What Are Various Forms of Consumer Exploitation?

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In a perfect world, the age-old business mantra "Customer Is King" would apply to any industry and market. Yet, this rarely happens. False advertising, deceptive billing, misuse of personal data and other unfair business practices are widespread. In today's hyperconnected era, customers demand transparency. Over 75 percent of buyers say they don't trust the accuracy of food labels. Approximately 37 percent would switch brands in favor of those providing more information about their products and services. If you want your business to thrive, consumer protection should come first on your list.

False Advertising

As a business owner, it's your responsibility to avoid making deceptive claims. This practice can hurt your reputation and brand image. Many companies promote mediocre products using claims like "guaranteed results" or "scientifically proven." In 2016, Volkswagen was sued over false clean Diesel fuel claims. Red Bull had to pay $13 million in 2014 for its famous slogan that Red Bull gives you wings. This claim implies that the beverage improves reaction speed and mental focus, which lacks scientific proof.

In 2013, Kellogg received a $4 million fine for saying that Mini-Wheats cereal boosts children's memory, attentiveness and cognitive function, and a year later, Walmart had to pay $66,000 in fines after falsely advertising the price of Coke in New York. Unfair business practices like these are meant to entice customers into buying products, but often they lead to costly lawsuits, revenue loss and even bankruptcy.

Bait and Switch

This common practice involves advertising specific products at an attractive price, then when customers decide to buy, they are told that the goods are no longer available but that other similar, pricier products can be purchased. For example, real estate brokers often advertise extremely low mortgage rates, knowing that most customers will not be able to qualify for those rates. Instead, applicants are offered higher rates once they come into the broker's office to find out more.

Deceptive Pricing

Deceptive pricing is a common form of false advertising. For instance, many stores increase product prices before launching a special offer that actually brings the price back to normal. Another example is advertising a specific item as free, but omitting the fact that customers have to buy a pricier product in order to qualify.

Deceptive Billing

From popular brands to small businesses, many companies use aggressive and deceptive billing practices to exploit their customers. Some add hidden fees to the initial price of a specific product. Others charge higher rates once a customer decides to buy, claiming that the shelf price is outdated. For example, in 2014, AT&T paid $105 million for its deceptive billing practices. The popular telecom company was billing customers for unauthorized charges and refused to issue full refunds.

Misuse of Customer Data

More than half of customers no longer feel comfortable sharing their data with brands that have been selling or misusing personal information without consent. Up to 78 percent say that their buying decisions are influenced by how companies handle personal data. For example, many organizations collect customer data as part of their email campaigns. Later, they sell that data to third parties or use it for purposes other than the requested service.

The EU General Data Protection Regulation reinforces laws for data protection and privacy for all individuals within the European Union, and international companies that handle EU customer data must comply with the rules as well. The end goal is to increase customer protection and data security internationally.

Signing Away the Right to Sue

Many times, customers fall victim of unfair business practices that void their rights to sue a company in case something goes wrong. Lending agencies, for example, often provide payday loans or credit with huge interest rates, and if customers fail to pay on time, they may end up losing their homes and savings.

These are just a few of the unfair business practices utilized by companies around the world. The list goes on: shoddy work, bogus sweepstakes, failure to deliver online purchases, abusive debt collection and much more. If you care about your reputation, avoid these practices at all costs. In a consumer-centric era, transparency is paramount.

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About the Author

Andra Picincu is a digital marketing consultant with over 10 years of experience. She works closely with small businesses and large organizations alike to help them grow and increase brand awareness. She holds a BA in Marketing and International Business and a BA in Psychology. Over the past decade, she has turned her passion for marketing and writing into a successful business with an international audience. Current and former clients include The HOTH, Bisnode Sverige, Nutracelle, CLICK - The Coffee Lover's Protein Drink, InstaCuppa, Marketgoo, GoHarvey, Internet Brands, and more. In her daily life, Ms. Picincu provides digital marketing consulting and copywriting services. Her goal is to help businesses understand and reach their target audience in new, creative ways.