I’ve never bumped into a live Ouroboros, but if I did, the sight would stop me in my tracks. “OMG! I didn’t think an animal could do that!”
The mythical creature, often depicted as a snake or dragon, has a strange epicurean craving: itself. Some representations show the animal chowing down on its tail, and I assume the meal continues from there. Historians believe the Ouroboros first appeared around 1600 BC. For ancient people, the Ouroboros symbolized harmony in opposites and renewal. Life from death, sustenance from hunger. Hopeful themes that we needed at a time when there were no scientific explanations for geological disasters, famine, floods, and plagues.
But for me, the Ouroboros is a metaphor for self-destruction. A risk plaguing every Sales Ethics Hall of Shame inductee since I began the award in 2013. As with prior years, the stories you’re about to read reveal the calamitous outcomes that occur when corporate managers are so ravenous for cash, they engage in deceitful behaviors and practices. Like the Ouroboros, their companies are sometimes consumed in the process.
Just beyond the edges of honesty and truth lies an open cesspool of malfeasance. An enticing spot for executives who are unfettered by the deliberate shackles of corporate governance. First, get your shoes a tiny bit wet. Then, jump in, hands and feet, and splash around. Even though the environment is putrid, it’s a formula for driving short-term revenue results.
“Integrity in combination with brains technically and efficiently trained is the highest priced, best paid product in the world. It is a rare and most valuable combination,” James Samuel Knox wrote almost 100 years ago in his 1922 book, Salesmanship and Business Efficiency.
Right now, Jim Knox is twirling in his grave at around 3,000 RPM.
For induction into the Sales Ethics Hall of Shame, companies must satisfy three criteria:
1. The primary purpose of the enterprise cannot be to sell an illegal product or service, like crystal meth or human trafficking.
2. More than one employee must be involved in unethical activity. Scams involving a single, rogue employee do not qualify for consideration.
3. Any chicanery must be repeatable and scalable—in other words, embedded in the company’s business process.
Presenting this year’s Sales Ethics Hall of Shame inductees:
Anheuser India. The beer’s on ice. So is the whistleblower.
Anheuser-Busch InBev NV, the Indian unit of Anheuser used third party sales promoters to make illegal payments to Indian government officials. “Anheuser-Busch recorded improper payments by its sales promoters in India as legitimate expenses in its financial accounting, and then exacerbated the problem by including language in a separation agreement that chilled an employee from communicating with the SEC,” Kara Brockmeyer, chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit, said.
“AB InBev is the fourth company in the past 18 months penalized by the SEC for its restriction of would-be whistleblowers,” according to a September 16 Wall Street Journal article, SEC Says Anheuser-Busch InBev Indian Unit Made Improper Payments to Officials.
Anheuser won’t feel much pain. The scam cost the company about $6 million in penalties and fines. Last year, Anheuser’s global operations earned $9.22 billion in profit alone.
Premier Cru Wines. “May I suggest the 2015 Ponzi?”
Premier Cru had a reputation for offering great deals on “future arrivals” of the finest vintage wines, and many of the world’s wealthiest people bought into the idea. One connoisseur, Lawrence Wai-Man Hui, was so enthralled that he allegedly paid the company $981,000 for 1,591 bottles. Alas, he received fewer than 100. This year, Premier Cru’s founder, John Fox, faced up to 20 years in prison for wire fraud, but a plea deal reduced his sentence to just 6.5 years.
“The Oakland-based U.S. Attorney charges that Fox conducted a fraudulent scheme, offering wines he didn’t have and using customers’ money to secure wines he owed other clients, wrote Peter Hellman in an August 19, 2016 article in Wine Spectator, Owner of Premier Cru Will Plead Guilty. If this sounds like Madoff, it is – just with wine.
