Posted by Hongkun Ma.
On Nov. 22nd, the ride-hailing app company Uber Technologies Inc. paid hackers $100,000 to conceal an incident that Uber revealed 57 million users’ personal information like names, phone numbers and addresses around the world. 600,000 Uber drivers’ license numbers also were released.
Whether the incident violated state law is being investigated by five state attorneys general: New York, Washington, Missouri, Connecticut and Massachusetts. Forty-eight states have laws that customers have right to know a company’s data breach and will impose fines if company violates them. For Uber, the incident has been so complicated, which lost the trust of millions of customers.
The incident reflected how a data breach can trigger responses from mass of regulators and enforcement agencies, and how a private company can have flexibility to deal with this kind of things. International regulators investigated the incident right away and data protection officers from throughout the European Union announced a task-force to look into the incident. Experts indicated that Uber had more flexibility in the way it report the incident, which can be reported as a security incident, because Uber is a private company. Uber is facing crisis of confidence and it’s difficult to win back the trust of their huge numbers of customers.
Finally, I would like to give some of my opinions. Uber is a private company, which is a third party between customers and taxi drivers. In China, Uber Company is almost monopoly. When it came into China market at the very beginning, most customers were attracted by its low price, which sometimes were even free to take a taxi. Uber gained a huge customer base from the beginning. Later, customers found Uber was not as cheap as before. It became more and more expensive, sometimes was more expensive than regular taxi. The strategy actually made the company lose some of their customers, but most customers stayed. And many customers found that Uber keeps ride details in their system for so long. Some of customers received messages that contained their personal information like history location, ride history or even private residences. From my perspective, it is possible that Uber sold customers’ personal information to third-party companies which would look for visits to key locations, such as particular market, meet-up events, café and so on.
The incident of Uber Company that they concealed the cybersecurity problem really violated law from state level, and not federal. For Uber, the challenge quickly became more complicated and needed to be handled.A company’s reputation can be easily built up and destroyed. And how to win back the trust of customers is becoming a really hard task for Uber Company.
Hongkun is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2019.
Source: https://www.wsj.com/articles/uber-likely-to-face-a-barrage-of-state-legal-action-after-breach-1512131094
Posted by Julian Toledo.
Known for its multiple smart phones and other electronic products, Apple has recently been accused around the globe of intentionally shortening the battery life of older iPhones to boost its profits. Consumer groups and government officials, primarily of the United States, South Korea, and France, have forced this technology company to undergo many lawsuits for unethical business behavior for almost two months. During late December of 2017, customers questioned whether Apple had adjusted the performance of its phones after a Reddit user shared online that his old iPhone had been functioning poorly until he replaced its battery with a new one. Consequently, other people with different iPhone versions began to post about their similar experiences. After quickly receiving huge backlash, Apple explained that it slowed down its phones with aging batteries, including the iPhone 6, iPhone 6S, and iPhone SE, after introducing an iOS update last year to prevent these products from unexpectedly shutting down. In addition, the company claimed that it has “never—and would never—do anything to intentionally shorten the life of any Apple product.” Since the uproar, Apple has made battery replacement cheaper and said it will bring a new iOS update that will notify users about their phone’s battery health. Although some individuals believe that Apple acted responsibly for stopping phone shutdowns, others are still complaining that the company could have handled this issue better.
As of January 12, Apple is facing over thirty lawsuits around the United States, with the majority of them arguing about the company’s deliberate slowdown of older iPhones without advising users. Scott Grillo, a Californian citizen and the plaintiff of a recent lawsuit, criticized Apple for “unfair business practices” and “breach of implied contract.” He told the court that after updating his device from a software upgrade, his phone began to operate inefficiently. Furthermore, lawmakers have been accusing Apple for failing to properly communicate with customers and manage the widespread problem. One government official that has challenged the company in this way is Senator John Thune of South Dakota. Thune argued in his letter to Apple CEO Tim Cook that even if the company planned to slow down older models of the iPhone to ultimately prevent shutdowns, “there should have been better transparency with respect to these practices.”
Outside the United States, more than 120 members of the South Korean organization called Citizens United for Consumer Sovereignty filed a civil suit against Apple on January 11. Led by head plaintiff Go Gye-hyun, the group is currently suing for the alleged destruction of property. For the damages, this consumer organization strives for two million win, or about $2,050, for each plaintiff. In addition, Apple’s recent controversy spread to France, where it is illegal to intentionally reduce the lifespan of goods to force buyers to purchase new ones. In fact, according to French lawyers, if executives are found engaging in this type of unethical business activity, they can be sentenced up to two years in prison and have their companies fined five percent of their sales revenue. In Paris, the public prosecutor’s office received complaints from another consumer group known as Stop Planned Obsolescence. Laetitia Vasseur, the cofounder of this organization, seeks to protect all consumers, especially because of how much more expensive Apple products are in Europe than in the United States. She stated, “At more than €1,200 per phone, these practices are unacceptable and cannot go unpunished. It is our mission to defend consumers and the environment.” This amount in euros translates to about $1,400, which demonstrates how problematic it is for individuals to replace their older, malfunctioning iPhones.
