Case Study: Kudler Fine Foods

Kudler Fine Foods
Name
BSA/310
November 30, 2013
Jennifer Streker

Abstract Kudler Fine Food’s frequent shopper program is a system developed to reward customers for their loyalty. Customers will earn points based on how much they shop. This is a typical marketing strategy that uses technology to calculate and record consumer purchases. In exchange for purchases or point-of-sale, the consumer is given points and later rewarded for those points. This is called web-based shopping. In the development process of the frequent shopper program there comes many potential legal, ethical, and information security concerns that must be addressed. If not addressed thoroughly it can result in additional fines and
costs, this will be concluded in this paper.

Introduction Kudler Fine Foods is developing a new frequent shopper program to provide incentives to their loyal consumers based on their shopping records. The system will track purchases, customer profiles, points accumulated, and redemption of points. It is a marketing technique designed to keep their customers and increase revenue. Although it is an excellent strategy, it brings many legal, ethical, and information security concerns. In relevance to these issues, it can result into fines and costs for the development of this program. The goal is to address these potential concerns with management that the new system may convey.
Legal Concerns Kudler Fine Foods should find the best avenue possible to protect the privacy rights of the consumer.
The program will record and save sensitive information along with their purchases. Without the protection of consumer privacy can result in the data getting compromised. There are many policies per law that Kudler Fine Foods need to follow to protect consumer rights. These polices include fair information guidelines for the promise to protect consumer information and the right to share with third parties. Consumers should be able to contact the company with any questions or concerns regarding the privacy of their information. Prior to signing up for the program, a descriptive privacy policy should be read, agreed, and signed by each customer. This will make certain the consumer is aware his or her information is kept secured and
confidential.
Ethical Concerns By enrolling in the frequent shopper program, consumers should be made aware their information and purchase history will be gathered and saved in the system electronically. The consumer will need to be advised the information will be used to create future promotional offers along with points accumulated for redemption. Consumers should be informed of the right to share their information with third parties for participation in the program. An agreement should be reviewed and signed by the customer. This will give the customer an option to participate or opt out of the program. According to Laudon (2010), “Other pressing ethical issues raised by information systems include establishing accountability for the consequences of information systems, setting standards to safeguard system quality that protects the safety of the individual and society, and preserving values and institutions considered essential to the quality of life in an information society” (p. 124).
Information Security It is vital that Kudler Fine Foods secure their website and database from unauthorized users.
The company may even want to consider allowing a trusted third party whose expertise is securing the storage of consumer information to keep it protected. This will guard consumer information and company data. Before information is collected, consumers should be given a digital certificate or required to create a secured log in and password for protection of their profile. The password should require a certain criteria to prevent hackers from logging into a consumer’s account. This is to guarantee authentication of the consumer. According to Laudon (2010), “Authentication is often established by using passwords known only to authorized users” (p. 316). A specific department should be assigned the responsibility to monitor and access this information along with assisting consumers with questions or concerns regarding the frequent shopper program. The department should be trained to identify consumers and others who are authorized prior to giving out any information. Employees should be knowledgeable in the privacy policy of the consumer and how violation of consumer privacy could break the
laws.

Conclusion
Kudler Fine Foods should research these potential concerns prior to developing the frequent shopper program. This will ensure issues are covered with the best protection of consumer information. Kudler Fine Foods should be aware of the legal and ethical restrictions that can incur with the frequent shopper program. Otherwise, if not addressed can result in excess costs and fines that can impact negatively on the company. In today’s time one can even face time in prison if wrongly convicted of violating these laws. According to Laudon (2010), “In today’s new legal environment, managers who violate the law and are convicted will most likely spend time in prison. U.S. Federal Sentencing Guidelines adopted in 1987 mandate that federal judges impose stiff sentences on business executives based on the monetary value of the crime, the presence of a conspiracy to prevent discovery of the crime, the use of structured financial transactions to hide the crime, and failure to cooperate with prosecutors (U.S. Sentencing Commission, 2004)” (p. 123). Extensive research and careful planning can make these issues preventable along with properly securing information.

References
Laudon, K. C., & Laudon, J. P. (2010). Management Information Systems: Managing the Digital Firm (11 ed.). Upper Saddle River, N.J.: Prentice Hall.