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 bad 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.

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, bad 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.