Chapter 15
Social and Regulatory Issues: Privacy, Security and Intellectual Property
Learning Objectives:
By the time students complete this chapter they should be able to:
• Discuss trust as a facilitator of Internet activity.
• List some of the concerns consumers have about the privacy of their personally
identifiable information.
Chapter Perspective
This chapter is placed toward the end of the book so students will have a grasp of the issues that
make privacy, security and intellectual property so important to Internet marketers today. The
privacy issues are likely to have come up in discussions of advertising and social networks. So
are the security issues, both in the context of database marketing and of concern about identify
fraud as a barrier to doing business on the web. Intellectual property may not be a top-of-mind
issue for students, but they need to recognize it as an important issue for marketers going
forward. It is trite but true to say that, if people and enterprises cannot reap the rewards of
intellectual content ranging from software to music, they will have no incentive to create it.
Students are often a participant in activities that violate intellectual property law, and they need
to learn to view the problem from a personal and a managerial perspective.
There are a number of discussion opportunities highlighted in the PPT and there are numerous
others you could build in to your classes or labs.
The Role of Trust in Facilitating Internet Activity
This section is built around two concepts, the Edelman Trust Barometer and Prof. Glen Urban’s
working paper “The Trust Imperative.” The working paper is thoughtful and well worth reading
in the original. It can be downloaded from
The 2011 survey had broad and interesting recommendations:
• Businesses must align their mission and operations with the social good.
• The current media landscape is characterized by skepticism and that requires
I find my students to be very responsive to cause-related marketing, as the generational studies
suggest they should be. The “multiple voices” and the influence of the CEO is also interesting.
Some studies on that subject are beginning to show up. This study focuses on employees’
attitudes
Accenture’s dimensions provide guidelines who want to achieve the benefits of a trusted brand
according to Urban on the previous slide.
Data Protection and Privacy on the Internet
This section discusses User perspectives on the subject of data privacy, government regulation,
and business response to the issue.
There are many issues. Four are especially important:
1. Control (actual and perceived) over PII
2. Identity theft
The industry effort, the Digital Advertising Alliance, to educate consumers about online tracking
is interesting and important. The icon shown in Figure 15.3 is the symbol of the effort; the
attempt is to make it a trust symbol. The demonstration described in Interactive Exercise 15.2 is
worth showing in class.
A few years ago it appeared that security was perceived as the greater problem on mobile
networks. That has shifted, with privacy a greater concern according to the TRUSTe study
(Figure 15.5). It is revealing, however, that in spite of privacy concerns, as many people are
willing to share PII (for a benefit) as are not (Figure 15.6).
Keep an eye on the SOPA legislation as it moves, or does not move, through the Congress. It has
substantial, and understandable support from publishers of all kinds of content. However, the
threat of large Internet firms to “go dark” in protest in the fall of 2011 was attention-getting and
stalled the legislation for at least a time.
are about data sharing via apps.
The attitudes of privacy experts toward the future of privacy regulation have undergone an
interesting shift since the second edition. The idea that privacy regulation is “hitting its stride” in
many countries, fueled especially by concerns over the actions of social networks, is thought–
provoking.
Business response to privacy concerns takes two forms—formal privacy policies and briefer
The Fair Information Practices Principles (FIPP) are part of the attempt to harmonize privacy
approaches across the globe. These principles seem to have been adopted by most Internet-using
countries, although, again, most countries have stricter regulation than the US. The principles
are:
• Notice/Awareness—before data is collected
These are the basic standards globally, and I think it is worth some time making sure students
absorb the principles and their meaning.
worth showing in class.
Detail on the subject of privacy regulations around the world would be voluminous, but students
need to be aware of the general issue. That is the self-regulatory climate in the U.S. versus the
more stringent regulations in most other countries. All students need to understand the
regulations in their own country and they are generally easy to fine. The regulations are
Consumer Data Security Breaches
You might want to begin this section with a reminder that in IT terms, security is a much broader
issue. However, consumer data security is the overriding concern for marketers.
This section begins with a description of the TJX incident, which was huge, newsworthy and
avoidable. It cost the company a lot of money along with a lot of reputation and that is worth
pointing out. The Epsilon breach was huge also, although it did not appear to include very
sensitive data. The Staples Canada issue is a short but fascination example of the many ways in
which our personal data can be released.
You might want to remind students that the concerns consumers voice about privacy are often
really concerns about the safety of data that is being transmitted to and stored by firms (and
The F-Secure surveys quoted in the text make several general points about the consumer data
security issues:
• Most users do have security software although it is not necessarily comprehensive and up
to date.
Security issues about which consumers should be cautious include:
• Malware in general. A lot of this comes with things like games that consumers, especially
young ones, want to download.
▪ Spear phishing is a newer and even more dangerous version. Through the actions
of an unaware or careless employee, it attempts to take over an entire corporate
system.
• Pharming is the creation of fake pages. Spoofing is virtually the same; creation of fake
sites. They use different technology but the result is similar.
