Saturday, February 16, 2013

Is your Credit Card bill Fact or Fiction? (2009)


 Based on a paper by Alan Alvarez
Summary by Joseph Gentile

      In 2009 JP Morgan Chase, a large financial company based in New York city thought it would be a good idea to try and boost revenues. This seemed like a simple enough task. The way they went about it however was completely wrong. They used some unscrupulous methods to bring about these increases. JP Morgan inflated many of the credit accounts they had on file and then brought the accounts to a collection agency or sued the account holders for not paying on a balance they really did not have. This practice was caught by many employees, but when questioned the managers just said that the company was in a hurry and the review process could be cut short or eliminated all together. If an employee had the energy to take the matter further or to the public then they were terminated. Eventually the practice was stopped but not before 1.9 billion unearned dollars were collected. These practices were illegal as they are basically stealing.
      From the standpoint of economic theory, these practices were completely within the right of the company. Part of the ethical theory of Individualism states that the only objective of a business is to profit, and that is exactly what JP Morgan Chase did. The other part of the theory states that "Everyone has the right to pursue their own interests...., but no one has the right to make other peoples choices about their pursuits for them." Chase also stayed within the confines of the economic theory here. They did not make decisions for anyone else, however, because what Chase did was illegal,and individualism states that what is done can not be illegal, Chase was not in the confines of Individualism and therefore was morally unethical.
   Another ethical theory is Utilitarianism. The Utilitarian point of view states that all decisions should come from a place that maximizes that happiness of everyone since "happiness and pleasure are the only thing of intrinsic value. JP Morgan Chase did not act in accordance with this theory because they brought unhappiness in the form of anxiety, stress, and worry to everyone they stole from. They also upset many of the employees who were involved with the fraudulent activities. Both of these parties are important shareholders in the company. This is completely converse with the theory of Utilitarianism.
      The next ethical theory that I would like to analyze is Kantianism. This theory states that the main goal of a person is to act rationally and to "be motivated by Good Will." JP Morgan definitely was not motivated by Good Will, in fact I  would like to stretch to the opposite side of the spectrum that they were motivated by malice and greed. They did not care who they hurt or what they did as long as they broke profit records and increased revenues. Kantian ethics also prohibits all forms of deceitful actions, all of Chases' actions were deceitful so they again were acting contrary to the ethical behavior described by Kant.
     The Final Ethical theory I would like to analyze Chase through is Virtue Theory. Virtue Theory states that there are four main virtues in business: Courage, Honesty, Temperance, and Justice. Courage is the "Willingness to take a stand for whats right." Chase did not take a stand for what was right by actively defrauding its customers. Honesty is just that, acting honestly; Chase did not act honestly, because when questioned by employees the company would lie to or even fire people who got too curious. Temperance is having reasonable expectations and desires. This was not met by Chase because they expected employees to act irrationally and just blindly follow orders, no matter if they went against company policy or not. Finally there is Justice, and one of the main components of Justice is Fair practices, and Chases actions were the opposite of fair. They kept the customers and employees in the dark and defrauded customers without even a second thought. This does not sound like a fair practice to me. Eventually the company stopped the practices due to lawsuits and other legal preceding.

These facts and analysis are based off the original paper by Alan Alvarez "JP Morgan Chase" (2012)

Salazar, Heather. "Business Ethics and Virtue." 14 February 2012.

Salazar Heather. "The Ethical Theory of Individualism." 13 February 2012.

Salazar Heather. "Kantian Business Ethics."13 February 2012. February 2012

Salazar Heather. "Utiliarianism and Business Ethics." 12 February 2012.

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