Ethics, Laws, and Customer Empowerment
Federal Trade Commission is considering re-writing rules regarding endorsements and whether companies need to announce their sponsorships of messages. This is in response to Sugging (selling under the guise), where sales messages are disguised as market research or unbiased opinions posted by users; in reality, the messages are from employees, sponsors, or paid respondents of the company. "Let the buyer beware" has never been more important than with reviews of products posted online. Readers have no way of knowing the true identity of reviewers.Over 60% of buyers look for online reviews for their most important purchases, including over 45% of senior citizens. Sugging isn't illegal as of now, but the consequences of being caught sugging are high. Even if the information posted was actually an accurate depictions of the offering's capabilities and benefits, consumers are less likely to believe it or any other marketing communications for that matter.
Legal Requirements
There are regulations governing the use of email to sell:
Can-SPAM Act prohibits the use of email, faxes and other technology to randomly push a message to a potential customer. Spam is a term used to describe unwanted commercial emails. It is legal to send sales messages via email, fax and other technologies if the seller has the permission of the receiver to send the messages. Permission marketing is a term created to suggest that marketers should always ask for permission to sell or to offer buyers marketing messages. Many companies offer consumers something for free in order to get their permission to send them sales messages. Consumers often have dump accounts or email addresses that they use whenever they need to register for something online. All spam from marketers go into these accounts instead of clogging up the consumers' regular email accounts. Privacy laws in the U.S. limit the amount and type of information a company can collect about a consumer and how that information can be used or shared. Europe, for the most part, has stricter rules. Gramm-Leach-Bliley Act of 1999 requires financial institutions to provide written notice of their privacy policies, or how the company will use and protect a consumer's private data. In 2003, the policy was widened to include other companies. Regardless of the Gramm-Leach Bliley Act, a company is required by the FTC to follow its privacy policy if it has one. So, even if a company doesn't fall under the Act, if it has a privacy policy, it must follow it or be in violation of FTC rules. Companies want to know everything about you in order to determine if you are a likely customer for their products. Sometimes the information they collect or have access to could lead to identity theft if it falls into the wrong hands.
Warranties and Promises
The Uniform Commercial Code governs commercial sales transactions in the U.S. The UCC defines many aspects of sales relationship, including warranties.
A warranty is a promise by the seller that the offering will perform as the seller said it would. There are two types of warranties under the UCC:
- Express warranties - these are oral or written warranties given by the company regarding how the product should perform and what remedies are available to the buyer should it fail to do so.
- Implied warranties - these are obligations from sellers to provide offerings that meet an average level of quality, regardless of any express warranties given.
Protecting Your Company
Just as there are unscrupulous companies out there, there also are buyers who want to take advantage of companies. Some tools to protect companies include:
- Preventing automatic ordering by Bots. A Bot is a kind of program that performs automatic functions online such as purchasing offerings. A buyer could use a bot program to purchase large quantities of tickets and then resell them at a higher price.
- Digital Millennium Copyright Act is designed to prevent copyrighted material from being pirated online, including marketing information.
- Phishing or soliciting personal information in order to steal an identity represents a big problem for companies. Firms should reassure their customers that they never solicit personal information through emails and customers should never respond to an email asking for such information.