Prosecutors allege Premier Cru’s scheme was in full operation from about 2009 to 2015, when the company went belly up. “In its bankruptcy petition, the firm declared $70 million in debt, mostly unfulfilled orders paid for by almost 9,000 customers in 45 states and 18 countries. It had less than $7 million in assets, mainly wine in its warehouse space.”
The prosecution’s case against Fox ultimately focused on a single fraudulent wire transaction: an undated transfer of $102,271 from H.W.M.L. – the same initials as Lawrence Wai-Man Hui.
Vitamin Water. Faulty math.
“Vitamins + water = all you need.” In 2009, the Center for Science in the Public Interest (CSPI) found this equation hard to swallow, and filed a class-action lawsuit against Coca Cola, Vitamin Water’s parent. The lawsuit cited other sketchy Vitamin Water claims, including “this combination of zinc and fortifying vitamins can . . . keep you healthy as a horse,” and that the drink could reduce the risk of eye disease, promote healthy joints, induce feelings of relaxation, or otherwise bring about a “healthy state of physical and mental being.” One nutritional tidbit that Vitamin Water’s marketers thoughtfully omitted: each bottle contains about 32 grams of sugar, just 9 grams less than a can of Coke.
The lawsuit was settled in April, 2016. “We’re pleased to have a resolution that improves the labeling and marketing of Vitamin Water and will help consumers recognize that the drink contains eight teaspoons of sugar,” said CSPI litigation director Maia Kats. In addition to dropping the false advertising claims, Vitamin Water’s packaging will now include the words, “with sweeteners.”
Lumosity. “Science”: make it part of your sales toolkit!
“Lumosity preyed on consumers’ fears about age-related cognitive decline, suggesting their games could stave off memory loss, dementia, and even Alzheimer’s disease,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “But Lumosity simply did not have the science to back up its ads.”
Lumosity hawked their claims through TV, radio, and social media. The company used “TV and radio advertisements on networks including CNN, Fox News, the History Channel, National Public Radio, Pandora, Sirius XM, and Spotify. The defendants also marketed through emails, blog posts, social media, and on their website, Lumosity.com, and used Google AdWords to drive traffic to their website, purchasing hundreds of keywords related to memory, cognition, dementia, and Alzheimer’s disease,” according to the FTC complaint.
But wait, there’s more. Lumosity also exploited its customers by offering incentives for providing recommendations. “The [FTC] complaint also charges the defendants with failing to disclose that some consumer testimonials featured on the website had been solicited through contests that promised significant prizes, including a free iPad, a lifetime Lumosity subscription, and a round-trip to San Francisco.” In biz-dev, we have a euphemism for this: loyalty incentives.
SwanLuv. Dude! I have this awesome idea for a startup: a “casino for marriage.”
In December, 2015, startup SwanLuv offered aspiring newlyweds a unique opportunity: up to $10,000 toward a dream ceremony. How? Sign up and stay married. Thousands of people bit the bait. But the company’s business model depended on failed marriages to fund new ones, and Swanluv up to 25 years to claw back their initial investment – with interest! It was all in the fine print, not that SwanLuv’s glassy-eyed prospects took the time to read it, let alone consider the risks.
Then, all of SwanLuv’s intentions crumbled. On Monday, February 15, 2016, SwanLuv announced that “actually, no – it would not pay for a single ceremony. Instead, it would let friends and relatives pay for it, providing a crowdfunding platform similar to GoFundMe,” The Washington Post reported (A Website Offered to Pay for Weddings. Then It Came Time to Write the Check).
Some pundits, like Jeff Reid, Founding Director of the Georgetown University Entrepreneurship Initiative, saw SwanLuv’s failure as tactical problem. He said that SwanLuv could have launched with good intentions, and that it collapsed before it could deliver on the promises. “There’s a line you don’t want to cross,” he said, “in terms of over-promising.”
But Reid should know better. This wasn’t over-promising. SwanLuv was a horrible premise for a startup that unfortunately got launched.
Wounded Warrior Project (WWP). Tug on the heartstrings of others, and live large.
