Page 183 - Business Principles and Management

Unit 2

have been removed from the market. And recalls have occurred with such products
as cars and sport utility vehicles. A federal Warranty Act requires sellers to specify
what they will or will not do if their product is defective. Many product liability
laws also exist at the state level.

INFORMATION
Businesses need information. This need has resulted in the heavy use of comput-
facts ers to manage data. Vast amounts of information from many sources are col-
& As a result, individuals and businesses need protection from the wrongful use of
lected, processed, stored, and distributed by computer, especially on the Internet.
figures private information.
Stores check credit card balances, banks check credit ratings, hospitals store
patients’ health records electronically, and the government collects income tax
data on all taxpayers. Incorrect information in any of these sensitive records
In the 1990s, Disney’s licensing could be very damaging to the individual. Also, only authorized people should
business became a victim of its have access to such highly personal information. Unauthorized use of personal
own success. The strategy during information can result in identity theft.
the first half of the 1990s was Therefore, businesses that use computer information extensively must handle
geared to hit films like Beauty it carefully to protect the rights of individuals and organizations. Carelessly
and the Beast, Aladdin, and The handled information can lead to information liability—the responsibility for
Lion King. Licensees reached a physical or economic injury arising from incorrect data or wrongful use of
peak of over 4,000, far too many data.
to manage. Disney eventually Information liability is similar to product liability. If a defective product
cut the number of licensees in injures someone, the injured party can sue the producer of the product. Simi-
half. By having broader relation- larly, if a person’s credit rating suffers because an employee keys a Social
ships with fewer licensees, Dis- Security number into a credit record incorrectly, the business is liable for
ney could build more effective creating the problem. Also, a company not directly involved in collecting
new merchandise campaigns or recording incorrect information may be held liable for distributing it. For
to strengthen established instance, if a store gives an incorrect credit balance to a bank that results
characters like Mickey Mouse in the refusal for a loan, the bank is as liable as the store that provided the
and Winnie the Pooh.
incorrect information.
Occasionally, someone tampers with computerized data. The Electronic
Communications Privacy Act and related laws make it a crime for any unau-
thorized person to access a major computer system and view, use, or change
data. The laws deal with the interception and disclosure of electronic commu-
nications, including e-mail privacy. Privacy laws help protect the public from
the wrongful use or misuse of information.
A debate continues over the electronic collection of information over the
Internet. Web sites can place small files called “cookies” on the computers of
site visitors without their knowledge. Cookies are files of information about
the user that some Web sites create and store on the user’s own computer.
These cookies can, among other things, track where users go on the Internet to
gather information on interests and preferences for marketing purposes. Some
people feel that such data gathering is an invasion of privacy. The companies
argue that they are simply identifying what consumers want so they can better
serve them.

CHECKPOINT
Describe three areas in which government protects consumers.

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