Unethical Practices Now Accepted in the US Lower business standards alright. Unless it is clearly illegal, there is no problem

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By Paolo von Schirach

June 29, 2010

WASHINGTON – E-mails filters are reasonably sophisticated these days, so that the avalanche of “Congratulations on your win“, or, “Claim your free gift” stuff, goes straight into the junk mail box, where it belongs. I am not sure whether or not enough is being done to prevent people from concocting fraudulent or semi-fraudulent messages aimed at teasing unaware members of the public so that they’ll get ensnared into whatever scheme and end up buying products and services they really do not want. But, thanks to e-mail filters, at least most of this stuff is recognized for what it is: “junk”.

Advertising “free” services

In television advertising, though, there do not seem to be such filters. Case in point, an ad featuring well known TV personality and commentator Ben Stein who promotes a website called “Freescore”. This ad promises to give you, for free, the credit score of the three main credit bureaus: Transunion, Experian and Equifax. Given the importance of your credit score for almost anything in America, free access to it, as compiled and constantly updated by the three major credit services, would be really useful.

I watched the ad and decided to test it. In the back of my mind, I thought that there had to be a catch of some kind, something like, “We’ll give you free access to you your credit score; but first you have to subscribe to this magazine, or whatever…”.

But –believe it or not– I also wanted to be positively surprised. I wanted to see that, for once, what you see is really what you get. I wanted to be convinced that at least some advertisers are honest and that, indeed, they’ll give you what they say you’ll get. In this case: “free” access to your credit score.

“Free” is not at all free

And so I went on line and found the website. Nothing in the home page suggests anything other than what is advertised: “Follow these steps and you’ll get access to your credit score”. So, second click. And there there is a form to be filled on line. But right there the catch: in the lower right hand side of the page. In the almost statutory “small print”, one reads that the service is “free”; but only for a 7 days trial basis. After that, if you want to continue to have access, you are charged $19.99 a month. So, not free at all. Alright, before you sign up, you are told the truth. So, what do we make of this? After all, can we be reassured that in the end this is honest advertising for honest commerce?

May be not illegal; but unethical

Not really. This is pretty awful. Probably not illegal and not necessarily worse than average; but emblematic of openly unethical behavior. Nothing could be more misleading than calling “free” and advertising as “free” something that is not at all “free”. And then there is the complicity of the TV personality who lends his face, his credibility to this deception. And, of course, whoever controls that bit of TV space is totally uninterested in the content of the ads, as long as they are paid for airing them. Again, probably we cannot call this ad “fraud”, because the small print reveals the actual terms of the deal: you want service, you pay a fee.

But what is entirely wrong and what should be inadmissible is that, in order to get people to walk through the virtual door and go to the website, you tell them a lie. “Come on in….It’s free!” And what is even worse is that I suspect that nobody really takes exception to this now well established modality based on deception –more or less pronounced, depending on the issues– as a routine business practice.

The savvy consumer should know better……

Of course, if you talk about this to any savvy observer or battle hardened consumer, they would say: “Ha, ha…..You fool. So, you fell for it, eh? Didn’t you know that these offers of “free this or that” are just teasers, so that you lower your guard and become enticed? Come on, my friend…’Thought you were smart…..You should know better”.

And so, at least among the cognoscenti, the understanding is that these ads in fact are for the idiots, people so dense who believe that what they are told is actually true! Can you imagine that….

And so, the smart people skip the junk and concentrate on the stuff that is more likely to be for real. Well, this may be a good way of surviving in a universe of double talk and pervasive deception. Fine, as far it goes.

In a society that reveres ethics lack of ethics is normal

But is this really the way we want to live? Does anybody really believe that accepting such low standards in terms of business ethics is alright? Apparently so. These ads about free services that turn out not to be free are aired as legitimate marketing tools. Likewise, the same can be said for ads that make outlandish claims for the health value of a product that turn out to be exaggerated or just false. By and large, no public outcries. Few if any inquiries by any consumer protection agency or equivalent.

And yet, the very fact that we, as a society, accept deception as a totally legitimate business practice, the fact that well known personalities accept to be paid for something that, while not technically illegal, is certainly unethical, speaks volumes as to what we have come to accept as “the new normal”. “Hey, everybody does it. This is how you get customers. This is how business works”.

While this looks bad, it gets even worse if we consider that all this happens in a society in which religion based ethics is theoretically the unshakable foundation of our beliefs and behavior, a society in which libraries are full of volumes on ethics, a society in which a fair number of tenured university professors make a living teaching ethics as respected faculty members in thousands of Liberal Arts and Philosophy Departments. A bit of a disconnect, here, wouldn’t you think? We are in principle firmly devoted to strong ethical values that, in practice, we disregard in a most egregious way.

Before the Wall Street 2008 debacle, shady practices were unobjectionable

Again, without trying to make too much of it, let’s remember that until not too long ago, all the mortgage brokers who were aggressively selling sub prime mortgages to unsophisticated clients, knowing full well that they were getting their customers into veritable financial traps, thought nothing of it, because “Hey, everybody’s doing it….So, why shouldn’t I participate in this business”? Indeed, why not? Well, because it is based on deception and half truths and thus wrong. Something does not need to be technically illegal to be reprehensible.

“We do not do these things here”

A while ago I listened to a radio program about trends in Wall Street way before the financial meltdown of 2007-2008. A story was told by the interviewee about a young, aggressive MBA who wanted to work for one of the old brokerage houses in New York. In order to make a strong case for being hired, he proposed to the firm manager a number of very clever but may be a bit shady new ideas aimed at increasing business volume and returns. The firm manager terse reply was: “We do not do these things here“. The young MBA was not hired.

I do not know the details. Maybe the firm manager was just a very conservative practitioner, stuck in the past and unable to see the wonders of new financial products. Or may be he thought that the bright new ideas presented to him were unethical –and for this reason not to be pursued.

Be that as it may, I would like to think of a world in which deceptive  practices of any kind, mendacious spinning by public officials and political commercials that clearly manipulate facts in order to make a point, along with unethical advertising, would be rejected because, in this society, as it were: “We do not do these things”. 

In the meantime, if you want to get your credit score, remember that you have to pay for the service. “Freescore” is really not free at all. “Everybody knows it”, including, I assume, Mr. Stein.

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