Deteriorating Retail Ethics

ancient_paztriot · December 16, 2003

Ken McIsaac

Dec 14, 2003-

Ethics: conscience, moral code, principles, moral values

In certain consumer markets, some corporations are increasing their use of unethical tactics to get my money. They use misleading ads, deceptive promotions, and all kinds of trickery. And and some cases, they are doing it in step with their competitors.

Why is this becoming so widespread? One of the main causes is probably the saturation of markets and therefore stronger competition. If creative slight-of-hand ideas in advertising and marketing are used by others to increase profit, what is a corporation supposed to do? To keep dealing fairly and squarely with consumers may cause the company to lose market share, resulting in less money for management and shareholders. One by one each business may feel it is necessary to consider joining the con game.

It is so generally expected by us consumers that we just quietly accept it, and it easily spreads wider. To those retailing in an ethical manner, thanks, but it's too bad that some are ruining the reputation of many. Perhaps you should not wait for us consumers to complain, we are too passive. You could do something yourselves.

Shouldn't we complain?

The following examples cannot all be considered unethical. Certainly there are different opions on what is right and wrong, acceptable or not. These are my own observations and opinions only.

L Tricked again!

Recently I bought a jar of jam boldly displayed at the end of a supermarket aisle. Just what I wanted - the label read Pure Fruit. I thought! At home, when I had more time, I was surprised at what I had actually bought.

Made From

Pure Fruit

LThe shell game: mix and fool

I have seen this sleazy promotion now and again over many years. A display reads 35% off, or only $29.95, but is only for another item in that display. I guess the store manager is hoping the consumer will not pay attention to the price at the till, or will be too embarrassed to refuse paying. Not only dirty pool, but really stupid! Of course I'm pretty stupid too if I don't complain about it, and go back to the same store for more their business.

L A Penny connived is a penny earned

I have department store charge statements that are formatted, to what appears, to get me to pay less than the balance. Retailers sometimes show a profit on high credit charges, and not on selling merchandise, so that might explain things.

In one example the bottom statement line reads This Month's Payment Due $10.00 and Minimum Payment Due $10.00 even though the account balance, shown above this, was considerably more. No thanks I'll pay the account balance.

L Salt - Sugar - Fat

The 3 pillars of good tasting, fast or packaged, profit making food. For many in the food business it's a dilemma. Often it is necessary to lace the product with too much of one or more of these to attract consumers. After all, the competition is doing it, and people love the taste. I love the taste too. Since they are considered bad for my health, except in reasonable amounts, they should show more concern. And I should examine all ingredients carefully and use commone sense. I do read: Nutrition Action Healthletter, a publication of The Center for Science in the Public Interest. www.cspinet.org

L Advertised special?

This is something that I see spreading through some of the stores. The management has a sale and places prominent tags on sale items throughout the store. They also place prominent tags that look similar but are not on sale. Some advertising flyers also use this technique, mixing non sale items with reduced ones, cleverly.

L Slalom through the cosmetic department

When at the mall I often walk through a department store cosmetic department to get to the parking lot. What a layout! The aisles are large triangles wandering around displays. I suppose there is some retailing rationale that says the store will sell a bit more product by slowing passers through. But what about the people that aren't interested in this, at this moment, that are in a hurry? What are they thinking?

L Commercials annoy me, generally

Well there are some cute ads that are easy to watch and listen to, but too many are too noisy, too misleading, too stupid. I watched and heard a broadcaster on Canadian national television explain about 'loud commercials'. The media tech had explained to him that the sound was not louder but it was enhanced to sound louder. ? ? ? ?

If they are meant to be intense and intrusive to capture the viewers attention, well this guy has them muted, and I know I'm not alone!

L Optical Illusions

I'm looking at a display ad in a retail electronics flyer. It shows a Flat Screen TV. It is not a flat panel, thin TV, it just looks like one. The graphic is a three dimensional type but is drawn in such a way that it looks like it has no depth. Did they forget to draw the projection for this 'Flat Screen' TV? And what is the reasoning? will someone traveling to the store be disappointed, but not upset enough to buy something else while there? Weird!

