Food Recall

Nature’s Best must recall their dog food, Healthy Hound, for elevated levels of vitamin D after being investigated by the US Food and Drug Administration for the deaths of four dogs. The Director of Communications has tasked his employees to create a campaign that shows contrition that uses positive visuals. This campaign features three ethical issues, which must be solved within a two hour timeframe.

Ethical Issues & Conflicts

1. The perfect image was found for a campaign, except the signed release only gives consent for the image to be used in the “Canine Cuisine” dog food project. The Director of Communications wants to use the image without consent.

2. For a paid sponsored post, the Director of Communications has asked the hashtags #sponsored, #ad and #sp be removed.

3. The Director of Communications wants to ask an innocent intern, who’s not trained in the ethics of communication or marketing, to go forward with unethical tasks in order to avoid taking future blame for the decisions.

Internal and External Factors

Internal:

• Political

The employee working with the Director of Communications is at risk of damaging their relationship with their boss or losing their job if they do not follow the directives. If the employee is forced to ask the intern to do the unethical tasks, they could put that innocent person’s reputation and career at risk. Plus, these employees have a way to fight back. According to the 2011 National Business Ethics Survey:

1. 45 percent of employees observed improper conduct at work. 

2. 65 percent of those who witnessed wrongdoing reported it (Working America).

In addition, any friendship or positive interaction between the employee and intern is in jeopardy if the employee is forced to make the intern go through with the unethical tasks. The relationship between the employee and director will also suffer.

• Legal/HR

The company environment will become one of confusion, distrust, stress and conflict since each person would doubt the intentions of the other, leading to a drop in productivity, lowered morale and employee attrition, which would lead to the downfall of the company (Newman.)

Further loss of business and brand advocacy among employees or investors could be lost if additional dishonesty is uncovered and distributed.

Several firms have faced expensive lawsuits due to a lack of disclosure of their relationship with influencers. The FTC requires disclosure in the first three lines of a post on social media. However, if the endorser is famous, it isn’t legally necessary. For example under section of the FEDERAL TRADE COMMISSION 16 CFR Part 255 - Guides Concerning the Use of Endorsements and Testimonials in Advertising, states: 

“A film star endorses a particular food product. The endorsement regards only points of taste and individual preference. This endorsement must, of course, comply with § 255.1; but … no disclosure is required because such payments likely are ordinarily expected by viewers” (Federal Trade Commission).

There is a lot of gray area that needs to be considered. If we decide to continue without disclosure, the worst that will happen is the FTC will send a private letter asking for disclosure. The second and more viable option is to post Shane Parker’s review from the Healthy Hounds page. The FTC states this is sufficient for viewers to understand an influencers promotion is a sponsorship. 

External:

• Legal: 

1. Competitors can sue under Section 43(a) of the Lanham Act which protects businesses against the unfair competition of misleading advertising or labeling. 

2. Colorado Consumer Protection Act punishes businesses that engage in unfair or deceptive trade practices with the public.

3. Using someone’s image without his or her permission may fall under both the statutory right of publicity and the common law invasion of privacy causes of action. The resulting damages could be up to $10,000.00 per violation or actual damages. 

4. State Consumer Protection Statutes criminalizes deceptive marketing.

• Social: 

A May report from U.K.-based photo -printing shop Inkifi looked at 800 Instagram accounts and found only 25 percent actually properly disclose sponsorships (Morning Consult). The FTC sent 21 letters to Influencers in 2017, but there was never an actual threat and there has been no action taken to those who are not complying. 

Despite pushback from a few consumer protection organizations, Harvard Business Review states:

 “In late 2018, 88% of consumers surveyed indicated their belief that influencers in general recommend brands because they are paid to do so, implying that people simply assume that influencers are brand-sponsored whether or not there is any disclosure." - Charry Audrezet

• Economic (business): 

However, if consumers do feel a practice is unethical, they will stop buying from that company. Further loss of business and brand advocacy among the public could be lost if additional dishonesty is uncovered and distributed, potentially resulting in bankruptcy. New research from Mintel reveals:

1. 56 percent of US consumers stop buying from companies they believe are unethical 

2. 35 percent of consumers stop buying from brands they perceive as unethical even if there is no substitute available.

