Ethical and Legal Issues in Selling

1
Ethical and Legal Issues in Selling

• Chapter 3

2
Legal Issues

• Protect consumers
• Protect competition
• Legal does not necessarily mean ethical

3
Ethical Guidelines

• The golden rule
• The professional ethic
• Kants categorical imperative
• The TV test

4
Relationships with Customers

• Deception
• Deliberately giving incorrect information or
  lying
• That harms competition
• FTC (Federal Trade Commission) Act
• Regardless of harm
• Wheeler Lea Amendment to FTC Act

5
Relationships with Customers (continued)

• Bribes
• Payments up front to influence decision
• US government officialsregulated by agencies
• Foreign officialsForeign Corrupt Practices Act
• Actionable Fraud
• Kickbacks
• Ongoing payments for purchases made

6
Relationships with Customers (continued)

• Gifts and entertainment
• Be sensitive to company policies of buying
  company.
• Make it clear that there are no strings
  attached.
• High pressure selling
• Only illegal if other laws are broken in the
  process.
• Depends on customer and situation

7
Relationships with Customers (continued)

• Special treatment
• Discriminatory pricing
• Robinson Patman Act
• If has effect on competition
• If is not based on difference in costs for seller
• Disproportionate offering of promotional aids and
  allowances
• Robinson Patman Act
• Disproportionate extra service
• Backlash from other customers

8
Relationships with Customers (continued)

• Reciprocity
• Requiring others to buy from you in order for you
  to buy from them
• FTC Act

9
Relationships with Customers (continued)

• Tying Agreements
• In order to buy desirable product, must also buy
  other products
• Clayton Actclarifying Sherman Act (antitrust)
• Exclusive Dealing
• In order to buy from us, cannot buy from our
  competitors
• Clayton Act

10
Relationships with Customers (continued)

• Sales Puffery
• Tolerated if merely glowing statements reflecting
  salespersons enthusiasm and opinions Our
  product is amazing!
• Not tolerated if make untrue specific claims
  about the performance of the product Our
  product will increase your output by 30.

11
Relationships with Customers (continued)

• Making promises that cannot be kept or
  misrepresenting suitability of a product for
  certain purposes
• Even verbal statements by salespeople can be
  considered legally binding
• Breach of contract

12
Relationships with Customers (continued)

• Phony surveys
• Green River Ordinances
• Failing to inform customers of cooling off period
• Green River Ordinances

13
Relationships with Customers (continued)

• Restrictions on Resellers
• Resale Price Maintenance
• Manufacturer dictating retail price
• Robinson Patman Actbut now often allowed.
• Spiffs
• Push money to resellers sales people from
  manufacturers or distributors.
• Actionable fraud

14
Relationships with Customers (continued)

• Conflicts of Interest
• Actionable fraud
• Company policy

15
Relationships with Customers (continued)

• Passing of Confidential Information
• Espionage Act

16
Relationships with Customers (continued)

• Withholding information on effective interest
  rates
• Truth in Lending Legislation

17
Relationships with Customers (continued)

• Failing to inform customers that your competitors
  have lower prices

18
Relationships with the Salespersons Company

• Padding Expense Accounts
• Theft, embezzlement
• Misreporting Work-Time Information and Activities
• Theft, embezzlement if result in overpay
• Falsifying Sales Results
• Theft, embezzlement if result in financial rewards

19
Relationships with Colleagues

• Making sales in someone elses protected
  territory
• Company policy

20
Relationships with Colleagues (continued)

• Sexual Harassment
• Civil Rights Act of 1964
• Sexual in nature
• Unwelcome to the recipient
• Related to the workplace
• Creates hostile working environment
• Quid pro quo demand

21
Relationships with Competitors

• Collusion
• Price fixing
• Sherman Act, restraint of trade
• Conspiracy
• Agreeing not to sell in particular areas or to
  particular customers
• Sherman Act, restraint of trade

22
Relationships with Competitors (continued)

• Harassment
• FTC Act
• Business Defamation or Disparagement
• Slander spoken
• Libel printed
• Getting information about your competitors from
  your customers