Business Finance
Example of business is behaving unethically but not illegally?

Question Description

I’m studying for my Economics class and need an explanation.

Example of business is behaving unethically but not illegally?

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Final Answer

Where I live, there is a used car dealership chain (Eastern Motors).  Their business model is that they will sell a car to anyone if they can make the down payment and will finance the rest (doesn't matter what the buyer's credit looks like).  Consequently, they have tremendous default rates on the car loans they make.  Once someone defaults, they immediately and aggressively attempt to repossess the car.  Once they have it back, they resell it again.  This way, they are able to basically take people's down payments, knowing that there's no way they will actually be able to pay the loan, only to take back the car in a couple months and do it all over again.

It's not illegal, and some people claim that they are serving an underserved market (i.e., those with poor credit), but if you really think about what's going on, it's clear that they are acting unethically and effectively preying on people who are, for the most part, financially unsophisticated.

Alex Z (997)
New York University

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