Corporate Profit Building through Blended Social Media Warfare Tactics

Corporations love to grow profits and will use their corporate image to promote product lines or specific products. They will also use deceptive tactics and create confusion among customers regarding what company offers the best product and value. General corporate image-building tactics and content face little scrutiny from regulators. On the other hand, product marketing efforts are subject to truth- in-advertising standards for product information disclosure in the United States. This has all become more significant in the realm of social media because companies can now open shops on Facebook, Google Shopping, and other sites, and regulators have more and more activity to monitor.

In a June 2015 white paper by Jessica Rich (director of the Bureau of Consumer Protection of the Federal Trade Commission (FTC)), entitled, “FTC year in review: Advertising and privacy in the age of influencers, smartcars, and Fitbits,” Rich points out that corporations are making many unsubstantiated and false claims about the products that they are marketing. The analysis identifies several areas where deceptive tactics are being employed, including deceptive health claims, deceptive endorsements, and native advertising [6]. There are several issues as well as specific cases that the FTC has dealt with in the last few years regarding deceptive tactics:

• ? A California-based online entertainment network engaged in deceptive advertising by paying influencers to post YouTube videos endorsing Microsoft’s Xbox one system and several games. The paid influencers failed to adequately disclose that they were being paid for their seemingly objective opinions [7].
• ? Warner Brothers, Home Entertainment, Inc. settled FTC charges that it deceived consumers during a marketing campaign for the video game “Middle Earth: Shadow of Mordor,” by failing to adequately disclose that it paid online influencers, including the wildly popular PewDiePie, thousands of dollars to post positive gameplay videos on YouTube and social media. Over the course of the campaign, the sponsored videos were viewed more than 5.5 million times [8].
• ? National retailer Lord & Taylor agreed to settle FTC charges that it deceived consumers by paying for native advertisements, including a seemingly objective article in the online publication Nylon and a Nylon Instagram post, without disclosing that the posts were paid promotions for the company’s clothing [9].
• ? A California mining company and its president settled FTC claims that they allegedly defrauded customers using an Internet investment pitch that played on fears of a worldwide financial breakdown due to the Y2K computer glitch [10].
• ? The FTC charged that National Payment Network, Inc. (NPN), headquartered in California, for allegedly violated the FTC Act by deceptively pitching to consumers an auto payment program, both online and through a network of authorized auto dealers, that it claimed would save consumers money. NPN failed to disclose that the significant fees it charged for the service often cancelled out any actual savings; fees averaged $775 on a standard five-year auto loan [11].
• ? The FTC found that nearly 11% of adults in the United States (an estimated 25.6 million people) paid for fraudulent products and services in 2011. Of the 15 specific scams the FTC asked about, the most-reported frauds involved weight-loss products, prize promotions, unauthorized billing for buyer’s clubs or internet services, and work-at-home programs. One-third of respondents first learned of the fraudulent pitch online [12].
• ? The FTC sued 1-800-CONTACTS, the largest online retailer of contact lenses in the United States, alleging that it unlawfully orchestrated and maintained a web of anticompetitive agreements with rival online contact lens sellers that suppresses competition in online search advertising auctions and that restricts truthful and non-misleading internet advertising to consumers on the search results page generated by online search engines such as Google and Bing [13].
• ? Lumosity paid $2 million to settle deceptive advertising charges for its “Brain Training” program, which the FTC charged deceived consumers with unfounded claims that Lumosity games can help users perform better at work and in school, and reduce or delay cognitive impairment associated with age and other serious health conditions [14].
• ? LifeLock was to pay $100 million to consumers to settle FTC charges that it violated a 2010 order in an action brought by the FTC and 35 state attorneys general that required the company to secure consumers’ personal information and prohibits the company from deceptive advertising [14].

In many cases, companies have been formed for the single purpose of defrauding consumers through the use of the Internet to reach a mass audience and without spending a lot of time or money. A website, online message, or spam e-mails can reach large numbers with minimum effort. It’s easy for fraudsters to make their messages look real and credible, and it is sometimes hard for investors to tell the difference between fact and fiction [15]. These fraudsters have mastered the social media warfare tactics of deception and confusion, and they work to steal money from individuals as well as companies.

Social media has also opened more opportunities to embed advertising in other content. According to the FTC, a basic truth-in-advertising principle is that it’s deceptive to mislead consumers about the commercial nature of content. Advertisements or promotional messages are deceptive if they convey to consumers, expressly or by implication, that they’re independent, impartial, or from a source other than the sponsoring advertiser. The FTC requires that

• ? Disclosures are clear and prominent on all devices and platforms that consumers may use to view native ads.
• ? In assessing effectiveness, disclosures should be considered from the perspective of a reasonable consumer.
• ? Disclosures are not effective unless consumers understand them to mean that native ads are commercial advertising.
• ? Disclosures should be in plain language that is as straightforward as possible. An advertiser also should make disclosures in the same language as the predominant language in which the ad is presented [16].