Tuesday, November 24, 2015

Verizon: Unlawful "Cramming" (2004)

When was the last time you took a good look at what you were being charged for on your cell phone bill? Well now may be a good time to start. From the introduction of SMS services in 2004, Verizon and many other cell phone companies have had piling allegations regarding an unlawful practice known as cramming, the deceptive practice of billing customers for services which they did not authorize. The most shocking detail of this evolving controversy isn't even Verizon allowing its customers to be scammed, it's the fact Verizon retains around 30% of the profit from these unauthorized charges. While these charges typically ranged from only $0.99 to $9.99 the scope of customers impacted over the past decade while these allegations piled in can easily reach the millions.
Until the FCC began investing this controversial matter in 2011 Verizon many times had told customers they could only refund them for a month or two of unauthorized charges. Much more were told they would receive no refund at all for the money stolen from them by Verizon. This is one of two major scandals Verizon has been involved in in the past few years. While the first lawsuit they encountered landed them a 64 million dollar loss, this federal investigation ended up costing Verizon even more. Even though it was dismissed and settled with a Stipulated Final Judgement and Order, the resolution of the conflict landed Verizon an addition 90 million dollar fee. That's over 154 million dollars Verizon stole from its share holders due to its greed and negligence.

In the case at hand, the stakeholders are Verizon Communications Inc., all of Verizon’s customers and the shareholders of the company. Verizon is impacted as a company due to the resolution of the conflict. They must not only spend money on hiring and firing some employees but they also must devote a large number of resources to putting an end to this scam. The other major shareholders are the customers because they are the innocent ones just like your parents having money stolen from them month after month by big businesses. Last but not least the remaining stakeholders are the shareholders of the company, the ones who truly own it. A shame they had 154 million stolen from them through an avoidable lawsuit.
Verizon Wireless logo

Individualism is an ethical theory which asserts everyone has the right to make their own decisions and no one has the right to make decisions for another. Another founding principle of individualism is that the only goal of a business is to maximize profits. Verizon would not only be held accountable for stealing from their shareholders but also for making decisions for their customers. Through the use of deceptive billing practices and unauthorized third-party charges one may say Verizon, by adding these charges and allowing them to be incurred, inhibits its customers from making their own decisions. Additionally one may argue that through the millions of dollars lost through recent settlements, that Verizon is, in fact, stealing from its shareholders.

Utilitarian principles are founded off of the thought that you should work to maximize the overall good for ourselves and others. Utilitarianism is the culmination of Egoism, the search of your own happiness and Altruism, the fulfillment of others happiness. Verizon, through their denial of refunds to some customers directly violates utilitarian views. After illegitimately taking money from their customers, they refused to pay them back for the company’s mistakes? That does not seem like a company looking out for the overall good or the happiness of other if you ask me.

Ivan Seidberg, former CEO of Verizon Wireless

Kantian ethics are ideologies crafted by Immanuel Kant based off of evaluating one's actions as for whether or not they came from the Good Will. In order for an action to be out of Good Will it must not only be rational but also done under the correct motivations. Determining rational actions entails the Law of Rationality when can be broken down into three formulas. These are The Formula of Universal Law, Humanity, and Autonomy. Using Universal Law to test Verizon’s actions requires you to imagine you, yourself, illegally charging your customers and profiting off of it. Now you must take that idea and universalize it to imagine that everyone in the world defrauded their customers of money. Since this is something that could not be accomplished and is unjust and immoral, it is not admissible under Universal Law and therefore goes against Kantian ethics. This is only one of many ways that Verizon's actions are deemed unethical under Kantianism.

Virtue Theory
Virtue ethics are centered on Aristotelian Functionalism which calls for the use of rationality in the operation of a happy and functional life. If people think and act rationally, according to Aristotle, they will in turn function well as members of society and live happy lives. Virtue theory calls for one's actions to fall in line with the four main virtues in order for the act to be deemed virtuous. The four main virtues are courage, honesty, temperance and justice. Through their actions, it is clear Verizon lacks honesty and justice in their practices, therefore, this controversy is to be considered an un-virtuous act.

Ethics Evaluation
In summation, Verizon goes against all the founding ethical theories and guidelines making it clear where greed and laziness got the best out of whoever was making the decisions for the company. Had Verizon gotten confirmed consent for the purchase of these third-party products I believe this whole issue could have been avoided. The premise for argument stems from the unfair and deceptive billing practices which in turn steals from its customers and it's shareholders. I believe the proper application of Virtue Theory and Kantian ethics could have saved Verizon from this scandal.

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