Intuit TurboTax: FTC Sues Owners of TurboTax for False Advertisements (March 2022)

TurboTax advertising free for simple returns

Ethics Case Controversy  

The American tax system is a Byzantine labyrinth of tax codes and forms. Many Americans look for ways to get through the tax-filing season without having to deal with all the stress the IRS enjoys saddling them with; preferably for free. Intuit’s TurboTax marketed itself as one such company. In most advertisements for TurboTax, the ads made it very explicit that filing your taxes with TurboTax would be free and easy. However, while there are some circumstances where you can file your taxes with them for free, most American citizens do not meet these requirements and would need to pay a fee to Intuit for their services. This practice has allegedly been going on for years, with a lawsuit from Santa Clara County in California dating back to September of 2019 claiming that TurboTax had been tricking customers into doing their tax forms on the website, only to make them upgrade to the “correct” version to finish filing. As Santa Clara County Counsel James William said in an email, “Through predatory and deceptive actions, Intuit has made hundreds of millions of dollars in unfair profits on the backs of California taxpayers” (Gibson & Ivanova, 2019). The company would trick the taxpayer into spending time and effort filing their taxes with TurboTax, only to pull the rug out from under them at the last minute.  

However, as recently as March of this year, a far more imposing entity has taken issue with Intuit’s false advertising: The Federal Trade Commission. With TurboTax’s actions affecting the taxpayers, the government was bound to step in at some point to try to protect its source of revenue. In the last few days of March of this year, the FTC decided to take a shot at TurboTax as several others had in the past. 

Timeline

The Federal Trade Commission was established on September 26th, 1914, just a few months after the beginning of the First World War. Its jobs were mainly to prevent monopolizations through trusts and to protect consumers. In order to protect consumers, the FTC among other things went after cases of fraud and false advertisements. 

The major claim made by the FTC was the heavy usage of the phrase “Free Guaranteed,” alongside many instances of simply the word “free.” One example referenced in the official FTC complaint filing against Intuit was a TurboTax ad titled “Auctioneer,” in which of the 95 spoken words in the commercial (Not counting single-letter words such as “a”), 40 of those words are the word “free,” meaning 42% of the script in the advertisement was simply the word “free” (Wamsley, 2022), (Official lawsuit filing). Under such circumstances, it would be easy to understand why most people used TurboTax with the idea that they wouldn’t have to pay anything to get help filing their taxes. 

In the lawsuit filing, the FTC also mentions the reporting done by the news site ProPublica. The publication had been following the lawsuits filed against TurboTax for a while at that point, and one report released on June 18th, 2018, detailed how a shocking minority of only 3% of eligible consumers utilized the IRS Free File Program and attributed this to the misleading names given to TurboTax’s free tax forms (ProPublica, 2020), (Official lawsuit filing). 

Another reason the FTC gives for why customers are unable to use TurboTax’s free filing is due to the numerous roadblocks that make it impossible for most people to qualify for TurboTax’s free services, such as those who fill out a work form 1099, and those who have a farm as a revenue source.  

The FTC has filed an order in the northern district court of California for TurboTax to immediately cease its actions, with the director of the Bureau of Consumer Protection stating, “We are asking a court to immediately halt this bait-and-switch and to protect taxpayers at the peak of filing season” (Federal Trade Commission, 2022). However, despite this, TurboTax’s misleading advertisements have been shown all over America, and the FTC will be taking TurboTax to the federal courts as soon as they can. 

 

TurboTax Maker Intuit Faces Tens of Millions in Fees in a Groundbreaking Legal Battle Over Consumer Fraud

However, despite the FTC’s claims, Intuit remains steadfast in its position that they have done nothing wrong. “Intuit is committed to offering free tax preparation services as demonstrated by more people filing their taxes for free with TurboTax than all other tax prep software companies combined. When Intuit has an opportunity to respond to these allegations in court, it will be shown that Intuit has at all times been clear and fair with its customers” (Gibson & Ivanova, 2019). In a statement made to ProPublica, the news site claims that the spokesperson added “not only did [it] not hide free filing options from consumers, Intuit helped drive the adoption of free tax prep by helping more people file their taxes free of charge than all other online tax prep providers combined” (ProPublica, 2022).  

Stakeholders  

Intuit, being an intermediary between US citizens and the US government, has many stakeholders. Firstly, the US citizens themselves. American citizens are required to file taxes— there's no legal way to avoid them. Many of them use TurboTax because they believed it would be a free way to receive help in dealing with taxes. Instead, most of them are required to pay TurboTax at the end of their filings. 

