Report: A Company’s Obligation to Report the Breach to Its Customers
Introduction
The term “ethics” is used to describe a set of guiding moral principles and values that help people and institutions behave in a way that is fair, just, and right. It entails considering how one’s activities could affect others and checking that they are consistent with values like honesty, integrity, and respect (Kubasek et al., 2020). Ethical principles provide a map for navigating what is right to do, and they go beyond the letter of the law.
The latter, on the other hand, is the body of rules and regulations set up by authoritative bodies to regulate social interactions, secure individual liberties, and settle societal disputes. Laws are binding and are enforced by different judicial and governmental institutions (Kubasek et al., 2020). They include ethical principles, but they cannot account for every possible ethical quandary, and doing what’s legal doesn’t necessarily make it right.
Then, the idea of Corporate Social Responsibility (CSR) stems from the recognition that firms should care about more than just making money. Clientele, workers, communities, the environment, and society at large are all stakeholders that must be taken into account. When it comes to CSR, ethical business practices cannot be overstated (Ferrell et al., 2019). When a business adopts this framework, it willingly assumes responsibility for making sure its operations are socially responsible. At the heart of CSR are ethical company principles, including being open and honest about everything you do, being respectful to workers, using resources wisely, being environmentally conscious, and safeguarding customers’ personal information.
For Mountain Top View, doing the right thing as a company means protecting client data and giving customers the respect they deserve. The company’s reputation in the eyes of its customers and the community depends on its ability to analyze its activities from a moral perspective, which goes beyond simply legal compliance. In the following sections, we’ll address the moral and legal implications of the recent data breach occurrence and suggest the next steps in communicating this news to the impacted consumers.
Analysis
The situation at Mountain Top View depicts a serious data breach occurrence that has legal and ethical implications. According to its website, the firm promises to protect the privacy and security of its customers’ information. The exposure of the client database, which included names, addresses, and phone numbers, calls into doubt the company’s ethical duty to protect such information.
The choice not to reveal the breach raises serious questions about the company’s commitment to transparency, a cornerstone of corporate ethics. Customers have a right to know whether somebody has accessed their personal information without their permission. Clientele’s faith in the firm might be eroded if the incident is not disclosed (Amazon, 2023). If the incident is not reported, the organization risks losing customers and making its commitment to data protection seem less serious.
Depending on the data protection rules in effect, a data breach may result in different legal responsibilities. There are several regulations across the world that mandate timely disclosure of data breaches to impacted persons and regulatory bodies. Mountain Top View might face fines and other penalties for failing to notify the incident in accordance with applicable data protection laws.
Multiple parties with vested interests and obligations are affected by the data breach at Mountain Top View. Customers whose data was stolen are the first and most obvious victims of the incident. Their personal information, including names, addresses, and phone numbers, was compromised. Customers have the right to be notified of any unauthorized access to their data and the reasonable expectation that their sensitive information would be secured. If this issue isn’t resolved quickly, customers’ faith in Mountain Top View might diminish, which would be bad for business.
Clare Applewood, as the store’s owner, is largely to blame for what happened. Clare’s choice as to how to address the breach will have significant effects on the company’s brand and relationships with customers. As a company owner, she understands the need to act morally and legally. Any mistakes in responding to the breach might have serious effects, including legal action and harm to the company’s image.
Carlos Rodriguez, who oversees both in-store and online operations, is also an important player. Because of his participation in the decision-making process, he will bear some of the blame for the company’s decisions. Carlos’s failure to act in the best interests of consumers and the firm after learning of the breach from Steve raises ethical issues. Employees who depend on their management to be honest and accountable may start to doubt the organization because of their behavior or lack thereof.
Steve, the IT lead who found and fixed the faulty code that allowed the hack, plays a pivotal role in handling the fallout. Even though he says he’s patched the hole, his choice not to alert authorities right away raises ethical concerns. To safeguard client information and maintain the business’s dedication to data security, Steve, as an IT specialist, must report and fix data breaches as soon as possible. The company’s response and its attitude to data security may be profoundly affected by its actions.
Regulatory bodies are an example of interested parties outside your organization. Companies like Mountain Top View may be required by local data protection and privacy regulations to notify impacted customers and authorities of data breaches. If the corporation doesn’t do what’s required by law, it might face fines, penalties, and more attention from regulators, which would only make matters worse.
Customers who made an online purchase during the first three months of the year were the only ones whose information was compromised, according to the circumstances surrounding the data breach. Nonetheless, consumers’ sensitive personal information was exposed in the hack, making fast notification of impacted users crucial. The issue of whether or not enough measures have been taken to avoid future intrusions is further raised by Steve’s claim that the database is now safe.
There might be serious repercussions from a botched response to this data leak. The company’s image and the faith of its customers are at risk, in addition to the risk of legal repercussions and regulatory scrutiny. Clients’ trust may be damaged if the breach is not reported and addressed openly and quickly, which might have a chilling effect on future business.
Recommendation
Ethical and legal factors suggest that Mountain Top View should immediately notify concerned consumers and regulatory authorities of the data breach that just occurred. This conduct is consistent with generally recognized moral standards since it prioritizes openness, responsibility, and the safety of the client (Federal Trade Commission, n.d.). Mountain Top View also has to examine and improve its data security safeguards to ensure that similar intrusions do not occur in the future.