L New and Unimproved Product

If a company sells a particular item and everyone has it, and it still works well, what is it going to do to maintain or increase revenue and profits? If a new and much improved version is not viable and there is a lack of new products to introduce, then a minor facelift and major promotion might work very well.

L Cartoon Alley

For examples of great techniques on how to sell to kids, and for a variety of what is offered in some food categories, I take a trip down the cereal aisle of my supermarket. I'm not saying this is unethical, but should marketing target kids at all?

LSave now, pay later

The 'product' only costs $100 - how can they sell it at such a low price? The refills are $25 ? ? ?

L New Townhouses - Minutes From the Beach

Yeah right! By jet maybe. One such advertisement in this area showed a happy couple by the shoreline. But it was 6 miles away. I suppose if I was living in Moose Jaw it would seem close.

L Loyalty cards make me barf

They add cost to the goods sold, which I guess is mostly borne by the shoppers that don't have the card (ie visitors). But what a nuisance it is carrying and using all these cards! There are too many! Anybody I have ever asked said they didn't like them either. I don't look at it as saving money at the till, but rather as a card to avoid being gouged.

L What kind of a sale is this?

Digital Service only $24.95 a month

for 6 months.

I observed one service provider start with this type of promotion. Then another, then another. This does not seem like a great sale, but perhaps if the text was all the same size, and the after price was stated, I might not be so negative.

L Buyer be wary

30% OFF an item that is grossly overpriced, is still overpriced.

L Shock and TV ratings

Perhaps you are alarmed about the progression of explicit television and perhaps not. I have wondered why it has increased dramatically in recent years and realize that many are interested in this. There is another consideration. Profit and curiosity.

I heard a TV producer, on a national radio documentary, state that their television program ratings were dropping and that they decided to introduce more shock. And so we curious ones are nudged into the herd. Kids too.

L My choice for the worse judgment

On my TV service, the Listings Guide channel has a split screen. The left side awkwardly scrolls through the listings, while the right half blasts commercials at me. Why would anyone promote anything in this way? I want to quickly find out what's coming on next!

L Self awarded awards

Some awards are quite vague, purposely. They are sometimes part of a business self therapy group. I recall an advertisement touting an award from the 'ABCXYZ Home Builders'. It was not specified, but a listing of the awards elsewhere had one for best promotional brochure. Not what a home buyer wants to know.

L Little walking billboards

I would not wear a piece of clothing that has advertising across the front or back. I have seen a three year old tot walking through the mall with the manufacturer's name boldly displayed on the chest. Hey, this is great promotion if someone is willing to do it. Thanks mom and dad!

L Junk food for schools

If those promoting the sale of junk foods in schools were serving time, on a diet of junk food only, I wonder if there views would change. What people will do for money!

~

There seems to be so much that is unethical and in poor taste, in the retail world. I have to wonder if these practices aren't taught in some business administration courses. Deception seems so common and widely accepted. Even some of the larger corporations openly use misrepresentation in their promotion, with no care that I might think badly of them. 'We aren't breaking any laws' would likely be the explanation. They know we don't care and will be back for more!

Things will work out OK because there are so many things we can do in our democratic society, we just have to do them. Make our free enterprise system free. Free to do what is good and honest. Unless we complain and take our business elsewhere when we feel cheated, we will only promote unethical practices in retailing.

ancient_paztriot · December 16, 2003

Frequent-buyer clubs, 0% financing and other so-called bargains are often big on hype but a bust on saving you money. Learn how to ferret out fakes and snag the real savings.

By Liz Pulliam Weston

My dear old granny used to chuckle at store banners that promised big savings. “You’re not saving,” she’d cackle. “You’re spending.”

Everybody, it seems, is trying to save us money by getting us to spend more, whether it’s 0% financing on cars, frequent-shopper cards at grocery stores or those behemoth warehouse stores. Most of the time, what seems like a great deal really isn’t.

