What is Marketing Fraud

Marketing fraud is an illegal practice perpetrated by a company or individual in the promotion of a product or service. At the core of marketing fraud is the act of making false or misleading claims. This includes exaggerating the qualities of a product or service in advertising, selling imitations as the genuine article, or hiding negative aspects or side effects. The goal of marketing fraud is to contact individuals to solicit them for money or other items of value in exchange for something of little value, of little to no efficacy, or not deliver any good or service at all. As a part of marketing fraud there is the promise or implied possibility of monetary gain, investment returns, or other types of rewards. False advertising is a type of marketing fraud.

Breaking Down Marketing Fraud

Marketing fraud is one of the oldest types of fraud, going much further back than the snake oil salesmen who sold tonics that were "absolutely, 100% guaranteed to cure whatever ails you." Consumers can usually protect themselves by adhering to the old adage, "if it sounds too good to be true, it probably is." In the United States, marketing fraud is regulated by the Federal Trade Commission (FTC) as an unfair trade practice.

Marketing fraud can take many forms. Those who would perpetrate such scams generally engage in the following acts:

  • Advertising or offering a good for sale and selling it and collecting the money for it without ever delivering it (without ever intending to).
  • Advertising a good or service and then, once paid, delivering a good or providing a service that is of lesser quality.
  • Pressuring a buyer into purchasing something that they do not want or need.
  • Misrepresenting credentials or expertise to sell a good or service that is unneeded or not effective.

Marketing Fraud and the Internet

The internet is fertile ground for marketing fraud because of the anonymity and the ability to spam messages into inboxes and across message boards and blogs. Indeed, with the pace of change in information technology and especially with social media marketing fraud has become global in scale. Marketing fraud perpetrators may not even live on the same continent as their victims.

Marketing Fraud vs. Mass Marketing Fraud

While marketing fraud and mass marketing fraud are related, there is a difference between the two concepts, mostly based on reach and the medium used to spread fraudulent claims. Marketing fraud may occur in any medium and need not reach a large amount of people. In contrast, mass marketing fraud is an illegal activity that uses the mass media to spread its fraudulent messaging, such as television, radio, the internet, the post, or in-person meetings, such as seminars. More often than not, because of its reach and cost-effectiveness, mass marketing fraud is most often committed via a web-based platform, such as email, online advertisements, messaging apps and social media.