Despite its financial success, technological influence, and popularity across the world, Apple holds a big responsibility in terms of legal issues. As a multinational company, Apple is seeking to regain its trust with consumer groups and government executives. However, with these many lawsuits filed against the company within a two-month period, it is uncertain how long it could take Apple to fix its reputation. Overall, this recent controversy accurately shows how such a small business action can significantly backfire. If a company’s conduct does not truly satisfy consumer demands, it can result in legal consequences that can ultimately impact its performance and status in the market.
Julian Toledo is a business management major at the Stillman School of Business, Seton Hall University, Class of 2020.
Sources:
http://money.cnn.com/2018/01/12/technology/apple-iphone-slow-battery-lawsuit/index.html
http://variety.com/2017/digital/news/apple-slow-iphone-backlash-1202647220/
Posted by Nimra Noor.
It is mid-morning on a long winter day: your body is low on cortisol production and you are hours away from getting off from work. Instantaneously, your brain directs you to walk towards the Starbucks franchise located in your office basement. Hoping that the tall latte you have ordered would boost your energy and sugar levels as you sip it while completing your project, to your utmost surprise, the beverage is already half emptied by the time you return to your desk. This disbelief leaves you wondering if you had gulped your coffee too greedily or if the barista underfilled your cup. However, even if you are certain that latter is the reason for your latte getting finished so soon, there is nothing much you can do about it, now that a new court ruling has “legally approved” the Starbucks barista to underfill your cup.
On January 5, 2018, Judge Yvonne Gonzales Rogers of the United States District Court for the Northern District of California provided a ruling that dismissed all allegations brought by Starbucks’ customers that the Seattle-based coffee chain was “uniformly underfilling its lattes and mochas” to “save on the cost of milk.”
CRYING OVER STEAMED MILK
California residents, Siera Strumlauf and Benjamin Robles and Brittany Crittenden of New York had accused Starbucks in their proposed nationwide class action of fraud and false advertising by underfilling 12-, 16- and 20-ounce lattes by about 25 percent.
“Starbucks lattes are uniformly underfilled pursuant to a standardized recipe,” the suit alleged. “By underfilling its lattes, thereby shortchanging its customers, Starbucks has saved countless millions of dollars in the cost of goods sold and was unjustly enriched by taking payment for more product than it delivers.”
To create a latte, the standardized Starbucks recipe follows filling a pitcher with steamed milk up to an engraved “fill to” line as per the size of the beverage ordered; using a separate serving cup for espresso shots; transferring the steamed milk from the pitcher into the serving cup; and finally topping with ¼” of milk foam, leaving ¼” of free space in the cup. Accusing the company of using a lower ratio of steamed milk to milk foam in order to economize by saving money on the milk, Starbucks’ customers argued that the engraved “fill to” lines in the pitchers are too low, by several ounces relative to the volume of the beverages advertised.
The plaintiffs further debated that the foam is not part of the beverage since it “isn’t measured on a volumetric basis.”
BARISTAS APPLYING THE THERMAL EXPANSION LAW
The famed coffee icon argued that its cups hold more than the advertised number of ounces, and the “fill to” lines guide baristas how much cold milk can be used as per each order. The volume of the milk then expands when it is steamed.
LEGALLY LOVED LATTE
Reuters reported that the Oakland, California-based Judge Yvonne Gonzalez Rogers said that the plaintiffs failed to provide enough evidence to prove that Starbucks cheated its customers, whether by having smaller cups; engraving “fill to” lines on milk pitchers too low to measure the proper volume; ordering baristas to cut down on ingredients; or leaving a quarter-inch of space before the top of the cup.
Judge Rogers also dissolved the plaintiff’s argument that milk foam should not be measured towards the total volume of the beverage. “No reasonable consumer would be deceived into believing that lattes which are made up of espresso, steamed milk and milk foam contain the promised beverage volume excluding milk foam,” Rogers wrote in the ruling.
WHY IT MATTERS
It is the third time since 2016 that Starbucks has won dismissal of a lawsuit over the volume of its drinks. Two similar charges, one from California federal court and one from an Illinois federal court, claimed that the Seattle-based coffee chain cheats its customers by underfilling its drinks and then added ice to fill up the unused space. The courts decided ruled that the ice counts toward the content of the customers’ drinks, similar to the fashion Judge Rogers regarded milk foam to be part of the hot beverage.
Nimra is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2020.
Link to the Article:
Stempel, Jonathan. “Starbucks wins dismissal in U.S. of underfilled latte lawsuit.” Reuters, Jan. 7, 2008, https://www.reuters.com/article/us-starbucks-lawsuit/starbucks-wins-dismissal-in-u-s-of-underfilled-latte-lawsuit-idUSKBN1EW0V5. Accessed Feb. 24, 2018.