VTech Holdings is a Hong Kong-based designer, manufacturer, and distributor of consumer electronic products. The company has a broad range of items from cordless and residential phones, wireless microphones, baby monitors, and electronic learning toys for infants, toddlers, and pre-schoolers ("About Us," 2018). They also stock other toys for small babies. Vtech also offers other contract manufacturing services to customers who want a vast range of electronic items. The ethical issue, in this case, arises from Vtech's toy division for kids.
Ethics is a set of moral principles that stretches individuals to think beyond themselves and consider others. It implies that ethical people must think ahead about how their actions are likely to affect other people before making a concrete decision. Ethics considers what is appropriate or inappropriate, right or wrong, and acceptable or unacceptable for one party as well as the general public (Shaw, 2008). Business decisions today reflect the ethical disposition of the leaders and have fallen under increasing scrutiny from the public. Customers are willing to do business with organizations that chose to do the right thing (McNeill, 2014).
VTech suspended trading activities on the Hong Kong stock exchange after it emerged that the firm was embroiled in an ethical issue. A hack on the corporation's information systems led to the stealing of personal details of 4.8 million customers (Baldwin & Kwok, 2015). The unauthorized access exposed the vulnerability of VTech, and the hacker managed to expose the names, passwords, email addresses, gender, and home addresses. According to cybercrime experts, these data point could be linked together by malicious parties to pinpoint the exact location of the kids' homes, which is a risky proposition. The ethical twist comes in since the parents trust their information is safe with the company. VTech had been storing home addresses, photos, names, chat logs, and videos on vulnerable servers while they claimed that their systems were secure. The secret answers and passwords should have been in an obscure and unrecoverable database as far as the parents and their children were concerned. VTech allowed the software to go into the market while they knew it did not have sufficient encryption, hence vulnerable to hackers. The company also collected photos, audio, and messages from around 638,000 children without the consent of their parents (Kang, 2018). The Hong Kong corporation was accused of the Online Privacy Protection Act of 1998 which protects children by requiring companies to ask the parents when collecting internet data on individuals below 13 years of age.
Larry Salibra, CEO of Pay4Bugs, a crowdsourced, bug-testing platform suggested that the case of VTech could be summed up as the use of basic security (Baldwin & Kwok, 2015). Hardware manufacturers like VTech undervalue the importance of software and hence install standard and low-level software to save on costs. Companies can afford to reduce their expenses by installing cheap defenses until such a breach occurs. According to the hacker, VTech was using low-security servers. It is unfortunate that such sensitive information was not stored in secure databases like it is supposed. Company representatives, in an admission of liability, stated that they had taken the requisite steps towards preventing a future reoccurrence.
Ethics is a part of philosophy that seeks to understand how human actions can be deemed wrong or right (Shaw, 2008). For example, individuals may make judgments out of experience history or by following the natural principles of reasoning. Three core theories are used to judge the actions of people:
- Deontological Ethics (duty)
- Utilitarianism (consequences)
- Value Ethics (character)
Deontology is a school of ethics that considers the actions themselves rather than their consequences. Therefore, to deontologists, a situation is either bad or good depending on whether the action that brought it about was wrong or right (Shakil, 2013). The most well-known and prominent form of deontology is attributed to the philosopher Immanuel Kant. According to him, the moral theory is rooted in the fact that humans possess the unique capacity of thinking rationally. No other animal can process information or reason like humans, and hence individuals should act per the dictates of moral duty. According to Kant, human emotions and inclinations should have no part in the moral action. The motivation behind a decision should be well-reasoned and based on obligation before it is considered (Tannsjo, 2010). In deontology, the right action is more important than what is good for the individual. For example, if using vulnerable people as lab rats to test for a vaccine is going to be successful, deontologists will disagree with the decision since it is not right to subject other people to suffering, no matter the outcome. The deontological theory states that we have the moral obligation to follow a specific set of rules and principles regardless of the results (Shakil, 2013).
