Recognizing Marketing Deception (Fraud?) Before Becoming a Victim

Lately, I’ve been hearing a certain radio ad bombarding the metro-NYC news station I enjoy listening to. The reason I like this station is simple: It’s intelligent, it’s interesting and it broadcasts the John Sterling/Susan Waldman Yankee commentary during the season’s games.

However, this particular radio ad strikes me as so full of misleading marketing language that I bristle every time it plays. Not only does it give my profession a bad reputation, but it may be tricking thousands of ingenuous consumers into signing up and becoming victims of what I almost consider fraud. But, too cleverly manipulative for that, it probably can’t even be found guilty of deception since every statement made is true. But it definitely is misleading unsuspecting listeners to interpret these “true” statements as good reason to respond to the ad and commit to the advertised service, only to discover later the naïveté of their gullible decision to do so.

Let me explain: The ad begins as an announcement in an authoritative tone that claims it can save American car owners thousands of dollars in car repair bills. As long as you have fewer than 200,000 miles on your car (as most people do), you will never have to pay for a car repair bill out of your own pocket again! The advertiser will pay it for you. If you’re sick and tired of spending your hard-earned money on car repairs, call to see if you qualify! (This puts the onus on you to prove you are one of the eligible fewer-than-200,000-mile car owners who can take advantage of this advertising deception to trick you into buying.)

You can even keep your own mechanic or your own car repair service and have the advertiser pay the bills for you. This includes all of the most advanced auto technology repairs you may ever need! (Again, they say this to throw you off course so you think about what kinds of repairs your car may need now or in the future and whether you will qualify.) So far, everything they have said with the possible exception of “saving you thousands of dollars” has been true. That is until you read between the lines.

No, you won’t be spending your hard-earned money on the car repair bill. Instead, you will be spending your hard-earned money to pay them a fee to represent you and pay your car repair bill for you. And while they claim you can save lots of money, you may actually be paying more by making them the middlemen. After all, they are in business to make money. They won’t be doing this for nothing. And how can they be paying for these expensive radio ads on such a powerful New York station? Only through responses from hundreds of unsuspecting customers who sign up in droves.

So what do you get out of it? Maybe lots of trouble if you sign a contract, and fail to pay their fee, and who knows what else! Probably they make it seem like they are providing you with a great service by guaranteeing they will pay for your car repair on your old clunker (with fewer than 200,000 miles) which allows you to keep driving and hopefully going to work (if you still have a job) while they wait for you to cover the bill (possibly late) with interest!

I am guessing about all of the finer details but you can see the risks I am pointing out. I can remember hearing about a similar fraudulent attempt being made by another auto payment company in the last couple of years that was being distributed through the mail. I later received a series of telemarketing calls about it. Now, I am hearing this ad for a different company on the radio. Could it be the same organization just operating under a different name? And ironically, as quickly as I recognized it, suddenly I no longer hear it, which may also be part of their formula: to run it for a short time to amass new customers and then disappear into thin air, so to speak. These are the kinds of questions I ask, since I am naturally suspicious of marketing claims that raise these kinds of red flags.

The concept is very much like the service a credit card offers: you pay with plastic and then you pay the credit card company with interest for their generosity in letting you pay over time. But we all know the enormous risk that involves, as a nation and a world, with unsolvable economic problems everywhere you look! If you are one of the unfortunate people who have lost the privilege of using any or all of your many credit cards, this car repair payment service ad may sound pretty appealing, particularly if old Bertha is making horrible noises and jeopardizing your commute. But I urge you to tread carefully and carry a big stick.

So what exactly are the laws concerning deceptive advertising, anyway? According to the Federal Trade Commission’s (FTC) Bureau of Consumer Protection, there are three attributes which determine whether an advertisement is false or unfair:

1. If it offends public policy;
2. If it is immoral, unethical, oppressive, or unscrupulous; or,
3. if it substantially injures consumers.

