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What Is Considered Bad Business Ethics?

It is bad business ethics and illegal for a used car dealer to roll back a vehicle's odometer.
Businesses who regularly engage in bad ethics will have unhappy customers.
Failing to replace a damaged or defective item is one example of poor business practices.
Declining sales and profits are consequences of engaging in bad business ethics.
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  • Written By: Angela Colley
  • Edited By: Susan Barwick
  • Last Modified Date: 17 September 2014
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Business ethics are the principles of conduct by which a company operates. This includes how the company owners want to manage the business and how the owners expect the employees to conduct themselves. Actions that result in civil lawsuits, criminal liability, or that simply damage the reputation of a business can all be considered examples of bad business ethics.

Dishonesty is a common example of bad business ethics. For example, if a company makes false claims in its advertising, the company is being dishonest to its customers. Making false advertising claims and failing to replace damaged or defective products or to refund their purchase price are examples of poor business ethics that can give a company a poor reputation and that can lead to civil lawsuits.

A business can also face lawsuits or costly recalls if they intentionally manufacture poor or faulty products. While not all faulty products are created intentionally, a company that knowingly makes and markets products that could hurt a customer is practicing bad business ethics. As a result, several customers may file a class action lawsuit against the company. The company may have to recall the products sold and notify the public of the problem, which can also lead to a poor company image.

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Bad business ethics also includes illegal actions. For example, falsification of information regarding financial status can lead to criminal prosecutions of business executives. Investors can lose great sums of money due to such practices. Businesses might also engage in criminal activity by participating in practices designed to prevent other businesses from competing with them. Illegal trade practices and violations of various state and federal regulations can result in civil as well as criminal penalties.

While civil lawsuits and illegal activity can damage the reputation of a business, poor business ethics can also include activities that involve no violation of the law. Poor customer service is not only a bad business practice but might be considered unethical as well. Participation in immoral or illegal acts by business executives or key employees can also harm the reputation of a business and might be considered examples of bad business ethics, especially if behavior occurs in the course of conducting business or the premises of a business.

Companies that consistently practice bad business ethics face several problems. Loss of business relationships and a poor reputation with the public can hurt sales. Lawsuits and settlements can be costly and can also result in lost profits. The final result of bad business ethics may be bankruptcy.

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Discuss this Article

pleonasm
Post 3

@KoiwiGal - Sometimes they are stung and sometimes they aren't. I think the problem is that the people with the most money can afford the best lawyers.

But bad business ethics aren't only the domain of big business. I mean, anyone can really indulge in them, unfortunately. Whole small businesses are based around taking advantage of people, either by not telling them something important, like the quality of a product, or by actively trying to get money out of people for no reason at all.

The unfortunate thing about this is that there isn't enough publicity to warn people about this kind of thing. So, it pays and even if people are caught, they will just move and start over.

KoiwiGal
Post 2

@indigomoth - Well, the consequences are never that bad for the big businesses as far as I can see. Look at what happens to oil companies after big spills that kill thousands of animals and wreck fishing communities and so forth. Pretty much nothing happens. At the most, they have to pay a fine, or maybe spend a bunch of money on cleaning up the spill. Other than that, people don't seem to care.

A lot of the time these bad ethical practices are done by people at the top and they end up getting what's known as a golden handshake when they are made to leave the company. So they get millions of dollars and probably don't have any trouble finding another job because of their connections, but everyone knows they have been corrupt.

If people want bad business ethics to disappear they need to vote with their wallets and also to put pressure on politicians to regulate businesses more.

indigomoth
Post 1

I could never understand why businesses take the chance of using bad ethical practices. I mean, it seems almost inevitable that they are going to be caught and it's not just that most of the time the practices are illegal, but in this world with the prevalence of mass media, it can really damage your reputation.

And there are plenty of people snooping around, trying to find a story, so you will inevitably be found out. And most business ethics are in place because they are unsustainable in the long run anyway.

It just seems like such a terrible idea I can't understand why any business would risk doing it.

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