Next, are the stockholders of TurboTax’s parent company, Intuit. If the FTC succeeds in its lawsuit against TurboTax and by extension Intuit, the company’s value will without a doubt drop, and that will mean the company’s stock prices will plummet. Stockholders will lose a lot of money and may be forced to sell their stocks, which will drive stock prices down even further. 

The Federal Trade Commission also has a stake in this case, as they are the main party against TurboTax listed in the lawsuit. They’ll be the ones arguing as the plaintiff of the case against Intuit, and will be spending a large amount of money on lawyers and their staff to fund their side of the case. 

Although it’s the FTC’s job to deal with cases such as this, the entire US government has a stake in this case. The US government is seen as the main protector of the people in these kinds of situations, so if the lawsuit ends in Intuit’s favor, many people will feel like the government has failed at its job. 

Finally, the last group of stakeholders, in this case, are other tax-filing websites, who would benefit from TurboTax being punished, as it would give those other tax filing websites a boost in popularity from people who would stop using TurboTax should Intuit lose the case. Those rival companies include names such as H&R Block, ADP RUN, and Symmetry. In fact, in May of 2019, due to previous legal troubles involving Intuit, rival H&R Block announced to CBS that “consumers’ use of H&R Block’s Free File program grew eight percent this tax season, exceeding the Free File program growth of 6 percent” (Gibson & Ivanova, 2019). 

Individualism

Through the eyes of an individualist, they would view Intuit's actions as unethical, due to their use of false advertisements to promote their business. While Intuit’s actions did increase profit and make its company one of the most recognized tax-filing brands in America, it did so through deceptive marketing, which brought it into conflict with the FTC. Friedman, an economist, and individualist states: “The only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders within the law of the land” (Salazar). While the main goal of companies under an Individualism ethical theory is to make as much money as possible, it is required to do so legally. The central theme in all of TurboTax’s advertisements is that filing your taxes with TurboTax is free, but never does it make mention that there are circumstances in which your tax filing may not be free, nor that the majority of people who file on TurboTax aren’t qualified to file for free.

Utilitarianism

Analyzing the controversy Intuit is in, their actions were not ethical from a Utilitarian viewpoint. The actions of Intuit Turbotax failed to maximize the happiness of the general public, and while the increased profits TurboTax saw likely made the company’s management happy; those who were tricked and had to pay money for a service they were led to believe was free were certainly greatly disappointed. The company used short-sighted thinking to maximize profits, going against Utilitarian thinking. However, long term it is costing them millions in lawsuits, which has undoubtedly put the company in a very disheartening position. Their customer’s happiness was taken away when they were faced with the reality of the false promises of “free tax filing,” and had to pay to file their taxes. The tax filers spent a great deal of time filing their taxes, wasting time that could have been used filing with another company who they might have actually filed for free, although some of their happiness could potentially be regained with money they could receive from the lawsuit settlements. The lawyers dealing with the case were likely to be angered by TurboTax’s actions, as they now have to go through the long process of Discovery in the court case; looking through hundreds of thousands of files to find anything the other party in the suit would want access to. The shareholders' happiness was greatly diminished due to the stock prices dropping as fallout from the lawsuits, and Intuit’s tarnished reputation.

Kantianism 

Kantianism is the name given to the ethical theory developed by Immanuel Kant. While many other ethical theories of business focus on one thing as the “goal,” such as Utilitarianism's pursuit of achieving the most happiness for the most people, or Individualism’s profit-maximization at all costs short of breaking the law; Kantianism’s “greatest good” is much more complex and situational than other philosophies. In Kant’s theory, one of the main aspects is the “Categorical Imperatives,” which are the main methods of rationalizing actions. One of this Categorical Imperative is the “Formula of Humanity,” which involves considering the rationality of all people, and treating them as valuable, even if they cannot be used for your own gain. There are many ways this could be applied, however, the way it can be applied in the context of the Intuit TurboTax lawsuit can be simply explained by Professor Salazar’s explanation in her writing on the topic: “This formulation, like the Formula of Universal Law, eliminates lying and deceit of any kind. Furthermore, it eliminates using ourselves without the consent of our rationality and it prohibits our use of other people without the consent of their rationality” (Salazar). 

The lawsuit filed by the FTC accuses TurboTax of false advertisements, which would fall under this category of “deceit.” So, is it true that TurboTax has acted deceitfully? Well, as mentioned previously, TurboTax’s advertising makes heavy usage of the term “free,” while most of its consumers are unable to receive free tax filings through TurboTax. However, there are some people who can get their taxes filed for free on TurboTax. Does this technology make it true? 

