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Not all publicity is good publicity

The idiocy of humans du jour comes courtesy of fashion retailer Urban Outfitters, which featured a $129 Kent State sweatshirt (no, the price is not the most outrageous part). The shirt appeared to be soaked in blood with elements resembling blood spatter, ostensibly referencing the 1970 school shooting at Kent State that killed four students and wounded nine.

I am all for pushing the envelope and being bold, and I have personally been known to be quite controversial in some of my statements. Furthermore, I don't like being politically correct and can see how humor defuses difficult situations. That being said, there is a line between being funny, ironic or hip and being in pure bad taste. Selling a massacre-throwback sweatshirt, in my opinion, clearly and transparently crosses that line.

Urban Outfitters fake blood stains, Urban Outfitters Kent State
eBay

The staggering part of this situation comes from how many people at Urban Outfitters had to have poor judgment to get that item to market. Between the design team, the merchandising team, the preproduction (and possibly full-production personnel), the photographers, the Web team and anyone else in the approval process, how did so many people view this item and continue to sign off on it, to the point where it was actually released to the public on its website?

Common sense seems to have become quite uncommon and there seems to be a vacuum in many corporations where bad decision-making goes unchecked. The NFL is another recent example where either there are far too many "yes men" unwilling to challenge bad ideas and decisions or a lack of people with the sense to know that they are bad decisions in the first place.

Read More Urban Oufitters' blood-spattered sweatshirt stirs outcry

Businesses are run by humans and humans make mistakes. In the desire to be socially relevant, sometimes brands make real-time errors. DiGiorno Pizza recently found this out the hard way, when a social media manager jumped on the #WhyIStayed Twitter hashtag with the response "#WhyIStayed You Had Pizza", not realizing the hashtag was from victims of domestic abuse who were sharing their very serious and personal stories. This case was a bona fide mistake, which was quickly caught and authentically apologized for.

However, there is a colossal difference between a mistake and a deficiency in leadership of the kind that was demonstrated by Urban Outfitters letting a sweatshirt design making a joke out of a tragedy.

Perhaps, as some have suggested, this was a publicity stunt. Bad behavior is often rewarded and/or forgiven in our culture and there's a pervasive belief that being talked about at all trumps the context of why you are being talked about. However, consumers are getting less tolerant of such acts.

Moreover, as a company, particularly a publicly traded company, it is important to stand for something and have a mission. What kind of culture do you develop when you think it's OK to sell a "massacre sweatshirt?" What kind of customer are you trying to attract? I can't imagine many consumers or investors want to be associated with the brand that appeals to those who find humor in shootings.

Read MoreNo such thing as bad publicity: 10 controversial businesses

Since this has happened far too many times recently to count, here's a handy-dandy guide to when your product, service or marketing strategy is not considered fashion, funny or appropriate:

Should I Produce this Product or Marketing Campaign? Here's when to say "no":

Does it reference a time when people died or make light of victims?

Example: Kent State "massacre" sweatshirt (Read about it from USA Today)

Example: Zara children's outfit that looks like a Holocaust concentration camp uniform (Read about it from the BBC)

Striped "Sheriff" t-shirt on Zara
Source: Zara
Striped "Sheriff" t-shirt on Zara

Example: Build-a-Bear 9/11 Marketing Tweet (Read about it from The Blaze)

Does it connote that girls are dumb?

Example: JCPenney I'm too pretty to do homework shirt (Read about it from the Village Voice)

Controversial JC Penney shirt
Source: JC Penney

Example: Children's Place shopping vs. math tee (Read about it from Consumerist)

A shirt by Children's Place
Source: NBC News

Does it overtly sexualize little kids?

Example: Wal-Mart's Naughty Leopard Toddler Halloween costume (Read about it from the New York Daily News)

As a consumer and investor, you also have the opportunity to make a statement with your dollars. You can show companies the true cost of their ignorance and poor judgment by shopping and investing elsewhere. In the meantime, I hope that when a business decides to push the envelope or be clever in the future, that they carefully consider the implications.

Commentary by Carol Roth, a "recovering" investment banker (corporate finance), entrepreneur/small-business owner, investor and author of "The Entrepreneur Equation." Follow her on Twitter @CarolJSRoth.