“Hey, I just deliver the boxcar contents to someplace called “Aushwitz.” It’s not my business what’s in them…”
In 2013, the United Parcel Service Inc agreed to forfeit $40 million in fees that it had received from illegal internet pharmacies shipping bootleg prescription drugs using UPS services, in exchange for a non-prosecution agreement with the U.S. Department of Justice. UPS also agreed to put policies and procedures in place to prevent illegal online pharmacies from distributing drugs through its shipping services in the future. Naturally, the faux pharmacies moved over to FedEx, and when that shipping service refused to cut a similar deal with DOJ under threat of prosecution, the government persuaded a Federal grand jury to indict the company for delivering drugs associated with internet pharmacies, and thus being a willing party to a criminal enterprise.
Now many are cheering FedEx as, in essence, an ethics hero for refusing to knuckle under to the government and accept responsibility where it has none. There are two arguments against the government’s prosecution of FedEx. One is that its natural result would be to require shipping companies to open every parcel and be certain that nothing illegal is inside. The other is that trying to eradicate crime and other misconduct by creating secondary service liability is inherently unjust. By pressuring credit card companies to refuse payments to companies the government regards as breaking the law, for example, alleged illegal enterprises can be put out of business without the government having to meet its burden of proof to show they really are breaking the law. If the government can intimidate carrying companies into refusing the business of illegal pharmacies, then the illegal pharmacies never have to be prosecuted. There is a third argument, but it is irrelevant: that the government shouldn’t be prosecuting the crime of providing prescription drugs over the internet at all. This is an entirely different and separate issue: The point is that the shipments are illegal now, and FedEx is facilitating them.
Your Ethics Alarms Ethics Quiz to begin what I sense will be a busy ethics week is…
Is FedEx an Ethics Hero?
My answer? No. A hero for trying to keep 40 million dollars and a near monopoly on the illegal internet pharmacy market? A strong case could be made that UPS, which has been condemned as a pushover, is demonstrating the ethical value of good citizenship by cooperating with the government, and FedEx is simply acting like a corporation, protecting its profits.
To be clear: I’m glad someone is challenging the government on this pracrice. As the various defenders of FedEx have pointed out, the government’s pressure tactics on secondary markets and service providers, including banks, may go too far. Great: let’s test it in court. Still, painting FedEx as a model of virtue also goes too far. “We are a transportation company — we are not law enforcement, ” FedEx says. And when it knowingly facilitates an illegal transaction by shipping contents from a company it knows is engaged in illegal commerce to a customer, what is FedEx then? In such cases, FedEx is relying on contrived ignorance. It doesn’t know what is in those packages; it doesn’t want to know…but it kinda does know. This ethical juggling act is worth a lot of money.
Sometimes, the messenger is blameworthy. Last night I watched the second episode of the creepy new FX series “The Strain,” about a plot to spread a vampire virus and eliminate humanity. The ghouls behind this dire scheme hire a low-life thug whose job is to sneak a van containing the earth-filled coffin of the uber-vampire (he looks like Nosferatu on steroids) past airport security. The driver doesn’t know what’s in the truck, but based on who hired him and lots of other clues, it’s fair to say that he knows he’s not hauling squeaky toys. Is he culpable for the blood-sucking pandemic that is soon to follow? Sure he is. (I was hoping that he would be gutted by the vampire’s giant killer tongue, but it looks like he got away.)
I’ll provisionally agree that targeting the messenger is a questionable way to stop illegal pharmacies. I will not concede that asking private companies to assist in law enforcement is government over-reach: this is the same argument companies use to excuse their knowing hiring of illegal immigrants. Citizens have a duty to support the rule of law. Companies can’t insist they deserve the constitutional protection given to individual citizens and then claim immunity from the duties of citizenship.
FedEx is fighting to keep a lucrative business that happens to involve aiding and abetting crime. It has a right to take that stand, but I’m not going to get all misty-eyed about it.
