Ethical Dilemma. Fritz and Helga work for alocal manufacturing company. Since their marriage five years ago,they have been working extensive overtime, including Sundays andholidays. Fritz and Helga have established a lifestyle based ontheir overtime earnings. Recently, the company lost two majorcontracts and all overtime has been eliminated. As a result, Fritzand Helga are having difficulty paying their bills. Several monthsago they began using a local payday loan company to pay their billson time. The first week they borrowed only a small amount to coversome past due bills. The next week, however, in order to pay backthe loan plus interest, they were left with an even smaller amountto pay bills resulting in a higher payday loan the second week. Inpaying back the second week’s loan, their remaining available fundswere further reduced. This cycle continued until they were nolonger able to borrow because the repayment plus interest wouldhave exceeded their paychecks. Fritz and Helga have had their carsrepossessed, their home foreclosed on, and they are preparing tofile for bankruptcy.

a. Is the payday loan company being ethical in continuing toloan more and more to Fritz and Helga each week?

b. What could Fritz and Helga have done to avoid ultimatefinancial ruin?