2.2 Toysmart case exercises - student module  (Page 17/19)

• Customer consent must be obtained by having them opt-in rather than opt-out of the transfer of PII. Opt-in represents a more active, opt-out a more passive mode of consent. By opting into the data transfer, Toysmart customers consent explicitly, knowingly, and freely to the transfer of their information. Opt-out is passive because unless customers expressly forbid it, the transfer of their PII to a third party will occur. The chances are that many customers will consent only if compensated. And the mechanics of obtaining positive opt-in consent are complicated. Is this done by email or snail mail? How can Toysmart customers be fully informed? What kind of timeline is necessary for their full consent? Implimentation of opt-in consent is more adequate morally speaking but much more difficult, time-consuming, and costly in its implementation.
• Any exchange of information must be in accord with TRUSTe standards which Toysmart agreed to when they solicited the right to use the TRUSTe seal. TRUSTe has its own standards (they can be found through the link above) which reinforce the above discussion of informed consent but also bring in other matters. Important here is the utilitarian concern of building and maintaining consumer trust to encourage their using the Internet for e-business. Web site certification agencies like TRUSTe exist to validate that a web site is trustworthy; but to maintain this validation, customers must know that TRUSTe will enforce its standards when websites become reluctant to follow them. TRUSTe must be aggressive and strict here in order to maintain the high level of trust they have generated with e-business customers.
• An important part of TRUSTe standards on the transfer of PII to third parties is their insistence that these third parties share the values of those who have been given the information. Toysmart cultivated a reputation as a trustworthy company devoted to producing safe, high quality, educational toys. The customer data base should be transferred only to concerns that share these goals and the accompanying values. (What are these?) Did Toysmart compromise on these goals and values when they agreed to accept Disney financing and advertising support? What are Toysmart values? What are Disney values?

In conclusion, this perspective piece is designed to get you to think about the right of informed consent, whether it can be reconciled with financial interests and rights of Toysmart creditors, and how this right can be implemented in the concrete details of this case. It has argued that customer PII can be transferred but only with the consent of the customers themselves. It has defined this consent in terms of express opting-into the transfer on the part of the customers. It has also argued that the third part must share the values and goals of Toysmart, especially those values accompanying Toysmart promises to customers.

Group exercise

Identify the role played and the values held by each of the following participants:

1. David Lord (CEO of Toysmart)
2. Disney (as venture capitalist)
3. TRUSTe (as non-profit)
4. Toysmart Creditors (Pan Communications)
5. FTC (government regulatory agency)
6. Toysmart Customers