0% financing

What’s better than free money? Nothing, if you ask the millions of Americans who stampeded to their local car dealerships when auto makers started advertising 0% loans.

Yet at the peak of the 0% frenzy, only about one in four car buyers who financed their purchases actually got a no-interest loan, according to J.D. Power and Associates’ Power Information Network, which tracks car-buying trends.

The 0% offers get the buyers in the dealerships’ doors, explains analyst Tom Libby, but most don’t get the great deals.

Here’s why:

Not all buyers qualify. You need good to excellent credit to qualify for most 0% deals. About half of Americans have good credit -- a FICO credit score of 720 or above. The other half don’t. If you’ve been late a few times on your bills, maxed out your credit cards or run into other trouble with debt, you might have trouble snagging the advertised rate.

Even if you qualify, you still might not be able to afford the loan. That’s because many low- or no-interest deals have loan terms of just two or three years, which boost the monthly payments. The payments for a $20,000 five-year loan at 5.62% would be $383.13 a month. At 0% for three years, the monthly outlay is $555.55. If the loan is just two years, the payments spike to $833.33. If you can make those payments, great. The best way to pay off most car loans is quickly. But chances are you’ll balk at the higher payment and settle for a longer loan, which means the car ultimately will cost you more.

Even if you can afford the loan, you’ll pay more for the car. Whether you bargain less hard, or the dealer is more resistant, the outcome is the same. A good chunk of the money the car companies lose from 0%t financing is recovered in a higher sales price.

For example: During the past five months, the average buyer of a Ford Explorer who financed with a 0% loan paid $29,824 for the vehicle, according to the Power Information Network, which downloads car purchase transactions from 5,200 car dealer franchises.

By contrast, those who paid cash or got some other type of loan paid $27,952 on average -- a difference of $1,872.

Chevy TrailBlazers, another vehicle that was promoted using 0% come-ons, cost an average $28,916 for those who opted for the “no cost” loan. Others paid an average $27,477 or $1,439 less.

So how do you fight back? Here are some ideas:

Good, old-fashioned bargaining. Get the car’s wholesale price -- what the dealer paid -- from Consumer Reports' New Car Pricing Service (Invoice prices are also available at MSN Autos; see links at left.) and negotiate up from that. Don’t let the sales person sidetrack you into talk about financing until you’ve settled on a price for the car. If he or she asks, “What you can afford to pay each month?” the proper response is: “That’s really none of your business.”

Line up financing first. If you can’t pay cash for a car, shop your local credit union and banks for a good loan, or check into a home equity loan. If the dealer can beat the best rate you find, terrific. If not, you’ll still get a decent deal.

Consider buying used. All the 0% deals helped drive down the price of older vehicles. A two-year-old Ford Explorer XLT can be found for about $16,000 -- about half the cost of the new version. (For more money-saving strategies for cars, see MSN Money's Decision Center, "The best deals on four wheels.")

Frequent-buyer clubs

Grocers have known for years that shoppers with loyalty or discount cards wind up spending a lot more during each shopping trip. According to a 1997 ACNielsen study, they sometimes spend two or three times as much as the average non-card shopper, depending on the store.

That’s because the stuff that’s not on sale is usually priced much higher, compared to the same items at stores that don’t have frequent shopper cards.

Stores get away with this because they know it’s simply too hard to keep track of the prices of more than a few items. You might know a good sale price on milk, for example. But can you rattle off the lowest price your store charges for cottage cheese? Sour cream? Yogurt? Half and half? Mentally walk down the aisles and think of all the stuff you regularly buy. Can you name a good price for each of those items? Can you name any price?

Unless you’re a mental prodigy, or you cheated and consulted a price book (more on that below), you were probably stumped pretty quickly. And grocers count on that.

How do you fight back? You can strategize your shopping, for starters. Get your store’s weekly flyer and plan your menus around that. Or try shopping at stores that don’t use frequent-buyer cards to see if your weekly bill goes down.

