Ethical Entrepreneurship: 7 Business Ventures to Avoid

Unethical ventures can sometimes be mistaken for a great business idea due to their profit potential. All aspiring entrepreneurs need to know that not every venture that can lead them to success is ethical.

Ethical entrepreneurship refers to a business owner’s contribution to a better and safer community. It means that whatever venture you choose should maintain your integrity as an entrepreneur, which includes abiding by the laws, participating in environmental preservation, and sustaining your responsibility to the community.

In this article, we have listed 7 examples of unethical businesses that some entrepreneurs take part in, but shouldn’t such as predatory lending, solicitations, and more. We have done investigatory steps to research and gather original insights into these ventures.

Additionally, there are more unethical business ventures that will not be included and discussed in this list, but the goal is to give you information to know how to discern which is a truly great business idea from one that can give you trouble with law and society.

What Constitutes a Bad Business Venture?

To be a competent and ethical entrepreneur, you have to know how to distinguish business ventures that are legally questionable or ethically wrong. Here are a few factors to consider:

• Legality: Will your business idea break any part of the law in your jurisdiction, no matter how small the offense is?
• Economic Impact: Does your business idea leave a positive impact on the economy of the country or city, or does it include malpractices that exploit the workforce?
• Social and Ethical Implications: How will the society view your business idea? It is a great question to ask early on, to decide if the business is ethical.
• Environmental Sustainability: With more individuals being environmentally concerned citizens, it is more important than ever for your business to support this movement rather than oppose it by using environmentally harmful practices.
• Consumer Harm: Ethical businesses do not only care about profit but are also genuine in prioritizing the health of consumers.
• Cultural Sensitivity: The world is more connected than ever due to the online world, and less strict borders. That is why you have to take into account the different cultures present in your target market and respect their traditions.
• Impact on Public Health: Businesses that can negatively affect the health of not just their consumers but the overall public are considered unethical and dangerous.

Understanding these factors is crucial to discerning what is a great business from one that can get you in trouble with the law and society.

Why Should You Avoid These Ventures?

Choosing the best business idea isn’t only about their potential for success and profitability. The ethical responsibilities should also be respected and maintained. Here are a few reasons why you should totally avoid business ventures that fall into ethically and legally questionable territories:

1. Reputational Risk and Public Trust: Your reputation is the most valuable asset in your company, especially if you go public with your shares and stock. Without trust from your investors and your target market, it will be impossible to sustain the company.
2. Legal and Financial Consequences: Starting business ideas that are legally questionable can also have legal consequences from penalties and fines to criminal charges and jail time.
3. Social and Ethical Responsibility: Without the support of the market, your consumers, investors, and even other businesses due to the ethical concerns of your venture the lifespan of the business will be short, and its profit potential will be cut off.

Next, let’s explore the different ventures that embody the qualities of an unethical business.

7 Business Ventures to Avoid

1. Predatory Lending Practices

Predatory lending practices refer to the unethical conditions used by lenders to get significantly more from their borrowers. This means unfavorable loans that will almost be impossible or unfair to repay, hidden fees from the agreed-upon setup, and misleading terms. To know more about the definition of predatory lending, visit this site.

However, not all high-interest loans are considered predatory, it is more about the method used, especially if it includes deception and trickery. Different countries and jurisdictions will have various regulations when it comes to predatory lending, however, it should be viewed as unethical no matter where you are.

Predatory lenders usually target desperate individuals with low to zero income, with some of them having large debts already. This is why banks require a good credit score before lending an individual a significant amount, to make sure that they can pay it back and not be trapped in a cycle of debt.

Then, after knowing who to target, lenders will begin to advertise with the promise of easy cash and effortless approvals. Once a client is engaged, the lenders will use manipulative tactics to make the borrower accept a loan that they won’t even have a chance to pay back because of high interest rates and hidden fees.

Ethical Entrepreneurship Concerns:

• Economic Harm and Social Impact: It is not only the individual borrowers that will have a hard time, the economy and society will also exacerbate poverty and inequality.
• Legal Risks and Regulation Challenges: While it is not universally illegal, there are more regulations that help prevent the risk of predatory lending.
• Financial Exploitation: If clients can’t pay back, your business will not even receive its expected money. Yes, they will be trapped in the cycle of debt, however, will the venture even stay standing by the time the borrowers can pay?

Predatory lending practices exist between the legality and the ethics of the venture. Ethical entrepreneurs should stay away from these practices as they can only hurt in the long run, despite an immediate boost of income. It should be understandable that they have a negative impact on society and should not exist.

