Issues in

Trustworthiness

Business Ethics

Trustworthiness

Trustworthiness requires:Honesty

Integrity

Promise-keeping

Loyalty

Trustworthiness

There are two types of honesty:In communication

In conduct

Trustworthiness

Honesty in CommunicationTruthfulness

Sincerity

Candor

Trustworthiness

Truthfulness

Trustworthiness

Sincerity

Trustworthiness

Candor

Trustworthiness

Deceptive AdvertisingAmbiguous Ads

Concealed Facts

Exaggerations

Psychological Manipulations

Bait and Switch Ads

Ambiguous Ads

Sara Lee released a new line of products called Light Classic desserts. The natural implication was that "light" meant fewer calories. However, Sara Lee admitted that light referred to the texture and not the calories.

Ambiguous Ads

Often advertisers use "weasel" words that are used to evade or retreat from a direct claim.

Some commonly used weasel words are: "helps," (helps stop), "up to" (provides relief up to eight hours), "as much as" (saves as much as one gallon of gas).

Ambiguous Ads

A consumer need not actually be confused or misled if the ad is found to have the capacity to mislead or deceive. Literally true claims and photographs can be deceptive if the surrounding representations and circumstances make them deceptive.

Ambiguous Ads

Advertisers have an obligation to provide clear information in order to fulfill. their obligations under the requirements of trustworthiness.

Concealed Facts

Tylenol advertised that hospitals dispensed ten times as much Tylenol as the next four brands conbined. They did'n say that the sold the products to hospitals at a cost substantially below what consumers pay.

Concealed Facts

Campbell soup ads depicted a think, rich soup. However, marbles were placed in the bowl to give the solid appearance.

Concealed Facts

When consumers are deprived of comprehensive information about a product, their choices are limited and distorted.

Concealing facts misleads people and undermines truth.

Concealed Facts

Under the obligation of trustworthiness, businesses have an obligation to provide clear, accurate, and adequate information.

Consumers should have access to the objective pros and cons of each product.

Exaggerations

Nabisco advertises its 100-percent bran cereal as being "flavored with two naturally sweet fruit juices" when there are the least significant ingredients.

Exaggerations

Much advertising relies on "puffery," the use of harmless superlatives such as "best," "finest", or "most.“

In determining the difference between puffery and deception, one must look at the intent of the advertiser and the likely interpretation of the ad made by the consumers.

Psychological Manipulations

Ads that appeal to subtle implications and psychological nuances appeal to our subconscious mind.

They appeal to power, prestige, sex, masculinity, femininity, acceptance, and approval.

Psychological Manipulations

It shows a lack of respect to act upon another without that person’s knowledge or consent.

Bait and Switch Ads

Bait and Switch involves:an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser.

Standards of Deceptive Advertising

Two standards have been put forth:The reasonable-person standard

The ignorant-consumer standard

Deceptive Ads

The reasonable-person standard states that:the law is obligated only to protect reasonable, intelligent consumers

who conduct themselves reasonably in the marketplace.

Deceptive Ads

The ignorant-consumer standard protects consumers who are careless or gullible in their purchases.

Trustworthiness

Accounting manipulations may use:Misrepresenting revenues

Misrepresenting costs

Trustworthiness

Honesty in action is fraud.

Fraud not only seeks to deceive but to take advantage of those who are not cheating.

It is a violation of both trust and fairness.

Trustworthiness

Fraud in common law involves:the existence of a false representation of a material fact

the person making the claim knows the falsity of the claim

the claim is made for the purpose of another to act

Trustworthiness

Fraud involves:the person intends to obtain an advantage, avoid an obligation or cause loss to another

the person defrauded relied upon the representation as true and acted upon it to his detriment

Trustworthiness

Types of fraud include:deception

bribery

forgery

extortion

corruption

Trustworthiness

Types of Fraud include:theft

conspiracy

embezzlement

misappropriation

false representation

concealment of material facts and collusion

Trustworthiness

example

Trustworthiness

Integrity requires one to stick to one’s principles under hardships.

Trustworthiness

Promise-keeping requires one to make reasonable efforts to fulfill one’s commitments.

Promise-Keeping

Avoid bad-faith excuses.

Interpret your promises fairly and honestly.

Don’t try to rationalize noncompliance.

Promise-Keeping

Avoid unwise commitments.

Before making a promise consider carefully whether you are willing and likely to keep it.

Think about unknown or future events that could make it difficult, undesirable or impossible.