If the leadership at VTech made decisions based on deontological ethics, the debacle would not have occurred at all. The parents of the children whose data was exposed had entrusted the services of the company and hence willingly gave up sensitive information. If an organization is aware of any risks to its stakeholders, it should move quickly to find appropriate elimination methods. Deontology ethics suggests that leaders would have brought up the security question before the incident occurred. The organization was aware that the firewalls it had installed were basic and cheap hence the customer information was dangerously vulnerable. VTech was aware of the remote possibility of a breach but chose to bet on the idea that nothing would happen. Deontologists would ensure that the company installs a robust security system to thwart any attempts by hackers since it is what is expected of a decent business enterprise. Kant proposed that people should only act if they are willing their decisions to become a universal law. If all information were secured by basic software, a lot of people would be at risk, and hence deontologists will opt to strengthen. Installing the cheap software saved money for the corporation, but it ended up with consequences that threatened the company's survival (Dunn, 2017). The action of installing a weak system, with the full understanding that there was something better on the market, is unethical in deontology reasoning.
Collecting information on the kids without the consent of the parents will be considered unethical since the action is wrong. Deontologists would not like this decision to be universal since it will affect their children in the process. Secondly, the action of collecting this information is tantamount to harassment since the company is preying on children who do not understand their rights. The decision is therefore wrong according to deontology ethics.
It is an ethical theory that considers the outcome of an action to determine whether the decision was right or wrong. It is rooted in consequentialism where the right action is based on the consequences produced (Gustafson, 2013). The utilitarian theory holds that a choice is ethical if it results in generating happiness for the greatest number of people. If the results of a given action make many individuals happy, the decision will be deemed right irrespective of whether it was accomplished via inappropriate means. Utilitarianism is the kind of reasoning that is used to support things like war and military invasions. It moves beyond the individual interest to include the well-being of other people. The most renowned utilitarian theologist of this school is John Stuart Mill and Jeremy Bentham.
In the case of VTech, the failure to install a robust security software meant that the company was able to save a significant amount of money. It means that the organization was happy since it was operating at a low cost of production since any savings made will directly improve the bottom-line (Altman, 2015). The customers were also happy because a cheap software means the services are equally priced. If the company had to install a robust system, they would have been forced to increase the cost of services to recover the huge expense of a high-quality security system. The parents are happy to purchase the devices because they are cheaper than the more advanced varieties. It shows that the company and customers are happy hence a utilitarian will be okay with the decision. Regarding the consequences of the action, the private details of about 5 million users were accessed, but luckily the hacker had no malicious intentions. VTech took a hit on the stock exchange when its share price fell 22% in the wake of the news of the hacking (Reuters Staff, 2015). However, the stoppage in trading was only brief, and the firm reassured parents it would improve the security to avoid such situations in future. The business has learned a lesson, and the customers are convinced that the situation will not reoccur. According to a utilitarian leader, this turn of events leaves the majority happy hence it was ethical. The fact that the sensitive information was not used maliciously is a plus since the parents have not suffered much, hence are not as unhappy as if it were utilized fraudulently.
The information taken from the children without the necessary permission consisted of about 638,000 individuals (Kang, 2018). Utilitarianism will consider this outcome when reaching a decision. The number of children that fell victim to the information collection is way small compared to the millions that are already subscribed. Utilitarian reasoning suggests that the action resulted in only a small number of people who were unhappy hence it was the right thing.
Virtue ethics looks at the moral character of the decision maker rather than the ethical duty or the consequences of the actions like deontology and utilitarianism respectively. This school of thought is more concerned about how people live their lives instead of assessing their specific actions. Ethics is about agents rather than actions and consequences (Bonde & Firenze, 2008). This approach uses the template of a virtuous individual to determine whether an action is right. A person with the right virtues has impeccable moral characters like honesty, discipline, loyalty, respect, temperance, generosity, wisdom, courage, etc. The decision is an ethical one if a virtuous person would have arrived at a similar conclusion under the circumstances. This philosophical approach is attributed to the Greek philosopher Aristotle (Bonde & Firenze, 2008). According to him, people would always make the right decisions if they practiced instilling the right virtues in their characters. Virtue ethics emphasizes the development of the appropriate character traits and also moral education. People develop these habits in their youthful years hence parents are responsible for ensuring they impart the right behaviors to their kids.
Virtue ethics will depend on the character of the leaders in any organization. In the case of VTech, an ethical decision would have been to roll out the apps only once the right security was in place. The leaders at the company sold the service as it was, saving a significant amount by avoiding the expensive versions. Customers, especially in these days of online trading, rely on the word of the seller regarding the authenticity and quality of the item or service. Connected toys have fallen under intense scrutiny because they are hackable and could be eavesdropping on kids ("Designing Secure Connected Products and Smart Toys," 2017). The...
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