______________________________
Pointer: Amy Alcorn
Sources: USA Today, Reuters, Tech Dirt 1, 2
Ethics Alarms 
Here’s the problem. We have one problem: The internet pharmacies on the one hand are breaking laws.
The other problem: Eric Holder’s Justice Department has shown a frightening pattern of political motivations for its investigations (like Operation Choke Point), not to mention abuses of power (see James Rosen of Fox News).
To me, the indictment of FedEx is Operation Choke Point taken to the next level. I have to reluctantly side with FedEx here. If I place an order, I don’t want FedEx or UPS going through my stuff. I certainly do not want the DOJ bullying them into doing so, either.
Believe me… I am LESS likely to use UPS in the future. FedEx, though, would probably get my business.
Perhaps the opposite. Operation Choke Point is intended to intimidate banks into denying service to businesses that sell guns and ammunition, and who are doing so perfectly legally. It’s the ultimate Government act of destroying legal businesses just because they don’t like them.
It seems that FedEx “may” be doing business with companies that are not “legal” but where’s the Government in prosecuting these businesses, rather than just denying them service from a legal enterprise?
Something stinks in this Justice Department and it ain’t because they haven’t taken out the trash.
I was going to comment – but you guys have said it well enough 🙂 Cheers!
Jack- I wish you would address the third argument. That’s the one that interests me the most. Is this really just another example of big pharma controlling Washington to ensure that they can keep the cost of drugs artificially high (sort of like a monopoly :)?
Very good point.
It’s a real issue—it’s just not the same issue. There is also a difference between banning otherwise legal sales of prescription drugs from Canada, and stopping the internet “pharmacies” that sell prescription drugs…or fake versions thereof—without a legitimate doctor’s approval. I have had some unfortunate interchange with the latter, and they are scum.
My question is at what point does a shipping service become responsible for the items it ships. I mean, not even the USPS inspects every item you send via the mail. The only time I have ever had to keep the item I am shipping open so they can inspect it was when I would ship items sold on eBay that I wanted to send via the special media mail rate.
I would argue that FedEx has no responsibility (legally or ethically) to make sure that the items shipped are legal when they have no reason to suspect the items. However, if FedEx actually knew what it was shipping and chose to do so anyway, then they are not behaving ethically at all.
After the shipping company is made aware, through evidence, of what they are shipping.
Absolutely not when the shipping company violates its implicit agreement not to violate privacy by searching packages.
By the way, FedEx says right on the slip that it reserves the right to open and search any package.
No doubt, there is still an implicit requirement that such an opening and search follows a justifiable reason. The blanket statement “we can do this” wouldn’t justify a wholesale application of the practice without any compelling reason. No?
Legally? Sure. Ethically maybe not. The Facebook “waiver” that supposedly allowed them to use users as lab rats was far less informative, and it probably will stand legal challenges.
I think that correctly encapsulates my view as well. But there is little question that when the item is sent by “Acme Pharmacy,” “Fly-By-Night Drugs” and other similarly shady operations that don’t hide their shade very well, FedEx has a pretty good (but not CERTAIN, mind you) idea what’s going on.
I’m always suspicious of packages sent from “Sinaloa Cartel and Assouates”.
You mention companies employing illegal workers. I think one key distinction is that the employer’s responsibility is reasonably well-defined — request an I-9 form, check ID, E-Verify, etc. — and if the prospective employee cannot furnish the proper documentation, the company can refuse to hire them.
There’s no corresponding bright line distinction here, no paperwork that will prove a shipper is legit. It would be a judgement call on FedEx’s part, and that is fraught with potential legal problems. Imagine if FedEx refused to hire certain people because it thought they might be illegal aliens: The civil rights lawyers would be parachuting in to sue for discrimination.
As a shipping company allowed to operate in the US, I’m pretty sure FedEx has legal responsibilities to provide service to all customers. (Especially after the early abuses by the railroads.) They certainly can’t refuse to serve blacks or gays, and they’re probably not allowed to refuse anyone without good reason (e.g. a track record of improperly shipping hazardous materials). They’d probably get in a lot of trouble if they started arbitrarily refusing shipments from certain sources without some concrete reason for doing so.
