9 Extremely Common but Very Distasteful Unethical Business Practices

The world is filled with all kinds of good and bad people, and so is the business industry. While most businesses operate to cater to the needs of their customers to generate income, some try to leverage their positioning to work for profits relentlessly. These inconsiderate entrepreneurs are more inclined towards moneymaking and gaining a bigger market share. They can stoop to any level to maintain their revenue and are not bothered about adversely affecting their employees, customers, and the environment.

These morally corrupted individuals go to the extent of committing fraud and deception to become successful. Since many get away with these deceitful activities, they have become common in commercial circles. Rising competition and changing customer behaviour make entrepreneurs follow this misleading path of cheating their customers and harassing their employees. Here is a list of 9 extremely common but distasteful unethical business practices. Budding entrepreneurs must steer clear of them to build a trustworthy and honest organisation.

1. Sharing Consumer Data Without Consent

Most businesses collect personal information from customers to build their databases. These include names, addresses, email IDs, phone numbers and credit card details for completing online transactions. This information is personally identifiable and can be used by hackers to steal identities or by third parties to send unsolicited marketing messages. However, sharing the personal information of customers without their consent is unlawful. The Protection of Personal Information Act (POPIA) safeguards personal information and ensures data privacy by businesses. Entities failing to abide by the regulation can be slapped with penalties of up to R10 million and imprisonment. Thus, businesses must get consent from customers before sharing data with authorised third parties. However, some entities sell this data without consent to increase their profits, which is highly immoral.

2. Deceiving Product Information

One of the most common unethical business practices is misleading customers by making false claims about the products. Businesses can use this strategy to sell their products to trusting buyers who get fooled by the wrong product descriptions and marketing taglines. Although making such claims is banned by the Consumer Protection Act (CPA), the practice is still prevalent. Many businesses use deceiving labels, false statements or fake packaging images to lure customers. The Advertising Regulatory Board also checks on false claims, but the problem persists. Thus, budding entrepreneurs looking for a business for sale South Africa must ensure they find a credible entity with high moral standards. An unethical business can fail because of its sham and lose its customers quickly.

3. Defamation of Competitors

In their quest to beat competitors, some business owners create fake accusations or defamatory comments to malign their image. They can pose as unhappy customers, write negative comments on their social media pages, and create controversies about their products to make customers turn away. It impacts the competitor’s credibility and makes them lose customers and sales. This unprincipled practice can backfire if the competitors decide to file a lawsuit against the false accusations.

4. Adversely Affecting the Environment

While the Federal Government is working toward achieving net zero emissions by 2050, many ruthless business owners are not worried about their carbon emissions and waste management. They keep adding more garbage to the landfills and use non-biodegradable materials for packaging. Their relentless use of non-renewable sources of energy further impacts the environment and creates pollution. Thus, new entrepreneurs planning to buy a South African business for sale must opt for sustainable entities focusing on becoming carbon neutral. With the government making environmental, social, and governance (ESG) reporting mandatory for businesses in future, this unethical practice is expected to be eliminated.

5. Harassing and Abusing Employees

Workplace harassment and exploitation of employees is disgraceful on the part of employers. Some businesses have rude and despicable management that believes in bullying workers and making work stressful for them. They force employees to work long hours without proper breaks and leave, creating pressure to meet deadlines. Many make their employees work in unsafe conditions, such as handling hazardous chemicals without protective gear. In addition, sexual abuse is another problem that affects the workforce and makes many females quit their jobs without the perpetrators getting punished. Although there are laws to protect workers against such exploitation, these incidents keep occurring.

6. Business Tax Evasions

Tax evasion is a distasteful practice of avoiding paying the correct tax bills by finding loopholes in the regulations. It is also known as corporate tax avoidance where businesses do not provide accurate information about their income. It reduces government revenue and impacts spending on programs necessary for nation-building and development. To prevent this practice, the government has introduced 15% global minimum corporate tax rate for large multinational enterprises. Every profit-making entity must contribute toward the betterment of the society.

7. Bribing to Gain Industry Leadership

A large number of businesses are affected by corruption. These malpractices include bribing the managers, directors and agents with gifts and cash to change their decisions. It can also be used to access classified corporate information or for insider trading to increase the sale of stocks and bonds of the business. Business owners can also bribe government officials to get unlawful things done. It affects the entire economy and makes society immoral. Thus, individuals looking for a business for sale in South Africa must ensure the entity has not been involved in corruption cases in the past.

8. Discrimination in the Workplace

Biases can make managers mistreat their employees because of their colour, religion, gender, age, disability, sexual orientation or ethnicity. They may not include them in important discussions, offer unequal pay, or withhold promotions. These loathsome practices are considered unfair workplace discrimination and are illegal. Employees can refer the problem to CCMA and get the issue resolved or go to the labour court. Businesses must maintain diversity, equity and inclusivity in the workplace to build a collaborative and healthy space.

9. Unethical Accounting

Most entrepreneurs want to showcase success and progress to ensure their business maintains its market position and reputation. It makes them inflate their profit margins during financial reporting. It is usually done with the help of accountants who are bribed to create false financial statements and manipulate accounts to make them appear profitable. They can even put up their businesses for sale in South Africa at a higher valuation to make profits. This practice makes investors put their money into the business without knowing its financial health and lose money.

Wrapping Up

Businesses are built to create wealth by entrepreneurs while balancing their social and environmental responsibilities and maintaining compliance with government regulations. However, many of them forget their duties and fall into the trap of corrupt and unethical practices, which can damage the business and lead to losses.