possibility that their preference for e-commerce will wane. It is for this reason that consumers rarely provide intrinsic details to the marketers. Such information can be used to determine preferences and lifestyles. Predictions about habits and conduct can be used to draw incorrect assumptions about themselves (Cavoukian, 1998).

Protection of consumers in the online platform presents numerous challenges. The fact that e-commerce involved economic activity through electronic interaction across organizations makes it important for all stakeholders to recognize the technical, perceptual, societal and legal issues, all which border on ethics. Consumer protection spans across all dimensions of e-commerce issues. It is for this reason that most organizations have found it necessary to develop products to mask their identity online, identify the risky websites and encrypt certain information (Udo, 2001).

Measures to Curb Infringement on Privacy

Technological advancements have made the e-commerce environments highly interactive, thereby elevating the catalogue of concerns (Spiekermann, Grossklags and Berendt, 2001). The highly-valuable data available from consumers remains a marketers’ mine field. The existence of boundaries in access and usage makes it possible for protection of both the consumers and seller, who sometimes fall in the hands of crafty buyers. The only reliable approach to protection of all parties is to ensure sufficiency of legal provisions, technical standards and self regulation.

Privacy Laws

Legal processes are slow in effect, while the effectiveness of decisions in the technological cycle is prime in terms of months. As a result, most individuals will only resort to the law after all other channels are exhausted. Legal provisions are also not conclusive and all inclusive. Differences in these laws across countries and regions make it impossible for unity of purpose and speedy execution of decisions.

Kalinauskaite (2012) stated “no one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, or to attacks upon his honor and reputation. Everyone has the right to the protection of the law against such interference or attacks.” The application of this in e-commerce makes it possible to found legal proceeding for individuals who are victims of privacy infringement. However, some jurisdictions are not keen on human rights and lack specific provisions to deal with such infringements. Socio-economic and cultural differences make it impossible for blanked application of the laws as well. Consequently, such laws are only applied in certain regions such as the US and EU, where strict application has been performed in the past.


Self-regulation becomes challenging due to the fact privacy statements and other seals are not upheld by both buyers and sellers. A number of organizations seek competitive advantage through these self-regulation measures since they are able to attract and retain consumers. However, it is impossible to enforce self-regulation across the range of e-commerce provides, since it is more intrinsic than extrinsic (Spiekermann, Grossklags and Berendt, 2001). Self-regulation and voluntary agreements have similar approaches to ensuring privacy. However, voluntary agreements are large scale as compared to self-regulation. The fact that a number of providers decide to abide by a certain code of operation voluntarily provides consumers with a higher level of satisfaction, compared to when a single provider comes out (Kutscher, 2002).

Technical Standards

According to Cavoukian (1998), technical standards have provides sufficient protection from infringement on privacy. However, technical standards are only applied to a certain extent, and by individuals who are well aware of the technical aspects of internet usage. Most individuals using online facilities are not computer experts and cannot measure up to the technical prowess of hackers and developers of malware and spyware (Spiekermann, Grossklags and Berendt, 2001). As a result, these individuals exist at the mercy of these individuals. Technical standards are thus relegated to the providers of e-commerce services. Through establishment of secure websites, fool-proof payment portals and data security makes it possible for consumers to shop without fear of losing such data to the wrong individuals. The use of technical standards can be achieved through the use of encryption, digital signatures and secure transmission. Protection of privacy infringements through a multiplicity of approaches makes it possible for buyer confidence to develop over time. In most cases, legal provisions backed by any other method provide the most reliable protection (Cavoukian, 1998).

Conceptual Framework

The conceptual framework identifies the ethical factors associated with e-commerce with focus on privacy. The actions of sellers, buyers, developers of e-commerce systems and third parties determine the extent to which privacy issues arise. The actions of these individuals range from voluntary sharing of information to illegal access to data about clients. The conceptual framework is indicated here under.







