Uber – Ethical Obligations to Consumers

Uber – Ethical Obligations to Consumers

Uber, a San Francisco based, alternative to tax services, is being sued for the alleged rape of a passenger that used their service in India. The suit states that Uber did not maintain basic safety procedures for its passengers. Uber advertises they have the best background checks available for its drivers; however the driver in this case had multiple arrests for rape and assault in his background. The case alleges Ubers business structure has allowed them in the past to not be liable for what happens from the time of pickup to drop off; any incidents are the driver’s responsibility alone.

What are the ethical issues at the forefront of this case? Does a company have an ethical responsibility to consumers of their product and/or service? Does profit matter more than safety? Do they have an ethical responsibility to advertise with truth and fact or with half-truths and fluff?

Corporations do have a responsibility to their shareholders; this is to turn a profit. Making money is the primary backbone of business. They have a responsibility to their employees to provide a safe non hostile workplace (Beauchamp, 1979, pg 232).  There is also a corporate ethical responsibility to consumers; this is to provide honest information that will allow them to make an educated decision (Beauchamp, 1979, pg 265). This company provided inaccurate and non-complete information to their customer, which allowed them to feel safe. The lack of concern for customer safety over profit is highly unethical and leans towards the utilitarianism school of thought, that there are no natural rights and all actions are motivated by pleasure.

I agree with the philosophy of John Locke, which is frank in its statement that there is a law of nature given to us that provides the morals we should abide by. Basic human rights are protected by the moral code given to us in the Bible, as well as the governmental laws that govern our lands. When a company offers a service, they should be held liable for the actions performed by agents of the company. The driver was not acting on his time, we was acting on the companies time.   Ethical Theory and Business discusses the reasonable expectations of a customer and the vulnerability of the customer, who does not have the full knowledge needed to make a crucial decision (Beauchamp, 1979, p265-267). It is unethical for a salesperson to withhold information that could be important to the decision a customer makes.

The company in this case is taking the necessary steps to repair the breaks in their system and ensure the safety of their customers. I believe that the strategy they are taking in this case will result in an improved product with stronger ethical implications. This is entirely contingent upon the fact that they follow thru with the plans they are making. We as human beings should feel safe in our daily lives, if we are unable to use corporations known worldwide for basic services, such as transportation, without being able to trust their advertising and claims, we are just contributing to the utilitarianism views taking over society.

Source: http://www.reuters.com/article/2015/01/29/us-india-uber-lawsuit-idUSKBN0L22NP20150129

 References:

Dunfee, T., & Donaldson, T. (2995). Toward a Unifed Conception of Business Ethics: Integrative Social Contracts Theory. The Academy of Management Review, 19(2), 252-284. Retrieved January 30, 2015, from http://www.tulevaisuus.fi/keko/KURSSITIEDOT/jo11_kalvot/DonaldsonDunfee_1994.pdf

Beauchamp, T. (1979). Ethical theory and business. Englewood Cliffs, N.J.: Prentice-Hall.

McDonald's - Virginia Employees Allege Ethical Misconduct

McDonald’s is in the news again, and this time their food is not under scrutiny. The worldwide company is coming under fire amidst a lawsuit filed this week by 10 ex-employees in Virginia, claiming they were victims of sexual and racial discrimination. This discrimination caused them to be terminated from their positions at McDonald's owned by franchisee Michael Simon. There are multiple ethical issues to be considered here. The issues of racism, sexual harassment, as well as the issue of at-will employment states and the issue of the viability of McDonalds Corporate being held responsible for the actions taken by supervisors at restaurants operated under a private franchisee.

In regards to the issue of racism and sexual harassment, these are moral issues. However, morals and ethics are commonly becoming interchangeable in today’s society. Title VII of the Civil Rights Act of 1964 prohibits discrimination based on an individual’s race, color, religion, sex, or national origin, this encompasses racism and sexual harassment. Ethical Theory and Business teaches us that these types of discrimination fall under the category of applied ethics. Racial and sexual discrimination are unethical, and a violation of human rights, however there are proper procedures to take when feeling discriminated against. Employers are responsible for creating a safe work environment for their employees. Ethical Theory and Business shows us that employees cannot disobey orders or walk out in order to avoid discrimination. Employees must file complaints through the proper channels, via their supervisor, their supervisor’s boss, human resources, or corporate human resources. In this case the employees state they contacted corporate and no action was taken, at that time they filed the law suit against McDonalds. Beyond Integrity – a Judeo Christian Approach to Business Ethics reminds us that we should respect human dignity, this includes the presence of a discrimination free workplace.

The state of Virginia is an at-will employment state, meaning an employer does not have to provide a valid reason for the dismissal of an employee, and an employee does not have to provide reasoning for leaving their position. Is this ethical? Scholar Richard A. Epstien, promotes the tradition as being fair and efficient, as discussed in Ethical Theory and Business. I would agree with this school of thought as there are initiatives in place to protect employees against wrongful termination. Wrongful termination restrictions vary state to state, however federally employees are protected from being terminated due to their race or their unwillingness to participate in sexual advances from their supervisor or boss.   

