Case Analysis on CSR

In this article by Ron Lieber, the breach of Equifax was exposed. The writer explains the emails full of fear and anger that he received following the leak and how worried citizens were. These messages lacked hope and exposed the helplessness affected people felt. Lieber then emphasized how this breach affected negatively those who had decent credit and a plan after retirement and how these folks now faced uncertainty. Having their credit information exposed not only posed a potential threat of identity theft but also allowed unwanted predators access to sensitive financial information. This breach could ruin a client’s credit within minutes, and they would no longer be able to buy a vehicle, close on a loan, or get approved for a credit card. Multiple issues from one breach. Lieber also elaborated on the disrespect and irresponsibility of the company’s chief executive Richard F. Smith presented after this breach. In this Case
Analysis I will argue that contractarianism shows us that the Equifax breach harmed regular adult citizens by leaking and disclosing personal financial information without any public regret or post-breach support and that these actions were morally bad.

Milton Friedman in his article, “The Social Responsibility of Business Is to Increase Its Profits” writes about a very interesting concept. He talks about the “social responsibility” of businesses and how ridiculous that truly sounds. Freidman exposes that businessmen usually claim that they are socially desirable yet oftentimes that is just said to create short-term profit. Their claim that the business has “social responsibilities” and that they hold the company true to them. This makes it such a questionable statement considering that the business is not a person that could be held responsible, but simply a system. Friedman urges companies to use their opportunities as businesses to be helpful in the society and make great profit as long as that truly helps the society. He ends by saying that businesses have the responsibility to use the given resources for the benefits of the people and the business itself- as long as it is done so without any fraudulent activity or deceit. He makes a remark that this is a fair game as long as there is no “cheating”.

Using what Friedman wrote and applying it to the Equifax breach discloses some interesting perspectives. Considering that Equifax is a company and not a human being, the public response could have been smoother and not as angry. But when putting into consideration how Equifax as a business responded to the breach, it becomes harder to sympathize and contemplate whom the breach was more beneficial for. If this was in fact a deceitful act, in benefit of Equifax and not the people (as it definitely seems to be), then this is a pure example of an unfair game of business according to Friedman.

Taking a look at this case from the eyes of contractarianism, the Equifax breach not only violated personal rights but also broke this silent contract with its users. This financial company used private information that is usually assumed to be kept safe and put citizens in a very vulnerable position. When the company became aware of the breach, they were hard to reach and incompetent to solve even simple questions. This act alone shows lack of upholding their half of the silent contract and shines light on the lack of responsibility they held for a mistake they made. All in all, this breach was highly beneficial for Equifax considering they will have many requests for service following the breach, and highly harmful for fellow citizens. This act made it difficult for people to get a loan, credit card, or mortgage. The correct approach from Equifax would have been to take into consideration how it would affect fellow citizens and allow instant fee-less account freezes. Equifax should have also offered a public apology and game plan as to
how they will tackle this issue ensuring the least amount of harm to its clients. In addition, they should have provided extra hands via employees to settle any discrepancies and allow for basic information to be handled over the phone or through the website. These small acts of respect would have upheld their social contract.
Melvin Anshen in his article “Changing the Social Contract: A Role for Business” looked at the social contract from a perspective of change through business. Anshen mentions that the social contract is very useful and beneficial in terms of business for supply and demand but he points out that it can be quite harmful for the public when the economic costs of such businesses lay on the public’s finances. He took the social contract and put it into many different categories of demand for example withholding price adjustments or increases to cover costs, providing financial business help for the less fortunate, training and education for beginners, the ability to invest into businesses without contaminating the environment around them, being able to donate to charities and ones in need, and the list goes on.

Ashen was thorough in elaborating how businesses often benefit from the customers purchases and the customers benefit from having businesses that meet their needs. These same businesses offer jobs that provide monetary ability to purchase the wanted service or product from fellow businesses; thus creating a wonderful supply and demand chain. Yet, unfortunately, Ashen points out that the environmental costs and destruction created by such businesses is often gone without financial punishment. This exchange of goods and services often carried a load of environmental impact that the government was expected to compensate to fix. These costs eventually lie back on the public as taxes and this beautiful chain of supply and demand turns into an uneven scale.

Considering that a social contract is a mutual agreement between one and another individual in society with good moral standing, this dilemma becomes unfair. Having the public pay for the service they need provided by a business they work for and in return pay for the environmental damage this same company is causing seems overwhelming for the basic Joe. This approach towards business and the public creates disbalance and the result of that ends up falling back on the regular citizens. Businesses such as Equifax end up getting the most profit and wealth from providing service and products, yet not upholding their social contract, resulting in the public suffering the most. Equifax has not upheld their part of societal construct and has broken public trust.

Equifax had the opportunity to accept their breach and publicly announce that their contribution to this stressful time was not completely preventable which in return would soften the blow of the public. Instead, this business decided to provide as little as possible to
remediation of the issues and offered little to no support. The environmental damage this created was left on the public once again to gather and clean up the mess with their own money. This type of irresponsibility shows the lack of respect and therefore does not uphold the social contract between the individual consumer and the business. In my opinion, Equifax could have avoided the immense potential damage by being honest and coming forward with the information they had by offering assistance and delaying or softening the environmental damage created by providing monetary assistance to those who have been affected by the breach.

In conclusion, the breach of Equifax affected almost every civilian in the United States that had any credit history or wanted to gain credit. The lack of responsibility and respect for consumers clearly showed that Equifax as a business did not uphold their part in the silent mutual social contract known as contractarianism. It is understood that Equifax did the cowardly thing by not providing more information and resources for their consumers, yet the business is still up and running as before. Considering if Equifax would have made a public announcement and that would have further harmed their reputation or caused them to completely shut down is possible, yet they chose to stay silent in a time of need. This company did not uphold their public trust and reputation through this breach, and to add, they did nothing to protect their client’s data and provide an easier way out. This all summarizes the fact that Equifax hurt plenty of civilians financially with their ignorance, chose not to participate civilly in contractarianism, and provided no relief. All in all, Equifax handled the breach morally wrong in a way that only benefited them.