Question

Traditionally the typical college level Business Law course focused students' attention on acting within the minimum standards set by the law. Unfortunately, many businesses and business leaders view the law (and it's setting of minimum standards of behavior) as the pinnacle of what they should strive to do. Ethics focuses more on what is right, regardless of whether or not it is legal. Consider the following hypothetical scenario: The MAJOR GROCERY STORE chain provides discounts to customers on product purchases if the customer provides his or her "Savings Club" card at the time of checkout. The chain's purpose in providing these cards is to better track, through technology, each individuals' spending habits and likely target advertising to particular customers' shopping patterns. To shop at MAJOR GROCERY STORE, customers do not need to provide this personal data, but to obtain any of the shelf-price markdowns, the customer must participate in the savings card program.

To increase its revenue, the MAJOR GROCERY STORE offers to sell its customer shopping history data to third parties (presumably so the third parties can target their marketing efforts as well). It turns out the HOME FINANCE LENDER company has employed some scientists who discovered that purchasers of a combination of health care products in certain amounts (for instance certain vitamins, easily digestible non-processed foods) are ten times more likely to have contracted a life-threatening form of cancer. Furthermore, the HOME FINANCE LENDER company has hired economists who through research have determined individuals suffering from this cancer are twenty times more likely to be experiencing financial issues (due to excessive absences from work and increased healthcare costs). Also these individuals are more likely to be receptive to high interest home equity loans, the kind of loans HOME FINANCE LENDER specializes in providing to financially desperate consumers. As a result, HOME FINANCE LENDER pays MAJOR GROCERY STORE to search its customer purchasing data and provide a list of its customers purchasing the certain combination of products, so HOME FINANCE LENDER can begin targeting those people with high interest rate loan offers.

The hypothetical situation described above clearly falls within the letter of the law. Nevertheless, are MAJOR GROCERY STORE and/or HOME FINANCE LENDER acting ethically? Is it fair to use scientific data analysis techniques to search for customers in financially vulnerable situations to add to the bottom line of the HOME FINANCE LENDER stockholders? Would you own stock in a company like HOME FINANCE LENDER if you know your shareholder rate of return would probably be 1% per year higher than a competitor's stock, when that competitor chooses to act more ethically than HOME FINANCE LENDER? Why or why not?

Answer 1

Ethics more focus on what is right ignoring that whether it's legal or not. In this scanario, It is not a right approach which is used by the HOME FINANCE LENDER to target the customers who are in financial vulnerable situtation. this is not ethical or we can say not a right approach because fair use of scientific data analysis technique is right when it is used for ethical purpose, but when such technique is used to target a particular vulnerable condition, than such approach can't be termed as ethical.

In the investor point of view the % higher rate of return is goods as compared to competitors and investor would like to go for such investment and own share of such company, but when it comes for ethical point of view than it will be reversed and right to choose the share of company who act more ethically whether the investor get 1% less return as compared to HOME FINANCE LENDER.