Ethics Alert Series

Consumer Fraud — In Your Name or on Your Platform — Is at a Crisis Level: An Opportunity for Brands

By Lisa Shosteck

BACKGROUND

The scope of fraud on unsuspecting consumers is on the rise with a loss of billions and billions of dollars nationwide. According to Kathy Stokes, Director of Fraud Prevention Programs at AARP, who recently presented at the ANA Ethics Policy Committee, all ages can fall victim to fraud. The younger population loses money to fraud with a greater frequency (i.e., falling victim to imposter scams, romance scams, lottery scams and identity fraud). However, the older population who holds the most wealth loses a greater amount of money especially at a time in their life when there's limited time to recoup such losses. We don't even know how much fraud exists because it so under-reported. And the reason behind that is often the unwarranted shame victims feel.

  • The Federal Trade Commission reported a $6 billion loss to victims of fraud last year
  • The FBI reported a $7 billion loss just to cybercrime, and
  • Javelin reported a $52 billion loss just to ID Fraud.

We raise this issue to alert both consumers and companies about this growing area of concern. Consumers need to know the risks they face and how to avoid victimization. There is a real opportunity for companies to take a greater leadership role by educating consumers, training employees, and taking preventative steps to protect their brand and support victims who have fallen victim to scams involving their company name.

Company's role: be the educator, protector, sympathizer!

  • Train appropriate personnel on how to respond to fraud victims with empathy and respect.
  • Educate consumers on what to look out for.
  • Inform consumers on how you will protect them (including appropriate security protocols).
  • Let consumers know what you will and will never do – if your company would never call a consumer out of the blue about a problem, then tell them.
  • Share how to report fraudulent activity – to the company and to the police (to grow awareness that fraud is a crime and the need to report).
  • If there's a way, help consumers get their money back or provide additional resources or assistance.

TOP SCAMS AFFECTING BRANDS

  • Publishers Clearing House (PCH): scammers pose as coming from PCH asking consumers to pay an administrative fee to get their winnings. [Detroit Free Press] No legitimate sweepstakes would ask for or require money, purchase, or subscription in order to receive winnings. (Protecting Older Consumers: Role of Self-Regulation in Sweepstakes and Prize Promotions)
  • Amazon: scams are up 500% including email tactics to try to get users to "update their account and/or payment information" or clicking on links to also deceive users into giving personal information. [NY Post]
  • UPS/FedEx: look out for phone calls, texts, mail, or emails claiming to be from the UPS or FedEx seeking personal information or payment information or asking you to click on links. Always verify a communication using the contact information provided on the UPS or FedEx's websites. [UPS, FedEx]
  • PayPal: provides tips about spotting and avoiding common scams and again be wary of clicking on links if you were not expecting payment via PayPal, etc. [PayPal]
  • Other scams: involving utilities, big tech, financial institutions

FRAUD ON BRANDS' WEBSITES/PLATFORMS

The following websites and platforms are potential hot spots for fraudulent activity. If in doubt, go to the company's official website for ways to check fraudulent activity and/or connect with the company through their approved means. Be wary of clicking on links in emails or sites that you were directed to without knowledge of who is sending you the links and for what purpose. The FTC has cited gift card scams as a top area of concern.

  • Facebook/Instagram
  • Google Search
  • LinkedIn
  • Dating sites/apps
  • Gift Cards

RESOURCES

GUIDANCE & PRINCIPLES

Treat victims with respect and empathy.

"What if companies said to victims: Falling victim is not your fault. It's the fault of the criminal who perpetrated this crime. I am sorry you've had to endure this," says Kathy Stokes, Director of Fraud Prevention Programs, AARP.

ANA offers marketing principles and guidelines to assist ethical marketers in applying a common sense set of standards, providing transparency and meeting consumers expectations.

