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Sniff Test: Is Your Company Ethical?

If you're not sure whether your company's policies keep you in the clear, see how many of the following statements you can agree with.
After a norovirus outbreak on Holland America's Zaandam, passengers got a gift certificate for a meal ... on a future cruise.
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From Hypocrites' "Do No Harm" to Google's "Don't Be Evil," the working world has a long history of good intentions. Nevertheless, maintaining an ethical enterprise can be tricky.

Profit is good, but too much is price gouging. Getting customers excited about an opportunity is great ... except when high-pressure tactics force emotional rather than rational decisions. We want contracts that protect our companies, but "fine print" clauses are often used to unfairly sideline legitimate customer complaints.

Where do you stand on the fairness spectrum? Take this sniff test: To see how your company fares on the ethics scale, answer yes or no to the four following statements.

1. We do not exploit our customers' lack of experience or knowledge.

Bad example: Not too long ago, I reported on a Long Island company that charged a woman $860 for a "major rebuild" on her toilet. Ninety minutes later, the worker walked out of her apartment after replacing $30 in parts. That's a labor rate of $547 per hour. (The local Lowe's would have replaced the entire fixture for less than $250, including installation.)

2. Our advertising is factual and does not purposely mislead.

Bad example: Every case of ID theft suggests that credit bureau Experian is not too good at its job–which is, after all, making sure credit cards and loans are given to the correct people. But while we wait for a perfect applicant verification system, the company heavily promotes FreeCreditReport.com–a monitoring service and $700 million-a-year business that only provides a "free" credit report if you sign up for a $16.95-a-month subscription. (Note: There's nothing "free" about it.) And of course, you wouldn't need credit monitoring at all if Experian was getting its main job right in the first place.

3. We allow our customers a fair trial period, and only charge canceling customers for products and services provided or actual costs incurred. 

Bad example: Alarm company ADT charged an Illinois woman $520 to install a home security system, and also locked her into a contract with a 75% early termination fee against unnamed additional installation costs. If the woman wanted out after the three-day "trial" period, she'd be on the hook for more than $1,600. The catch? The ADT contract stated the company wouldn't even respond to alarms until after the first week of the contract.

4. We willingly replace or refund when the fault is ours, regardless of the contract or warranty terms.

Bad example: When passengers on Holland America's luxury ship Zaandam fell ill with the highly contagious norovirus a few years ago, the company didn't take the ship out of service. Instead, they loaded the next group of Hawaii-bound vacationers from the harbor in San Diego, then locked down the common areas and sanitized while at sea. Passenger who'd paid thousands of dollars endured a voyage that was less than ideal. However, the cruise line PR rep did tell me, "It was probably more ideal than projectile vomiting and diarrhea." Compensation for that once-in-a-lifetime cruise that wasn't? A $60 coupon for a complimentary meal on a future trip. (Of course you'd have to spend big bucks just to be able to cash in on the credit.)

How well did you score?

If you were able to agree with all four of the highlighted statements, your company is an ethical standout. Fewer than four, you may need to review policies to find ways to be more fair and open with your current and potential customers.

Please feel free to chime in with your own examples below.

IMAGE: Flickr photo courtesy of Daniel Ramirez
Last updated: Apr 18, 2012

RON BURLEY | Columnist

Ron Burley is a nationally recognized consumer advocate and serial entrepreneur. He is the author of Unscrewed: The Consumer's Guide to Getting What You Paid For and senior partner at Brushfire Consulting.

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



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