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3 Ways to Do Business With Someone Dishonest

No company is completely trustworthy. And you don't have to be the judge.

Would you buy from a company who's known for overcharging its customers? Would you sell to a company that notoriously makes up false excuses to underpay its suppliers Would you partner with a company that has known ties to organized crime or is or run by someone who you don't trust?  Or a company that makes false claims?  These are all dishonest practices.

But that might not stop you.

It's not stopping you from flying on Southwest Airlines, is it?

According to reports last week, The U.S. Department of Transportation fined Southwest Airlines $300,000 for allegedly violating its full-fare advertising rules.  The company ran TV ads offering $59 sale fares to certain cities on certain dates and an investigation revealed that they didn't have any seats available for that price.

Just an isolated incident?  Apparently not, according to the U.S. government:

"This violation caused Southwest to fall afoul of a cease-and-desist order dating from July 2013 on the same infraction, causing the government to require an additional payment of $100,000."  Southwest admitted that "the audio portion of the TV ads shown in the Atlanta market last year incorrectly named three cities that weren't intended to be part of the $59 fare sale, but said, "As soon as we became aware of our mistake, we pulled the incorrect advertisements off the air and honored the $59 price point for any consumers who called our reservations centers."

Silly rabbits!

An honest mistake?  The government doesn't seem to think so. And it's not the first time.  In fact, Southwest has been cited in the past for violating safety standards and flying "unsafe" planes. But admit it: You don't really care, do you?  And neither do I.

Deceptive or not, the next time I fly I'm happy to go on Southwest, particularly if they're offering the least expensive fare.  Which means that I am guilty of doing business with a potentially dishonest business.  Is that OK?  Yes it is.  In fact, if you're a business owner you often have to do business with people who you may not trust.

To be fair, Southwest is not the only company caught doing things that seemed kind of wrong. To name a few examples: Archer Daniels Midland was found to be price fixing in 1990′s after an informant blew the whistle.  Manufacturing conglomerate Tyco's CEO and CFO were found guilty of stealing $600 million from the company.  Parmalat, an Italian company that produces Ultra Hot Temperature milk and other foods was accused of questionable accounting practices in 2003. Martha Stewart was indicted and served jail time for nine counts of securities fraud and obstruction of justice. Deutsche Bank AG was caught spying not only on its board members, but also on the personal life of some of its investors. Barclays, one of the world's largest banks, owned up to the allegation that it manipulated the London Interbank Offered Rate, which was tied to trillions of dollars worth of financial contracts and derivatives. Wrigley, the candy and gum maker, once tried to market Lifesavers' Pineapple Soda. (OK, that wasn't fraudulent, but talk about disgusting!) These companies, even Wrigleys, have recovered, still exist and thrive.

And these are just the ones we know about.  How many of your customers, suppliers and partners are doing disreputable things that aren't making the news? I think it's safe to say that fraud, dishonesty and deception is not uncommon in the business world. So how do you protect yourself?  Here are three easy ways:

1. Ask around.

Go ahead, be a gossip.  If the customer, partner or supplier is important enough to your business then talk to others doing business with them.  Ask for references.  Bring them up in conversation at the next conference you're at.  Ask questions if you smell something bad.  You're not being unreasonable.  You have employees, family members and others who rely on your business for their livelihood too.  They're putting their confidence in you, as the boss, to ask the tough questions.

2. Trust your gut.

I believe in vibes.  I believe that some people aren't meant to get along.  I believe in opposing energies.  I think that you can not like someone but still trust them.  But sometimes you meet that person who gives you the creeps.  You can't give a specific reason why. Maybe it's the way he looks, or something she said, but you're just not comfortable.  If your gut is telling you that, then there's a reason for it.  Living on this earth for 49 years has taught me to trust my gut when this occurs.

3. Know your exposure.

Go ahead, fly on Southwest.  I will.  In the unlikely event that the company is grounded because of fraudulent business practices, I may be inconvenienced or lose my ticket.  In the (hopefully) very unlikely event that their poor maintenance practices of the past causes my plane to fall from the sky today, then I just won't be around to complain. (And my wife will cash in!)  So I'll take the gamble. I'll also gamble selling, collecting, buying and even partnering with companies or people who I'm not especially trustful of.  If there's money to be made, then that's my job.  I'm not running a "social" business.  Cash flow to me is very, very important.  But I definitely won't get too far entangled.  I won't share liabilities or equity. There is a line.  I will know my exposures and manage around them.

The bottom line:  No company is completely trustworthy.  And you don't have to be the judge.  If you have a deep moral issue with a customer's behavior, beliefs or reputation, then it's completely within your rights as a business owner to not to do business with them.  But if you're selling to someone who's known to be sketchy, just don't go complaining if bad things happen.  And if someone tells you he'll "make you an offer you can't refuse," then run for the hills!

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IMAGE: Getty
Last updated: Jun 4, 2014

GENE MARKS | Columnist | Owner, Marks Group

Gene Marks is a columnist, author, and small-business owner. He oversees the Marks Group, a 10-person technology consultancy to small and medium-size businesses. A certified public accountant, Marks has also worked in the entrepreneurial services arm of KPMG. He writes for The New York Times, Forbes, and The Huffington Post.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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