WWP, the largest US veteran’s charity, accepted $350 million in donations last year alone. But according to a CBS News report, only 54% of WWP’s funds provided direct benefits to veterans. The rest went to overhead. “Spending on conferences and meetings skyrocketed from $1.7 million in 2010—the year after [Steven] Nardizzi became CEO—to $26 million in 2014,” according to a Fortune report. Nardizzi and WWP COO Al Giordano were fired by WWP’s board of directors in March.
Former WWP employees spoke up about the charity’s extravagant spending that apparently began when Nardizzi became CEO. At a 2014 annual conference at a luxury resort in Colorado, one employee recounted that Nardizzi “rappelled down the side of a building. He’s come in on a Segway. He’s come in on a horse.”
“More than 40 former employees told CBS News that spending by the charity was out of control. Two former employees were so fearful of retaliation they asked us not to show their faces,” according to the CBS report. “It was extremely extravagant. Dinners and alcohol and just total excess,” one said. “I mean, it’s what the military calls fraud, waste and abuse.”
Youi. The company’s tagline: “We get you.” Ain’t that the truth!
Youi, a large insurance provider based in Australia, had a unique selling model. Imagine you wanted a quote for car insurance. So you visit Youi’s website, but find no option to receive this information online. Instead, you’re informed that you must talk directly with one of Youi’s sales reps. That’s when trouble starts.
This year, five internal whistleblowers stepped forward to expose Youi’s sales practices. They describe a “company culture [that] encouraged sales staff to defraud potential customers on a large scale by billing them for policies they never signed up for. The whistleblowers also say customers are having claims rejected due to a cult-like corporate culture that drives staff to falsify insurance documents to make sales. Youi’s customers are left paying for policies that don’t actually cover them,” according to an article, Does Youi Owe You? Insurer Accused of Billing without Consent. Youi’s tactic for direct rep involvement with prospects is key for perpetrating the scam, and it has propelled the company’s growth.
“On the phone, customers are often told they can’t be provided with a quote until credit card numbers are handed over. Once the credit card details are secured, some of Youi’s sales representatives put them through as a sale, no matter what the customer asked for.” According to one rep, “They would say they needed to get credit card details to [email] a quote. Then they would activate the policy without telling the client.” Youi’s revenue was $654 million in 2015, up from $71 million in 2011.
“Even if a customer tells the sales representative they don’t want the policy, their credit card details will often be billed. ‘If I wanted a sale, what I would say is OK, that’s your quote, just to hold the price, if you give me your credit card details we can put it in the system,’ says another whistleblower.” Said a third, ‘Quite often a client would ring within a cooling off period and want to cancel that policy – and it would not be done.’” You can read additional complaints by clicking here.
How do customers perceive this experience? One described it as “probably one of the worst I’ve ever had in my life.”
In August, Youi’s senior management announced their intention to plead guilty to misconduct charges filed by the New Zealand Commerce Commission. “We have made some mistakes and acknowledge that even one is simply one too many, said Danie Matthee, Youi’s CEO. “I would like to apologise to every affected customer personally and provide each one with the assurance of our commitment to achieving only the best customer outcomes.”
Trump University. No BS degrees here. Just degrees in BS.
Trump “University” (I am compelled to add quotes) began in 2005, and ceased operations in 2010. The company made this year’s Hall of Shame because litigation against the company is still pending and . . . because . . . well, by now, you know.
In Trumpian fashion, the ad claims were yuuuuggggge. “He’s the most celebrated entrepreneur on earth . . . And now he’s ready to share—with Americans like you—the Trump process for investing in today’s once-in-a-lifetime real estate market.” The ad shared that Trump had “hand-picked” his instructors, and ended with a backhanded compliment for prospective students: “I can turn anyone into a successful real estate investor, including you.”