TurboTax makes little if any indication that there are circumstances where taxpayers would either not be qualified to pay for filing their taxes or otherwise would be shown an option to file taxes that they would have to pay to use. All of TurboTax’s ads say “free,” not “Potentially free.” It’s clear that TurboTax is deceiving customers who use their website, and in doing so violate the Formula of Humanity. 

In response to the FTC’s lawsuit, Intuit defended itself by writing a blog post responding to criticism leveled against it, mostly by listing the number of people who have used the program. For instance, one accusation it claimed was a “myth” as “Free isn’t really free with TurboTax,” to which the company stated that the “fact” was “last season approximately 13 million taxpayers filed their taxes with TurboTax products and paid absolutely nothing, including more than 11 million who filed with TurboTax Free Edition and nearly 1.2 million who filed with TurboTax IRS Free File” (Team et al., 2021). Instead of explaining its actions and decision-making process, Intuit merely cites the number of users who did not have to pay for its services. This makes it seem like the company doesn’t care that there are seemingly tens of thousands who fell through the cracks; to whom “free” wasn’t really “free” with TurboTax.

Virtue Theory

To view the actions of TurboTax through virtue theory, the rationality of the company’s actions must be considered. Virtue Theory is based on Aristotle’s Theory of ethics, in which he believed that happiness is having lived a flourishing life, not through pleasure like under Utilitarianism. To live a flourishing life, he explains, means to fulfill one’s functions well. Aristotle describes humanity’s defining characteristic as being rational animals. Thus, to fulfill our function as human beings, we have to exercise our rationality. One of the ways to exercise this rationality is to work together with others, and there are four cardinal virtues of character that make that easy. Those virtues of character in business consist of courage, honesty, temperance, and justice. Intuit TurboTax’s actions violated three of those four virtues: honesty, justice, and courage.

Honesty: The controversy surrounding TurboTax is its advertisements claiming that filing your taxes with TurboTax was totally free. In reality, only people in very specific circumstances who file the right kinds of forms are able to file for free. Aside from this, TurboTax offered multiple filing programs with similar names that confused many users, and further diminished the number of people who were able to file their taxes for free. The company lied to its consumers in order to profit; betraying the virtue of Honesty.

Justice: Due to the actions taken by Intuit, the company has landed itself in legal trouble. The marketing of TurboTax as a completely free tax filing website brought many people to the company, and thus a large amount of revenue. However, this lie violates the FTC’s guidelines against False Advertisements and fraud. This infraction against the legal code of the United States is a clear betrayal of the virtue of Justice, as the company did not engage in fair practices against its competitors, who (to our knowledge) have remained within legality and been fair in their practices.

Courage: When faced with accusations that the company wasn’t living up to its goal of providing everyone with free tax filings, rather than admit and try to rectify this, the company instead released statements saying that the company had, in fact, done no wrong. The company did not want to stand up for what was right, which would have been to provide free tax filings to everyone. Intuit decided to be cowardly, and fight against the criticism leveled against it instead of admitting to its failure and vowing to try harder.

Temperance: Intuit did in some ways act temperate. Intuit did not seem to be too unreasonable in its desires and expectations, though it also wasn’t exceptional in either category. The company seemed rather content to stay as it was, instead of trying to expand or grow too fast. It’s possible that Intuit believed that by remaining more temperate, it would be able to stay unseen by the government and avoid investigation; a plan that would ultimately fail. 

 Action Plan*

The current issue facing Intuit TurboTax is that despite the constant claims that the company provides people with free tax filings, the truth is that only a small number of people actually qualify for those free tax filings. To rectify this, TurboTax will have to undergo changes to regain consumer trust and goodwill. The company will need a new mission statement, which will be to “Build the best E-filer, providing an easy and efficient process.” This will help TurboTax consumers know that TurboTax intends to improve itself and make things easier for the taxpayers. TurboTax will adopt core values of honesty, trust, fairness, and communication. This will show Turbotax is in a new place and trying to regain the trust of their previous consumers, whom they have wronged.

To ensure that the issues facing TurboTax now don’t happen again in the future, a restructuring of upper management positions, such as Chief Executive Officer and Chief Financial Officer, will be implemented, so that people will see that the company will not tolerate its higher-ups breaking the law and lying to consumers.

