The High Cost of Unethical Business: Top 4 Biggest Corporate Scandals

Top 4 Biggest Corporate Scandals

From United Airlines to Turing Pharmaceuticals, here are some companies that messed up big time. 

Trigger warning: This article contains a discussion on suicide. 

Corporate life is rife with scandals, from crazy CEOs who dance naked in front of employees to companies faking sustainability. Scandals can tarnish reputations beyond repair and have a negative impact on everyone involved in the company, causing the company’s stocks to plummet and customers to lose trust. Moreover, executives or employees may struggle to secure future employment opportunities. All of this is to say that no company really wants to be caught up in scandals.

To avoid scandals, companies need to know all that can go wrong and take preemptive measures to stop them. With that in mind, here is a list of some of the biggest corporate scandals in recent history that all startup founders can learn from. 

United Airlines—bad customer service

In 2017, U.S.-based United Airlines came under fire for throwing a customer off an overbooked plane traveling from Chicago to Louisiana. The company needed to free up seats for four additional crew members who needed to reach Louisiana and tend to another flight that would be canceled without their presence. 

However, when no one volunteered to get off the plane, the airline had to conduct an involuntary deboarding, and David Dao was selected but refused to leave the plane. According to a fellow passenger, Dao tried to reason with airline authorities saying that he was a doctor and had patients to see the next morning. 

In videos taken by other passengers, it was seen that Dao was screaming as a security officer dragged him off the plane, with his glasses sliding off his face and his shirt riding up above his midriff. 

This incident deeply tarnished United Airlines’ image despite the company issuing a formal apology. Customers responded with severe backlash, with some even chopping up their United Airlines credit cards. As a result, the company’s stock fell by 4%, bringing its market value down by US$1 billion.

Bed, Bath and Beyond (BBBY)—pump and dump

BBBY became a very popular meme stock in August 2020, surging in popularity right alongside Gamestop. But soon after, shareholder Pengcheng Si filed a lawsuit against BBBY’s former chief financial officer (CFO) Gustavo Arnal and a large-scale shareholder Ryan Cohen. 

Si claimed that he lost US$106,480 during the meme stock frenzy and accused Arnal and Cohen of creating a pump-and-dump scheme that artificially inflated ‌stock prices. This claim gained validity from the fact that Cohen had been involved in the turnaround of Gamestop, which made investors confident in his other stock holdings, such as BBBY. However, once the share prices of BBBY began to rise, Cohen started selling his stake in the company, making US$60 million when he cashed out. 

This scandal took a tragic turn when Arnal jumped off a skyscraper and committed suicide a week after the lawsuit had been filed. Post this, the company’s share prices fell by 15%. As of 2023, the company is on the brink of bankruptcy, with BBBY stocks falling to US$2 a share in January. There is doubt whether it will be able to continue staying in business. 

Kobe Steel scandal—false claims about product quality

In 2017, Japanese steel manufacturer Kobe Steel was embroiled in controversy over the quality of the copper and aluminum it was producing. The company admitted falsifying data about the strength and durability of its products. 

This falsification had, in turn, affected the quality of products being manufactured by its over 600 clients. These clients include Boeing and Mitsubishi in the aerospace industry as well as Toyota, Nissan and Honda in the automobile industry, to name a few. The compromised product quality brought down Kobe’s shares by 40%. Its CEO, Hiroya Kawasaki, even stepped down from his position after the scandal. 

Turing Pharmaceuticals—hiking prices 

In 2015, Turing Pharmaceuticals the manufacturer of the life-saving anti-parasitic drug Daraprim, raised the price of the drug from US$13.50 to US$750 per pill after obtaining exclusive manufacturing rights. The drug is commonly used to treat infections in people with human immunodeficiency virus (HIV). The CEO of the company, Martin Shkreli, defended the company’s decision to hike prices as a matter of capitalism. He claimed that insurance coverage would ensure that those who needed the drug would still be able to afford it. 

However, the alarming price hike led to the Federal Trade Commission (FTC) of the U.S. and seven state governments filing a case against Shkreli. The court ruled against Shkreli, barring him from the pharmaceutical industry for life. A fine of US$64 million was also imposed on him and his company to return the profits they had earned from inflating the price of the pills.

These four stories, albeit very different, show us the impact of making poor business decisions. Corporate scandals have far-reaching consequences, not only for the companies involved but also for their stakeholders, including customers, employees and investors. 

In three out of four cases, the companies mistreated their customers. United Airlines did so directly by manhandling a customer, Kobe Steel did it by selling low-quality materials and Turing Pharmaceuticals inflated prices. Consequently, they suffered the wrath of customers, and in Turing Pharmaceuticals’ case, that of government authorities. These scandals highlight the importance of putting customers first and creating a culture of ethics and transparency so that such incidents can be avoided in the first place. 

Also read:

Header image courtesy of Envato. 


Share on facebook
Share on twitter
Share on linkedin
Share on email


How Does Rihanna Promote Fenty Beauty

How Does Rihanna Promote Fenty Beauty—and Some Hot Tips for Your Brand

Rihanna’s Superbowl performance left the social media world quivering—for both good and bad reasons. While some thought the pop star did the bare minimum, others resorted to recreating her dance moves, celebrating her pregnancy announcement and lauding her for her genius marketing move.


From Budget to High-End: Our Top Picks for Gaming Computers 2023

Gaming has evolved from a mere hobby into a full-blown lifestyle for countless gamers worldwide. From casual gamers to professional players, everyone understands the importance of a high-performance gaming computer. These computers come with specialized components that are optimized to deliver the ultimate gaming experience.

The Most Anticipated Foldable Phones of 2023 You Won't Want to Miss

The Most Anticipated Foldable Phones of 2023 You Won’t Want to Miss

Innovation in the smartphone industry is the key to staying ahead of the curve, and foldable phones are leading the way. These devices offer innovative designs that provide larger screens in a compact form factor, generating new excitement and anticipation among tech enthusiasts.

How to Get the Most Out of Reddit Marketing

How to Get the Most Out of Reddit Marketing: A Guide for Businesses and Bloggers

In recent years, Reddit has become one of the most popular social media platforms on the internet. With over 430 million users, Reddit provides businesses and bloggers with a unique opportunity to reach a vast and engaged audience. However, many businesses and bloggers struggle to effectively leverage Reddit for marketing purposes.

What Happened and What It Means for Startups and the Crypto Market

3 Successive Bank Closures: What Happened and What It Means for Startups and the Crypto Market

The recent spate of bank failures in the U.S. has sent shockwaves through the financial world, with experts warning of a repeat of the 2008 crisis. In just one week in March, we saw the failure of two banks—Silvergate Bank, which announced plans for liquidation, and Silicon Valley Bank (SVB), which struggled to cut losses on bond investments because of inflationary conditions.

Top 5 Important AI Applications (And a Bonus One for Fun)

Top 5 Important AI Applications (And a Bonus One for Fun)

Artificial intelligence (AI) has come a long way since its inception. Today, it has numerous applications across various industries, and it is changing the way we live and work. Besides AI’s more serious applications, like in healthcare and financial services, it can also be used to create art, write content, taste-test beer and make memes. Here, we explore its most life-changing inventions along with some fun applications we can all look forward to.