If you really want savings, though, consider using the frugal shopper’s best friend: the price book. This can be as simple as a notepad or as fancy as software for your PDA, but it allows you to track the price you pay for various items. Over time, you can see when you’re getting a really good price and also begin to see patterns of when certain items go on sale.

“You’ve got to know your prices,” says Jonni McCoy, author of three books on savings, including “Miserly Moms: Living on One Income in a Two-Income Economy,” “because everyone’s going to try and convince you they’ve got the best deal.”

McCoy started keeping track several years ago after she quit her job to become a full-time mother. She used an old week-at-a-glance calendar someone gave her, entering prices for items like sugar, peanut butter, meat and paper products.

“I was surprised by how much variation there was,” McCoy said -- not just in the prices different stores charged, but the prices the same store would charge from one sale to the next. The same jar of peanut butter might be anywhere from 8 cents to 13 cents an ounce, depending on the sale. Now when she finds something at her lowest “target” price, she stocks up.

Think this is too much effort? Consider that the average family spends $4,000 to $5,000 a year on groceries -- typically its biggest expense after housing and transportation. Even saving 10% on your shopping trips will put $400 to $500 more annually in your pocket. That’s a pretty good return for just a few minutes’ worth of your time each week.

Wise up about warehouse stores

The only thing bigger than these concrete boxes is the line you face at the checkout counter. But you’re saving tons of money, right?

Longtime savvy shoppers are doubled over about now, laughing. They know warehouse shopping is often more trouble than it’s worth.

It’s not just that you may wind up inadvertently with a lifetime supply of cinnamon, as one of my girlfriends did after getting carried away in the spice section.

It’s that the prices aren’t that great.

Take diapers. Costco sells Huggies for what amounts to 22 cents per nappy. That’s the same price you’ll typically find at Target -- and Target’s got more checkout stands.

But you can do even better. Our local grocery store regularly puts name-brand diapers on sale, lowering the price to 13.9 cents each. I recently combined such a sale with a $2 coupon. The store matched the coupon with another $1 off, and now the baby’s bottom is covered for 9.7 cents.

McCoy finds she can buy name-brand paper towels, toilet paper and other paper products for much less at her local store than she can at a warehouse.

“Paper products are usually 250% higher at the warehouse than they are during a good (grocery store) sale,” McCoy says.

But other items are a bargain, and you can spot them if you track prices. Costco sells loaves of Tillamook Cheese for less than $5 each, for example -- a price our local grocery store matches only a few times a year.

Again, you’ve got to know your prices -- and your tolerance for half-hour checkout lines.

No payments until doomsday

Whether it’s computers, carpet or caviar, you can probably find a store willing to let you take it home now and pay for it months or even years later.

Watch out.

The most common ploy with no-payments-until-whenever plans is charging you interest during the supposed payment vacation. The interest charges pile up, but you don’t get the bill until your first payment is due.

The type of transaction could cost you, as well. Some no-payment plans are actually installment loans, which means you can’t use your credit card. And that means you lose the buyer protections a credit card offers. What’s more, applying for an installment loan means you’re applying for new credit, which can put another ding on your credit report.

How do you sidestep the traps? The usual way: by reading all the fine print. Or by bypassing the no-payment deal entirely. Most of the time, you’re better off paying cash for what you buy. That way you’re sure you can afford it, and there won’t be any surprises months down the road.

ancient_paztriot · December 16, 2003

11/12/2003

John Zuccarini, a veteran of cybersquatting disputes, yesterday became the first person convicted under America's new Truth in Domain Names law. In tears, he admitted that he intentionally used misleading web addresses to lure children to porn sites.

Zuccarini is no stranger to domain name disputes, having lost actions to actor Kevin Spacey and companies including FAO Schwarz, Alta Vista and others.

In October 2001, the Federal Trade Commission took action over his practice of registering internet domain names that were misspellings of famous brands or names - known as typosquatting. For example, he registered 41 variations on the name of pop princess Britney Spears so that fans misspelling her name in their browser would be taken to Zuccarini's sites.

The most likely candidates to misspell addresses are, inevitably, children. Zuccarini had at one stage over 5,500 domain names registered, including, to use examples from the latest complaint, teltubbies and bobthebiulder.