But the New York State Attorney General’s (AG’s) office considered Trump U a sham, in part because the term University did not conform to state requirements. The AG filed a complaint against the Trump University. Among the allegations, “no specific Donald Trump techniques or strategies were taught during the seminars, Donald Trump ‘never’ reviewed any of Trump University’s curricula or programming materials, nor did he review any of the content for the free seminars or the three-day seminars.”
Instead, the attendees were served motivational Pablum. “The contents and material presented by Trump University were developed in large part by a third-party company that creates and develops materials for an array of motivational speakers and seminar and timeshare rental companies.” As for Trump’s physical presence at Trump University? The closest the attendees got to Trump was standing next to a life-sized photo of The Donald – for a Tweetable photo op, of course.
The Trump U Sales Playbook that would work well at your local used car lot. “If they can afford the gold elite don’t allow them to think about doing anything besides the gold elite,” one paragraph advised. Such high-pressure selling tactics were cited in the AG’s complaint:
“This bait and switch was laid out in the Trump University Playbook (“Playbook”), which provided step-to-step directions to Trump University instructors on what to tell students during the seminars. . . . Trump University instructors and staff were given detailed guidance as to how to build rapport and approach consumers one-on-one to encourage further purchases. Trump University representatives were explicitly instructed to push the highest priced Elite programs. Even when students hesitated to purchase the expensive programs, Trump representatives were provided stock responses to encourage purchases, including encouraging students to go into debt to pay for the Elite programs.”
Trump University exploited and abused its salespeople, too. According to a 2016 article in the New Yorker, Trump University: It’s Worse Than You Think, former Trump University salesperson Ronald Schackenberg recounted working with one couple which included a man who was on disability. He explained, “After the hard-sell sales presentation, they were considering purchasing the $35,000 Elite program. I did not feel it was an appropriate program for them because of their precarious financial condition.” Schnackenberg said that his bosses reprimanded him for advising the couple to select a lower-cost alternative. Another salesperson then “talked [the couple] into buying the $35,000 program after I refused to sell this program to them,” he testified. “I was disgusted by this conduct and decided to resign.”
The Trump Network / Ideal Health. 2,187 people X $20 = A Lot of Money.
“The Trump Network was a marketing company that sold vitamins and beauty products. Within a few years, the company fell on hard times, leaving some salespeople in tough financial straits,” The Washington Post reported on March 24 (Some say Trump Network let them down). Trump “became involved in an industry that consumer advocates had long criticized as promising financial independence to sales recruits but rarely delivering it.”
When Donald Trump licensed his name to Ideal Health, salespeople were thrilled. “Oh, my God, people cried when they heard it was him,” said Jenna Knudsen, who was a top producer at Ideal Health at the time. “They cried and looked at each other and said, ‘We’re going to be millionaires!’”
That didn’t work out, exactly. “In one complaint to the FTC, obtained through a Freedom of Information Act request by The Washington Post, one former sales representative recounted spending $1,887.75 on starter kits and other materials. ‘They kept tricking me into believing that I will make money just by selling more products and inviting more people, but the rate of return is so low,’ wrote the consumer who is not identified. ‘In other words, they are scamming and deceiving people, making them believe that if they ‘just hang in there’ they will make money.’”
Another rep, Sara Harper, said “A picture was painted that [Trump] was involved at a level of business decision-making that I don’t think he really was.” As sales representative Yvonne Zook explained, “With Trump coming in, they hyped it up to make us believe, oh, it’s not going to take us long now; we’re going to make money so much faster.”
Most of the controversy comes from how sales representatives were rewarded and recruited. Many were wowed by a de-facto pyramid scheme: “2,187 people X $20 = A Lot of Money.” Multi-level marketing companies are legal, but the FTC prohibits pyramid schemes.
“A Trump Network compensation plan shows that those in sales were promised big rewards for recruitment. A hypothetical example presented by the company showed that salespeople could build ‘levels’ of salespeople under them and would earn commissions of $100, $25 or $20 each time a new recruit bought a business starter kit for $497.”