On the TurboTax website, it will be made clear that anybody with an annual income of less than $66,000 who files their taxes with the company will be able to do so for free, no matter what forms they fill out or where they receive their income from. Anyone with an annual income of over $66,000 will have to pay, however, both will be offered the bundle package, with discounts on all Intuit-owned products and services.

The company will probably want to innovate itself by firing a handful of employees that do not meet the productivity quota. While hiring new employees, TurboTax will look for reliable characters as well as quick and efficient workers to improve the company. This includes creativity in the advertising department to flourish their negative controversy. The recruitment of these new employees will help promote structure in its new growing operations. First, there will be a public apology. 

 TurboTax will likely have to cut back heavily on the “free” marketing slogan. In new commercials, Turbotax being free for people with under $66,000 in annual income will be the message the commercials send, NOT that everyone files taxes for free. The commercials will also talk about the bundling service plan for Intuit products. 

The current standing of the company has led to many lawsuits, and could eventually lead to bankruptcy from legal fees and lawsuit settlements. This isn’t an issue of profits, it’s an issue of being able to continue as a company. Right now, the company is essentially engaged in fraud by falsely advertising the company’s tax filing program is free for everyone, when it is in fact, not free. The solution to this would be to create a discount bundle program: if you file with TurboTax, you get a discount on the prices of other products and services owned by Intuit, such as Quickbooks, mint, and credit karma, and Mailchimp. This will keep consumers active on TurboTax, while also promoting other Intuit services through subscriptions. 

 

*During the creation of this paper, the TurboTax lawsuits were settled. 

 

TurboTax advertising their e-file as "free guaranteed"

 

 

 

 

 

Authors: Christopher Bousquet, Tyler Kelly, Ian Graiff, Jason Yang

 

 

References  

 

Gibson, K., & Ivanova, I. (2019, September 7). Intuit faces new lawsuit alleging it duped low-income taxpayers to pay for free tax prep. CBS News. https://www.cbsnews.com/news/intuit-lawsuit-turbotax-maker-faces-new-suit-forallegedly-deceiving-low-income-taxpayers-to-pay-for-free-tax-prep/  

 

ProPublica. (2022, February 24). TurboTax Maker Intuit Faces Tens of Millions in Fees in a Groundbreaking Legal Battle Over Consumer Fraud. https://www.propublica.org/article/turbotax-maker-intuit-faces-tens-of-millions-in-feesin-a-groundbreaking-legal-battle-over-consumer-fraud  

 

Wamsley, L. (2022, March 29). Federal Trade Commission accuses Intuit of deceptively advertising TurboTax as free. NPR. https://www.npr.org/2022/03/29/1089490958/freeturbotax-ftc-intuit  

 

ProPublica. (2020, March 2). Why Are Millions Paying Online Tax Preparation Fees When They Don’t Need To? https://www.propublica.org/article/free-file-online-tax-preparation-feesintuit-turbotax-h-r-block 

 

Federal Trade Commission. (2022, March 30). FTC Sues Intuit for Its Deceptive TurboTax “free” Filing Campaign. https://www.ftc.gov/news-events/news/pressreleases/2022/03/ftc-sues-intuit-its-deceptive-turbotax-free-filing-campaign 

 

Official FTC Court Filing https://s3.documentcloud.org/documents/21562461/ftc-complaint-against-intuit.pdf

 

Salazar, H. Kantian Business Ethics. Kodiak. https://kodiak.wne.edu/d2l/le/content/90493/viewContent/1251838/View?ou=90493 

 

Team, I. B., Team, I. B., Castro, D., Abney, K., & Divine, C. (2021, July 22). The Facts About Filing Taxes for Free. Intuit®: Official Blog. https://www.intuit.com/blog/taxpayerempowerment/the-facts-about-filing-taxes-for-free 

Amazon: Pro-Union Smalls Fired at Amazon for Starting Union (April 2022)

 The Case:

Amazon is one of the world’s largest online retailers and continues to be one of the fastest-growing companies in the world. With massive fulfillment centers strategically placed throughout the country, they pride themselves on the ability to provide next-day or 2-day delivery for almost all items. Being established nearly 28 years ago has provided them with the ability to learn and experience new ways of doing business. While Amazon has changed and or modified their operations to adapt with modern day needs, they still have areas that require improvement. Although they do provide employees with above minimum wage pay, healthcare coverage and free tuition for college, many employees feel that this is not enough. One area of improvement is how they treat their employees as expendable objects. Having this mentality has created a major push for unionization of workers within fulfillment centers.