Gaps in Knowledge

Most of the studies reviewed relate to the manner in which to enhance privacy by identifying the risks and sources of the risks. Spiekermann, Grossklags and Berendt (2001) focus on the work of hackers, Zainul, et al. 2004 focused on the existence of laws while Cheng et al (2011) directed their research on the existence of relationships between buyers and sellers. Other researchers have directed focus on the reason why privacy issues. However, none of the studies have identified the role of the buyers on buyers in infringement of privacy rights. The actions of buyers, intention or spontaneous sometimes provide persons will ill intentions with a gate way into their lives. Such actions could be on e-commerce portals, social networks on the World Wide Web.


E-commerce is a revolutionary strategy in the modern day business place. Its application is prime for all industries, albeit to differing magnitudes. The ability of buyers to access information about products from the comfort of their houses makes it possible to enhance the reliability of the supply chain and value creation efforts for all the customers. The effectiveness and efficiency of this platform is not without challenges, most of which exist in ethical dimensions. Privacy surfaces as one of the most common form of concerns for all users of e-commerce. The unauthorized access has ethical and legal implications, thereby making it necessary to address such challenges across jurisdictions. The difference in ethical and legal standards makes it necessary to establish harmonized solutions in order to promote acceptability of the platform in the global market place. This study aims at identifying the ethical issues associated with privacy in e-commerce. The study seeks to establish responsibilities and approaches to ensuring a tradeoff between efficiency and effectiveness.

References List

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Ackerman, M. S., Cranor, L. F., and Reagle, J. 1999. Privacy in E-commerce: Examining User Scenarios and Privacy References. ACM Conference in Electronic Commerce.

Cavoukian, A. 1998. Privacy: The key to Electronic Commerce.

Chapter 7, 2008. The environment of Electronic Commerce: Legal, Ethical, and Tax Issues. Available at Book/08_eC_Chapter7.pdf [Accessed 26 January 2013]

Cheng, H. F. et al. 2011. Ethics in Electronic Commerce: An exploration of its Consequences. African Journal of Business Management Vol 5 (11)

Christopher, B. 2011. Disclosive Ethics and Embryonic Developments in E-Gambling Commerce. Available at [Accessed 26 January 2013]

Cranor, L. F. 2003. ‘I didn’t buy it for myself’ Privacy and Ecommerce Personalization. Available at [Accessed 26 January 2013]

Irtaimeh, H. J., and Al-Hawary, S. S. 2011. E-Business: Crimes & Ethics. International Bulletin of Business Administration. Available at [Accessed 26 January 2013]

Kaapu, T., and Tiainen, T. 2009. Consumer’s View on Privacy in E-commerce. Scandinavian Journal of Information Systems. Vol 21 (1).

Kalinauskaite, A. E. 2012. Commerce and privacy in the EU and the USA. Available at [Accessed 26 January 2013]

Kutscher, B. 2002. Self-regulation of E-Commerce in Europe-Time to Think Small. Available at [Accessed 26 January 2013]

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Smith, R., and Shao, J. 2007. Privacy and E-Commerce: A consumer Centric Perspective. Available at [Accessed 26 January 2013]

Spiekermann, S., Grossklags, J., and Berendt, B. 2001. E-Privacy in 2nd Generation E- Commerce: Privacy Preferences versus Actual behavior. Available at [Accessed 26 January 2013]

Stahl, B. C. 2010. The paradigm of E-Commerce in E-Government and E-Democracy.

Udo, G. J., 2001. Privacy and Security Concerns as Major Barriers for E-commerce: A survey Study. Available at!Privacy/Privacy%20and%20security%20 concerns%20as%20major%20barriers%20for.pdf [Accessed 26 January 2013]

Valenzuela L. M, et al 2010. Impact of customer orientation, inducements and ethics on loyalty to the firm: Customers’ perspective. Journal of Business Ethics, 93(2)

Zainul, N., et al. 2004. E-Commerce from an Islamic Perspective. Electronic Commerce Research and Application. Vol 3


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