“Extraordinary growth on Level 7.” – Sounds like a Trumped-up promise.
Mitsubishi. How many miles per gallon would you like this vehicle to get?
When car makers release mileage ratings for their vehicles, they are assumed to be honest. But in lieu of tests, Mitsubishi took shortcuts by using rudimentary desktop calculations. And when tests were conducted, Mitsubishi manipulated resistance ratings to produce better mileage results. In April, Mitsubishi admitted to falsifying data on four models, including mini-cars sold only in Japan, and others sold under Nissan Motor Company’s brand name. It’s not hard to understand why: higher mileage ratings help sell vehicles. And this year, Mitsubishi disclosed that it has been engaging in such deception for 25 years.
“Investors responded by pushing Mitsubishi shares down by 10%. The fuel test scandal has now erased half of the company’s market value, and its shares are sitting at a record low,” according to the website, KTLA.com. At the time the article was published, Mitsubishi stock sold for $3.40 per share, well below its December 1, 2015 high of $8.42. Since then, the stock has rebounded slightly to $4.46 (11/13).
The scam forced Mitsubishi to book a one-time loss of $479.5 million in 2016, more than triple the original estimate. Mitsubishi will use part of the funds to pay owners of the affected vehicles. Each mini-car owner will receive $960, while owners of other models will receive $290.
When news of the scandal broke, Mitsubishi Motors said its management created an “environment for fraud.” In May, Mitsubishi President Tetsuro Aikawa and Executive Vice President Ryugo Nakao announced they will leave their positions effective June 24. “The Japanese government called the situation ‘extremely serious,’ noting Mitsubishi violated the trust of its customers,” according to a UPI report, Mitsubishi Offices Raided after CEO After CEO Admits Fuel Economy Deception .
The incident marks the first time a Japanese carmaker has admitted misconduct in reporting fuel efficiency.
Mylan. Outcry? I don’t hear any outcry. Do you hear any outcry?
Adults and children at risk of severe allergic reactions carry EpiPen injectors, a Mylan product, in the event of emergencies. “After acquiring the injectors in late 2007, Mylan has raised the price 17 times by a total of 548%,” according to a report in The Wall Street Journal, CEO of EpiPen Maker Defends Price (September 22). That leap calls into question whether the company’s costs have escalated in tandem.
Mylan’s CEO, Heather Bresch, cited rising costs for sales, marketing, and disease-awareness efforts. Really? And stratospheric price hikes are only part of the shenanigans. The US Government has accused the company of overcharging the federal-state Medicaid program. “Andy Slavitt, acting administrator of the Centers for Medicare and Medicaid Services, said Mylan wrongly classified the emergency epinepherine product as a generic when it should have been classified as a brand-name product . . . In doing so, Mylan paid a smaller rebate of 13% or about $163 million when it should have been paying a rebate of 23.1% or more,” according to a Wall Street Journal article, US Disputes EpiPen Fees. Seems the company wants things both ways: Mylan has received significant protection from the FDA, which has limited its competition.
Second, to ameliorate concerns from a congressional committee investigating the company’s pricing strategy, Mylan performed creative profit calculations. Bresch said Mylan’s profit was a paltry $100 for a two-pack of injectors, on a list price of $608. But in response to questions from The Wall Street Journal, “Mylan said that the profit figure presented by Ms. Bresch included taxes, [a fact that] the company didn’t clearly convey to congress. The company substantially reduced its calculation of EpiPen profits by applying the statutory US corporate tax rate of 37.5% – five times Mylan’s overall tax rate last year. Without the tax-related reduction, Mylan’s profits on the EpiPen two-pack were about 60% higher than the figure given to Congress . . .”
In September, representative Elijah Cummings of the House Oversight committee said, “We didn’t believe Mylan’s numbers last week during their CEO’s testimony, and we don’t believe them this week, either.” Last year, Mylan moved its headquarters to the Netherlands for tax purposes.