One complication I’ve heard about this situation is that FedEx claims they agreed to stop accepting shipments from any company the government identifies for them as an illegal pharmacy, but the government wouldn’t provide a list. It seems to me that if the law enforcement folks wouldn’t stand up and say “these people are criminals” then they shouldn’t be insisting that FedEx do so.
(It’s my understanding that the government contends that FedEx was more than just a neutral shipper: Some FedEx employees were well aware of what was going on and were heavily involved. If true, that would change things.)
I don’t think FedEx is particularly heroic here. But I’m not sure they’re a villain either.
That was supposed to be a response to your main post, not this comment. I don’t know why it ended up here.
They are not villainous at all. But then I don’t think seeking profit is villainous. Elizabeth Warren might disagree.
“Companies can’t insist they deserve the constitutional protection given to individual citizens and then claim immunity from the duties of citizenship.”
That covers it very well – whether or not companies are juridical persons.
I actually disagreed with this statement. Nothing FedEX is saying relies on their status as a corporation, they are simply refusing to aid the government in performing its duties. Any individual has that right as much as FedEX does (unless what they do qualifies as aiding and abetting, which will be decided by a court) even if it may or may not be ethical to do so in any given situation.
I also don’t know that any individual has the duty to “support the rule of law” when this means taking affirmative action to do so. Citizens certainly have the duty to obey the law, but in a country founded on the notion that “it [may] become necessary to dissolve the political bands which have connected them with another,” and where the ultimate sovereign is the people, not the government, it doesn’t seem to follow that the government should be able to compel anyone to aid them in the performance of their duties, absent some sort of criminal act and intent.
Jack frequently relies on the notion that disobeying the law is unethical, regardless of the law. I believe he has, however, carved out an exception for “civil disobedience” (correct me if I’m wrong,) and this seems like an example of that. FedEX is aware that its policy may be inconsistent with the law, but believes, apparently, that what they are doing is proper. They therefore decided to act consistently with that belief, and are prepared to accept the consequences of that decision by forcing the government to prosecute. This seems at least a little heroic, assuming you agree that either these illegal pharmacies shouldn’t be illegal or there should not be any requirement that shipping companies take extra measures, which would probably violate to some extent their customers’ privacy, to ensure they don’t ship illegal goods.
I have no idea how to format on this thing.
Jack
I agree that if FedEx has a reasonable suspicion that it may be facilitating an illegal transaction it has a duty as a good corporate citizen not to participate. With that said, I believe that we are witnessing an increasing level of government use of private enterprise to conduct extralegal investigations and to exact punishment when the government itself is unwilling or unable to do so because the Constitution bars such activities.
As most people know, or should know, the Constitution does not bar private enterprises from searches and seizures without probable cause or any other due process consideration. Ironically, courts have held private firms financially liable for not providing services to individuals the offending business firm finds socially objectionable.
If the government or UPS has the ability to determine the amount of revenue earned as a result of transporting drugs from these Internet pharmacies then it must know from where the items are shipped, how often, and to whom they are going. I submit that it appears the government cannot develop sufficient probable cause to obtain a warrant to raid the offending pharmacy so it resorts to strong arming regulated business to affect its desired outcome. If that is the case, I see little difference in recruiting private citizens to obtain evidence against an accused that the government itself is unable to acquire Constitutionally. From my reading, most courts see such evidence as tainted when it is learned that the citizen is acting on the behest of the government. (correct me if I am wrong)
I see no justification for UPS to have its earnings taken without a trial. Using the threat of a criminal complaint against an otherwise legal enterprise to exact a punishment for act of intermediation between two entities that are breaking the law without the willingness to prosecute both the buyer and the seller is at best prosecutorial laziness or at worst, using government power to coerce an individual to perform an act that the government is proscribed from doing itself.
A good corporate citizen will acquiesce to a request from government that is substantiated by facts and evidence. However, it should not be compelled to pay a fine for participating in an illegal act that on its face appears to be a normal business legal business transaction when the government is unwilling or unable to prosecute those it knows to be the primary parties (buyer and seller) in the illegal transaction.
