Practice: Analyzing Agency-Related Issues

1. Complete the table below by identifying the types of deceptive practices that the

examples describe. (40 pts)

Deceptive Practices Examples of Deceptive Practices

Misuse of company resources or theft. Annie is a purchasing agent. At home, she

uses her company's purchasing code to buy
products for her personal use.

False representation or An agent for a franchising company tells a

misrepresentation. prospective new franchisee that one perk is
group insurance. After the franchisee signs
on though, the franchising company says
there is no group insurance and that the
franchisee must have misunderstood.

Bait-and-switch tactics. Linda is a real estate agent. She advertises

a rate of only 5 percent of the sale, but after
signing a contract with Linda, people in
houses that sell for less than $300,000 find
out that their fee is actually 7 percent.
Practice: Analyzing Agency-Related Issues

Analyze different deceptive practice situations.

1. Angela buys an airline ticket at an online discount site and prints out the information. After
she has completed the sale, she receives an email saying that she has to pay an extra $25 to
have a seat on the plane, an extra $40 for a usage fee, and a $30 luggage fee if she wants to
take a carry on. She looks back at the original information she printed and sees no notice of
any of these fees.

a. What, if any, deceptive practice did this employee/agent use? (10 pts)

Hidden fees or undisclosed charges.

b. If a deceptive practice was used, would the liability belong to the company, the
employee/agent, or both (shared liability)? What, if any, consequences would this situation
possibly cause for the company (20 pts)
Both the company and the employee/agent could be held responsible for the hidden
fees. If it's proven the company knew or allowed these practices, they might face legal
trouble, fines, damage to reputation, and lost trust from customers. They could also
face complaints from regulators or customers, which could harm their business.

2. A company, LocalWater, sells bottled water that it claims comes from springs in the local
area. LocalWater does not own the rights to any springs, so the company pays hefty prices
for access to the water. Gary, the bottling manager, has been having trouble staying within his
budget, so he instructs employees to fill bottles from the tap every Thursday and Friday until
further notice. This practice allows Gary to only have 3/5 of the spring water bills he usually
has. A disgruntled employee goes to the newspaper with an exposé saying that once or twice
a week, LocalWater fills the bottles out of the tap.

a. What, if any, deceptive practice did Gary use? (10 pts)

False labeling or misrepresentation of product origin.

b. If a deceptive practice was used, would the liability belong to the company, the
employee/agent, or both (shared liability)? What, if any, consequences would this situation
possibly cause for the company? (20 pts)
Gary, as the bottling manager, deceived consumers by instructing employees to fill
bottles with tap water instead of water from local springs. This could lead to trouble
Practice: Analyzing Agency-Related Issues

for both Gary and LocalWater. If the company knew or allowed Gary's actions, they
might face fines, lawsuits, and damage to their reputation. Customers may stop
buying their products, and regulators could investigate them. This could all make it
harder for the company to stay in business.