In the 1990s, Sears Auto Centers was burdened with a heavy scandal that deeply wounded its image with customers, and cost the corporation a pretty penny. A handful of complaints gave way to an investigation, and it wasn't long before the company was forced to settle for tens of millions of dollars. Furthermore, there was irreparable damage to Sears image with its customer base, all because of some unethical business tactics that easily could've been avoided. The problem in a case like this, for the CEO especially, is recognizing and admitting where a mistake such as this comes from. To a corporation, it may appear as though they are just trying to push sales and increase revenues, but to their valuable customers, it can quickly turn to fraud. An instance like this, where a customer is deceived or beguiled by the corporation in order to take advantage, is referred to as fraud in the inducement. This qualifies as such because the customer was misled about facts on his or her car after being brought to the shop, and then are encouraged to use this misinformation to make a decision. Of course, the shops and managers probably were not thinking about managing their legal risk and instead were following orders from corporate. .
This is where the blame really does fall on the CEO and other corporate officers. When a CEO gives orders to increase sales, even if he or she does not lay out the precise plan, there is now a responsibility for the CEO to be aware of the sales tactics being used by employees after such pressure is placed on the stores. It is always a CEO's obligation to know what practices are going on within the company, and to pay attention to fraudulent activity like that aforementioned above. The coupon bait and switch method here, for example, was something that needed to be on the corporate officer's radar. The CEO was likely knowledgeable of auto repair shop schemes and bad business, because everyone is, and to allow those behaviors to fly within the Sears Auto Repair Centers was far too aloof for the likes of a company leader.