For years Amazon executives have stopped any attempts at unionization by implementing anti-union posters and pamphlets in warehouses. Employees and well recognized labor unions like the Retail, Wholesale and Department Store Union (RWDSU) have tried to establish themselves within Amazon for years but have been unsuccessful (Solon NBC NEWS). RWDSU representatives have claimed that workers voted against unionization, due to the fact that they were victims of intimidation by Amazon associates. Seemingly every time a new laborer movement tries to unionize, there’s always a lack of voters or corruption in the voting process.

            As the COVID-19 Pandemic began to spread throughout the US, many people feared the outcome due to the unpredictability of the virus. With grocery stores running low on food, various stores and restaurants shutting down, retailers like Amazon were deemed as an essential business. This meant that workers were forced to meet their daily quotas while also trying to accommodate COVID-19 safety protocols and procedures. Christian Smalls, a supervisor in an Amazon fulfillment location in Staten Island, New York, was fired in March of 2020. After noticing the harsh working conditions and lack of safety protocols he decided to protest by organizing a walkout over the lack of worker protections (Selyukh NPR). At this time, he was suddenly discharged from the company for violating their safety protocols. This departure from the company was a shock to Smalls as he was only trying to improve the safety standards for himself and the employees during the start of the pandemic. The sudden departure reassures the fact that the company treats its employees as expendable objects.

            Smalls knew that he was fired as a result of his walkout just hours prior. The actions on behalf of Amazon did not sit well with Smalls as he knew he needed to stand up against the massive e-commerce. A short time after being fired he formed the Amazon Labor Union (ALU). Smalls did not have a huge financial backing or support like the RWDSU, so he utilized GoFundMe to generate support for his message. Using his personal experiences within the company and generated funds, he hosted informational events at bus stops and locations near the facility. These events allowed him to steadily attract members to his “grassroots union drive”. Smalls and his organizers “demanded higher wages, longer breaks, paid sick leave and paid time off for injuries sustained on the job” (Hsu NPR). While Amazon completely disagrees with the idea of unionization, Smalls and his supporters in the ALU argued, this needs to happen as they’re one of the richest retailers in the world.

Amazon completely opposes any unionization in their facilities as they have noticed the negative effect that a union can have on a business’s profitability and production. They feel that for 28 years they have produced jobs that allow for their employees to live a decent life, while having enough money to buy the things they want. Heather Knox an Amazon Spokesperson provided the companies reasoning for opposing unionization; “Our employees choose to work at Amazon because we offer some of the best jobs available everywhere we hire, and we encourage anyone to compare our total compensation package, health benefits, and workplace environment to any other company with similar jobs” (Hartmans Business Insider). Although they provide some of the best compensation for their workers, many employees like Smalls feel that the risk of working in the warehouses is not worth the reward. That is why Smalls is so adamant about establishing a union.

       On Friday, April 1, 2022 Smalls and fellow workers in the Staten Island facility voted to demonstrate that a majority of employees agreed with unionization. When the results were tallied it was clear that Smalls and his supporters were successful in their pro-union push. Miraculously, they established the first ever union at Amazon; The Amazon Labor Union. Currently the ALU includes 8,300 workers within the Staten Island warehouse. As a result of the union forming there are eight immediate changes that the workers are advocating for: (Health and Safety, Pay, Promotions, Overtime, Working Conditions, Transportation, Time, and Union-Busting), (Amazon Labor Union). These changes will alleviate some of the economic impact and current wage gaps in the company. 

Stakeholders:                                                                                      

The stakeholders in this specific case include the current employees, future employees, general public, top executives, and shareholders. Amazons’ reputation and future success can be affected by the actions of the ALU. Together these stakeholders play a critical part in the fulfillment center operations. The current employees are affected as they can face repercussions for wanting to join in voting for a union. While the current employees at the Staten Island fulfillment center won’t experience any issue, due to the fact of being in a union. Other warehouses across the country may experience issues as their employees are not in the ALU and therefore not protected by the rules and regulations of the union. Future employees can also be affected as a result of the union being formed. With the formation of a union at the Staten Island location, many new workers might apply for employment there as they see the benefits of working in a union. Being a part of a union is favorable as it allows employees to negotiate for better working conditions and benefits. 