Any company that wants to succeed in the long run must work tirelessly to keep its customers’ confidence. Ethical qualities of honesty, integrity, and respect for people’s rights to privacy are consistent with transparency in resolving data breaches and swiftly alerting consumers who may be impacted. Consequentialist and deontological ethics, for example, place a premium on safeguarding customers’ best interests, which may be accomplished through prompt breach reporting.
Companies like Mountain Top View are required to follow certain data breach notification and disclosure rules in the US. Financial institutions, particularly firms that provide financial goods or services, are subject to the provisions of the Gramm-Leach-Bliley Act (GLBA). The GLBA would apply to Mountain Top View if it collected and used customers’ financial information, such as credit card numbers, for online purchases. In addition, numerous individual states in the United States have passed their own legislation requiring reporting of data breaches (Ferrell et al., 2019). Definitions of personal information, notification requirements, and deadlines may vary widely across these statutes.
Ethical and legally sound responses to the breaches may be found in authoritative sources, including lawyers, industry standards, and privacy regulators. These references stress the need to contact impacted clients in order to lessen the impact and encourage proper data handling. Mountain Top View may show its dedication to business ethics by following these guidelines.
Conclusion
The legal and ethical ramifications of technological developments in the modern commercial environment are substantial. On the one hand, modern tech helps firms improve their productivity, data-analysis tools, and customer service. However, questions concerning data privacy, cyber security, and responsible technology usage are also raised by these advancements. There is a maze of data protection requirements that businesses must negotiate to make sure they are doing the right thing with consumer data. Ethical issues include being open and honest with customers and keeping their data secure. Sustained success in the digital age requires finding a middle ground between using technology to expand your organization and breaking the law or acting unethically.
An Ethical Framework Applied to the Company
Framework
The WH (Whom-How) Framework for Business Ethics was chosen as the basis for making ethical decisions. It places emphasis on two key criteria that management decisions must meet: the identification of the stakeholders impacted by the decisions and the adherence to action-oriented business behavior via a set of attainable principles for making ethical choices (Kubasek et al., 2020). The “W-who” part of the concept is concerned with identifying and weighing the interests of those who will be affected by a decision. Consumers, owners/investors, management, workers, the community, and future generations are all considered major stakeholders. The “H-how” part provides managers with a set of principles that may be put into practice when making ethical choices. These guidelines are based on the idea that businesses should be driven by a desire to make a difference. Public disclosure, universal application, and the golden rule are the three tenets.
The WH Framework is an all-inclusive method that considers stakeholder input and offers concrete recommendations. The framework aids decision-makers in making well-balanced and responsible decisions that are consistent with ethical standards by taking into account the interests of diverse stakeholders and using action-oriented ethical principles. While helpful, the concept may fall short of covering all angles of today’s complicated corporate ethics. It may not consider the nuances of certain industries, cultural variations, or the emergence of new ethical concerns in the digital era.
Given that it is related to Mountain Top View’s unique ethical challenges, the WH Framework is a good fit for the business. Mountain Top View, a company in the outdoor equipment market, deals with many different types of people every day. By considering the W-who factor, a corporation may assess how its choices will affect various parties and protect their interests.
Application
Steve, the head of IT at Mountain Top View, may have benefited from the WH (Whom-How) Framework for Business Ethics in the event of a data breach.
W-who (Stakeholders)
Steve would have started the WH Framework by figuring out who was impacted by the hack. Customers who made purchases on the company’s website during the first three months of the year are the most important people here. The potential damage to their personal information and faith in the organization would have been obvious to Steve.
H-how (Guidelines)
Next, Steve would have looked at the H-how recommendations for making moral choices, which is the second part of the framework.
- Public Disclosure: Steve would have known how crucial it was to be forthright and notify the appropriate individuals about the incident as soon as possible. To ensure the situation was handled properly, he would have informed Clare, the owner, and Carlos, the supervisor of retail and online operations. He also would have recommended that the firm notify the impacted consumers of the breach since he believed that it was the corporation’s responsibility to do so.
- Universalization: If Steve had decided not to disclose the breach, he would have done so after contemplating whether or not this choice might be generalized to other circumstances. He probably knows that neglecting to notify a violation, no matter how little, may damage reputation and ethics with customers.
- Golden Rule: If Steve had followed the Golden Rule, he would have considered how he would feel if he hadn’t been warned of a possible data breach. Following the Golden Rule of treating others as he would want to be treated would encourage him to disclose the security issue quickly.
References
Amazon. (2023). Code of business conduct and ethics. Web.
Federal Trade Commission. (n.d.). Data breach response: A guide for business. Web.
Ferrell, O., Harrison, D. E., Ferrell, L., & Hair, J. F. (2019). Business ethics, corporate social responsibility, and brand attitudes: An exploratory study. Journal of Business Research, 95, 491–501. Web.
Kubasek, N. K., Browne, M. N., Dhooge, L. J., Herron, D.J. & Barkacs, L. L. (2020) Dynamic Business Law (5th ed.) McGraw-Hill Education.