Theranos. First, we must become billionaires. Then we’ll worry about test accuracy and quality control.
“In Arizona, Theranos successfully lobbied for a law allowing laboratories to provide blood tests directly to patients without involvement by doctors, who are trained to question unusual results,” The Wall Street Journal reported in October (Flawed Theranos Tests Hurt Patients). That effort provides a clue about the company’s motivation: less oversight means greater profit. Arizona Governor Doug Ducey bought the company’s lobbying rational, and signed a law that granted the company its wish. He prematurely lauded the company’s CEO, Elizabeth Holmes, citing her “devotion to serving and empowering patients with new and improved technology.”
Clueless about the technology, Ducey passed a bad law, and jeopardized the health of thousands of Arizona residents. According to the Wall Street Journal article, Theranos “left a trail of agonized patients who had been drawn to Theranos by its claims of convenience, low cost and reliability . . . Theranos failed to maintain basic safeguards to ensure consistent results, according to regulators, independent lab directors and quality control experts.” Bypassing physicians in the information chain removed a crucial safeguard for patient care.
“A federal inspection report said a Theranos laboratory ran an important blood test on 81 patients in a six-month period despite erratic results from quality-control checks meant to ensure the test’s accuracy.” The test measured how long it takes blood to clot, an important indicator for patients who are at risk for having strokes or blood disorders. For patients taking blood thinners, such as warfarin, inaccurate measurements can have fatal consequences. “Too much warfarin can cause fatal bleeding, while too little can leave patients vulnerable to clots and strokes, according to medical experts.” Inspectors allege that Theranos released test results to patients even when the results violated the company’s own quality assurance requirements. Patients have filed at least ten lawsuits against Theranos in Arizona and California.
Holmes has admitted her company’s technology was a fraud, and she relied on secrecy to perpetuate the scheme. According to an article in Vanity Fair, “When employees questioned the accuracy of the company’s blood-testing technology, it was [COO Sunny] Balwani who would chastise them in e-mails (or in person), sternly telling staffers, “This must stop,” The Wall Street Journal reported. [Balwani resigned in May.] He ensured that scientists and engineers at Theranos did not talk to one another about their work. Applicants who came for job interviews were told that they wouldn’t know what the actual job was unless they were hired. Employees who spoke publicly about the company were met with legal threats. On LinkedIn, one former employee noted next to his job description, “I worked here, but every time I say what I did I get a letter from a lawyer. I probably will get a letter from a lawyer for writing this.” If people visited any of Theranos’s offices and refused to sign the company’s lengthy non-disclosure agreement, they were not allowed inside.
Tyler Shultz, grandson of former Secretary of State George Shultz, worked for Theranos and is currently embroiled in a legal battle with the company for exposing their internal testing discrepancies. “Fraud is not a trade secret,” Tyler Shultz said. “I refuse to allow bullying, intimidation and threat of legal action to take away my First Amendment right to speak out against wrongdoing.”
Update: In October, 2016, Theranos shuttered its blood-testing facilities and its management has decided to refocus its efforts on developing products for outside labs, hospitals, and doctors offices. Federal regulators have proposed banning CEO Holmes from being involved in any blood-testing company for at least two years.
Honest Company. Our supply chain will cleanse all those bad ingredients from our products.
Honest Company became a valuable marketer of household cleaning supplies and diapers partly by bragging about ingredients that were absent from its products – namely, SLS or sodium lauryl sulfate. SLS, in case you didn’t know, is common to popular products like Colgate toothpaste and Tide laundry detergent. But Honest Company told consumers that SLS irritates skin, and placed it at the top of its Honestly Free Of . . . label. The company achieved $1.7 billion in market valuation in less than four years.
