Legal and Ethical Issues in Business

Executive Summary

This report suggests changes as per the identified legal and ethical requirements. Truth in advertising, data collection, and its privacy were established as primary legal concerns which needs to be addressed to avoid the occurrence of legal issues. Direct marketing to low-income populations, data collection, and transparency in language remain the most vital concerns in the field of ethics. Our recommendations are conditioned by the organization’s aspiration to benefit the selected community by following legal and ethical guidelines.

Addressing the Two Legal Requirements

Truth in advertising: Analysis and recommendations

According to the general understanding, the most important function of advertising is to promote the sale of goods. But this is not its only goal; it is not achieved only by providing information. Advertising can also educate the public or shape public opinion, but informing the public about the product’s availability is only part of the advertising tasks. Industrialist also wants to encourage people to buy their product (Cash & Trezona, 2021). A message or statement is true if the declared connection between the subject and the predicate really corresponds to the link in the real world that is indicated or communicated between the subject and the predicate (Cash & Trezona, 2021). In order to meet the requirements of the U.S. Trade Commission, it is vital that the ad presents truthful information.

In the proposed lines, there are some inconsistencies that present predicaments toward the project realization. For instance, the statement “there is no better way to give” does not correlate with requirement number three, which regards the non-superiority of claims (Executive summary, n. d., p. 3). The plan developer must realize that there are other ways to give which can be equally beneficial. Moreover, it limits one’s perception of good deeds and forces individuals to get involved in the project. In order to make this sentence work, it is better to paraphrase it in the following way: “if giving is your goal, we are ready to help attain it.” This phrase sounds inspirational and encourages people to participate in the initiative.

The other line that contradicts the same requirement is “the best way to help your neighbor is to help yourself to our loyalty membership” (Executive summary, n. d., p. 3). This statement also does not substantiate the direct and implied meaning of help and imposes limitations on the concept of help as it only presumes financial investments. By adding “one of the best ways,” the sentence is likely to work because it removes the superiority frame.

“The more you buy, the more you give to [place]” line implies that a person should contribute to the neighborhood, and it is their debt to make as much investment as possible. It calls for action but not in a positive way because there is the implication of force. This phrase refers to the same requirement and must be rephrased so as to attract clients.

Finally, the line “membership pays for itself” opposed the first two requirements of the U.S. Trade Commission regarding the non-deceit and accurateness of information (Executive summary, n. d., p. 3). When reading this statement, a potential participant would have such questions as “How does it pay off?”, “How much should I contribute?” or “How long should I be a member so that it pays for itself?”.

If no answers could be provided in any sections, then the truth of these claims might be inquired. In order to avoid the occurrence of extra requests for details, it is necessary to add precise facts. For instance: “membership pays for itself after an n-month subscription to our loyalty program.” This addition will ensure customers of the program’s sincere intentions.

Data collection and privacy: Analysis and recommendations

The availability of up-to-date customer information is a serious advantage and a great opportunity for any commercial company. Having accurate data, a business can significantly improve interaction with the audience and increase profits (Burdon, 2020). Ensuring the confidentiality and security of participants’ data before, during, and after data collection is critically important for the user research process. It protects participants from data leaks and cyber threats. The current legislation leaves the question of the turnover of data and the possibility of their monetization (Burdon, 2020). Also, in judicial practice, universal criteria have not yet been formed to find a balance between the need to protect the privacy of users and the needs of the business community in the digital economy.

The security of the company’s data is crucial to its overall well-being as it protects confidential information, financial records, and employee records. Privacy and data security are important topics that information security professionals should constantly consider (Burdon, 2020). The current program is to be realized nationally, which signifies that data must be protected to the highest degree.

The other factor to consider is the age of the target audience. Despite the fact that high school students are among our largest customers, they have not reached the age of majority, and the contractual terms of the incentive membership program, not to mention the data that one will collect, will put schools in an awkward position. Schools are required to protect the privacy and dating of their students, including those over the age of 18. In order to legally retrieve data and store it confidentially, the stakeholders must obtain parental consent from the underaged and regular consent from adults.

