Tag Archives: deception

Stronger FTC Influencer Marketing Rules

17 Nov

Influencer marketing is a BIG deal today. With influencer marketing, we target well-known individuals. Their effect on the purchase decision is significant for some consumers (followers). Because of some abuses in the use of influencer marketing, stronger FTC influencer marketing rules introduced new rules.

Our past posts on influencer marketing include the following:  Influencer Marketing: Coming of Age  How to Best Reach Influencers: An Infographic.


Why Stronger FTC Influencer Marketing Rules Are Needed

As far back as 2013, we asked. “Is It OK for Celebrities to Plug Products on Social Media?” Why?

Consider these observations from Nick Bilton, writing for the NY Times:

“Today, celebrities and people with large social media followings promote products, But often we cannot know if it’s an authentic plug. Or if they were paid to say nice things. Take Miley Cyrus, the pop star traveling around America promoting her new album. One morning, she posted on Twitter: ‘Thanks @blackjet for the flight to Silicon Valley!’ The details of the arrangement between BlackJet, a Silicon Valley start-up that arranges for private jet travel, and Ms. Cyrus are unclear. But Dean Rotchin, chief executive of BlackJet, said ‘she received some consideration for her tweet.’ Ms. Cyrus did not respond to a request for comment.”

So, these questions arise. Does a celebrity call out a product because they believe in it — without being paid? Or does the celebrity endorse a product because they receive payment?


Stronger FTC Influencer Marketing Rules Now in Effect

Because of ethical abuses, the FTC moved to set standards for acceptable influencer marketing.

Lawyer Jeff Brown gave his take on this issue for Advertising Age: “The FTC watches activity in social media channels. And it is prepared to take action against both advertisers and influencers if ‘material connections’ between an influencer and any promoted product or service are not clearly and conspicuously disclosed.”

To learn more, directly from the FTC, click the links:

  • FTC Endorsement Guides: What People Are Asking. Suppose you meet someone who tells you about a great new product. She tells you it performs wonderfully. And that it offers fantastic new features. Would that recommendation factor into your decision to buy? Probably.  Now suppose the person works for the firm selling the product. Or receives payment from the firm to tout the product. Would you want to know that when you evaluate the glowing recommendation? You bet.”
  • Guides Concerning the Use of Endorsements and Testimonials in Advertising. “The Guides represent  interpretations of laws enforced by the FTC.  They provide the basis for voluntary compliance by advertisers and endorsers. Practices inconsistent with these Guides may result in corrective action by the FTC. And this occurs if, after investigation, the FTC believes believe practices involve conduct  unlawful by statute.”
  • FTC Staff Reminds Influencers to Clearly Disclose Relationship. “The FTC reviewed Instagram posts by celebrities, athletes, and other influencers. As a result, FTC staff sent out more than 90 letters. And the letters reminded influencers and marketers to conspicuously disclose their relationships to brands when promoting or endorsing products through social media. They mark the first time that FTC staff reached out directly to educate social media influencers themselves.”


Click the image to read more by lawyer Jeff Brown.

Stronger FTC Influencer Marketing Rules Now in Effect

Credit: Andrew Harrer/Bloomberg


More Gamesmanship on Retail Prices — Even Online

14 Mar

As we wrote a short time ago, companies are not always transparent or honest when they say an item is ‘on sale’ when it really is not: “Unfortunately, many retailers misuse the term ‘sale.’ And shoppers are often persuaded that a product is on sale even when it isn’t.” According to Evans and Berman’s Marketing in the 21st Century: Price advertising guidelines have been set by the FTC and trade associations such as the Better Business Bureau. The FTC’s guidelines set standards of permissible conduct in these categories.”

STILL not convinced that all ‘sales’ really are sales? 

Then, consider these observations from David Streitfeld, writing for the NY Times:

“The perception of a bargain is fostered by online retailers’ use of something variously labeled list price, suggested price, reference price, or manufacturer’s suggested retail price. Whatever its name, the implication is that people are paying much more somewhere else. But with many products online, you could not pay the list price even if you wanted to. That is because hardly anyone is actually charging it. It is a sales tactic that is drawing legal scrutiny, as well as prompting questions about the integrity of E-commerce. If everyone is getting a deal, is anyone really getting a deal?”

“Here is one recent example of how retailers use list prices to motivate online buyers: Le Creuset’s iron-handle skillet, 11 ¾ inches wide and cherry in color. Amazon said that it would knock $60 off the $260 list price to sell the skillet for $200. Sounds like a bargain, the sort of deal that has helped propel Amazon to over $100 billion in annual revenue. Check around, though. The suggested price for the skillet at Williams-Sonoma.com is $285, but customers can buy it for $200. At AllModern.com, the list price is $250 but its sale price is $200. AtCutleryandMore.com, the list price is $285 and the sale price is $200. An additional 15 or so online retailers charge $200. On Le Creuset’s own site, it sells the pan for $200.”


