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Ethics, Laws, and Customer Empowerment

19 January, 2016 - 17:13


  1. Apply general ethical principles and concepts to online marketing.
  2. Explain the laws that regulate online and other types of marketing.

You are about to graduate and move to another city to start a new job. Your employer is paying for your moving expenses, so you go online to see what people have to say about the different moving companies. One company has particularly good reviews so you hire it. Yet what actually happens is vastly different—and a complete disaster. Little surprise, then, when you later discover that the company actually paid people to post those positive reviews!

Unfortunately, such an experience has happened so often that the Federal Trade Commission (FTC) is now considering rewriting rules regarding endorsements and whether companies need to announce their sponsorships of messages.

Once upon a time, before the days of the Internet, any form of selling under another guise or a phony front was called sugging (a word created from the first letters of selling under the guise, or SUG). The term was primarily applied to a practice in which a salesperson would pretend to be doing marketing research by interviewing a consumer, and then turn the consumer’s answers into reasons to buy. More recently, some companies have hired young, good-looking, outgoing men and women to hang out in bars and surreptitiously promote a particular brand of alcohol or cigarettes. Sugging seems to be a good term to apply to fake reviews, as well.

Figure 14.6 This customer comment, posted on, is really from a customer. If it weren’t, Stubb’s would be lying, yet we expect companies to post true statements if they are positive. More difficult to trust are anonymous reviews; we assume they come from real customers, but that is not always true. And when they aren’t from real customers, the company is guilty of sugging. 

Truly, in no other marketplace should the term caveat emptor apply as strongly as it does on the Internet. Caveat emptor means, “let the buyer beware,” or “it’s your own fault if you buy it and it doesn’t work!” Product reviews can be posted by anyone—even by a company or its competitors. So how do you know which ones to trust? Oftentimes you don’t. Yet many of us do trust them. One study found that over 60 percent of buyers look for online reviews for their most important purchases, including over 45 percent of senior citizens. 1

Figure 14.7  Most of us know that you can’t believe everything a salesperson says about a product in a setting like this. But what about online? Whom can you believe? It’s caveat emptor, or let the buyer beware, there, too!  

While sugging isn’t illegal, it isn’t fair. Not only is the content potentially misrepresented, but the source certainly is. As you already know, a marketer cannot make promises about an offering’s capabilities unless those capabilities are true. Sugging is similar—it involves misrepresenting or lying about the source of the information in an effort to gain an unfair advantage.

The consequences of being caught while sugging can be high. Even if the information posted was actually an accurate depiction of the offering’s capabilities and benefits, consumers will be less likely to believe it—or any of the other the company’s marketing communications, for that matter. The loss of trust makes building any kind of lasting relationship with a buyer extremely difficult to do.