Addressing the Three Ethical Concerns

Direct marketing to low-income populations: Analysis and recommendations

Direct marketing involves individual communication of the producer (seller) with potential consumers in person, by phone, or by e-mail. In essence, this is a special type of marketing communication, excluding information intermediaries, based on a personalized attitude to customers, assuming close interaction and feedback (Cash & Trezona, 2021). As it presumes direct appeal to the individual, it is necessary to recognize what group they belong to avoid making a fatal mistake. The wrong appeal may result in the loss of clients and the project’s failure.

In the program, we target the low-income population, which means that marketing strategies should be soft. Our campaign should prove that we can add value to the life of customers. In addition, it is vital to ensure they do not make non-discretionary spending (Cash & Trezona, 2021). Therefore, it may be useful to provide a free trial before purchasing a membership so that the potential clients realize what benefits they would receive and if the program is worth a monetary investment.

The plan states, “points earned in aggregate by communities via purchases would be converted into charitable donations to nonprofit organizations or schools that serve the neighborhoods or regions of our low‐income members” (Executive summary, n. d., p. 1). It means that not only the unprivileged population will be targeted, presuming that middle and high-income audiences will be able to afford our products. It means that the employees will have to sort out the clients in accordance with their income and sell the company’s services and items using different selling strategies.

When addressing the low-income audience, it is vital to offer them the lowest tariffs on the program in order to attract them with low prices. However, the salespeople have to state the benefits of incentives and be ready to explain each advantage in detail so as to prove the truthfulness of the information. We remember to provide each customer with redeemable points. We aim to make redemption possible in every case by establishing an automated score system that traces everyone’s accounts.

The other ethical issue is rewarding business owners for signing up new members. It is true that crediting them with additional points is wrong as these should be transferred to low-income communities. Our value states “caring for employees, shareholders, and the community,” meaning that we care for both inner and outer circles. In order to make the program efficient, we will not score the points to the business owners’ private accounts but rather transfer them to local organizations that could redeem them. This way we will make the financial operations transparent which will legalize our presence in the market.

Transparency in language: Analysis and recommendations

Transparency in language resumes that we make open statements regarding our program and the benefits our customers will receive as a part of their membership. Hence, we attempted to directly state the advantages listed in “ad lines for marketing and sales campaign” section; however, as per the above-mentioned revision, we will change them so they sound truer to reality. In addition, we will clarify the tariffs and the benefits every person will receive after purchase. Addition, we aim to be transparent in numbers and the financial team will take care of proper finance allocation. Moreover, our priority is to take care of points distribution and their redemptive power.

Collection and use of consumer data: Analysis and recommendations

We should turn customer data into a key knowledge base of the company using the Customer Data Management Platform (CDP) for business analytics, reporting automation and business decision-making. In addition, it is beneficial to collect relevant data (identification, quantitative, behavioral and qualitative characteristics), which focuses on a complete comprehensive customer profile, and not channels or devices (Burdon, 2020). This platform will be protected by a cloud system and will be automatically deleted is the membership is nor prolonged after several month of subscription end. This way the data is not likely to be leaked or disclosed. Asking parents or official guardians about the birthdates of underaged users will remain a necessary practice. It will be in power because the legalization of data collection and its further usage is pivotal to company’s reputation.

Organizational Parameters

The program will be changed after revising all the sections and reconsidering ethical and legal concerns. Primarily, we will ensure the advertisement meets the U.S. Trade Commission Requirements because the current ad lines may not fully represent the company’s intentions. What is more, the issue of data privacy will be solved by signing agreements with the participants. All private information will be collected in a cloud system and automatically removed after non-active membership.

Our aim is to provide the customer with benefits that remain consistent with legal and ethical practices. Hence, we strive to ensure the transparency of our intentions by establishing clear and easy-identifiable conditions. We do so by setting the options using transparent language, which is easily perceived by the target audience. Finally, we will use soft marketing strategies considering the status of the chosen population.


Burdon, M. (2020). Digital data collection and information privacy law. Cambridge University Press.

Cash, P., & Trezona, J. (2021). Humanizing B2B. Practical Inspiration Publishing.

Executive summary. (n. d.). Web.

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