In the court cases we considered this week where Honda was being sued by various customers who had purchased hybrid Civic models, only to find that the cars didn’t quite live up to the promised miles per gallon, one of the most surprising facts to come up was that the company had never anticipated being sued at all, let alone by classes of thousands in Superior courts and clever individuals in Small Claims. It turns out that like most auto makers, Honda has just printed the EPA estimates for its car’s average performance on the window sticker without further comment. Since those ratings are sanctioned by the U.S. government, and since there is no law requiring any further elaboration, the company had just reasoned that they had no responsibility to offer anything more…
In the event, neither court saw things that way; it remains to be seen if future court decisions or appeals will concur with Honda’s position. But in reviewing the story, I thought it brought up an interesting question in ethics. The use of EPA ratings as a basis for comparison on car window stickers is accepted as the industry standard, and complies with the relevant Federal laws; most auto makers assume that this makes them bulletproof and that anyone who is harmed by the assumption that those estimates are correct will have to sue the EPA first. But even if that is correct, and even if the company is safe from legal actions (a supposition not supported by the facts of the case), there remains the question of what the company’s ethical responsibility was in this case…
On the one hand, the fact that the hybrid Civic does not actually get 50 miles to the gallon under many common operating conditions (e.g. running the air conditioner, driving in city traffic, playing the radio) could have a serious financial impact on the owner. While it is true that EPA estimates are intended only as a basis for comparison, and all purchasers need to be aware of disclaimers like “your mileage may vary), the fact that the company knew there were major discrepancies (40% less than the window sticker under some conditions) and made no effort to disclose them sounds questionable. This is especially true in cases where the withheld information would have affected the purchasing decision. Since there were many alternative vehicles that could out-perform the hybrid Civic under those conditions (including, we should note, the regular non-hybrid Civic), the withholding of that information could be seen as fraud…
On the other hand, the EPA itself cautions users that its performance numbers are not intended to be absolute measures of any car’s gas efficiency, and should only be used for comparison. If Honda had printed lower fuel efficiency numbers on its window stickers, or even added warnings about efficiency under specific conditions, they would have been accepting a massive disadvantage in marketing their product versus the competition. The company has a responsibility to its stockholders (to make money), to its employees (to maintain their jobs) and even to its vendors and creditors (to maintain their businesses) – and there is no indication that printing such information would help the consumer anyway. All of the other auto makers could continue using the EPA estimate numbers, even if those numbers were just as bad as the ones on the Civic hybrid, and go on making money at their customers’ expense…
So the question appears to be, does the company’s ethical responsibility to provide complete and correct product information to potential buyers outweigh its responsibility to its stockholders to make a profit, or its responsibility to its other stakeholders to stay in business? Especially if doing so would bankrupt the company and damage all of the people who depend on it without giving any benefit to potential buyers, who would probably still be getting incorrect information from all of the surviving car companies? I’m sure that we all agree that honesty is the best policy, and that every company has a duty to provide the most accurate consumer information possible, but what happens when fulfilling that duty will destroy the company and all of the people associated with it and do no good whatsoever?
It’s worth thinking about…
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