HW16: Chapter 20

20.10 You work for a software company that has developed a system that provides information about consumers and that is used within a SoS by a number of other retail businesses. They pay you for the services used. Discuss the ethics of changing the system interfaces without notice to coerce users into paying higher charges. Consider this question from the point of view of the company’s employees, customers, and shareholders.

No, no, NO! This is not ethical whatsoever. First of all, it’s usually not a good idea to coerce your customers, nevermind to pay higher charges they weren’t warned of for something they didn’t necessarily ask for. The keys to building a strong long-term relationship with your customers are to respect them, stay honest with them, and keep them informed. None of these values are reflected here.

The perspective of the company’s employees on this approach could go a couple of ways. First, they could support the decision because higher rates for customers could mean higher payment for their hard engineering work, at least in the short-term. Otherwise, they may be hesitant to support the decision, seeing the obvious ethical issues with it, but also hesitant to say anything and risk their positions at work.

Depending on how involved shareholders are in internal decisions, they may not have been aware that this price-gouging occurred. In some companies, shareholders vote in special meetings where something like this would have been discussed. However, if it was a rash decision that didn’t line up with a special meeting, the shareholders may have been left without a say. In this case, shareholders may stay blissfully ignorant. Their main objective is to keep the value of their shares up, so if that happens, the shareholders may not have too much to say.

Circling back to the customers - they are going to be the ones who view this as highly unfavorable. If they agreed to a certain pricepoint of a certain interface and now the company is giving them no choice but to pay more for a different interface (with no warning), they are going to be rightfully upset. They may opt to switch to a different software provider, but this doesn’t even things out as they would be deeply inconvenienced by having to make that transition. Overall, the risk that the company would lose many customers with this scenario outweighs the benefit of charging more. They would be much better off slowly introducing the new interface and offering it for a bit more money. No coercing allowed!

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