Image by Burnt Pixel via FlickrThat's the topic of the next essay my ethics students owe me. Much of the "literature" (pompous word for journalists wondering out loud) is against it, but I think the issue is not really a matter of "direct ethics" -- journalists at heart think it's unethical -- but ethics at a remove. That is, if enough readers/viewer think it's unethical and if engaging in it costs credibility, then the practical cost of it is greater than the value of whatever facts would not otherwise be obtained.
And let's step back one more remove: The malefactors exposed can sue for fraud if the undercover reporter has filled out (let us say) an employment application that disguises the reporter's true work background. As in many libel cases, juries too often side with the "victim," and even if the news organization wins on appeal, the financial costs discourage future risk-taking.
The bean counters never forget.