Ethical Problem Analysis Research Proposal

Pages: 7 (2271 words)  ·  Style: APA  ·  Bibliography Sources: 6  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business - Advertising

Ethical Problem: False Advertising

False advertising is a serious ethical problem as it gives unfair advantage to competitors on a product or service that may not be better than rival's in the market. It is through deceptive advertising that companies try to win more customers or at least attract them to their product/service and it is only after they use it, that they finally know the truth. However in the meantime, customers lose money and competitors lose customers and hence False Advertising is strictly prohibited by law even though it continues to a common practice.

The reason false advertising continues to prevail is because while the law forbids false claims, the term it uses is deception which makes it far more complex to find out which ads are false and which are deceptive. The law doesn't allow advertisers to make deceptive claims which will affect a consumer's purchasing decision. How that is different from false advertising is not easy to understand. Coleman (2001) sheds light on the complexity of legal terminology in the case of false advertising:

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"We spend billions of dollars a year on advertising and false advertising is one of the best known forms of fraud and deception. Who hasn't seen an advertisement that seems patently false or bought a product whose performance fell far short of promoter's claims? But the legal definition of false advertising is much more generous to the advertisers than most people assume. Although common sense would tell us that false advertising consists of the use of untrue statements in advertising, the law uses a different standard. It is not falsity but deception in advertising that is illegal. [This] means that the deceptive advertisement must somehow affect the purchasing decision of the customer." (p. 24-25)

Research Proposal on Ethical Problem Analysis Assignment

Whether an advertisement is false or deceptive doesn't matter to a customer who has been cheated. For him, the fact remains that, it was due to misleading advertisement that he lost his money and his trust was betrayed. This is a highly unethical business practice but even some of the biggest names in business have also resorted to such illegal tactics to attract customers. One very recent example of this was the YAZ commercial which even Yaz said on television that it needed to correct on directions of FDA. Bayer, the world leader in pharmaceuticals, is the manufacturer of YAZ, which is the most popular birth control pill in the U.S. YAZ commercials indicate that the birth control pill does more than offer protection. It also helps with acne and PMS problems. However later FDA forced YAZ to correct "a few points" in the commercials and a revised commercial was aired. It was a rare occasion when FDA forced a corrective campaign and asked Bayer to spend $20 million on corrective advertising. "Regulators say the ads overstated the drug's ability to improve women's moods and clear up acne, while playing down its potential health risks. Under a settlement with the states, Bayer agreed last Friday to spend at least $20 million on the campaign and for the next six years to submit all Yaz ads for federal screening before they appear." (Singer, 2009)

The idea of correcting the wrong claims has given consumers better control over the situation. Previously the only thing advertisements were required to do was stop showing the deceptive ad, it is during 1970s that Federal Trade Commission made it mandatory in some cases for advertisers to not only cease commercials but also run a corrective campaign. The practice of false advertising has been on for decades and the first case in this regard was brought to the attention of FTC in 1950s when Colgate-Palmolive made misleading claims about its shaving cream. (Pratkanis, p. 115) Since then laws have become a stricter even though they have not been able to completely stop misleading claims. And what has complicated the problem is the new age of the Internet.

Nowhere can you can more false claims than on the Internet because what is happening on Internet companies is much easier to mask. Still the Internet companies that choose to advertise on national television cannot possibly escape scrutiny completely as was noticed in 2005 when Match dot com came under attack for false claims. Yahoo Personals was also sued for false advertising and misleading claims the same year.

The news item regarding Match dot com and Yahoo being sued for unethical practices [Utter, 2005] sparked a lot of interest among the Internet users and gave us another reason to question the ethics of today's marketing ploys and advertising tactics.

Matthew Evan, a resident of Los Angeles sued Match.com to what he alleged were the "date bait" techniques of Match.com. He accused the site of using fake profiles, sham e-mails to lure people into paying subscription fee of $29.99 a month. Mr. Evans has named Ms Autumn Marzec as an employee of Match dot com who was used as 'date bait' to keep him subscribed. The case was filed on 10th November 2005 in U.S. District Court in Los Angeles.

Match.com denied the charges and Ms Marzec issued an affidavit that she has never been an employee or a contract worker of Match.com or its parent company, InterActive Corporation. In another case, Robert Anthony of Florida accused Yahoo Personals of unfair trade practice by jacking-up the number of potential date seekers by false entries into their databases. Both Match.com and Yahoo Personals were paid subscription sites and hence the profits they made were huge. In view of the huge profitability, there is a possibility that business managers will be tempted to use tactics that are on the boundaries of legally permissible. There was more than one problem with their business practices. Match.com claims that it is one site that 20,000 new people join every day. In all fairness, we must not forget that there is no way to verify this claim. For one we do not know if 20,000 actually join each day, secondly, even if they do, how we know that some people are not duplicating their profiles. It is so very easy to duplicate a profile and hence their claims sound very dubious.

Then there is always the problem of inactive members. Yahoo and Match.com must both understand that the members of their site are not always active ones and hence their claim of huge membership is also a false claim because several of their members are simply not there. The ethics involved in Yahoo's case are of professional dishonesty. If the members are shown as active contacts but any attempt to contact them fails because they have not paid their monthly subscription, one would get the impression that the dating company is cheating while the excuse from the company such as Yahoo Personal would be that the rules allow old members to renew their subscription within a fixed period and the names cannot be removed till that period has expired. The Match dot com case is highly unethical as it is a clear cut case of fraud. If the allegation is found correct than the Company is cheating its members, misusing its employees, misrepresenting its strength to gain financial advantage. Hiring of professionals to date members may be construed as running an illegal escort agency.

If the allegations are correct, both companies are in breach of ethics of advertising and trading. The Federal Trade Commission laws demand that advertisers must tell the truth and not mislead the consumers (members in this case); in addition deceptive or unfair practices in business and advertising are not permitted. Sellers are responsible for claims they make about their products and services. The businesses are not permitted to fail to disclose a material fact particularly when consumer is likely to assume something that is not correct. Bait advertising in which the seller offers an attractive product which he/she does not want to sell is also against the law [Advertising, 2001].

Although larger and well-known companies take steps to ensure that their business is not effected by legal violation and normally take action to ensure that they do not get involved in grossly unethical or illegal practices, it is not unlikely that a few regional managers may try to boost their sales targets by cooking the books, declaring additional members or use marketing techniques such as tempting members to renew their membership by giving them hopes of something useful happening very soon, fake e-mails arriving just before the membership become due for renewal falls into this category.

False advertising is a major problem for Internet sites where sometimes even the members may be found using fake profiles. They may misrepresent themselves and thus this makes the whole Internet matchmaking business a gross web of lies. Substantial percentage of members acknowledges unethical practices with the people they come in contact with through these dating companies. One Member acknowledged that "Many people (selfishly) want to avoid the discomfort of having to call off an email 'relationship' when it is going very well so they just… [END OF PREVIEW] . . . READ MORE

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