CSE Ethics & Compliance in Sales 1 — Questions and Answers
Question 1: Which ethical principle requires a sales executive to disclose all material facts about a product that could influence a buyer's purchasing decision?
- Principle of reciprocity
- Principle of full disclosure (Correct answer)
- Principle of exclusivity
- Principle of competitive advantage
Correct answer: Principle of full disclosure
The principle of full disclosure obligates sales professionals to share all relevant information that could reasonably affect a customer's buying decision.
Question 2: A sales representative offers a purchasing manager tickets to a major sporting event in exchange for preferential treatment on a contract bid. This practice is best described as:
- Relationship building
- Value-added selling
- Commercial bribery (Correct answer)
- Incentive marketing
Correct answer: Commercial bribery
Offering gifts or entertainment to influence a business decision constitutes commercial bribery, which is illegal and violates ethical sales standards.
Question 3: Under the Foreign Corrupt Practices Act (FCPA), which of the following is PROHIBITED for US companies operating internationally?
- Paying customs duties in foreign countries
- Facilitating payments to foreign government officials to secure contracts (Correct answer)
- Hiring local sales representatives abroad
- Offering volume discounts to foreign clients
Correct answer: Facilitating payments to foreign government officials to secure contracts
The FCPA prohibits US companies from bribing foreign government officials to obtain or retain business.
Question 4: When a sales executive knowingly misrepresents the capabilities of their product to close a deal, this constitutes:
- Puffery
- Fraud (Correct answer)
- Aggressive selling
- Competitive positioning
Correct answer: Fraud
Knowingly misrepresenting material facts about a product to induce a purchase constitutes fraud, exposing the company to significant legal liability.
Question 5: A company's code of ethics in sales should primarily serve to:
- Maximize short-term revenue at all costs
- Establish standards of conduct that guide ethical decision-making (Correct answer)
- Limit the autonomy of the sales force
- Replace formal legal compliance programs
Correct answer: Establish standards of conduct that guide ethical decision-making
A code of ethics provides a framework of values and standards that guide sales professionals in making ethical decisions across various situations.
Question 6: Which legislation primarily governs how sales organizations must handle consumer personal data in the United States?
- The Sherman Antitrust Act
- The CAN-SPAM Act and state-level laws like CCPA (Correct answer)
- The Robinson-Patman Act
- The Clayton Act
Correct answer: The CAN-SPAM Act and state-level laws like CCPA
The CAN-SPAM Act governs commercial email practices, while state laws like the California Consumer Privacy Act (CCPA) regulate broader personal data handling.
Question 7: Price fixing among competitors is prohibited under which US federal law?
- The Fair Labor Standards Act
- The Sherman Antitrust Act (Correct answer)
- The Sarbanes-Oxley Act
- The Dodd-Frank Act
Correct answer: The Sherman Antitrust Act
The Sherman Antitrust Act prohibits anticompetitive agreements, including price fixing among competitors, to protect free market competition.
CSE Ethics & Compliance in Sales 1
Which ethical principle requires a sales executive to disclose all material facts about a product that could influence a buyer's purchasing decision?