Promise-Keeping

Avoid unclear commitments.

Be sure that, when you make a promise, the other person understands what you are committing to do.

Trustworthiness

Loyalty is a responsibility to promote the interests of certain people, organizations or affiliations.

The duty of confidentiality requires us to keep some information confidential.

Conflicts of interest should be avoided.

Bankruptcy

There are two types of bankruptcy:Chapter 13

Chapter 7

Bankruptcy

A Chapter 13 bankruptcy gives you the chance to reduce the amount you pay on debts.

It allows you to keep property that you otherwise might not be able to afford to keep

It protects you from your creditors.

Bankruptcy

In Chapter 7 bankruptcy, most debts are wiped out and you never have to pay them.

The law allows certain property to be exempt.

Bankruptcy

Most bankruptcies result from medical emergenciesjob lossdivorce

Bankruptcy

According to Bush, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 will:

“will protect those who legitimately need help, stop those who try to commit fraud and bring greater stability and fairness to our financial system.”

Fairness

The financial services industry argued that bankruptcy frequently is the last refuge of gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires who buy mansions in states with liberal homestead exemptions to shelter assets from creditors.

Fairness

Those who fought the bill’s passage said the change will fall especially hard on low-income working people, single mothers, minorities and the elderly and will remove a safety net for those who have lost their jobs or face crushing medical bills.

New Law

Those with insufficient assets or income could still file a Chapter 7 bankruptcy.

A judge must approve the plan.

If it is approved, all debts are entirely erased after certain assets are forfeited.

New Law

Limitations on “exemptions barring creditors from going after a debtor’s home” were established.

Filers must submit to a two-point “means test” to determine whether they qualify for Chapter 7 liquidation.

New Law

Those who fail can then apply for Chapter 13 to establish a debt repayment plan over the course of three to five years.

Filing fees and legal expenses will be significant.

Each debtor will be required to pay the cost of a mandatory “credit counseling” course.

New Law

Those whose income is above their state’s median income who can pay at least $6,000 over five years — $100 a month — would be forced into Chapter 13

A judge would then order a repayment plan.

New Law

A debtor's reasonable monthly expenses will be subtracted from estimated monthly income. If the remainder, known as discretionary income, is below $100 a month, the debtor can file for Chapter 7. If not, the debtor might not be allowed to file for Chapter 7.

New Law

If a consumer's disposable income is between $100 and $166 a month and

If his or her credit card debt is $24,000 or less,

the debtor can't file under Chapter 7 and must instead file under Chapter 13.

New Law

Amendments rejectedspecial homestead exemptions for the elderlyExemptions for those with significant medical expenses for illness that force them to file for bankruptcy

• Would have allowed them to keep $150,000 of the equity in their primary residence

• If medical bills exceeded 25 % of the person's income, the person would have been exempt from the new means test

New Law

Between 30,000 and 210,000 people - from 3.5 percent to 20 percent of those who dissolve their debts in bankruptcy each year - would be disqualified from doing so under the legislation, according to the American Bankruptcy Institute.

New Law

About 70 percent of the people who file for bankruptcy now do so under Chapter 7, while the other 30 percent or so fall under Chapter 13, according to the American Bankruptcy Institute.

New Law

Currently, 70 percent of the people who file Chapter 13 bankruptcy are unable to complete their original repayment plan

New Law

This has been called the Deflation Guarantee Act of 2005.

This supposed "consumer protection act" the most anti-consumer act in the entire history of Congress.

New Law

The new law may discourage entrepreneurs from taking risks.

Fewer companies starting up equals fewer jobs to fill, which has potentially catastrophic consequences for the entire U.S. economy

New Law

It does not cap interest rates

cap fees

make allowances for loss of jobs, medical expenses or anything else

New Law

The Senate rejected a measure to cap credit-card interest rates at 30 percent.

New Law

If ever there were a case for needed reform, it would be in usury laws that might restrain the insane growth in credit.

New Law

The Millionaire’s Loophole:asset protection trusts

since 1997, lawmakers in five states - Alaska, Delaware, Nevada, Rhode Island and Utah - have passed legislation exempting assets held domestically in such trusts from the federal bankruptcy code.

Bankruptcy

The legislation does not address the real problems of the debt society:

declining real wagesjob insecuritylong-term unemploymentrising health care costs

New Law

The new law will siphon more money away from these families and put it into the deep pockets of the credit card industryThe credit card companies made profits of $30 billion, much of it from increasing penalty fees and sky-high interest charges.