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Comment by paulcole | Hacker News Reader

Serious question: Has there EVER been a case where a fine has been truly damaging/punitive to a company? Every instance I remember seems to be of the parking ticket variety.

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They are worse than parking tickets. A parking ticket is a loss in most all circumstances. It may be small, but the incentive is there to avoid the ticket. In these business cases, they are a net gain. The company does something illegal, makes a bunch of money off of it, and gets a fine for less than they made. They earn more by breaking the law and are incentivized to do so.

If you were a delivery driver you would consider parking tickets a cost of doing business too.

The difference is it is quite likely that the parking ticket cost is higher than the profit, even revenue you made while parked there. So there is a real incentive to at least try and avoid them.

Consider the case if a parking ticket was 5c - why would (absent other disincentives) delivery drivers ever obey parking signage?

This is a bit old but AFAIK still in place. http://www.nbcnews.com/id/14602712/ns/business-us_business/t...

"Under the program, the type of violation determines the ticket’s outcome. For example, double-parking in some parts of the city is a violation that can be erased completely for commercial vehicles. Violations for blocking a crosswalk or a bike lane can only be reduced by about 15 percent. Fines for blocking a driveway can be knocked down by 75 percent. To date, 312 companies are enrolled in the program, including heavyweights like UPS, FedEx, Verizon, Coca-Cola and Time Warner Cable, which are the city’s biggest commercial offenders."

crazy

It's as if legal parking costs $20, the parking ticket is $5. However you may not even get the parking ticket, so obviously you would never pay for parking.

This was the situation for bicycle parking in Japan.

~$5 a day to park my bike legally.

~$25 ticket if my bike got confiscated for being parked illegally.

It got confiscated twice in 3 years. Needless to say, basically everyone parked illegally.

When I was a kid, Brussels public transport was purely proactive payment. Hop on a bus/tram/subway, scan your card. I didn't ride enough for it to matter, and it was cheap (1 euro per trip), so I didn't game the system but many of my friends just decided it was either going to cost them $500/yr in fines or it would cost them $500/yr in tickets, so they just rode without a ticket.

That's pretty much how it works with delivery services and ride shares where I live. Tickets are of course discounted by the chance of actually getting one during the time you are in violation, which seems to be small. They are close to useless as a disincentive.

When the government wants to destroy a company they have a mechanism for it. https://en.m.wikipedia.org/wiki/Judicial_dissolution

Edit: Arthur Andersen, for instance, was convicted of a crime and had to surrender its CPA license, putting the company out of business.

Fines are just supposed to change behavior. $3 billion is a lot of money regardless, and it’s likely Facebook will invest additional resources in the future to help avoid future such fines.

They should add 2 zeros to the fine and offer FB the option to be broken apart instead.

Crimes were committed. Crimes continue to be committed.

> Arthur Andersen, for instance, was convicted of a crime and had to surrender its CPA license, putting the company out of business.

It was my understanding that Arthur Andersen went out of business as soon as it was indicted, such that there was no point in actually convicting it. And that that experience mostly defeated the purpose of having that process exist, since it isn't appropriate to kill a company without showing that it did anything wrong.

According to Wikipedia the firm wasn’t completely put out of business until the conviction. I don’t know how accurate that is.

They did win a unanimous ruling on appeal to the Supreme Court years later but by then it was too late to save the company.

I don't like Facebook and I don't like their privacy practices. However, $5B is approximately 20% of their cash on hand so I think that we aren't talking about "parking ticket" level fines.

For real changes in behavior though, it'd probably take something radical like fining their board directly instead of punishing the shareholders.

The fine could be 100% of cash on hand and they would still have too strong an incentive to not change.

I simply do not believe that but everyone is certainly entitled to their opinion.

What ever cash FB has on hand is what they want to have on hand. They’ve got plenty of ways to raise whatever cash they want or need in no time.

But not for free, and not forever. I've got ways I could raise some cash too, but not for free, and not forever. It may seem like it, since the cash I could raise is denominated in thousands and theirs in billions, but it's still true.

Personal finance is not corporate finance. You’re not worth north of 500 billion with probably millions of difference sources of revenue. (Billions since they’re clearly turning each user into revenue.)

Are you claiming that Facebook can raise money forever and without cost?

Because if not, that was not a very useful post, and if so, it's obviously not true on the ground that if it was that easy, they'd simply do so and have All The Money (TM).

What is the incentive exactly? What do they really gain by having such crappy security practices, other than just not having to spend the time and money to improve security?

Happens all the time to small businesses. You piss of the wrong person, phone calls get made and crippling fines are levied. At least that's how it works in my state. I can't think of it ever happening to a big business though.

I feel like our legislature hasn't scaled up with the economy and inflation.

I feel this not just in the corporate world, but individuals as well. Only financially speaking, parking tickets and speeding tickets are an annoyance to me. If I didn't have an ulterior motive of being a good citizen, I could easily rationalize tickets as a tax. For others, they are oppressive given the severity of the offense. I don't think this is right.

There’s an “operational understanding” that companies should rarely be prosecuted or fined substantially because it can easily bankrupt them. I find this mindset ridiculously offensive.

Imagine if we could backport that understanding to people.

Turn your family into a corporation and make everyone executive directors?

Read up on the SNC Lavalin affair going on in Canada right now and you'll understand what typically happens.[1]

Company pays bribes in Libya. Attorney General presses charges. Prime Minister gets scared that company will go under if severely punished (lost jobs = lost votes) so puts pressure on Attorney General to "go easy on them".

[1]https://en.wikipedia.org/wiki/SNC-Lavalin_affair

Whenever they want to actually damage a company they just don't fine them. They pass a new bill, create new regulations, or take action against individuals in the company in order to "send a message" without hurting the business as a whole, to avoid scaring off other companies. which is exactly what a serious fine would do, as it should, and as everyone (but the investors) want.

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