Based on the lessons presented in the texts mentioned above, it would appear that McDonald’s Corporate has not acted in an ethical fashion. (Contingent upon the validity of the allegations in the case). The corporation promotes diversity and a safe work environment. Although the locations in question are franchised owned, the amount of control the corporation holds over franchise holders requires them to have a stake in the wrong doings of their employees. For corporate to have been notified by the employees that they had been subject to unethical practices and to have not acted upon the allegations, with an investigation allows for a valid law suit. McDonalds has a published Whistleblower policy, allowing for employees to notify of any discriminatory or unethical behavior, without fear or retribution. It is my belief that if the allegations are found to be legitimate, McDonalds should be required to provide the dismissed employees with monetary damages in the amount of the lost wages incurred, and they should be reinstated to their positions in McDonald’s restaurants, not owned by the franchisee in the case.

Source: http://www.reuters.com/article/2015/01/22/us-mcdonalds-lawsuit-discrimination-idUSKBN0KV1TV20150122

Amazon – Multi-National Tax Strategy – Luxembourg – Ethical Evaluation

BUS520-B Week 2 Blog #1

Amazon – Multi-National Tax Strategy – Luxembourg – Ethical Evaluation

Amazon, Inc. (a US based company) is facing allegations from the European Union regarding the alleged receipt of illegal aid from the government in Luxembourg, in the form of a “cosmetic” tax arrangement (Fairless, 2015). The potential back-tax bill, if the case is found in favor EU, could be in the hundreds of millions of dollars.

The primary ethical issue to be considered in this case is whether the actions by Amazon constitute a case of premediated tax avoidance or was their intent to utilize the benefits of an advanced planning agreement in relation to transfer pricing. Legally transfer pricing is often used between subsidiaries or divisions whom act as separate entities and trade supplies or labor, these transfers are commonly done at market price to avoid one company losing money on the transaction (Investopedia).

Multi-National companies have been found to strategically utilize transfer pricing arrangements in order to move product to lower tax regions and avoid paying taxes on profit in high-tax jurisdictions. Is this legal? It appears to be so. Is this ethical? Not in my opinion, nor it appears the popular publics opinion.

Companies have a social (ethical) responsibility to pay corporate taxes, where they operate. Taxes go towards a countries infrastructure, their healthcare systems, education systems, transportation systems, etc. The presence of a corporation allows for jobs, the employees that work for a corporation reside in the country, thus they are directly affected by the lack of taxes that their employer pays to their government.

Additionally, in this case we need to look at the agreement between Amazon and Luxembourg. Was this a “sweetheart deal”, allowing for Amazon to receive state aid? State Aid is defined by the European Commission to be an advantage given on a selective basis to undertakings by national public authorities. By paying a fee to their Luxembourg subsidiary, that monies is exempt from corporate tax rates, which would otherwise have be 28%.

Accepting state aid allows for unfair competition gained by government support in the country of operation. This is illegal in Europe and the US. It is also unethical. It can hinder other companies in the same market from a chance to gain business, if they operate at lower margins, due to having to pay a corporate tax. Competition in a market is needed for sustainability and consumer choice. Monopolies are not legal, and with a government providing tax breaks to one entity, the entity could easily facilitate an industry take over. Reasonably this is not something that could happen overnight, but with a long term arrangement, it is feasible.

There are a few elements found in the review of the agreement that raises red flags in my opinion:

1.    The agreement was made in 2003 with no revisions or review since.

2.    The agreement was approved in 11 days by the authorities, this is an abnormally short time period to conduct the required lengthy and in depth review to determine feasibility.

3.    The royalty fee paid to the Luxembourg subsidiary is a flat fee, it is not based on sales or volume, and it is tagged as “intellectual property”.

These elements lead me to believe this is an unethical attempt at tax avoidance. Intellectual property does not have a “market price” average or indicator, no concrete product to justify the payment of. Is it feasible to believe that a logistics and warehousing company can produce over 500 million dollars in intellectual property per year? Close to $5 billion dollars over the last 10 years?

There has not yet been a resolution to this case, it is still under investigation. Amazon is denying any wrongdoing or unfair advantage gained by their agreement. I would like to see Amazon take the ethical route and begin to pay the proper corporate taxes in the country they are based. A company should provide support and give back to the local community, as that entity is taking advantage of the countries offerings, whether directly or indirectly.

Source:

Fairless, Tom (2015, Jan 16). EU Details Tax Case Against Amazon. The Wall Street Journal Retrieved from: http://www.wsj.com/articles/eu-details-tax-case-against-amazon-1421395136

References:

Transfer Pricing. (n.d.). In Investopedia. Retrieved from http://www.investopedia.com/terms/t/transferprice.asp

State Aid. (n.d.). In European Commission. Retrieved from: http://ec.europa.eu/competition/state_aid/overview/index_en.html