Business Ethics
Businesses and Customers
It is clear that businesses can directly affect how a customer thinks about goods or services, the world around them, and themselves. If they could not then they would not spend millions of pounds on advertising each year! But given this then they occupy a position of trust. With this trust comes a question regarding how much information a company should provide to the customer and in what form.
In 2011 a court decision meant that banks had to compensate millions of people after they had been mis-sold Payment Protection Insurance (PPI) which was judged to be "ineffective and inefficient". It is beyond doubt that banks knew that PPI was a con, yet it was not in their interest to stop selling PPI because it was "a cash cow". In order to sell PPI banks tapped into the insecurity of customers by promising a "safety net". PPI promised to repay people's borrowings if their income fell due to illness or job loss.
We might think that here is a case where a business's actions towards the customer are morally wrong. But how might we explain this? Well, one obvious way of explaining it is via trust. As Doug Taylor, who works for "Which?", stated: "We've always known that people were being mis-sold PPI, but we were still amazed to discover the scale of it. It appears that salespeople are chasing their commissions, their bosses are chasing profits - where's the sense of responsibility to the customer?"
But how far does this "responsibility" reach? It is of course not in a business's interest - that of making a profit - to give the customer a balanced and "honest" viewpoint. An advert for a computer that says: "this is very expensive; you are probably just buying the label. You do realize that the statistics say you'll use approximately 5% of its capacity, probably for games, a bit of word processing and surfing the web" will probably not get the company very far in terms of sales. So it seems unfair to compel businesses to be honest and balanced in this way.
But on the other hand a company cannot lie. This of course is why the "horsemeat" scandal and other "food fraud" cases have been so controversial. It may be that people would choose to eat horse meat but the trouble arises when they are deceived into eating it. These were cases where food companies deliberately lied, or deceived the customer for profit.
But what is lying? Well, it is not when someone fails to tell the truth but rather it involves intentional deception. But why ought companies refrain from lying?
Looking at Act Utilitarianism accounts it is quite hard to say why it would always be wrong to do so. Presumably, for the act utilitarian, it is not always morally wrong for a business to lie and to exploit the trust of the customer. If, by lying, a business produces more happiness than by not lying, then it is morally acceptable for the business to lie.
We might not think that we would get the same result for the rule utilitarian. A plausible rule might be "do not lie in a position of trust where there are reasonable grounds that you'll be found out". If this were justifiable through utilitarian grounds, then it would be unacceptable for businesses to lie to the customer. Yet, even on the rule utilitarian account it is true that it is sometimes morally acceptable for a business to lie.
This contrasts with the Kantian approach. If you recall, for the Kantian it is always morally wrong to lie. It is true in all instances that one ought not to lie. Kant uses the Categorical Imperative to show this. Let us reconsider the PPI case. It would be irrational for the head of a bank to want the maxim "lie to the customer if it means making a profit" to become a universal law. It is irrational because if this is a universal law then there would be no trust in businesses at all and therefore there could be no profit and no businesses. It is self-defeating and irrational. So it seems that on Kantian grounds the way that PPI was sold was morally wrong.