3. 27 percent stop purchasing even if they think the competitor offers lower quality.

4. 63 percent of consumers feel that ethical issues are becoming more important.

Key Values

“In looking for people to hire, look for three qualities: integrity, intelligence and energy. And if they don’t have the first, the other two will kill you.”  - Warren Buffett

The Healthy Hounds company can follow these main key values by performing the following:

• Advocacy

  • Rededicate company mission to providing healthy dog food

  • Prove company integrity, even if not legally mandated

• Honesty

  • Follow FTC regulated Influencer sponsorship

  • Give rightful payment to talent and talent agency

  • Deny willful blindness by using ‘ignorant’ intern

• Loyalty

  • Make consumer and employee health and well-being a priority

  • Maintain professional reputation and relationship with talent agencies

• Professional development

  • Promote an honest and ethical working environment

• Objectivity 

  • Understanding the emotional pain of consumers and the long-term risks of unethical business practices. 

“There’s no way to succeed in business without the highest ethical standards.” - Jordan Belfort

Nature’s Best public relations professional obligation:

• Consumer 

  • Empathy and respect for dogs who have become ill or passed away and their owners

• Employer

  • Guide Director to make ethical decisions 

• Shareholders

  • Maintain highest ethical standards to ensure company success

• Government

  • Follow FTC guidelines, even if not legally required

Ethical Principles

Mill’s version of utilitarianism teaches that one must evaluate the quality of one’s actions, in addition to the quantity - relating to the ethical principles of truthfulness and confidentiality. This is key for ethical decision making. The common catch-phrase associated with this is “the greatest good for the greatest number”, i.e. nonmaleficence. However, quality is essential for assessing the greatest good or happiness, applying to beneficence, or moral obligation. This clearly brings potential consequences into consideration when grappling with a dilemma and justice. 

• Truthfulness and confidentiality 

• Beneficence

• Nonmaleficence

• Justice

Course of Action

Image Consent Options

1. Use the image illegally and risk tens of thousands of dollars in reparations and legal fees plus public disgrace, loss of shareholders, and severance of professional relationships with talent agencies. 

2. Create new digital contract with talent, same day. Time sensitive and includes additional fees in the thousands.

3. Use picture of CEO with dog - time efficient, legal and free. 

We recommend option 3 because this humanizes the CEO and company, is time efficient, and comes without risk.

Influencer Sponsorship Options

1. Do not post sponsorship and risk receiving a letter from the FTC.

2. Post review from Healthy Hounds social media page in order to comply with FTC disclosure requirements. 

3. State sponsorship in review without hashtags.

We recommend option 2 in order to represent the company as transparent and honest, even without having to technically be so, in this particular instance.  

Intern Scapegoat Options

1. Practice willful blindness by using the intern for unethical practices and risk being reported to authorities, being sued for emotional distress or under the whistleblower law, and/or creating a bad reputation for potential employee candidates. 

2. Practice ethical behavior and risk nothing. 

We recommend option 2 because the arguably more ethical choice may present the company as more trustworthy and comes without risk. 

Citations

Audrezet, Alice, Charry, Karine. 2019, Aug 29. Do Influencers Need to Tell Audiences They're Getting Paid? Retrieved by https://hbr.org/2019/08/do-influencers-need-to-tell-audiences-theyre-getting-paid 

Federal Trade Commission. Guides Concerning the Use of Endorsements and Testimonials in Advertising. Retrieved by https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-publishes-final-guides-governing-endorsements-testimonials/091005revisedendorsementguides.pdf

Mintel. 2015, Nov 18. 50% of Americans Stop Buying From Brands They Believe Are Unethical. Retrieved by https://www.mintel.com/press-centre/social-and-lifestyle/56-of-americans-stop-buying-from-brands-they-believe-are-unethical

Mintel. 2015, July. The Ethical Consumer. Retrieved oby https://store.mintel.com/the-ethical-consumer-us-july-2015

Newman, Emily. 2015, Nov 19. Effects of Unethical Behaviour on Business. Retrieved by https://corp.yonyx.com/customer-service/effects-of-unethical-behaviour-on-business/