2. Prostitution and Solicitation

Solicitation and prostitution laws differ significantly depending on the country and the jurisdiction you are in. Take for example, in Canada, selling sexual services can be legal, however purchasing and communicating with the purpose of obtaining these services is illegal. Click here to read more about these laws.

This ambiguous rule collectively creates a complex legal landscape and opens up business opportunities in the gap or gray area of the said law. These types of ventures must be avoided at all costs despite the unclear legal status.

Typically, as a business venture, this industry’s operation includes a variety of roles such as the service provider or the workers, middlemen such as agencies, and the clients or service purchasers.

The business models of each operation can be distinct depending on the laws of their jurisdiction. However, the process usually goes through these steps beginning with the client contacting the provider or the middlemen, either in person or through online websites. Then after texting or calling about the location, time, and selected provider, the middlemen will confirm the appointment without being explicit about the services offered. The last is how you would imagine it, exchange of money or donation for the agreed upon services.

Ethical Entrepreneurship Concerns:

• High Risk Legally and Ethically: Engaging in these ventures can lead to problems with the laws of the jurisdiction you are a part of.
• Potential for even worse Crimes: Even if solicitation or prostitution law is ambiguous in your country, your business can inadvertently be associated with even serious crimes such as trafficking and exploitation.
• Health and Safety Concerns for All Parties Involve: If the service is not fully legal in your jurisdiction, there is a big chance that it is also not regulated posing health and safety risks to all.
• Social Stigma and Discrimination: The majority of the population views this venture in a negative way for various understandable reasons.
• Risks of Scams and Coercion: Sudden changes in appointments and not showing up on schedules can expose both clients and providers to risks of receiving scam messages and coercive threats.

These operations exist in the legal and ethical gray area of different laws, that often use discreet forms of communication and operate in a manner that attempts to manipulate the legalities of different jurisdictions. Hopefully, all of this information helps you as an ethical entrepreneur to steer clear away from any business ventures related to it.

3. Misleading Health and Wellness Products

Health and wellness products are a big industry that is only getting more popular because of social media and the digital world. Before modern times, only selected stores could sell health and wellness products, now anyone can market and advertise their products to the general public and earn profit this way. Nothing is wrong with this practice, however, if it leads to misleading claims and potentially harmful products, that is where the problem begins.

If you are an ethical entrepreneur who is planning to sell supplements, vitamins, and any other health products, you must verify that it is scientifically backed and not promise something they can’t realistically do such as easy fixes for health issues, fast weight loss, or enhancing the physical prowess of an individual.

The regulation of health and wellness products is done by different governmental organizations for each country, and in the United States, it is led by the Food and Drug Administration or FDA. However, despite all their efforts, they can’t review the effectiveness of each supplement, which opens the door to misleading products to be advertised online.

Nowadays, with the help of influencers and brands, it is easy to hook any individual to buy a certain product. But not all of these products will live up to their expectations and some could pose a possible danger to the health of its consumers. To read more about health claims on various products, visit this FTC page.

Ethical Entrepreneurship Concerns:

• Misrepresentation and False Claims: As an ethical entrepreneur, no one should try to deceive their customers in order to upsell their products. Misrepresenting the benefits of your supplements or vitamins can lead to the exploitation of the desires of consumers for an easy solution to their health problems.
• Risk to Consumer Health: The lack of quality control for these supplements means that they pose a threat to the public’s health. Ensure and triple-check that whichever product you decide to market will not cause any harm to consumer health.
• Social and Psychological Impact: Advertising a product in a way that exaggerates its capabilities or flat-out lies to the customers not only can cause physical health concerns but also psychological ones. It will basically create false hope for these consumers leading to body image disorders and anxiety.
• Environmental and Sustainability Concerns: If these supplements and vitamins were proven to be harmful or not effective, this means that they wasted resources and can have negative impacts on the environment.

As an ethical entrepreneur, one should not participate in shady practices that involve selling health and wellness products that are not effective and can’t hold up to their promises. It is better to be honest with your consumers and tell them upfront in the marketing campaigns and advertisements that the benefits are not guaranteed. This way you can maintain your integrity and the company.

4. Exploitative Gig Economy Ventures

More and more business owners are looking to hire contractors rather than permanent employees. However, these circumstances open the door for the gig economy, which in most places is not regulated. With a number of sites where anyone can advertise their services such as Freelancer, Upwork, and Fiverr, ethical challenges are more prominent in the industry than ever.