The general public and top executives can be affected by the outcome of the ALU in the future. For example, if workers in the ALU and Amazon's executives are unable to agree upon safety standards, pay or benefits, there can be delays in production as a result of union workers striking. The shareholders of Amazon are at risk in the pro-union movement, as there seems to be uncertainty as to what can happen within other fulfillment centers across the country. One fear is that other fulfillment centers across the country will also unionize, resulting in a massive unionization movement throughout the whole company. Shareholders may view this change as good or bad if they disagree with the direction the company is heading. This can result in shareholders buying more shares of Amazon stock or selling off their shares, all depending upon if they see the company continuing to grow exponentially or decrease in size.  

Individualism:

Based on the ethical theory from Milton Friedman known as Individualism, theorizes that a company or owners sole ethical responsibility is to increase profits for owners or stockholders as long as they are obeying legal responsibilities. Tibor Machan took Friedman’s theory and included the statement that in order for Individualism to be ethical the actual goals of the business must not be to make a profit. (Salazar)

The reaction of Amazon for Chris Smalls trying to develop a union was not unethical according to Individualism. It was not necessarily illegal for Amazon to fire Smalls for starting the protest outside of the Staten Island facility since he broke protocol that Amazon set into place. Federal law states that “working time is for work, so your employer may maintain and enforce non-discriminatory rules limiting solicitation and distribution”(NLRB), so firing Smalls without the pandemic protocol would still be legal since he led chaos within the facility during working hours. Amazon tends to be “anti-union” because they feel it is in the best interest of the customers, shareholders, associate companies and it has been mentioned that they feel a direct employee to employer relation is better than a union, therefore according to Machan, their reaction to unions are not unethical as well. The lack of unions in the workplace potentially increases profits since the union can reduce production output on a day to day basis, ultimately diminishing the profit the company can make significantly.  By firing Smalls and attempting to prevent the unionization from occurring, from Amazon’s viewpoint they were protecting profits and eliminating an area of concern that would bring them down. From an Individualistic standpoint, the actions taken by Amazon were perfectly ethical and the right thing to do as long as the termination was legal. The leaked information about how they would use the publicity of the firing of Smalls’ to their benefit to prevent the talk of unions in the news as well as the workplace seems to have malicious characteristics for both Smalls’ termination as well as their anti-union tactics. The leaked information reveals unethical actions from an Individualistic approach because it is illegal to fire an employee for simply spreading union information and for personal gain motives.

Utilitarianism:

A utilitarian would view the outcome of the pro-union movement as the most ethical and beneficial outcome. Based upon the belief of a utilitarian, “a businesses actions should aim to maximize the happiness in the long run for all conscious beings that are affected by the business actions” (Salazar 17). Until the formation of the ALU a utilitarian would not view the actions as impermissible. The reason being that employees in the fulfillment center were not treated properly and faced consequences whenever they tried to bring attention to the issues they faced. On Amazon's behalf these actions were unethical from a utilitarian stand-point and unsafe from the perspective of the workers.

         Although a utilitarian views the actions as unethical, the executives and shareholders believe they’re providing excellent opportunities for their employees to maximize happiness without being in a union. Amazon continues to oppose unions and argue against them as they feel they do not have their employees’ best interests in mind. They feel that “Unions could lead to less collaborative relationships between employees and their supervisors, and could favor employees with seniority over new employees” (Hartmans Business Insider). With a union creating a divide between the workers and management, this would disrupt the principles and foundations that Amazon was founded upon. Many executives do not want an outside organization interfering with their internal business operations. They also fear that participating in a union will cost them more money than they can afford, thus limiting the high hourly rate and benefits employees are currently paid. This is the reason why some executives and shareholders oppose fulfillment centers from unionizing like the Staten Island fulfillment center did. 

Unlike the executives at Amazon a utilitarian would see the actions of the ALU as permissible. These actions are accepted as they will maximize the pleasure of the employees and minimize any pain and suffering that resulted from working in the fulfillment centers. With the little time and experience Christian Smalls had, he was able to create a union movement in one of the world’s largest e-commerce.

Shortly after establishing a union in the Staten Island fulfillment center, Smalls began to receive letters and emails from across the globe. Many of the letters came from current employees encouraging him to take the ALU to more fulfillment center locations. In an interview with National Public Radio Smalls stated; “the world is definitely paying attention now and these workers are paying attention now, which is the best thing possible because that’s exactly what we plan on doing…we want to spread like wildfire across the nation” (Selyukh NPS). By following through on his goal to establish a union that acts in the employee’s best interest, he was able to maximize happiness and promote the ideas that utilitarianism was founded upon.