In 2016, the Wall Street Journal commissioned two independent laboratories to verify Honest Company’s SLS-free claim. And . . . “our findings support that there is a significant amount of sodium lauryl sulfate in Honest’s detergent,” said Barbara Pavan, a chemist at Impact Analytical, one of the testing labs. The second lab corroborated those results.
Honest Company disagreed with the findings. “We do not make our products with sodium lauryl sulfate,” said Kevin Ewell, Honest Company’s manager of R&D. Confused?
Hang in there, because there’s more: “Honest said its manufacturing partners and suppliers have provided assurances that its products don’t contain SLS beyond trace amounts. Honest provided the Wall Street Journal with a document it said was from its detergent manufacturer, Earth Friendly Products LLC, that stated there was zero “SLS content” in the product. Earth Friendly, in turn, said the document came from its own chemical supplier, a company called Trichromatic West Inc, which it relied on to test and certify that there was no SLS,” according to the Wall Street Journal article, Laundry Detergent from Jessica Alba’s Honest Co. Contains Ingredient It Pledged to Avoid (March 10). And Trichromatic sources its products from India-based Galaxy Surfactants (emphasis, mine).
Still with me? Good . . . “Trichromatic told the Wall Street Journal the certificate wasn’t based on any testing and there was a ‘misunderstanding’ with the detergent maker. It said the ‘SLS content’ was listed as zero because it didn’t add any SLS to the material it provided to Earth Friendly and ‘there would be no reason to test specifically for SLS.’” (italics, mine)
Clear as mud. This finger pointing and semantic obfuscation isn’t helpful to customers. But what about the claims that SLS is dangerous in the first place? “In its pure form SLS can cause skin rashes, but many consumer products companies including P&G, Colgate-Palmolive Co. and Seventh Generation Inc. have vouched for its safety when used in their products.” That doesn’t matter. Jessica Alba, co-founder of Honest Company, describes SLS as a “toxin” in her 2013 book, The Honest Life.
The Wall Street Journal’s investigation caused Honest Company to revise its Honestly Free Guarantee. Before, the company described its products as “honestly free of” dozens of ingredients, including SLS. Then, it tweaked the semantics ever so slightly to say its products are “honestly made without” those ingredients. And statements that the ingredients the company eschews are “risky” or “toxic”? Scrubbed clean off the website.
Verizon. Free Supercookies! But we’re not telling whether we just gave one to you.
Every digital native knows that the non-edible kind of cookie tracks what people do online. We live with these cookies, and we’ve devised clever ways to defeat them. Mostly, we know cookies exist, even though we don’t pay specific attention to their presence. But supercookies are different “because they create unique identifiers that cannot be deleted by users,” according to a Wall Street Journal article, Verizon Fined in ‘Supercookie’ Investigation (March 8).
And sometimes, consumers don’t know their privacy has been invaded. The FCC investigated Verizon following complaints that supercookies were used to deliver ads from 1-800-FLOWERS.com to a rich, vulnerable target demographic: male Android smartphone users ages 25-44 with incomes higher than $75,000 prior to Valentine’s Day, 2014. Ka-ching!
Such demographic targeting occurs all the time. The ethical issue is that Verizon used supercookies without disclosure and consumer consent. “Consumers care about privacy and should have a say in how their personal information is used, especially when it comes to who knows what they’re doing online,” said FCC Enforcement Bureau Chief Travis LeBlanc. Verizon will pay $1.35 million to settle the case.
Among this year’s Sales Ethics Hall of Shame inductees, Premier Cru, SwanLuv, Trump University, and Trump Network were all consumed a la the Ouroboros. The others have survived, but I have no doubt they lost some vital pieces and parts. In particular, customer trust.
President-elect Trump, who is directly connected to two companies in 2016’s Hall of Shame, has pledged to cut business regulation. Que sera, sera. I expect a very healthy crop of candidates for 2017’s Sales Ethics Hall of Shame.
Author’s note: some readers might wonder why Wells Fargo didn’t make this year’s list. The company was inducted into the 2015 Hall of Shame.