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Ethical and Legal Issues in Selling

Learning Objectives Develop principles upon which to base ethical behavior. Identify the sources of influence on ethics and ethical

behavior. Understand your role in maintaining the ethical position

of the organization. Discover what loyalty to the company requires in the

event that your employees may be involved in questionable ethical behavior.

Recognize the implications of federal and local laws regarding ethical standards.

Chapter 3

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• The basic message of their book is simple: You don’t have to cheat to win!

• “Nice guys may appear to finish last, but usually they are running in a different race.”

• Cheating, lying, and short-changing the customer on service may bring a satisfactory profit today, but it is a sure way to court failure for the future.

Dr. Ken Blanchard and Dr. Norman Vincent Peale

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Do Honest Salespeople Finish Last?

The Origin of Ethics: Legal standards are

enforced by laws and statutes

Ethical standards come from society

The Ethical Dilemma

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Two Systems to Describe Ethical Thinking:1. Deontological uses

specific rules2. Teleological defines

right and wrong in terms of end results Utilitarian: The greatest

good for the greatest number

Bases for Ethical Systems

Ethical ambivalence results from learning that everything is relative Are there any moral absolutes?

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Universal Nature The Golden Rule Everybody plays by the

same rules Truth Telling

Trust facilitates cooperation

Responsibility for one’s actions Don’t blame others for

your problems The “victim” mentality

Guidelines for Ethical Behavior

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Company Code of Ethics Government action and fear of retribution have

convinced more companies to adopt a code Typical issues covered: Expense accounts, gift giving, or

unethical demands by a buyer Examples Set by Colleagues and Competitors The Bottom Line

Survival and Profit Groupthink

Peer pressure Gamesmanship

Winning for the sake of winning

Influences on a Salesperson’s Ethics

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Responsibility to Self Responsibility to the

Company Accuracy in expense accounts Honesty in using time and

resources Accuracy in filling out order

forms Responsibility to

Competitors Responsibility to Customers

Misrepresenting products and services

Keeping confidences Giving Gifts and Entertaining

Clients

Developing A Personal Code of Ethics

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Some cultures have different expectations

Global Rule of Thumb: Salespeople should

follow the laws of their country and the rules of their company

Operating in a Global Environment

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Whistle-Blowing You may be held legally accountable for

inaction Recent rulings encourage whistle-blowing

Ethics and Job Tenure

Sometimes the best policy may be to keep quiet until solid evidence can be

accumulated against a wrongdoer. A word of caution… inaction can even

be grounds for legal action.

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Some incentives encourage fudging Management may not be accessible to help

with ethical issues Do control mechanisms exist for:

Customer complaints? Salesperson dissatisfaction? Expense accounts?

Are sales goals impossible? Manage the distribution of sales territories

fairly

How the Company Treats the Salesperson

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Sexual harassment cases filed with the EEOC have gone up 230 percent over the past decade

Nearly 16,000 complaints per year Look for a harassment policy including:

Company leadership Immediate complaint investigation Privacy rights protected Thorough follow-up Sensitivity training Review training for comprehension Periodic refresher courses

Sexual Harassment

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Five checkpoints in ethical decision making:

1. Is it legal?2. Is it fair to all concerned?3. Would I want someone else to act this way

towards me?4. How would I explain my actions to

someone else?5. How will it make me feel about myself?

Ethics as Good Business

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clear conscience.

Remember…

There is no pillow as soft as a

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Some legal traps Quality below standard specified Violation of delivery date Pricing concessions Incomplete or incorrect instructions Misrepresentation of product usage Slandering competitor Kickbacks to buyers Charges after the sale

Laws fall into broad categories Monopolistic actions Deceptive actions

Legal Issues Facing the Salesperson

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The Sherman Antitrust Act of 1890 The Federal Trade Commission Act of

1914 Unfair methods of competition in commerce Unfair or deceptive acts or practices

The Robinson Patman Act of 1936 Defines price discrimination Gives FTC the right to limit quantity discounts Prohibits unfair promotional allowances Brokerage allowances only go to independent

brokers

Specific Antitrust Laws and Their Sales Implications

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Guidelines For Selling

Written or verbal offers to sell may be binding Financing must be explained clearly and

completely Salesperson must know legal responsibilities of

both parties Warranties and guarantees

Express warranties are made by salesperson or in writing Implied warranties

Are a result of state law Unless a disclaimer is made

Uniform Commercial Code (UCC)

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Cooling-Off Law