Based on a paper by Lauren Silvis
Summary by Heather Salazar
Summary by Heather Salazar
In 1989 Nutrisystem was worth $800 million, but
just a few years later (in the mid-1990’s) they fell to only $50 million and
had to file for bankruptcy. This was due to Nutrisystem’s lack of ethics. They
had failed to warn customers that if they lost weight too fast on the
Nutrisystem program, that it could cause gallbladder disease. As a result, hundreds
of customers needed to get surgeries from being on the Nutrisystem diet. 1,500-2000
lawsuits were predicted in 1991 and Nutrisystem was liable to compensate these
consumers. 
Nutrisystem’s actions were unethical according to every major ethical theory. Under an Individualist or Economic Theory, Nutrisystem was in the wrong because they caused major profit losses in the company due to their negligence. A simple warning could have saved them $750 million dollars in their worth as a company in just one year. Even in 2009 after 20 years of recovering from the gallbladder scandal, Nutrisystem was worth only $530 million, about half of what they were worth before the problem. According to Utilitarianism, which seeks to maximize happiness of all stakeholders, Nutrisystem was clearly in the wrong, as well. Not only did they harm their own company, their stockholders, and their employees, but they cause hundreds, possibly thousands of medical problems in their customers. These medical problems cost their customers money, time, and serious pain to themselves and their families. Indirectly, it cost taxpayers money, as well, from medical bills and bankruptcy. Overall, Nutrisystem’s failure to warn customers wasn’t in anyone’s best interests and a Utilitarian would have suggested to Nutrisystem to not only warn customers but actively help them to be healthy in their weight loss plans. A Kantian would likewise think of Nutrisystem as being unethical, but they would focus on the fact that Nutrisystem disrespected their customers by covering up important information about their health in using the weight loss system.
If customers had been aware of these issues, they could have rationally
decided on whether they wanted to pursue the diet. Instead, customers were
being used as a mere means to the end of pursuing profits. A virtue ethicist would
say that Nutrisystem attempted to be clever, but they ultimately failed. In
addition, they were dishonest and unintelligent. However, they did end up paying
the medical bills of people who pressed charges and they did end up correcting
their errors, so they demonstrated courage in this. Because they were forced to
do so by law, however, customers might still legitimately be distrustful of
Nutrisystem.
Nutrisystem’s actions were unethical according to every major ethical theory. Under an Individualist or Economic Theory, Nutrisystem was in the wrong because they caused major profit losses in the company due to their negligence. A simple warning could have saved them $750 million dollars in their worth as a company in just one year. Even in 2009 after 20 years of recovering from the gallbladder scandal, Nutrisystem was worth only $530 million, about half of what they were worth before the problem. According to Utilitarianism, which seeks to maximize happiness of all stakeholders, Nutrisystem was clearly in the wrong, as well. Not only did they harm their own company, their stockholders, and their employees, but they cause hundreds, possibly thousands of medical problems in their customers. These medical problems cost their customers money, time, and serious pain to themselves and their families. Indirectly, it cost taxpayers money, as well, from medical bills and bankruptcy. Overall, Nutrisystem’s failure to warn customers wasn’t in anyone’s best interests and a Utilitarian would have suggested to Nutrisystem to not only warn customers but actively help them to be healthy in their weight loss plans. A Kantian would likewise think of Nutrisystem as being unethical, but they would focus on the fact that Nutrisystem disrespected their customers by covering up important information about their health in using the weight loss system.
If customers had been aware of these issues, they could have rationally
decided on whether they wanted to pursue the diet. Instead, customers were
being used as a mere means to the end of pursuing profits. A virtue ethicist would
say that Nutrisystem attempted to be clever, but they ultimately failed. In
addition, they were dishonest and unintelligent. However, they did end up paying
the medical bills of people who pressed charges and they did end up correcting
their errors, so they demonstrated courage in this. Because they were forced to
do so by law, however, customers might still legitimately be distrustful of
Nutrisystem.
These facts and analyses are based on an original research
paper by Lauren Silvis, “Nutrisystem: Gallbladder Gore” (2011).
Clifford, Robert. (April 1,1997). See also the following
references: Getting Weight Loss Centers
to Fork Over. Retrieved from
http://cliffordlaw.com/news/attroneys-articles/archive/getting-weight-loss-centers-to-fork-over
on October 9, 2010.
NUTRISYSYTEM. Retrieved from http://www.fundinguniverse.com/company-histories/NutriSystem-Inc-Company-History.html
on October 9, 2010. United States Court of Appeals,
Ninth Circuit. (March 1, 1996). In RE: Keegan Management Co. Retrieved
from http://caselaw.findlaw.com/us-9th-circuit/1140033/html
on October 9, 2010. United States Securities and Exchange
Commission. Form 10K: Nutri/System Inc. (December 31,
2000). Retrieved from http://google.brand.edgar
online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=554344&SessionID=fY_wHSHpJOYgAl7 on November 24, 2010.
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