Please review the following spotlighted ANA Guidelines & Principles as it relates to brands' responsibility and role with consumers:

Marketing Principles

An ethical and accountable marketer:

  • Is committed to customer satisfaction, good corporate citizenship, and responsible environmental, community, and financial stewardship.
  • Clearly, honestly, and accurately represents its products, services, and terms and conditions.
  • Delivers its products and services as represented.
  • Communicates in a respectful and courteous manner.
  • Responds to inquiries and complaints in a constructive, timely way.
  • Maintains appropriate security policies and practices to safeguard data.

II. EDUCATION

Entities should participate in efforts to educate individuals and businesses about marketing.

VI. DATA SECURITY

The protection of Personally Identifiable Data is the responsibility of all entities. Entities should assume the following responsibilities to help protect the security and integrity of Personally Identifiable Data: written policies and procedures; data security training; personal devices; monitoring; contractual safeguards; breach plan; notice; email; sensitive data; data transfers; and employee use of data.

I. TERMS OF THE OFFER

  • All offers should be clear, honest, and complete, accurate and consistent with all descriptions, promises, claims of limitation to be in accordance with actual conditions.
  • Photographs and artwork should be accurate portrayals and current reproductions of the products and services.
  • All marketing contacts should disclose the name of the sponsor and each intent/purpose. No one should make offers or solicitations in the guise of one purpose when the intent is a different purpose.
  • Every offer should clearly identify the marketer's name and address and/or phone number for which the consumer may contact them.
  • Offers should not be mistaken for bills, invoices or notices from public utilities or government agencies.

III. SPECIAL OFFERS AND CLAIMS

Terms and conditions for the use of the word "free" and other similar representations.

IV. SWEEPSTAKES

Terms and conditions for sweepstakes and prize promotions.

IX. DIGITAL MARKETING

Email Authentication: Marketers that use email for communication and transaction purposes should adopt and use identification and authentication protocols.

Use of Software or Other Similar Technology Installed on a Computer or Similar Device: Marketers should not install, have installed, or use, software or other similar technology on a computer or similar device that initiates deceptive practices or interferes with a user's expectation of the functionality of the computer and its programs.

X. TELEPHONE MARKETING

Restricted Contacts: A marketer should not knowingly call or send a voice solicitation message to a consumer who has an unlisted or unpublished telephone number or a wireless device except in instances where that specific number was provided by the consumer to that marketer for that purpose. A marketer should maintain an in-house Do-Not-Call list and refrain from calling numbers for solicitation purposes that are on the marketer's in-house DoNot-Call list.

ANA Center for Ethical Marketing mediates consumer inquiries. If a company or a consumer believes a marketing promotion or practice is questionable and may warrant a formal review by the ANA Ethics Review Committee which receives and investigates consumer complaints, consumers and companies may file a complaint.

You may view our current and past reports for listings of companies that the Committee has found to be out-of-compliance. Our first step in the process is to reach out to companies with the complainant's concerns and request an investigation and response. The Committee's leading role is to bring awareness and education regarding industry standard practices. It is our experience that most companies resolve the matter fairly quickly. The Committee will only publicize its findings if the company has either responded that it will not come into compliance with industry standards or does not respond at all to repeated attempts to resolve the issue.

If you are interested in knowledge-sharing and connecting with other ANA members about this issue and marketing and ethics, there are different opportunities to get involved:

  • ANA Ethics Review Committee: This committee reviews and recommends actions on marketing and ethics complaints and educates companies and consumers.
  • ANA Ethics Policy Committee: This committee reviews pending activities at the federal and state levels; learns about best practices and key topics and provides input into guidance on related ethical standards and compliance issues.

If you have questions or want to get more involved in marketing and ethics, please contact ethics@ana.net. We look forward to collaborating with you in our shared efforts to ensure good business practices, consumer protection in the marketplace, and consumer trust by providing accountability.

Source

"ETHICS ALERT: Consumer Fraud — In Your Name or on Your Platform — Is at a Crisis Level: An Opportunity for Brands." Lisa Brown Shosteck, ANA Center for Ethical Marketing, 10/21/22.