The gig economy offers several advantages such as flexibility of work schedule, and autonomy on the job. However, the classifications of being a freelancer or independent contractor often lead to a lack of health benefits and legal protections in case something goes wrong. This includes discrimination in the workplace, lack of health insurance, and no set minimum wages. To know more about the ethical challenges of the gig economy visit this article of the University of Oxford.

Ethical Entrepreneurship Concerns:

• Worker Classification and Rights: Classifying them as contractors means these workers will not have the same rights as registered employees. That is why the nature of the gig economy can lead to the vulnerability of their legal rights.
• Impact on Society and Traditional Employment: The rise in popularity of working as a contractor and independent workers could lead to a lesser workforce in traditional jobs which would have a negative impact on society.
• Psychological and Social Stress: Without job security and being a lot more prone to exploitation in their jobs, most freelancers will face psychological and social stress.

As an ethical entrepreneur, there is nothing wrong with hiring contractors, freelancers, and individuals who participate in the gig economy. However, what’s wrong is some business owners use them to pay less despite more work and avoid paying taxes and benefits that they all deserve.

5. Unethical Environmental Practices

Unethical environmental practices are important to consider when starting any new business or maintaining a current one. If the general public obtains the fact that any company is hurting the environment in any way, their stocks, customers, and integrity will all go down quicker than they can remedy it.

One of the most viral examples is the Volkswagen scandal, where they were found using Dieselgate or a device that was installed in their cars to manipulate the emissions of their vehicles during their testing phase. As expected this quickly tanked their share values and led to a worldwide investigation of their products.

Another is the BP scandal, the worst oil spill in history. It can be classified as accidental, however, surely there are some ethical practices that could have been done to prevent such pollution of the Gulf of Mexico. This led the company to face billions of claims for compensation.

There are a lot of environmental factors that should be considered when starting a business. Here are a few that you should take into account to avoid negatively impacting the environment and killing your own company:

• Pollution: This issue involves factories and companies releasing harmful chemicals or substances into the air, soil, or water. Any businesses should carefully reassess if they are contributing to environmental pollution in any way, and try to fix it as soon as possible.
• Climate Change and Emission of Greenhouse Gases: Climate change refers to the actions by humans that negatively affect the long-term global temperature and weather conditions. One of the most harmful substances that can cause climate change is the emission of greenhouse gases.
• Waste Management: All businesses are responsible for the proper disposal of any waste that they generate. It is important to include in your business plan how you will handle the waste management of the company whether it is recycling or overall reduction of waste.

To know more about environmental issues that you should be aware of, you can visit this article from Environment Go.

As an ethical entrepreneur, you have a big responsibility to your community and environment. Whatever business you decide to pursue, you have to ensure that you are not hurting the environment in any way. However, if you do, you have to admit that the company has made a mistake and do everything in your power to resolve the issue instead of trying to maintain the profit.

6. Manipulative Marketing Practices

Marketing refers to the advertisement method used by companies to attract potential customers and even investors. It is one of the most important aspects of running a business. It can directly affect the sales of a product or service, and make or break the revenue of the company. Due to how vital it is, there are companies that resort to using manipulative marketing practices that harm the expectations of the consumer and the integrity of the company.

One of the most notable marketing campaigns was Burger King’s International Women’s Day tweet in 2021, in which they said “Women belong in the kitchen”. Although they meant it in a different way, it still caused significant backlash to the company. They intended to get the attention of the public, yet they did so in a negative way because of manipulative practices.

Another is Audi’s commercial which directly compared a bride to a used car before buying it. This involves checking her stats and features just like how you would when buying a used car. This caused outrage from the public and opened up the door for criticizing the way the company objectifies women like they are products.

Ethical Entrepreneurship Concerns:

• Misrepresentation and Deception: One of the most risky tactics that marketers use is misrepresentation or deception by using controversial content to attract attention to their product or brand.
• Offending or Alienating Audiences: Using these controversial topics without carefully planning to not offend or alienate any of their audience can result in a negative brand perception.
• Impact on Social Values: Large brands especially ones that can afford to market in front of millions of people have a responsibility not to create a negative social norm or support any of it.
• Long-Term Brand Damage: While these strategies can sometimes be effective in generating brand awareness, do you really want them to know your company for a negative connotation?

As an ethical entrepreneur, it is your responsibility to develop your marketing campaigns without manipulating the public through deceptive strategies, controversial topics, and other methods to go viral immediately. Be respectful of everyone’s opinions and views, and stay true to your brand’s values and mission.