A utilitarian would also agree with the pro-union movement as it results in long-term benefits for the workers. This unionization movement is just-in-time as currently there is a larger wage gap than ever before. The additional wages and benefits for union workers would take effect immediately, preventing any future cases similar to what Smalls experienced. By allowing unionization throughout all the fulfillment centers, Amazon would be making themselves a more attractive company for future employees and stockholders. Allowing employees to have a greater voice in the company, they must realize that employees will take their union agreement seriously as it maximizes their happiness in the long run. The pro-union movement may also result in more shareholders feeling inclined to purchase Amazon stock, as they know the company will operate with their employees’ interests in mind.  

Kantianism:

For this case, there were both positive and negative aspects when viewing it through the lens of Kantianism. One scenario that would be viewed as particularly negative was how Chris Smalls acted when he was trying to make a change within the company. He organized a protest in which many rules that Amazon had specifically put in regarding the pandemic were violated. Rules that had to do with social distancing, gathering during a quarantine, and size of the groups were all specific rules that were violated. A Kantian would not necessarily be pleased with Chris smalls because a key part of Kantianism is rational decision making. “Don’t act inconsistently in your own actions or consider yourself exempt from the rules.” (Salazar 5). It could be viewed that Smalls interpreted it as okay to exempt himself from the rules on the day he organized the protest which caused him to be fired initially.

  Another belief that Kantians have is to, “be motivated by Good Will, seeking to do what is right because it is right.” (Salazar 5). Smalls had good intentions with what he was attempting to do. He may have just not gone about it in the best way. He believed that how the company was handling their protocols with the COVID-19 pandemic was morally wrong. One of his major concerns was with how employees were being notified about quarantine and exposures within the work environment. In Smalls’ case, he had an exposure to someone with COVID-19 on March 11, 2020. Amazon failed to notify him about having to quarantine for nearly two weeks. They finally told him he was required to quarantine on March 28, 2020. This came so long after his exposure that the incubation period for the virus had actually ended. He wanted to make a change and he was motivated to help make a change for a better, safer work environment for him and his employees because it is the right thing to do which is something that follows along with Kantian ethics.

Looking at how the company handled the situation from the point of view of a kantian, Amazon did a very poor job with how they handled their protocols. Smalls was just one employee that stood up to them but he was not alone and was doing it for many employees within the company. The principle of Kantianism that Amazon did not follow was, “Respect people, their autonomy, and individual needs and differences”(Salazar 5). The pandemic was something that was new to everyone. People had all different ways of going about it and the top priority was making sure that everyone felt safe. There were a variety of ways in which this was accomplished but Amazon did not seem to care at first even though their employees tried to display their unhappiness. Amazon expected the rules they put in place to be done a certain way without taking into account any other ways of doing it. Many companies were able to respect people's individual needs during this time by ways of working on zoom or careful tracking of exposures, but Amazon failed to do things that way which is why it would be viewed negatively by Kantians.

Virtue Theory:

The virtue theory is an ethical theory that entails people shouldn’t focus on rules to follow but to instead focus on what your core values and personality traits would tell you to do (Ethical Theory, 2018). For example, if you are a person who is generally a compassionate person, act with compassion in all decisions you make. Virtue theorists believe that the way to truly find who you are as a person is to, “suggest that once you can imagine what a good person is like, you should behave in any situation as you think such a person would behave.” (Ethical Theory, 2018). Other ways to find yourself is to realize what characteristics truly make you flourish and to act off those. 

With this case regarding ALU vs. Amazon the virtue theorist would find most of what the ALU is doing as morally required. When Smalls led the walkout, it was because he acted based off who he was all about. Determination is what drove Smalls the most. His relentless determination is what led to all his decisions that he made in this case. After being fired by Amazon Smalls could’ve just given up and found a different job but instead stood his ground because that was just the type of person he was. He decided to start the bus stop barbeques and the GoFundMe because he was determined to see Amazon own up to their issues. Yes, the styles were unorthodox, but he needed to find a way to get to the workers and that was the only effective way he found. Based on the virtue theory Smalls made actions off who he was as a person which in this case is determined. He did what he thought was right and ran with it. He was even arrested by Amazon earlier this year for trespassing while they were delivering food and union materials to the warehouse parking lot. It doesn’t matter if somebody else thinks it wrong according to the theory because he was doing what he thought was right. According to Smalls, “Amazon doesn't become Amazon without the people, and we make Amazon what it is.” (Hsu & Selyukh, 2022) That quote alone explains his thought process and explains what his personality traits give off. What Amazon is doing on the other hand is impermissible according to the theory. Amazon’s slogan is Work Hard, Have Fun, Make History. That is what Amazon’s core principle values are supposed to be. According to the workers on the other hand Amazon is not actually acting according to those values. Two of three values are being instructed but one is not being hit at all according to employees. There is no fun to be had at Amazon. Not once has Smalls expressed how he’s had fun working at Amazon he only has ever talked about the tough work environment and how unfair the wages were. Apparently, he can’t be lying with over 2,000 of his colleagues being behind him. The virtue theory in this case would be in favor of Smalls and would be against Amazon.  