Once in a Zuccarini site, users were bombarded with a flurry of pop-up windows displaying ads for goods and services ranging from internet gambling to porn. In some cases, the legitimate web site the consumer was attempting to access also was launched, so consumers thought the hailstorm of ads to which they were being exposed was from a legitimate web site.

And a Zuccarini site is very difficult to leave. In a practice known as mousetrapping, programming code at the sites obstructed surfers' ability to close their browser or to go back to the previous page. Clicks on the 'close' or 'back' buttons caused new windows to open, and more ads to appear - in the hope that the user will click on one and transfer to the advertised site.

Zuccarini, according to the complaint, was paid a referral fee of between 10 to 25 cents whenever a user moved on from his site to one of the sites advertised. The scheme earned him up to $1 million a year, and a huge number of complaints and civil court actions.

These culminated in May last year when a US District Court permanently barred Zuccarini from diverting or obstructing consumers on the internet and from launching web sites or web pages that belong to unrelated third parties. The court also barred him from participating in advertising affiliate programmes on the internet, and ordered him to pay almost $1.9 million in damages.

But Zuccarini did not comply with the order and in September this year was charged under the Truth in Domain Names statute.

This new legislation makes it a crime in the US to use "a misleading domain name on the internet to deceive a minor into viewing material that is harmful to minors on the internet." It carries a maximum sentence of four years.

In addition to pleasing guilty to 49 charges under the domain names law, he also pleaded guilty to one count of possessing child pornography, according to CNet news.com. Zuccarini apparently made a plea bargain with prosecutors, agreeing to a recommended sentence of 30 to 37 months' imprisonment. However, the sentencing judge is not bound by the agreement.

Sentencing is due to take place on 20th February.

ancient_paztriot · December 16, 2003

Scam sites start spoofing secure sites

By Dinah Greek [12-12-2003]

Latest cons show increasing sophistication of cyber-criminals

Online shoppers are being warned to look out for fraudulent websites dressed up as real businesses following the launch of a police investigation into a spoof website scam.

A number of consumers have been duped by unlockedphones-uk.com, which claimed to sell mobile phones at knock down prices. The site, which has now been closed, took consumers' money, but did not deliver the goods.

Shoppers are advised to buy only from secure sites (those with an address that starts https:) using secure socket layer (SSL) encryption. But increasingly, fraudsters are spoofing these addresses.

Unlockedphones-uk.com gave a 'genuine' address and conned people by carrying fake VeriSign and TRUSTe shopping site logos. The site had the golden padlock icon in the bottom right-hand corner of the page and had an internet address that began with 'https:'.

Its security certificate was genuine, but was hijacked from and embedded onto the site.

Steve Roylance, technical marketing director of security specialist company Comodo, warned that the problem with SSL is the certificates, logos, icons and the https url can be spoofed.

He also said providers were taking shortcuts. "Less reputable SSL providers do sometimes cut corners issuing certificates to sites with little or no validation of the individual or entity. This practice could allow rogue web sites through the net."

A final twist saw an address and phone number listed on the website to Mphones, an unrelated company, which called in Scotland Yard after being inundated with calls from angry customers.

Detective Sgt Steve Santorelli of Scotland Yard, who is heading the investigation into unlockedphones-uk, warned that people should always be wary of unrealistic prices. "If it looks to good to be true then it is," he said.

How to spot a fake

Online shoppers should always double click on the padlock icon. If nothing shows up it is a fake. If a window appears, read the details and look for issuer and subject. Also, an error message will appear if the security certificate does not belong to the site shown.

There are tools available to help check a site's security. Comodo has released free software called TrustToolbar and VerificationEngine to help consumers verify websites. TrustToolbar authenticates a visited site. If a site is genuine it shows up in the toolbar.

While not every site is covered, most major brands are. By running VerificationEngine you are able to verify that the site you are visiting (or directed to via email) can be trusted.

www.trusttoolbar.com

www.vengine.com