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MGT 216 Week 1 Discussion Question 2

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Are there any situations in business that are legal but unethical? Can you think of any
situations that are ethical but illegal? Provide hypothetical workplace examples to support
your argument.
Response:
Many situations in business are legal but not ethical. For example, certain business is
inherently unethical. One example is check-cashing businesses, which charges extortion-level
interest rates to poor people on short-term loans by holding their paychecks as collateral. Once
people get into check-cashing cycles, it’s almost impossible for them to get out of debt. In a
similar vein, I’d argue that many fee structures in the banking and credit industry are unethical.
For example, many credit card companies pull people in with low introductory rates, but the
rates quickly increase over time or with even a single missed payment. Since the increased rates
apply to previously made charges, the result is that the effective price of purchased goods
increases for the consumer after-the-fact. By setting minimum payments so low that the
customers debt will actually increase rather than decreasing over time, the companies show that
their goal is to keep people in debt rather than helping them get out of it.
The question of what might be ethical but not legal depends on one’s moral principles.
For many people, actions that are illegal are inherently immoral. However, one possible example
of such an action is a pharmacist offering a needle exchange service in a community where no
other such free service is available. Needles are generally only available with prescription, so
such a program, if unsanctioned, might be illegal. However, if the pharmacist believes that he or
she is not encouraging drug use but is discouraging spread of disease, then this might be an
ethical practice.
Another example of a practice that is ethical but not legal might be bribery, in certain
foreign markets. For example, a company that provides travel services to American customers in
third world countries may have to provide a certain amount of budget for “roadside fines” (e.g.
bribes to police officers), which are standard in countries such as China and Mexico. Even
though illegal, it is part of the “way of doing business” in those countries and the company
would be unable to operate without following cultural practices.

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