Attention to potential harm is a utilitarian characteristic (Tittle, 2017). In other words, this characteristic occurs when the interests of others are placed in first position. There are two ways to look at rights-based analysis: Buyers rights and sellers rights (Tittle, 2017). Buyers rights include ensuring all buyers (Customers) have adequate information to make an educated decision on what benefits them the most. Sellers (Service Providers) rights answer questions, such as what services to provide and what financial products meet their goals. Some businesses run on “Caveat emptor (buyer beware)” (Tittle, 2017), but is that ethical or fair? Below are two examples, one of a positive externality and one a negative externality.

Throughout this blog we will find out if this is a fair statement: “if you want the sale, you should have to tell – tell me what I need to know. Well, but if I want the product, I should have to find out!” (Tittle, 2017).

A positive externality is an effect or benefit that is realized by a third party who does not have anything to do with the initial transaction (Dictionary, 2019). Many financial institutions have taken environmental steps. RBC has published a blueprint and has stated that “As a large financial services institution, RBC uses a great deal of paper, both internally and in client materials. Well managed forests are a renewable resource, and we will do our part to conserve forest resources and support sustainable forest management” (Footprint, 2014). The positive externality from this is the environmental impact. Companies such as RBC use less paper to help reduce the amount of forests that need to be cut down. This, then, benefits all of the animals living in the forest and the air quality, as trees help clean our air. The clean air and animal protection are third-party to the reduced paper transaction, but they reap the benefits. In this case, we can say that a utilitarian approach was taken when preparing this environmental analysis. Also, in this case, RBC is conducting a cost-effective approach by reducing the paper usage, while making a positive impact to the environment at the same time.

A negative externality is the exact opposite, causing detrimental byproduct to a third party who does not have anything to do with the initial transaction. With financial institutions becoming more digitalized, there are many examples that indicate negative consequences, such as when a fraudster takes hold of the clients online banking information and steals money. In this case, the police would have to get involved, and the society as a whole suffers from this use of police resources. The police resources could have to be utilized for more meaningful cases.  Therefore, the bank’s action of taking services to digital platforms is derived from a good will and the desire to achieve more convenient customer service.  However, the end result leads to unforeseen and negative consequences of potential scams. On the other hand, the buyers’ rights in this case would be the ability to get their money back based on the bank’s policy. For example, the CIBC website states that “if you’ve been a victim of fraud, and you’ve met all of your responsibilities, we promise to return 100% of the money you’ve lost from your CIBC accounts” (CIBC, 2019). In this case, the utilitarian approach is used as CIBC is not the victim, but they are willing to protect their clients and put their interests ahead of the business. 

To answer if the statement: “if you want the sale, you should have to tell – tell me what I need to know. Well, but if I want the product, I should have to find out!” (Tittle, 2017) is a fair statement, we have determined that this is not a fair statement according to buyer rights. Buyers (Customers) have the right to know all the details about the product they are using or thinking of using. It is the responsibility of the financial institutions to educate clients, as they are in a position of trust.

References

CIBC. (2019). Fraud Protection Guarantee. Retrieved from if you’ve been a victim of fraud, and you’ve met all of your responsibilities, we promise to return 100% of the money you’ve lost from your CIBC accounts.

Dictionary, B. (2019). Positive Externalities. Retrieved from WebFinance.

Footprint, R. E. (2014). Retrieved from http://www.rbc.com/community-sustainability/_assets-custom/pdf/RBC-Environmental-Blueprint.pdf

Tittle, P. (2017). Ethical Issues In Business. Broadview Press.