Exploiting Loopholes in the Law: Smart or Stupid?

balance-154516_640Know in advance that this will not be a fair and balanced article. I have no special patience for the various arguments in favor of exploiting loopholes in the law. They exist, certainly. People will sometimes go to great lengths to justify that which they know to be unethical, but I can’t quite bring myself to call it anything other than what it is. Unethical.

Sure, you can give yourself a pat on the back for being clever. You can, rightly, point out that since said loophole exists, you’re not technically breaking the law, and of course, you are technically correct. But the reason that word appears in quotation marks, is because we all know what the intent of the law was. It’s just an unfortunate, and all too human,oversight that allowed an imperfect law to be created.

I’ve even seen people trot out the argument that the way loopholes get closed is by people exploiting them. This draws attention to said loophole, which prompts further action. Thus, in a way, the justifiers say, their act of exploiting the loophole is a kind of public service. It’s amazing, the things that people will tell themselves in order to feel better about actions they know to be unethical.

Excuses and faux justifications aside, at the end of the day, there are three reasons that such activities are a categorically bad call:

1) The people doing it know it’s unethical

That’s the reason for the justifications. If it was an ethical move, no justification would be needed, and the topic wouldn’t even come up in conversation. For some reason, some people find it hard to simply do the right thing.

2) Public perception

Like it or not, your business needs customers to survive. Customers form “the public,” and “the public” tends to take a dim view of those who try to skirt around the edges of the law. If I’m a competitor of yours, and it comes to light that this is what you’re doing, I’m going to beat you to death with it. My marketing people will have a field day running over you. Sure, you might be able to pay yourself on the back for saving a little money in the short run, but when I walk away with 25% of your long term customers, ask yourself if it was worth it?

3) You’re only hurting yourself

This can best be illustrated by an actual example from a few years ago. A manufacturing company had some waste by-product from their manufacturing process. A sludgy, nasty liquid that would have been expensive to store and ship off. Since there were no specific laws governing the disposal of this particular substance, the company owners took a shortcut and dumped it in the river that ran next to the factory.

The problem? The river was an important part of the town water supply. People started getting sick, including many people who worked at the plant. Insurance claims went up, absenteeism soared, and the plant struggled to remain profitable. In the end, Federal investigators were dispatched, existing regulations were edited to include the nasty substance, and the company never recovered. By trying to save a few bucks, they wound up losing money by making their own people sick, and completely alienated the community they relied on. It never ends well.