Action Plan: 

Amazon fulfillment centers across the nation are facing issues with employees being treated poorly and they need to implement actions to fix this problem. A labor union is an organized association of workers that is formed to protect the further rights and interests of the workers. The US has hundreds of labor unions operating in different industries throughout the country, however most people don't realize that unions are critical to creating equality and fair wages for employees. Not having a union established is unfair and unethical to the employees who want one and would benefit from having one at the world's largest online retailer. Without access to a union employees are affected as their wages, compensation plans and benefit packages are not enough. They are often inadequate as no one is there to fight or negotiate for the employees. The current issue is that Amazon does not act in favor of their employees and put their billion dollar profits before their employees. This is wrong because without the employees, the fulfillment centers would be unable to meet the current demand. Listening to the voices of the employees is critical as a union will meet their employees needs, while also operating ethically and being profitable for the company. 

Amazon's current mission statement is “we strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience’’ (Amazon). It’s obvious that the current mission statement is completely customer focused and mentions nothing about their employees. A new mission statement is needed in order to guide the company into a new era of employee focused improvements. We recommend that “Amazon devotes its resources and technologies to improving working conditions and resources for their employees, by allowing them to join the Amazon Labor Union”. This new mission statement still follows their original idea of providing customers with the best possible experience. But also provides their employees with the best possible care and benefits, as they are focused on their employees and strive to provide the best for them. 

As the Staten Island fulfillment center is now a part of the ALU several values they should abide by are: well-being for employees, trust, constant improvement, and teamwork. 

• Well-being for Employees - The safety and livelihood of their employees is more important than meeting production deadlines or daily quotas. Instead of treating employees as replaceable objects, they need to treat them as human beings with emotions. Amazon is responsible for the health and safety of their employees and they need to address this issue more than ever.   

• Trust - Creating a relationship between executives and employees allows for trust to be established. Allowing employees to freely communicate their concerns or observations to the fulfillment center managers / executives  allows for a connection to be made. 

• Constant Improvement - As new technologies and ways of doing business are constantly improving, this new to be considered in the workplace. Thus improving upon and limiting the strenuous or labor intensive activities employees do on a daily basis.   

• Teamwork - Communication between executives and employees allows for ideas and responsibilities to be shared throughout the company. This helps to reduce the stress some employees feel when they are given meticulous tasks. 

To ensure ethical productivity and monitoring of ethics at fulfillment centers across the nation, they need to take actions similar to how the ALU was formed by Christain Smalls. Having a union established and union representatives like Smalls allows employees to approach them with issues and or recommendations for improvements. The ALU also prevents executives from abruptly firing an employee, similar to what smalls experienced. 

Hiring someone that is experienced with ethical behavior or experienced in business ethics is critical to Amazon flourishing after the ALU movement. The person hired could use their knowledge and determine if tasks are unethical or how to improve these processes for employees. Hiring a production manager / analyst would allow them to make recommendations based on what they observe. They can also be critical in determining if a task should be substituted with a robot, this would prevent employees from doing monotonous or physically demanding tasks.

To promote having union workers in fulfillment centers, Amazon can advertise on boxes saying “This package was packed by union workers”. They can also create advertisements saying that they agree to increase the number of union workers or unionize a majority of fulfillment centers by 2028. To create a better relationship between the executives and employees they should also allow for employees to freely express their ideas and or protest whenever an agreement cannot be reached.     

Moving forward they will need to add upon their existing values to incorporate the ideas of their employees. Also new and current employees should not be threatened or forced to do things outside of their union agreement. Adhering to the union agreement established between the ALU and executives will promote greater business profits and productivity for the company. In turn more people will want to shop at Amazon as they agree with the idea of unionization and feel that employees are treated fairly. This plan conforms to the original mission statement because the company will still be producing great products that many people can enjoy, without violating the ethics and values of their employees. 

Authors:

Daniel Doyle 

Dominic Gallant

Andrew Huta

Logan Paranto

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