Company Evaluation of Ethical and Legal Obligations
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Southern New Hampshire University *
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Course
315
Subject
Law
Date
Jan 9, 2024
Type
docx
Pages
7
Uploaded by BarristerThunder11980
Company Evaluation of Ethical and Legal
Obligations
Evaluation Performed by Alana Aldridge for Clare Applewood
Introduction
This evaluation is being performed due to the concerns of the company's owner, Clare
Applewood, to understand if this company has an ethical and/or legal obligation to report a
customer data breach to the customers and recommend a course of action.
Definitions
Ethics
: the study and practice of decisions about what is good or right.
Business ethics
: the application of ethics to the special problems and opportunities experienced
by businesspeople.
Social responsibility of a business
: the expectations the community imposes on firms doing
business within its borders.
(*) This means that this is a link to an electronic PDF that can be found online.
Ethics and the law
Meeting legal requirements is the minimum standard for a business to be considered ethical.
Ethics helps to guide the law, while business ethics helps guide decisions within firms. Law and
business ethics are interactive systems – informing and assessing each other. Social
responsibility can be thought of as a business's obligation to society. In contrast, business ethics
is considered a conscience that focuses on what benefits the business.
Analysis
The circumstances that have transpired and caused the need for an evaluation of ethical and legal
obligations are that there was a database breach of Mountain Top View’s customer information
database. The data in question is the information of customers who purchased products online
during Q1. This information included the customers’ names, addresses, and phone numbers. This
data breach was revealed by the company’s Information Technology Lead, Steve. Once the hack
was discovered, Steve promptly corrected the faulty code that brought the hack about and was
confident that the information was secure. Steve did not report this data breach to anyone else in
the company. The data breach was disclosed by Steve in the company breakroom and was
overheard by the Business Operations Overseer, Carlos Rodriguez. Carlos then inquired why
Steve did not report the data breach to anyone within the company. Steve responded by
explaining how he quickly fixed the code and did not believe the information accessed was very
important.
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Ethical and Legal Issues
There are several ethical and legal issues involved in this situation. Some of the problems
involved are:
There is legislation requiring notification of security breaches involving personal
information in all states, Puerto Rico, and the Virgin Islands.
It is illegal not to notify customers of a breach of information.
There could be a loss of trust between the employer and the employee.
There could be a loss of trust between the customer and the business.
False advertising due to their claim. “We are committed to keeping customer information
secure and protected.”
There could be a social responsibility to provide extra information security services to
those affected by the data breach.
Affected Parties
1.
The customer: The customer is the most critical stakeholder because their information
was the data the hacker collected.
2.
Clare Applewood: The company's owner is the next most crucial stakeholder involved
because they are ultimately held responsible for the incident and any damage that occurs
due to the data breach.
3.
Steve: This employee was not trained sufficiently in what procedures to follow if there is
a data breach. This employee can also be held responsible for any damage that occurred
because of his negligence in not reporting the incident due to his lack of concern for
customers’ rights.
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Recommendation
This recommendation considers the guide from the Federal Trade Commission, or FTC, on
responding to a data breach. First, law enforcement should be notified of this data breach to
ensure the company complies with all state and federal laws and regulations. Then, a team of
experts should be brought in to examine the company’s data storage and coding to ensure there
will not be another data breach. While the one employee did do their own investigations into the
breach, there should be a second opinion from a senior analyst. There should also be a meeting
with legal counsel. This legal counsel will be beneficial for all the stakeholders involved. An
interview between the employee who discovered the breach and the employer facilitated by a
Human Resources representative should be conducted. From this, a comprehensive plan should
be created and sent out to all employees to provide instructions if a situation like this should arise
again. Once the company and the employees have been given clear instructions, all affected
customers should be notified of the data breach. The company should provide resources and
monitoring services to those affected by the breach. If any customers could not be informed
through normal channels, public attention should be brought to the incident to allow all
customers to receive support from the company.
There will be a link to where to find state and federal laws on reporting a data breach in the
references section.
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Explanation of Recommendation
This recommendation has been thoroughly and carefully constructed to advise this company
legally and ethically on proceeding after a data breach. “
The Economist
, in a report sponsored by
Cisco, HP, Qualcomm, and SAS (
http://graphics.eiu.com/upload/Corporate_Citizens.pdf
)*,
presented a clear case that most of the over 500 top American business executives who were
interviewed for the report believe that being a good corporate citizen is consistent with the profit
motive. The report listed four factors that executives believe are essential for profits and
corporate citizenship to function as partners: leadership at all levels, employee engagement,
rigorous measurement of achievements, and public-private partnerships.” (Kubasek, 2022) This
quote shows that informing different entities according to laws and in a socially responsible way
can benefit a company, its consumers, and other stakeholders. So, as a business, it is beneficial to
follow a recommendation such as this or one closely related to this for the best results after a data
breach.
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Conclusion
There have been many advances in technology that have affected the business world of today.
Many of these advances have been incredibly beneficial to businesses and the economy. These
many technological advancements for businesses also have legal and ethical implications. Some
legal ones include data and privacy protections, intellectual property rights, and cyber security
laws. If a business does not abide by the laws and regulations that pertain to these different
issues, they could be forced to pay hefty fines or even serve jail time. Some of the ethical
implications include handling and collecting data, using AI and system automation that can affect
many individuals' employment, and giving equal access to anyone regardless of their social
status. In conclusion to the analysis and recommendation of this situation, numerous benefits and
issues can arise from using technology and should be addressed responsibly.
References
FTC (n.d.). Data Breach Response: A Guide for Business. Federal Trade Commission.
https://www.ftc.gov/business-guidance/resources/data-breach-response-guide-business
Kubasek, N., Browne, M. N., Dhooge, L. J., Herron, D. J., & Barkacs, L. L. (2023). Dynamic
Business Law (5th ed., pp. 16-39). McGraw Hill LLC.
https://prod.reader-
ui.prod.mheducation.com/epub/sn_8133c/data-uuid-f0b97567b80045488515db800b422eee
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NCSL (2022, January 17). Security Breach Notification Laws. National Conference of State
Legislatures.
https://www.ncsl.org/technology-and-communication/security-breach-notification-
laws
(*) This means that this is a link to an electronic PDF that can be found online.