Some of our largest companies have been fined heavily in the last few years by the FTC, FCC and other government agencies. Facebook just paid a $5 billion fine as part of a settlement for violating consumer privacy rights. Bank of America paid the Department of Justice a $25 million fine for its shady trading processes.
This is becoming the norm in America. Huge companies like Amazon break the law or don’t protect their customer’s personal information, then they’re fined. The good news is that these actions do force large companies to handle customer data more carefully. The bad news is that too many companies have grown so large that fines like this don’t hurt them.
Hefty Fines for Facebook and Others
This has become so commonplace that there are lists each year of the organizations who pay the largest fines. Below are just a few:
- Citigroup paid $475,797,475 for unauthorized trading
- Wells Fargo paid $3,122,608,441 in a mortgage-backed securities case where they were accused of adding to the financial crisis that affected millions of homeowners
- Verizon Communications paid $614,300,000 to the FCC for illegal activities during a merger with Straight Path
- HSBC and US Bankcorp paid $866,600,000 and $617,400,000 respectively for money laundering
The simple fact that huge organizations like this have been accused of these crimes is a serious matter. However, these cases come and go each year without really damaging the overall value of the company.
Another element of this phenomenon is what these companies pay their workers. If they can pay such huge fines and keep right on doing business as usual, then surely they can pay their employees a decent wage.
Can Wealthy Orgs Pay Their Employees More?
Bank of America pays its tellers an entry wage of $13 per hour. Consumers are questioning the legitimacy of a company like Amazon being worth billions of dollars when the average worker is only earning $28,446 per year. It’s very clear that these companies could easily pay their employees much higher wages. But will they? No, and there’s nothing anyone can do about this.
Regardless of whether they do or not, companies like Microsoft, Facebook, Apple and Amazon have reached a place where it doesn’t matter what happens, they will still continue to grow. They might have security breaches. Even security experts like Equifax have been hit hard by Russian and Chinese hackers. Yet, they suffer these losses, fines, and setbacks while still continuing to grow.
Too Big to Fine
Many experts are calling this phenomenon: Too Big to Fail. But now there’s another label and it’s known as: Too Big to Fine.
Facebook can easily afford to pay a $5 billion dollar fine. Their stock prices didn’t suffer at all during the investigation into their part in the Russian election meddling scandal. Most users on Facebook barely understand or care about the part Facebook played in getting the current president elected. Though quite a few people were called out by name and lengthy investigations were completed, it did not hurt many of those involved.
20 years ago, it would have seriously damaged the reputation of any company accused of working with Russia to overthrow the American election process. And yet, today, this is just another story that people read in passing. Facebook users seem unconcerned about whatever role it might have played in the scandal. In the last quarter of 2018, Facebook had 2.32 billion active users worldwide.
The frightening fact of life is that many of today’s companies have become so large that they cannot be affected by any event, no matter how devastating it might seem. In the face of their outrageous wealth, these organizations still feel no compulsion to pay their workers a healthy living wage.