Fingerhut, based in Minnetonka, Minnesota, is a direct-marketing company that sells a smorgasbord of consumer goods through an array of specially targeted catalogs. In November 1996, an article in the Star Tribune, a major Minneapolis newspaper, drew attention to a class-action lawsuit pending against Fingerhut that suggests the firm made its profits by exploiting the poor. Several civil rights groups rallied around the suit and submitted amicus curiae in favor of the litigation. The case illustrates issues in ethics and management communication. Discussions focus on the constituencies. Is Fingerhut exploiting its customers or providing them with an affordable method of obtaining valued consumer goods on credit? Do retailers have a duty to offer products at reasonable prices? Are the high interest rates reasonable given the risk? What are the options: pawn shops, rent-to-own? What is the profile of the typical Fingerhut customer? Discussions also focus on the issues communicating to the constituencies. How much damage will the lawsuit do to Fingerhut's image as an ethical, socially conscious company? What communication strategies can the firm employ? Should it react to the lawsuit? What should it tell its employees?
Fingerhut's Price Strategy Available to Purchase
This case was prepared by Lee Fennel under the supervision of Gretchen A. Kaslow, assistant professor of Business Administration, and June A. West, assistant professor of Business Administration. It was revised by Research Assistant Jenny Mead under the supervision of Patricia H. Werhane, Ruffin Professor of Business Ethics, and R. Edward Freeman, Elis & Signe Olssen Professor of Business Administration, Darden Graduate School of Business, University of Virginia. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation.
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West JA, Kalsow GA, Fennel L, Mead J (2017;), "Fingerhut's Price Strategy". Teaching Notes, Vol. ahead-of-print No. ahead-of-print.
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