Much has already been said about the ethics (or the lack thereof) of brands when it comes to marketing and advertising. This is because some campaigns have exploited and emotionally manipulated people’s pain or used causes that people care about to sell their product in tone-deaf ways, while others have been downright illegal and unlawful. If you’re a business owner, it’s important to be mindful of the ways we communicate about our products and services and to make sure that our promotional practices are always above board. Here are some unlawful marketing and advertising practices to avoid.
One of the worst promotional sins your company can commit is false advertising, also known as the misconduct or crime of communicating, transmitting, or publicly circulating a promotional material or ad that contains misleading, false, and downright deceptive statements, created to recklessly or intentionally promote and increase the sale of goods, property, products, or services to the public.
One well-known case of false advertising was when Hyundai overstated its vehicles’ horsepower by 10 percent. Around 840,000 people who bought the brand’s cars from 1996 to 2002 filed a class-action lawsuit in Southern California in 2002. The Korean brand was forced to settle in 2004, offering prepaid debit cards to their consumers who were affected by the deception. Exaggerating or overstating your goods and services may be beneficial for your sales in the long-term, but it would ultimately cause your business more in the long run. It’s important to partner with online marketing and advertising firms that know the ins and outs of ethical advertising and marketing and how to use trends and tools to your advantage without deceiving your audience.
Marketing fraud, on the other hand, is very similar to false advertising, with some key differences. Marketing fraud is also the unlawful practice of creating misleading or false promotional materials and claims for financial gain, but it can also take the form of cold contacting consumers to solicit them for their valuables or money in exchange for a good or service that has little or no value. One crucial aspect of this type of fraud is the claim or promise of investment returns, financial gain, or other types of reward.
An example of marketing fraud or scam was the strategy of Dead Sea Cosmetics, an Israeli skincare brand that has been banned in countries like New Zealand for their pushy and downright intimidating sales tactics. They have a common spiel for women walking in malls: “You must be so tired. You seem like a busy woman.” They would cajole consumers into paying for exorbitantly-priced skincare products only for these women to walk away with thousands of dollars worth of credit bills and no memory of how they were persuaded into buying the products. The problem with this unethical tactic is that they often target consumers who seem more vulnerable, like the elderly. While reaching sales quotas is hard work, there are ways to do it that don’t deceive and deprive people of their hard-earned money, and more importantly, their agency and right to refuse.
Somewhat related to false advertising is consumer fraud, which is the practice of using deception to ultimately cause consumers to suffer financial or other types of losses. It’s when consumers enter the business transaction thinking they are participating in a valid and legal transaction only to find themselves defrauded. Consumer fraud often involves making inaccurate or even outrageous claims, and false promises, to cheat consumers out of their money and investment.
Failure to disclose sponsorship
With the rise of social media and its close partnership with digital marketing also came new rules to ensure that all sides are playing fair and doing right by consumers. Because the lines have been blurred for many years, the Federal Trade Commission (FTC) has required content creators across all platforms to preface and disclose any paid sponsorship, endorsement, review, or advertisement with black-and-white statements like, “This is a paid advertisement or review.” The problem is that YouTube videos or Instagram posts don’t often look like paid ads, and many creators and influencers still get away with this practice. While YouTube is not legally accountable and responsible for its creators, audiences themselves notice when influencers are not being forthcoming about sponsorships, and that is perhaps one of the biggest consequences of not being transparent: You lose the trust of consumers. If you’re working with influencers, make sure to encourage them to be honest about the financial partnership.
The Bottom Line
We have a responsibility to our consumers to be honest in our advertising and marketing practices. Use ethical and lawful practices and see how your integrity will benefit your business in the long run.