UNETHICAL BUSINESS PRACTICES

Marketing Research 6331
Instructor: Dr. Chiquan Guo
February 05, 2015

UNETHICAL BUSINESS PRACTICES
By Max Jackson
An Academic Paper on the miss use of customer information

This was originally my response back to another Graduate Student that I was critiquing. In his analysis, he made a statement saying that "Gathering information on his customers for possible use in the future on something unrelated to his current work he does can only easily be viewed as unethical but not illegal, and that the companies that get prosecuted who use this data for data mining purposes, are civil in nature, not criminal, because these tactics are not illegal. Based on his statement I was able to demonstrate to him not only where his error was but at the same time how it was very illegal based on the hypothetical situation I created and used. Also the name of the other Graduate Student has been changed for legal Reasons.
Question: Many researchers think that if an action is legal, it is ethical. Do you agree? Why or why not? Be sure to give examples to support your argument
Intro:
Hello Mr. Johnson. How are you? I have to say that you do bring up a decent argument with respect to the use of customer information on whether or not it is ethical to use or not ethical to use or may even not be illegal. For example, it is true that all companies use data for what they consider to be for permissible purposes, in other words legal as long as it falls within the scope of their business model and they agree to only use for specific purposes only that will not in any way comprise current or potential customers. However, just because they have a use to the data, doesn't necessarily make it legal or even right, in fact when you look at the grand scheme of it all, it is unethical and the way it is used is highly illegal.
Hypothetical Example:
The Case of Mr. Morgan and Valero:
For example, lets say that Mr. Morgan fills his car up using Texaco Gas. The Texaco station is just by his house. Now let's say unbeknoenth to Mr. Morgan, his neighborhood gas station has just been bought out by Valero, (http://en.wikipedia.org/wiki/Valero_Energy). Valero has been purchasing all the sole proprietor owned gas stations throughout Texas, however they have not changed the name in order to avoid customer panic based on the fact customers despise Valero based on the fact of their support of OPEC. Now let's say that Valero has removed the previous swipe machine within the gas station and in the stores with their own swipe machine which is a EMV reader, which is able to not only read but extract all information that may be of a sensitive nature to all customers on all major credit cards and debit cards. From these cards Valero is able to retrieve what the names of the customers are,(Mr. Morgan), banking information regarding card number, expatriation date, security codes, average daily balance, where the customers physical address is because the card is tied to a billing address all the way down to what the customer purchases are, all the way down to how much they purchase of a certain item where they purchase it all the way down to possible travel information. For example, if you're a business client using your personal or business credit card for business use and two days out of the week you go from Dallas to Houston Texas, the swipe machine knows, because the program that is tied into swipe machine is technology that has the ability to use topical mapping, g.p.s. location and graphing, having the ability to track where the card was last used along with the day and time. Now let's say that Valero is able to take that information and segment it based on all the different, categories that it needs in order to make the data usable which can then be downloaded into a Crystal Report, Excel Spread Sheet, Access Database or any type of database system that allows anyone to do Qualitative and Quantitative Data Analysis in order to make the information useful for marketing purposes in order for Valero to use for itself or turn around and sell it to the highest bidder that is more than willing to pay for this type of information in order to gain a competitive advantage within the market place or within its industry against Its rivals or deal with international competition from others within the same industry.
The case point that I'm making here is that to companies like Valero, they do not consider what they are doing to be illegal and not unethical, but it is illegal and unethical because they sensitive information that is on customer credit cards like Mr. Morgan's, along with the fact that Valero never had the customers consent for this type of usage. It is because you or anyone as customer did not grant Valero or companies like it the right to use this information most especially if that information is so sensitive that it sparks a law suit.
Here is an extension of the Mr. Morgan hypothetical example as to what can be obtained from a credit or debit card in this example using Valero's Credit Card Swipe Mechanism at their pumps and within the stores…
Patient Information: At the doctor's office, Mr. Morgan uses his credit card to pay for his monthly supply of Atorvastatin. Atorvastatin is used to lower high cholesterol and triglyceride levels, reducing the risk of chest pain, stroke, heart attack, or certain heart and blood vessel problems.
Information usage: From Valero's Swipe Machines used at their gas stations, by Mr. Morgan after purchasing gas or other items, Valero was able to extract Mr. Morgan's Medical Prescription information, the cost of his prescriptions, what pharmacy he purchased the prescriptions, what his quantity limits where and milligram usage, who is primary care physician is, what day he normally purchases his prescriptions on, who his doctor or other Physicians may be and the prescriptions that they may have prescribed to Mr. Morgan followed by what insurance carrier and insurance plan he may have for his medical provider all the way down to Mr. Morgan's Qualified Medical Expenses in the form of co pays, co insurance, everything along with once again where he lives, where he goes, along with all his personal habits which are tied to the credit card.
What can Mr. Morgan's information be used for:
Drug Manufactures: Drug Manufactures can now target market specific prescriptions to Mr. Morgan regarding his use of Atorvastatin, and based on his medical condition, followed by other conditions he may have, followed by access to brand name drugs that were once out of Mr. Morgan's reach based on cost.
Pharmacies: Pharmacies will be able to market to Mr. Morgan based on their location followed by internet pharmacies that both allow mail order and types of prescriptions they will carry or not carry followed by any type of discounts that may be offered based on relationships with his current carrier and medical plan he uses or from what plans the pharmacies prefer.
Insurance Providers: Insurance Providers can now market to Mr. Morgan because they now have his information and can see his demographics. From this data provided by Valero, they know where Mr. Morgan lives and can determine based on demographics provided by Valero, if he is Medicare or Non Medicare Eligible or even Medicaid, or just a individual that is Pre 65 on a group plan. Since they have his address they will be able to market to him what plans are accepted by the hospital he lives around, what prescription drugs he is taking are covered by the plan along with any out of pocket cost he may be spending with respect to qualified medical expenses, they will know Mr. Morgan's Conditions and that he uses atorvastatin along with other prescription drugs. Not only this, but based on the information the insurance carriers have, followed by their affiliations with other insurance companies including Mr. Morgan's current provider they secretly have the ability to pull a copy of Mr. Morgan's full medical history which would allow them to know if he is a current health risk for their insurance plan which will allow them not to market to him, saving the any and all potential health insurance carriers time on medical underwriting because they have his entire medical history or they can do a rate increase with respect to medical underwriting questions they can ask with respect to Mr. Morgan's health, which would either increase or decrease premiums.
Closing:
Everything I have just stated within this hypothetical scenario can happen because the technology for one is there and companies of course do it every day with respect a lack of knowledge on behalf the consumer and the laws the companies hide behind. This is not only unethical but criminally negligent because it involves the use of sensitive information that is protected by patient confidentially and consumer protections laws which makes all of it not only illegal but also unethical. In order for Valero to be able to do this and for it to be legal and ethical, companies like Valero in this Hypothetical example must get permission from the customer to use this data for marketing purposes. However, if the customer says refuses, which in this case they will, then companies like Valero shouldn't have access to it.





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