Kudlers fine foods is specialty foods store with three different stores in the San Diego area. They already have a working and functional website, with a decent amount of traffic going through it as well. They have decided that they want to create a frequent shopper program for there customers. But with the fact they are a specialty foods store with high quality in mind financial saving for customers is not there goal. It will be to give them gifts instead from free food, hotel room upgrades, or airline upgrades for example. The company already has a fully working sales and marketing team in place that has the ability to record sales. With this information they have the ability to analyse it for sales purpose’s. This new frequent shopper program has a great opportunity to expand there sales and customer base. It also creates many different legal, information security, and ethical issues to be addressed before they become an eventual problem. The security issues that can be around a frequent shopper program are pretty big. Your taking peoples personal information in and there spending habits on your system. Information that customers do not like if stolen and used against them in any way. That being said when you have a system with valuable information long enough someone will get in and steal it. So systems need to lower this possibility as much as possible. To do this encryption certificates can assist in this. It helps in enforcing your access policys. This makes it so if the information is stolen it isn’t so easy to use it. The next is securing all this data while it is in storage. With the size of the company and there I.T. department it would be best to outsource data storage to a specialized company as the cost would be less and would be more secure than if handled within the company. Another way to reduce liability with this information would be to reduce the amount of data the company will hold on to. This means if a frequent shopper is not active within a two year period there information will be removed from the system and they will have to start over as a brand new customer. This is so were not holding on to additional information that likely would never be used again anyway so it cuts down on storage costs and security risk as well. For the legal issues to look at there are a few to be concerned with. To have a frequent shopper program to be successful you will have your customers personal information and more than likely a lot of it. When kudler foods obtains this information from there customers they will be legally liable for all of this data. If it were to be stolen kudler foods can face very steep fines if this data were to be stolen or lost. The state law they would need to observe is California law SB 1386. This law to be in compliance will mean the company that loses anyones personal information that was taken by someone not authorized to obtain it. If this were to happen you will need to notify the customer of this accurance as soon as possible. This type of situation can be very embarrassing to the store and also expensive. The next law to be aware of is federal law which there are many for example the Privacy Act of 1974. This is the goverments way of regulating peoples personal information and giving them the ability to levy fines in court for not abiding to the constraints they have in place. Part of this is to define the companys responsibilities of allowed and not allowed uses of the information. As well as what the consequence of not abiding by these rules will be. It also says extra training must take place for managers to be aware of the responsibility to protect the customers personal information. If they are going to go international with the frequent shopper program. They will have even more rules which has the US Safe Harbor Rules involved. If you do not keep in compliance with these rules you will not be allowed to collect personal information from European customers. Which could be damaging for company growth in the future. So all together it would be best to get legal internally or an external law firm to assure that everything correct before starting the program. To avoid any future lawsuits that can be stopped before hand. Now with the concern of ethical behavior. A previous agreement should be also stated to the customer with the agreement. This will be for the fair use of the collected information tell them how this information will be used. By doing this prior to them signing up it will save you from making decisions on how you use there information which could be legal but not what the agreed upon or have the customer return. This can mean things pertaining to sharing the customers information with any company you may partner with for extra incentives from them. Obviously theres not a very high chance of anyone finding this out at all. But if it were ever to be found out this could become a major loss to the company as no one would trust you with any of there information. Customers do not appreciate when being tracked in ways they did not agree upon. This can also be apart if they give you your email for example you would ask them if they want emails on any new benefits or offers the program may have. Giving them the option to opt out or not would be important and not forcing them to accept it or not. Kudler foods adding this program has many legal, ethical, and security issues to get through in order to start it. It will also give them a way to target there advertisements, give there valued customers free gifts for there patronage and track there sales more accurately. This in return can help in customer growth and higher profits overall. On the other hand the potential for a very public and costly situation can arise if it is not handled correctly. All of this information needs to be deeply reviewed by each applicable department. This will require a lot of time and consideration if it will profit more than the costs of the intial and long term costs of the program.

Reference’s
California law SB 1386

http://www.informationshield.com/casb1386overview.htm

Privacy act of 1974

http://www.justice.gov/opcl/privacy-act-1974

US Safe Harbor rules

http://www.bbb.org/council/eusafeharbor/bbb-eu-safe-harbor-dispute-resolution-program/safe-harbor-privacy-principles