Is FedEx a hero – In my view, no, it’s just doing business in a manner that is consistent with prevailing law and uniform treatment of it customers. If government prosecution is too costly and difficult, then the fastest way to stop Internet pharmacies is for the government to obtain a court order ordering that all packages shipped from known illegal pharmacies to be diverted to DEA and the goods confiscated. FedEx and UPS can deliver a letter to the original consignee that the package is being confiscated by the DEA. When the buyers fail to receive their goods and lose their money they will stop breaking the law. When they stop buying, the illegal pharmacies will close.
I have a thought – and I’m not trying to combat you in any way Jack – while FedEx is probably doing this to save money, I think the Department of Justice’s actions of circumventing the law are unethical enough to warrant this suit. I’m not trying to make an “at any cost” argument, nor do I advocate unethical behavior to combat the government.
However, at the risk of being reductivist, I think the underlying issue here is, as Inquiring Mind and Jim said above, is that the DOJ’s actions here are not about legality or ethics. Instead, they’re playing personal politics and circumventing the law to close businesses and activities they don’t like (guns and ammo shops, adult film companies, casinos, check-cash places, and so on). They figured out a method of shutting down businesses they don’t approve of, based on taste, without having to go through the whole changing the Constitution bit.
While FedEx shouldn’t have been shipping extra-legal pharmaceuticals as it isn’t their job to scrutinize every single addressee who delivers through them. Most extralegal companies have front names or ship through personal addresses.
If FedEx wasn’t given either funding or a list of names to refuse shipment, then the DOJ is either “Choke Point-ing” businesses, or are simply shaking down companies for money. Or both – it is the gov, after all. My opinion is that the DOJ is the unethical character here and my hypothesis is that there’s a bit of entrapment here (Choke Point is basically legalized entrapment, to a certain degree).
Though I do agree with you Jack – FedEx should stop shipments of certain names while still pursuing legal action against the gov.
Bzzzt! There are no heroes in this situation, no one is really acting for ideals but profit and convenience. People expect that their packages won’t be opened wholesale when they pay for shipment. Of course the customers are the first group of non-heroes
– Does the DOJ sue the post office for all the things that have gone through there too? Or does UPS and FedEx have deeper pockets and getting them to toe the line will have a chilling effect on other items which aren’t as illegal, but only unacceptable. Would this kind of reasoning validate shipping sugared soda if that tax in NY would have gone through? Making illegal drugs a test case means people will accept it more easily. The drugs are dangerous, but this could easily become another blank check for gov’t intrusiveness.
– UPS and FedEx are both looking for their bottom line. One is betting that rolling over will cost them less than holding to a principal. The other is betting that the losing the drug business is only a fraction of the packages that people won’t send because people are getting tired of losing privacy. They want to get through this with the least damage to them and their brand approval. This easily could have been the other way around with the other company caving.
This blight of gov’t pressures to skitter around warrants is even more suspect than the customers. Illegal products will always find another way to get to the eager fools who want them. (or the desperate who just can’t afford the legal ones) After they shut down the heroin what’s next. My ‘think of the children’ reflex is wearing out; if an official says that I can’t believe they mean it. They can’t provide enough evidence so they bully others to do their job, passing these overreaching actions on to everyone who sends packages. It’s not really the govt’s business if my old auntie is ordering from an adult toy store through FedEx, that’s between her and her triple A’s. I know I don’t trust big brother, right or left.
I have to admit, this one worries me a bit. If FedEx (or UPS) are really supposed to refuse to do business with Internet pharmacies, then does the principle apply to service providers in general?
Should restaurants refuse service? Should the dry-cleaner? The cable company? Perhaps more pertinent: The Internet Service Provider?
I thoroughly agree that the government should do the job of law enforcement and prosecute the bad guys, and NEVER engage in coercing other citizens into assisting (at least, not without the required warrants and subpoenas).
–Dwayne