Are You Guilty Of Unethical Business Practices?

By Dr Daleen Smal | Personal Development

Feb 19
Unethical Business Practices

Ethics is a huge topic. The problem is also how to decide what qualifies as unethical business practices? Ethics is open to debate and falls under philosophy, not science.

There are many legal requirements to combat unethical business practices. But ethics go beyond what’s legal. It’s about doing the right thing irrespective of anyone watching. It’s not only individuals who may participate in unethical business practices, but also companies and governments.  

For example, Mattel used hazardous lead paint on toys. Walmart used unethical labor tactics and forced employees to work overtime without pay. Enron committed financial fraud, embezzled funds, lied about earnings, and at the end collapsed. Nestle hired women dressed as nurses to persuade mothers to use infant formula instead of healthier breast milk and babies died of malnutrition.

These are not the only culprits. Companies like Apple, Toyota, and Monsanto are also amongst them. Sadly, there are many more.  

Unfortunately, people are very good at rationalizing unethical business practices that serve their self-interest.

1. Misinformation And Dishonesty

Misinformation and dishonesty take many forms.

Someone may lie about the product he’s selling by using false or misleading advertising. They may lie or hide safety issues about their product.

Companies could cover-up dangerous working conditions or use illegal labor and paying sub-standard wages. There are many charges laid about sexual harassment and, unfortunately, countless ones go unreported.  

Like Enron, companies may use false information in their financial statements. Or brokers may recommend stocks that they own to drive up prices. Another form of financial misconduct is price-fixing to keep prices at a high level.   

Individuals may also fall prey to dishonesty. Some parents buy their children’s admission to elite schools. Or make financial donations to schools so their children are selected for certain teams.

It doesn’t end here. The world is full of examples where individuals, companies, and governments participate in unethical practices and then justifying it.

Nowadays, realistic, artificial intelligence enhanced forged videos known as ‘deep fakes’ can make it look like people are doing and saying things they never did. This intentional and covert dissemination of false information is a very dangerous threat for individuals and brands.

In the online world, we also see this type of dishonesty in false negative reviews.   

By the look of things, this disinformation and false news attacks will become more convincing and common.

Key Points:

  • Misinformation and dishonesty take many forms.

  • Lying about products, labor practices, financial fraud, and fake news and reviews are just a few examples of unethical business practices.

2. Combat Unethical Business Practices In Your Business 

People have a preference to work for ethical and trustworthy organizations. In a poll, as many as 71% of the people said they would take a pay cut to work for a company with the same values as them.

As online business owners, we must establish the values and ethics in our business. We must accept the responsibility to act ethically towards our employees, customers, and suppliers.

But it goes beyond that. As entrepreneurs, we are influencers in this world. Often we help others to start their online businesses. We all have limited energy, time, resources, and money. And we decide to spend it in an ethical or unethical manner. Business owners have to consciously choose to work only with clients, employees, and suppliers who match their business’ ethical standards.

Key Points:

  • We must establish the values and ethics of our business.

  • As entrepreneurs and influencers, we must accept responsibility to act ethically towards employees, customers, and suppliers.

3. Unethical Marketing Practices 

Values and ethics regulate our behavior beyond government or legal control. Marketing ethics deals with the principles, values, and ideas by which we market our business and products.

Questionable marketing practices include bait and switch and spam. If you use unethical marketing practices, you could drive people away from your business.

So the real test for your marketing methods is how your consumers react to your marketing and what they believe about your business. If they are not happy with what you’re doing, they will vote with their feet by walking away from you and your brand.

Key Points:

  • Marketing ethics deals with the principles, values, and ideas by which we market our business and products.

  • So the real test for your marketing methods is how your consumers react to your marketing and what they believe about your business.

4. Misleading Advertising As Unethical Business Practice

Misleading advertising is illegal. The Federal Trade Commission (FTC) regulates advertising. They want advertisers to make accurate statements and back their claims with evidence.

The dilemma for advertisers is that you want to show your product as attractive as possible. Often an advertiser will overstate certain features and soften others.

But in this process, the lines get blurred somewhat. This is when advertisers cross the ethical line when they can’t prove their claims.

For instance, Nutella advertised their sugar-laden hazelnut spread as a kid's nutritious breakfast. The company was sued and had to reimburse people $3.05 million. They had to change their marketing campaign and modify the Nutella label.

We have seen some online marketers advertising their income. This is also tricky. You may advertise you made a certain amount of dollars only if you can prove that you did make it. If not, then it’s misleading.

So, whatever you put in your ads, make sure you have proof it’s the truth.

Key Points:

  • Misleading advertising is illegal. Advertisers must make accurate statements and back their claims with evidence.
  • Whatever you put in your ads, make sure you have proof it’s the truth.

5. Misleading Advertising As Unethical Business Practice

It’s well-known that playing on people’s emotions is an effective way to advertise. It’s because people buy on emotion, not logic. After they bought something, they will rationalize their emotional decision.

You cross the ethical line when you evoke rage or sadness in a tasteless way. Don’t be insulting because your audience is diverse and you must respect everybody. It’s not a great idea to make ads at the expense of others. One of the dangers is that advertisers use stereotyping.

Sensitive subjects where people were injured or died, like with 911 or COVID-19, are best avoided in advertising.

You should also be careful about your word choices. What’s acceptable in one community may not be in another.

In a poll conducted by Harris Interactive, 35% of people will not buy a specific brand due to distasteful ads. They also found that 28% of Americans refuse to buy a certain brand due to the spokesperson. It again shows how each single perception matters and will damage your brand if you get it wrong.

Your ads send a powerful message to the public beyond selling your product. Always make sure you’re sending the right message reflecting your brand’s values and ethics.

Key Points:

  • It’s well-known that playing on people’s emotions is an effective way to advertise. You cross the ethical line when you evoke rage or sadness in a tasteless way.
  • Sensitive subjects where people were injured or died, like with 911 or COVID-19, are best avoided in advertising.

6. Insensitive Controversy As Unethical Business Practice

Advertising is about attracting attention, making people stop, and clicking on your link. Be disruptive, is what advertisers tell you. By being controversial you can be disruptive. You can present an unpopular opinion and stir up emotions and conversations.

The danger is that you can make more enemies than fans. Some use newsjacking in their advertising. Newsjacking is when someone uses tragic events like the Boston Marathon bombing, 911, or Tasmanian bush fires in their ads. For instance, it’s tasteless to build Facebook fans using a trending tragic event hashtag, like #911.

In the face of tragedy, nobody cares what your business has to say about it. The only ethical action is to offer condolences or help. Your intentions may not have been to offend but in tragic cases, nobody cares about your intentions. Insensitive controversy will backfire on you, your business, and your brand.

Having said this, there are ways in which you can use trending events correctly to boost your open rates. Breaking news is gold. But there is an important newsjacking rule. If people have seriously suffered in trending news, leave it alone. Never try and benefit from other peoples’ pain and suffering.

Key Points:

  • Advertising is about attracting attention, making people stop, and clicking on your link.
  • In the face of tragedy, nobody cares what your business has to say about it. The only ethical action is to offer condolences or help.
  • Insensitive controversy will backfire on you, your business, and your brand.

Conclusion

We live in a competitive world and the temptation will be there to use unethical business practices to get the edge. It’s a conscious choice to remain ethical in what we do.

Look at your business practices and marketing strategies. It’s a deliberate choice to end anything that could be considered unethical. It takes only one incident to destroy your reputation and brand that you have spent years building.

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