Students need to know the terms. Even more, they need to be reminded to never, ever, for any
reason give personal information on the basis of an incoming communication. Always go to the
site. Sadly, as the results of past natural disasters have shown, not even that is totally safe. The
only defense is to watch URLs and pay attention to current news. Even the best firewall may not
protect against some of the attempts to capture personal information.
Protection of Intellectual Property in the Digital Age Slides 30-31
The intellectual property issue is more important to some groups of marketers than the brief
treatment in this chapter suggests. It is worthwhile to make that statement explicitly. It is also
worthwhile to try to personalize the issue as much as possible in order to get students to think
Intellectual property includes:
• Creative productions like music an images of various kinds
Napster has always been the poster child of intellectual property issues. In the end, its demise
was almost complete. In its wake is SOPA in the U.S. and the work of the World Intellectual
Property Organization that is attempting to bring some order to the conflicting maze of
intellectual property laws and practices.
If you read the usage agreements of content sites carefully, you find that “commercial use” is
invariably excluded. One copy for non-commercial use is often sanctioned. That’s how bloggers
do what they do. However, if a blogger is asked to take down copyrighted text or images she
must comply or risk a lawsuit.
The world of content has become a complicated one and students should recognize that.
Creative Commons is one interesting way of trying to lessen the complexity. The site is
Discussion Questions
1. Explain why managers should be concerned about the trust customers have in their
brand or company and what they can do to build trust.
The text tries to make it clear that brand trust provides the short term benefit of enabling sales
and the long term benefit of sustainable competitive advantage. Just like every customer contact
2. Do you think consumers often take actions on the Internet that reflect lack of trust in
websites or marketing practices there? What might some of those actions be?
Consumers do take actions. The list on p. 411 ranges from refusing to provide information to not
3. Discuss concerns that consumers may have about the privacy of their PII. What do you
think a business can and should do to alleviate these concerns?
Concerns range from negligible to so strong that they prevent use of various Internet activities,
4. The chapter highlights online tracking for behavioral advertising as a particular
concern of many Internet users. Has anything you have learned in this course made you
more wary of what sites you visit and what information you divulge on the Internet?
This is a personal issue, but I find the answer is often a resounding “yes” even from
5. What are some of the special privacy issues faced by users of social networks?
The specific issues are myriad, but I think they can be summed up pretty easily. First remember
that sharing is the entire idea. People who don’t want to share at all certainly shouldn’t be on
6. Why do you think that security seems to be a greater concern than privacy for users of
mobile devices?
7. What actions would you recommend to Internet users to protect the privacy of their
PII?
First, have a good firewall, virus checker, etc. and keep them up to date. Then be careful what
8. What are the Fair Information Practices Principles and why are they important?
The FIPP, as listed in the text, are:
• Notice/Awareness
The importance of FIPP has several dimensions:
• They are important principles of consumer protection
9. Have you or anyone you know ever been informed that they had been affected by a data
breach? If so, what actions were recommended for their protection? More generally,
what actions should consumers take if they fear some of their data may have been
compromised?
10. Have you experienced any of the other security threats discussed in the chapter? What
was the result?
This is an explicit attempt to get at personal experiences. Some students have breezed through
11. How has the Internet increased both the importance and the difficulty of protecting
intellectual property?
You might ask students to think about the library at your school. Is their primary use of the
library remote—from dorms or home? Is the library doing things to attract students to the
physical location—coffee shops in the library, perhaps? Has some of the library space been
turned to other use; meeting rooms and lounges, for example? Your perspective on the changes
ownership of content even more difficult to monitor.
12. What do you perceive to be the attitudes of your peers to sharing of intellectual
property on the web?
13. Do you think that Creative Commons licenses offer value in the protection of
intellectual property on the Internet?
I think most experts agree that Creative Commons is useful but by no means a final answer. For
14. Examine the complex issue of providing personal information in return for content or
services and try to precisely define your own position on the issue.
As I said above, I think this is the heart of the issue as far as consumers are concerned—at least
Internet Exercises
1. Internet Career Builder Exercise.
2. Conduct your own privacy survey, using the websites you are tracking or others that
you visit frequently. Do they all have a privacy policy? Do the policies you find seem to
meet the requirements of the Fair Information Practices Principles? Why or why not?
This is a good exercise that helps to get some of the personal opinion out of the equation and
provides some interesting empirical data. What sites do is interesting. It will often be the first
3. Conduct informal interviews with consumers to evaluate how much they seem to know
about various Internet privacy and security issues. Evaluate the degree to which they
seem to be taking actions to protect their own PII.
4. Research the privacy and security policies of your school. Do you think most students
are aware of these policies and understand the reasons for them? Do you think most
students agree with them? Why or why not?
The brief answer is usually that students have not read the policies that affect their lives as
Key Terms
adware programs installed on consumers’ computers, with permission, that enable them to
receive targeted ads.
identity theft stealing key items of personal information with criminal intent, usually to cause
financial harm.
PII (personally identifiable information) any piece of data that can identify a person, alone or
in combination with other data items; also sometimes called personally identifying information.