Common Ethics Violations

Posted by Shannon Walker

on June 22, 2013

stock illustration sign post right wrongThe ethical behaviour of most business professionals is regulated by codes of conduct. Common ethics violations can include the mishandling of funds, conflicts of interest, and lapsed licensing.

Improper or fraudulent billing are ethics violations that can involve charging customers for services they did not receive. This most often happens in industries where the party who receives the bill is not the party who received the services. The prevalence of this specific ethics violation has led many insurance providers to issue a list of services to clients who could be subject to these offences, encouraging them to report discrepancies.

There are several ways financial professionals can commit ethics violations. A prime example is not placing a client’s funds into an approved escrow account. Managing escrow accounts is also often required for attorneys and real estate agencies. If they fail to do so and place client funds into personal or business accounts, they are generally in violation.

Many professionals are required to renew or update their licenses and certifications. This often requires that courses be taken and/or fees be paid. For various reasons, many professionals do not renew their documents before they expire. Since many clients (and often supervisors) do not check regularly, these ethics violations often go unnoticed if a regulatory body does not discover them.

Crossing a sexual boundary is an ethics violation that is different than sexual harassment or sexual abuse. In sexual boundary cases, both parties may be willing participants however, something about the sexual relationship is inappropriate due to a code of conduct. Examples of these ethics violations can be found in doctor-patient relationships, consulting practices, educational settings, church forums or other in-person businesses. A psychiatrist engaging in a sexual relationship with a client he knows to be emotionally or sexually vulnerable is an ethics violation.

Conflict of interest usually involves a professional who violates a client’s trust or places the client at risk because of dealings with a third-party. These situations may arise with attorneys (a criminal defence lawyer who dates his client’s prosecutor) or consultants. It is often experienced on voting boards where there is a personal relationship between a voting party and a third-party with vested interest in the outcome of the vote. In these cases, the potential for a biased vote, or that the subject may provide information or engage in activities with opposing parties that jeopardize the outcome, is an obvious conflict of interest.

Improper handling of documentation is commonplace in numerous industries. It is often prevalent in the financial, health, legal and mining industries. Many documents and files contain sensitive and confidential information. When these items are not handled according to the rules and regulations governing them, a company’s (and peoples) privacy, finances, and safety can be jeopardized.

Ethics violations such as discrimination, safety violations, poor working conditions and releasing proprietary information are other examples. Situations such as bribery, forgery and theft, while certainly ethically improper, cross over into criminal activity and are often dealt with outside the company. In an effort to insure that ethics violations do not occur, ethical codes of conduct should be crafted and distributed to the company’s executives and employees.

When businesses prescribe to high standards of professional ethics, customers feel comfortable doing business with them. When business ethics violations occur, however, the opposite is generally true and companies determined to have questionable business values tend to experience financial and reputational damage.