[jakelazaroff]

That's one way of looking at it. The other way is that companies should feel about equal pain relative to their sizes. Otherwise, big companies are able to gain an unfair advantage by just ignoring laws for which they can afford the fines.

[AnthonyMouse]

> The other way is that companies should feel about equal pain relative to their sizes. Otherwise, big companies are able to gain an unfair advantage by just ignoring laws for which they can afford the fines.

Which doesn't make any sense and just gives them the incentive to play the same games they do in avoiding taxes.

The first reason it doesn't make sense is that the penalty should have some relation to the damages. If you cause $500 damage to someone else without their consent, screw you. But if the fine for that is $5000 per victim, it's a deterrent no matter how big you are, because $5000 is more than $500 (and provides a fair margin for the probability of not getting caught), and if the company is getting more than $500 in value from doing it then it could have just offered to pay the victim $501 to consent to allowing it, which implies that they're not.

Meanwhile if you don't think large corporations can move numbers around on a spreadsheet to minimize what they owe, you haven't been paying attention. And we sure as heck don't need a system where Equifax gets to put its risky business in one entity that has inconsequential revenues and then suffer a $10 total fine when it screws up this bad because whatever penalty percentage of almost nothing rounds to zero.

[jakelazaroff]

Say companies A and B each cause $500 in damages. Company A makes $600 from that act, while Company B makes $6,000. A fine of $5,000 is way over the top for Company A, but Company B can just write it off as the cost of doing business.

As I've said elsewhere, I'm not advocating one particular method of coming up with this number. I'm just saying that the fine should depend on the company, not be a flat number based on damages caused.

[paulddraper]

If the cost of damages (including a punitive 2x or whatever) is really and truly $500, and Company B is willing to make their victims whole at that cost...I'm 100% sure there's a problem that needs solving.

[otakucode]

What you are talking about is called punitive damages. Punitive damages exist exactly for the purpose of causing financial pain to companies in order to give them actual incentive to change their behavior (since if it is profitable to kill people, companies will make killing people a standard operating practice, we have multiple proofs of this). No other type of damage is levied as punishment. Other types of damages are driven by actual recovery of damages.

[Sabinus]

What does their ability to pay fines have to do with their share price? A % of profits or revenue would be more fair.

[lostlogin]

Percentage of profits would be a terrible way to fine. Imagining how that could be messed with isn’t hard. Mysteriously there would be no profit and the follow few years worth of expenses would be pre-paid, spent or otherwise brought forward.

[inlined]

And that’s why you charge a percent of revenue, not profit.

[jakelazaroff]

Sure, I don't really have any opinion on the best way to measure the size of a company. I'm just espousing the principle of scaling the fine to their ability to pay.

[ineedasername]

%of profits it fraught with ways to hide profits. Even gross revenue can be gamed, albeit with less efficacy. More practical is something like X dollars per infraction, with the ability for regulating bodies to exert some professional judgement that lets them determine if the culprit's infractions were severe enough to let the per-infraction cost put them out of business all together.