Case Analysis on CSR

 The case explained by Lieber happened in 2017 when Equifax was hacked, and customers’ details of about 147 million people were compromised, which was used for identity theft and fraud. Equifax, one of the largest credit reporting agencies in the United States, did not encrypt their data or fix known lapses in their security.  However, this negligence was not only an offense against the structure of consumer trust but also an ethical issue concerning corporations’ moral obligations to protect consumers’ data. The leakage led to unfavorable outcomes for the victims, including the loss of credit and enhanced stress related to identity theft. Therefore, in this case analysis, I will explain that contractarianism demonstrates that the Equifax breach was detrimental to consumers because entities breached the implicit trust and consumers’ expectation of security, which is that an organization willingly put consumers’ data in a vulnerable position, which was morally wrong.

Central Concepts from Friedman

Through his argument, Milton Friedman laid out a business ethics strategy, stating that corporations’ major responsibility is to their shareholders. In Friedman’s perspective, the social responsibility of a business is to maximize its business profits, for instance, through the consumption of resources involved in activities that propel business profitability, provided that such activities are within the legal standards of acceptable competition or do not involve deception (Friedman, 2022). He states that corporate executives act under the instructions of their principals and shareholders. Under their instructions, they must run the business efficiently, that is, for the greatest profitability, and within the framework of the general laws and rules of society, including legal and ethical values.

Applying Friedman’s Concept to the Equifax Case

Examining the Equifax data breach with the help of Friedman’s approach, it can be seen that the company’s steps can be looked at while focusing on the organization’s obligations to its shareholders. One example is Equifax, which recently lost consumers’ data, and their late response to consumers was an absolute violation of such a responsibility. By not protecting customers’ data, Equifax committed negligence that resulted in the loss of consumers’ trust and legal sanctions, as well as the company’s stocks dropping in value (Lieber, 2017). These consequences negatively impacted shareholders due to reduced profitability and an eroded market position. According to Friedman, Equifax’s actions neglected the theory of the business function because the company did not strive for profit maximization as their actions violated ethical standards and legal requirements of consumer data protection that should protect shareholders’ interests.

Evaluating Equifax’s action through contractarianism, a theory originating from the conception of moral norms backed up by a contract or agreement, forms another approach. From the contractarianism perspective, where John Rawls’ theory falls, justice is the cornerstone that respects people’s rights as part of the contractual agreement. This, therefore, means that corporations, including Equifax, are responsible for protecting consumer data because it is part of the unwritten social bargain that customers have with the organizations they do business with.

A Contractarianism Assessment of the Case

The Equifax breach was an obvious violation of this implicit agreement. Consumers give out their details, believing that the company will put adequate measures in place to protect them. Equifax was trusted with the information, and when the company did not fix a known vulnerability and later did not inform people about the breach on time, it violated that trust and caused damages. In this regard, this breach can be deemed immoral because it was executed in contradiction with the concepts of equity and rightfully deserved freedom to pursue individual interests, which serve as the principles of contractarianism.

According to this contractarian analysis, Equifax should have protected consumers’ data by fixing security flaws and implementing strong cybersecurity solutions. In addition, in case of a breach, Equifax ought to notify people of the breach and provide resources to contain the possible damage. This approach would have applied the concept of social contract and ensured that there was fairness and regard for the rights of the company’s customers.

Thus, when considering the combination of Friedman’s insistence on the self-interests of shareholders with the contractual concern with the principles of fairness and the protection of people’s rights, it is possible to identify that Equifax failed on many levels of ethicality (Friedman, 2022). The company not only let its shareholders down in terms of profitability and trust, but it also erred in its ethical responsibility to safeguard its customers’ information.

Central Concepts from Anshen

Melvin Anshen’s principle relates to how businesses transform society’s contract relations. According to Anshen, business organizations are slowly and steadily experiencing pressure to assume non-economic responsibilities. Such responsibilities include environmental conservation, social responsibility, community customization, and posterity for the business, even in its operations. Anshen reveals the evolution of the focus on shareholder value while managing multiple stakeholder claims, which displays a more extensive concept of business responsibilities (Anshen, 1970). This idea puts pressure on companies to do what is right for society and to operate for the benefit of society if that does not coincide with short-term gains.

Applying Anshen’s Concept to the Equifax Case

Based on the data, the Equifax case worked perfectly with Anshen’s framework as an example of how a corporation cannot handle the growing social contract requirements. Equifax, one of the three leading credit rating firms, held millions of consumers’ personal information. The leakage also posed the risk of the data being misused while revealing that the company lacked proper cybersecurity policies and took a long time to inform the affected individuals. Such actions or inactions demonstrate a disregard for other social obligations, like the protection of consumer data and the preservation of trust.

The concept developed by Anshen is crucial, as it shows that Equifax needs to consider ethical purposes and social utility besides the economic ones. Equifax failed to do so, and consequently, it jeopardized the consumers’ personal information and undermined their trust, causing critical brand deterioration. Therefore, this would also confirm the real-life experience of societies where social responsibilities are thrown into the background to achieve economic benefits in the shortest time possible. This pressure concerns the problems that ought to be solved by businesses because, according to Anshen, the new social contract foresees the obligations of ethical behavior and socially responsible actions.

Contractarianism Review of the Case

Analyzing Equifax’s actions through contractarianism offers a strong ethical foundation from which to judge its behavior. Contractarianism, more specifically, stresses justice and fairness as the basis for societal cooperation. Therefore, it assumes that moral norms are based on social contract theories within a society where people agree on the laws of their association to protect their rights and interests. In the case of Equifax, the hidden social agreement between the company and consumers was presumed to be data privacy and honor in their operations. Equifax’s inability to protect consumer data and its response time in informing the victims violated this contract, thus causing significant losses to millions of people (Lieber, 2017). Thus, from a contractarian point of view, this action is appalling from a moral point of view because it is against fairness and individual rights.

The right thing for Equifax to have done, according to contractarian ethical theory, should have been to act in advance to install proper measures for cybersecurity and respect consumers’ data more. Additionally, in the event of the breach, Equifax should have immediately informed all the affected people and assisted them in preventing further consequences of the breach. This approach goes with the fairest, the justice system, and the consumer’s rights to be protected and valued.

Conclusion

 In conclusion, when examining the Equifax violation according to contractarianism and the two aforementioned ever-changing social agreements by Anshen, one can identify the practical moral deficiencies of the business. Equifax breached the code of conduct when they failed to secure customers’ information and delayed informing them, undermining fairness and respecting people’s rights. Critics may point to the fact that companies exist to generate profits for shareholders, a concept less mindful of ethical responsibilities to others. Additionally, the swift advancement in technology and incorporation of data require that firms put up protective measures for consumers’ data, thus fostering trust and social benefit. On the one hand, my position supports calls for greater corporate responsibility and better data protection;on the other hand, it presents issues concerning the integration of financial objectives and moral obligations. Understanding and awareness of these threats are important in establishing equity in the business world and protecting individual rights.

References

Anshen, M. (1970). Changing the social contract: a role for business. Columbia Journal of World Business, 5(6), 6–14.

Friedman, M. (2022). 2. The Social Responsibility of Business Is to Increase Its Profits1. Ethical Challenges to Business as Usual–Second Edition, p. 134.

Lieber, R. (2017). Why does the Equifax breach sting so bad? The New York Times. https://www. NYTimes. Com/2017/09/22/your-money/Equifax-breach. html, retrieved, p. 3, 2017.