Click the image to read more from the NYT.

A Le Creuset 11¾-inch skillet sold for $200 at more than a dozen Web sites, but the list prices they quoted varied. Photo Credit :Gretchen Ertl for The New York Times


When Is a “Sale” a Sale?

30 Nov

Unfortunately, many retailers misuse the term “sale”. And shoppers are often persuaded that a product is on sale even when it isn’t. [For our holiday shopping tips, please click here.]

As noted in Evans and Berman’s Marketing in the 21st Century: Price advertising guidelines have been set by the FTC and trade associations such as the Better Business Bureau. The FTC’s guidelines set standards of permissible conduct in these categories:

  • A firm may not claim or imply that a price has been reduced from a former level unless the original price was offered to the public on a regular basis during a reasonable, recent period of time.
  • A firm may not claim its price is lower than that of competitors or the manufacturer’s list price without verifying, via price comparisons involving large quantities of merchandise, that an item’s price at other companies in the same trading area is in fact higher.
  • A suggested list price or pre-marked price can’t be advertised as a reference point for a sale or a comparison with other items unless the advertised item has really been sold at that price.
  • Bargain offers (“free,” “buy one, get one free,” and “half-price sale”) are deemed deceptive if terms are not disclosed at the beginning of a sales presentation or in an ad, the stated regular price of an item is inflated to create an impression of savings, or the quality or quantity of a product is lessened without informing consumers. A firm cannot continuously advertise the same item as being on sale.
  • Bait-and-switch advertising is an illegal practice whereby customers are lured to a seller that advertises items at very low prices and then told the items are out of stock or of poor quality. Salespeople try to switch shoppers to more expensive substitutes, and there is no intent to sell advertised items. Signs of bait-and-switch are refusals to demonstrate sale items, the belittling of sale items, inadequate quantities of sale items on hand, refusals to take orders, demonstrations of defective items, and the use of compensation plans encouraging salespeople to use the tactic.

As Suzanne Kapner reported last week for the Wall Street Journal:

“Building complexity into product prices benefits retailers. It helps to cloud the transparency of online pricing, making it harder for shoppers to compare prices across chains. “’The more prices become convoluted, the less retailers will have to match lower prices offered by their rivals,’ said Simeon Siegel, an analyst with Nomura Holdings Inc.”

“And price has become a moving target. Amazon changed prices 666 times on 180 popular products sold from Nov. 1 through Nov. 19, according to Market Track, a price-tracking firm. That is a 51% increase in price volatility compared with similar products sold during the same period a year earlier. Wal-Mart Stores Inc.’s prices changed 631 times and Best Buy Co. ’s prices changed 263 times on similar products sold during the same period this year.”

Take a look at four deceptive practices highlighted by the Wall Street Journal. Click the image to see a larger view of the chart.



Aggravated by Airline Pricing?

29 May

The complexities and variability of airfares can be disconcerting even to the most patient people. Two recent articles appearing in the Wall Street Journal illustrate the situation. The second article referenced in this post shows how dire matters are to many fliers — the government is proposing a new disclosure rule.
First, Scott McCartney reported about the “Airfare Riddle: Same Flight, Different Prices”:

“The flight is the same. Even the seat is the same. So why is the airline charging two different — sometimes very different — prices? American Airlines and US Airways, which merged late last year, are selling seats on each other’s airplanes. But they are pricing tickets separately, and will continue to do so for the next 18 to 24 months. American flights have one price in American’s reservation system and sometimes a different price in US Airways’ reservation system. Same for flights on US Airways airplanes: Check both AA.com and USAirways.com and you’re likely to see different prices.”

“The savings opportunity for savvy travelers can sometimes be large. Earlier this week, a one-way ticket on American’s Flight 1054 from Boston to Dallas-Fort Worth was $656 on American’s website, but only $346 on USAirways.com. A Phoenix-Seattle round trip on US Airways flights for travel June 13 to 20 was $359 on US Airways’ Web site, but only $298 on AA.com.”

Within McCartney’s article was an interesting chart. Click the image for a larger version.

Illustrations by Jean Tuttle

Second, Jack Nicas wrote about “U.S. Government Proposes Requiring Airlines to Disclose More Fees”:

“The U.S. Transportation Department’s proposed new rule would enable customers to see airline fees for the first two checked bags, a carry-on bag, and a seat reservation alongside airfares when they browse for tickets. The requirement is largely aimed at improving fliers’ ability to compare prices between carriers on travel Web sites like Kayak and Expedia. ‘The current system does not give consumers accurate pricing and does not allow comparative shopping,’ said Charlie Leocha, head of the Consumer Travel Alliance, a flier-advocacy group. ‘This new system will… So it is a dramatic change.'”

Within Nicas’ article was another interesting chart. Click the image for a larger version.


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