7. Privacy-Invasive Technology Services

Privacy is a major concern in today’s world where someone can have access to your personal information through the digital world. These technology services can be embedded in popular social media apps and websites to track the user’s behavior and personal details to help them generate profit for their company.

Just like the solicitation and prostitution laws, privacy laws can vary depending on the country. For example, in Europe, they have the European Union’s General Protection Regulation or GDPR. It regulates the collection of personal data of users to preserve their privacy. It is required in almost all types of digital platforms in their jurisdiction.

Ethical entrepreneurship suggests that anyone who is starting or managing a business should not engage with privacy-invasive technology. It is disadvantageous for all parties involved and will only negatively affect the company in the long run.

Ethical Entrepreneurship Concerns:

• Legal Risks: Online privacy breaches can be illegal in some jurisdictions, and can easily shut down your whole operation when proven to be guilty.
• Negative Impact on User Trust and Company Reputation: In the event that your company is found to be using privacy-invasive technology, users will quickly abandon your product or service harming your brand’s reputation and profits.
• Potential for Abuse: It opens up the potential for abuse such as surveillance of certain individuals, human rights concerns, and even some criminal activities.

Ethical entrepreneurship in the realm of technology must respect the privacy rights of all individuals. This means any business should avoid accidentally or purposely collecting personal data that the person did not give permission to. Otherwise, the online world will also be a dangerous place for everyone.

Core Values of Ethical Entrepreneurship

Based on the examples we have discussed and the overall concept of ethical entrepreneurship, these are the core values that business owners and aspiring entrepreneurs should strive to acquire and maintain:

1. Integrity: This core value emphasizes conducting any business-related activities honestly and transparently, respecting both your own brand’s values and the customers.
2. Legal Compliance: Ethical entrepreneurs should not only ensure that their business is honest but also 100% aligned with their jurisdiction’s legal regulations and requirements.
3. Social Responsibility: Another core value is respecting the general public’s opinions and well-being. It is not enough that your business is legally allowed, you must also take into account how your products or services will affect not just your customers but your community.
4. Environmental Protection: We all live on the same planet, which means each and every one of us has a responsibility to protect and preserve it to the best of our ability. This means ensuring that your business practices are sustainable and do not harm the environment.
5. Accountability: Ethical entrepreneurs take responsibility for their actions no matter how they negatively impact their businesses. They must be ready to take action to reverse or prevent any damages or harm that their operation will or has caused.

These core values of ethical entrepreneurship will guide future and current business owners to build ethical and more sustainable businesses not only for their own sake but for the overall betterment of society and the environment.

Final Thoughts

We know that the subject matter is very sensitive to a lot of people and confusing, especially because it involves understanding the different laws of different countries.

However, the main focus of the article is only to provide information and opinions on what type of business ventures to avoid for young entrepreneurs to respect both legal and ethical boundaries.

Here are a few notes on our research approach:

Research Methodology Note: The development of this article involved comprehensive investigative steps, each meticulously planned and executed with the explicit aim of gathering in-depth, firsthand information across a spectrum of business sectors. This investigative process included an extensive analysis of industry reports, legal frameworks, and ethical considerations in various fields such as predatory lending practices, solicitation and prostitution industry, misleading health and wellness products, exploitative gig economy ventures, unethical environmental practices, and privacy-invasive technology services.

It’s important to clarify that any direct inquiries made during this research, particularly in sensitive areas, were conducted solely for the purpose of research, data collection and to deepen the educational content of this article. These inquiries were never intended to engage in or procure the services or practices being investigated. Strict adherence to legal and ethical standards was a paramount concern throughout this research process, ensuring that no laws were inadvertently breached.

Our commitment to upholding legal and ethical standards in our journalistic endeavors was unwavering, underscoring the importance of accuracy and integrity in the information presented. This methodology reflects our dedication to providing well-researched, reliable, and ethically sourced information to our readers.

Disclaimer: This article is intended for informational purposes only and does not endorse or promote any of the business ventures discussed. The topics covered, including predatory lending practices, prostitution and solicitation, misleading health and wellness products, exploitative gig economy ventures, unethical environmental practices, and more, are presented to raise awareness about ethical considerations in entrepreneurship. For a comprehensive understanding of our content guidelines, please refer to our Disclaimer Page. Readers are encouraged to conduct their own research and consult professionals as needed.

Christian Paul Seguiza Founder and Lead Web Developer at Webpreneurships

As a professional web and software developer, the author possesses a strong foundational background in Computer Science. This equips him with both academic rigor and practical insights into the world of web-based entrepreneurship. As the founder of this platform, webpreneurships.com, he stands at the intersection of technology and business.