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Ethical and Legal Issues in Selling

. Legal Issues. Protect consumersProtect competitionTypes of lawsStatutoryAdministrativeCommon law

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Ethical and Legal Issues in Selling

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    1. Ethical and Legal Issues in Selling Chapter 3

    2. Legal Issues Protect consumers Protect competition Types of laws Statutory Administrative Common law “Legal” does not necessarily mean “ethical”

    3. Ethical Guidelines The Golden Rule The professional ethic Kant’s 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 (cont.) Bribes Payments up front to influence decision US government officials—regulated by agencies Foreign officials—Foreign Corrupt Practices Act Actionable Fraud Kickbacks Ongoing payments for purchases made

    6. 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 Relationships with Customers (cont.)

    7. 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. Reciprocity Requiring others to buy from you in order for you to buy from them FTC Act Relationships with Customers (cont.)

    9. Tying Agreements In order to buy desirable product, must also buy other products Clayton Act—clarifying Sherman Act (antitrust) Exclusive Dealing In order to buy from us, cannot buy from our competitors Clayton Act Relationships with Customers (cont.)

    10. Sales Puffery Tolerated if merely glowing statements reflecting salesperson’s 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%.” Relationships with Customers (cont.)

    11. 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 Relationships with Customers (cont.)

    12. Phony surveys Green River Ordinances Failing to inform customers of cooling off period Green River Ordinances Relationships with Customers (cont.)

    13. Restrictions on Resellers Resale Price Maintenance Manufacturer dictating retail price Robinson Patman Act—but now often allowed. Spiffs “Push money” to resellers’ sales people from manufacturers or distributors. Actionable fraud Relationships with Customers (cont.)

    14. Conflicts of Interest Actionable fraud Company policy Relationships with Customers (cont.)

    15. Passing of Confidential Information Espionage Act Relationships with Customers (cont.)

    16. Withholding information on effective interest rates Truth in Lending Legislation Relationships with Customers (cont.)

    17. Failing to inform customers that your competitors have lower prices Relationships with Customers (cont.)

    18. Relationships with Own 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 else’s protected territory Stealing leads from other salespeople Company policy

    20. Relationships with Colleagues (cont.) Sexual Harassment Civil Rights Act of 1964 Sexual in nature Unwelcome to the “recipient” Related to the workplace Quid pro quo demand -- or – Creates hostile working environment

    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 (cont.) Harassment FTC Act Business Defamation or Disparagement Slander: spoken Libel: printed Getting information about your competitors from your customers

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