This last point is considered the most important in weighing whether the advertisement is false or unfair, with customer injury normally based on loss of money as a result of a purchase which would never have been made had the advertisement not been misleading in the first place. False statements are determined by whether they are false on face value; or whether they are implicitly false. In my opinion, the above radio ad may be making a blatantly false claim by saying it can save you enormous sums of money if you use their service. However, with a clever twist of interpretation, that statement could be considered true if they attribute your savings to be from payments made directly to the car repair vendors.

If you are not paying your mechanic directly for your car repairs, you are essentially saving that money. However, you will need to use that “saved” money to pay the car repair payment company who will pay your mechanic for you, regardless of how deceptively they are advertising their service. Does this strike you as ethical? Furthermore, I believe the ad says “can save you” as opposed to “will save you” which implies there may be other conditions involved which you must fulfill in order to assure that their claim can deliver as stated.

Based on complaints the FTC receives, there are some consistent themes which emerge, most frequently about undisclosed costs and conditions. Responsible radio advertisers avoid legal problems by simply adding a statement like “Restrictions may apply,” while some over-zealous advertisers devote a good percentage of the radio ad time to spell out in detail a long rant of disclosures delivered at warp speed making it virtually impossible to understand what is being said. Depending on space available, the FTC advises advertisers using visual media to disclose details “clearly and conspicuously.” If space is limited, perhaps the 3-word disclaimer mentioned previously can suffice, but tiny type and deliberately ambiguous terminology is frowned upon.

What the FTC allows or regulates seems to be a somewhat gray area with decisions dependent on whether the ad is national or regional in scope; whether it represents an industry regulated by another branch of government (such as airlines, banks, insurance companies, common carriers, and companies that sell securities and commodities); or whether it can be resolved by some other more local agency like the Better Business Bureau. As stated previously, of most vital importance to the FTC seems to be issues involving consumer injury, whether to “health, safety or wallet.”

Penalties for non-compliance can be stiff ranging from a simple “cease and desist” order which if not obeyed properly escalates to a sum of $16,000 per day for further infractions; to fines reaching into the millions of dollars when appropriate, sometimes requiring refunds to consumers affected by the offending ad; to running new ads and contacting purchasers to correct the previously deceptive information.

If an ad has hurt you in some way as a result of deceptive practices, you have the right to complain to the FTC as well as contact a lawyer. If the offensive ad is far-reaching enough, your case may be considered suitable for a class action suit, involving many plaintiffs in addition to yourself. Be aware, however, that regardless of how noble your attorneys’ representation may seem in such cases, it is usually the lawyers who benefit most in class action suits.

What if you think an ad from a competitor of yours is deceptive? You have a few options, some or all of which you can pursue:

1. You can contact a lawyer to explore whether you should sue for unfair competition by making deceptive claims in ads.

2. You can file a complaint with the National Advertising Division (NAD) of the Council of Better Business Bureaus, which investigates and resolves such disputes on both a national and regional basis.

3. If the ad is local, you can contact your local Better Business Bureau to file a complaint.

4. You can contact the print or broadcast medium where the ad ran to report your suspicion about the deceptive nature of the ad.

5. You can contact your state Attorney General’s Office or your city, county, or state Office of Consumer Affairs to report the issue.

6. Finally, you can contact the Federal Trade Commission, Consumer Response Center, 600 Pennsylvania Avenue, NW, Washington, DC 20580; or call: toll-free 1-877-FTC-HELP.

As a word of advice from a marketing expert, if you are an advertiser utilizing techniques of vagueness, or worse, duplicity, to camouflage the full truth of your message, keep this in mind:

“The bitterness of poor quality remains long after the sweetness of low price is forgotten.” – Benjamin Franklin

Translation: An unhappy customer will share his unpleasant experience not only with his friends and family, but also will spread the bad word about you on blogs, forums and chat rooms, giving your company a negative reputation you will never be able to live down in today’s Google-dominated universe. If your advertising misdeed was unintentional, it will be far less expensive to try to win back the loyalty of one dissatisfied customer with a valid complaint than to try to weather the devastating winter of his discontent.