Ethics & Online Marketing

No one would question that business ethics are being scrutinized now more than ever. Unethical business dealings have already toppled giants like Enron and could very well lead to the demise of its accounting firm, Arthur Andersen. The Internet is not immune to the subject of ethics — spam, privacy, security of personal data, and general issues of trust are all factors the legitimate online marketer must contend with.

Consumers’ lack of trust is illustrated by a recent privacy survey conducted by IBM in which 78% of responding U.S. consumers stated that they did not complete an online purchase because they were concerned about how their personal data might be used by the site. A survey by Jupiter backs up these results — they found that 58% of respondents worry about companies selling their personal information to others. So how can we, as online marketers, combat these powerful perceptions?

We need to start by remembering that proper marketing ethics in the off-line world apply to the online world as well. For example, false advertising is still a no-no. The American Marketing Association, has codified its standards in its statement that consumers “should be able to expect that products and services are safe and fit for intended uses; that communications about offered products and services are not deceptive; and that all parties intend to discharge their obligations, financial and otherwise, in good faith.”

Simply put, never ever mislead your customer, be prepared to back up your claims, and always deliver on what you sell.

Online marketers face unique challenges created by ecommerce. In order to gain the trust of consumers, online retailers must *clearly* spell out their privacy policies on their sites. Consumers should know *exactly* what the site plans on doing (or not doing) with any personal information or indirect data (cookies, IP addresses, etc.) they divulge as a result of visiting and interacting with a web site. If a site’s policy is to sell OR share consumer information with business partners, that fact needs to be disclosed.

Another smart tactic is to do business only with those companies that practice similar ethical marketing activities. For example,if you’re planning an advertising campaign, do due diligence on those sites on which you plan on advertising to ensure that they do not support spamming or privacy infringement activities. Make sure that the sites have clear privacy statements stating their anti-spam policies, and check to make sure that email newsletter subscribers are “confirmed” opt-in (the latest vernacular for “double opt-in”) and that it is simple to unsubscribe.

The Offenders & The Challengers

As we all know, spammers throw all considerations of privacy out the window. Spam or “unsolicited commercial email” (UCE) is primarily viewed as bulk delivery of commercial emails to people who have not requested them and have no prior relationship with the company or individual making the offer.

Unfortunately, spam is increasing, despite ISPs attempts to block offenders. A recent study by Executive Summary Consulting, Inc. and Quris revealed that, on average, spam constitutes 37% of an individual’s inbox, the highest portion of any email type. And as a growing number of ISPs attempt to block spammers, there has been an upsurge of spammers hacking into and utilizing corporate accounts to send their spam from. To the recipient, the spam seems to have come from the corporation. This “hijacking” goes beyond irritating customers, as the victim company now runs the risk of ISPs blocking any mail coming from their domain, negatively impacting their ability to function.

ISPs aren’t the only ones trying to do something about spam. The courts as well are attempting to crack down on spam. As recently as May 28th, a lawsuit was filed by New York Attorney General Eliot Spitzer against MonsterHut alleging fraudulently advertising and deceptive business practices. MonsterHut, which claimed that its email lists were 100% double opt-in, had more than 750,000 people ask to be removed; more than 40,000 of these people, when unremoved, registered complaints with MonsterHut’s ISP (which eventually pulled the plug on the company). According to the Wall St. Journal, the Attorney General is seeking a “court order that would prevent MonsterHut from conducting future malpractices, would require the company to disclose how it obtained all the e-mail addresses on its lists and would require MonsterHut to pay civil penalties and court costs for violating New York’s consumer protection laws.”

The U.S. federal government is also pursuing spammers through its Federal Trade Commission (FTC). The FTC is specifically targeting deceptive spam practitioner such as scams selling domain names that do not exist. According to one FTC representative, the FTC might soon pursue spammers who use deceptive subject headers or those who use false removal tactics.

In Europe, the anti-spam laws are even more strict, and U.S.-based marketers need to be aware of this as they collect email addresses and begin to market overseas.

As the proliferation of spam continues, the outcome is sure to be more and more lawsuits and more spam regulation legislation (which we will be covering in the next newsletter).

Related Links:

U.S. Federal Trade Commission

SpamCon Foundation

Coalition Against Unsolicited Commercial Email

American Marketing Association

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