When Marketing Is Attracted To The Dark Side
by Alf Nucifora
Although some politicians and ad agency practitioners have subverted and manipulated the craft for their own ill-gotten gains, marketing, as a practice and a profession, generally carries a positive perception on the part of the consumer public. But little thought is given to the seamier side of the marketing world. Big mistake! As the data shows, "crook's" marketing is huge in its size and scope and extremely sophisticated in its strategy and execution.
It's the big kahunna of the crook's trade, the fastest-growing crime in America. Simply stated, identity theft is the unauthorized use or access of a person's personal identifying information. Legitimate marketers call it database mining or CRM and use it to forge customer relationships. Crooks use it to fraudulently obtain credit, gain access to bank accounts and loans, order goods online, rent an apartment or get a job. The estimated cost of financial identity fraud in the U.S. has reached over 4 billion dollars (1999) with one credit bureau reporting 522,922 consumer identity theft complaints/inquiries in 1997 alone, up from 35,000 five years earlier. It's estimated that 350,000 to 500,000 individuals become victims of identity fraud each year (including this writer who had credit card statements stolen from the mailbox and account numbers appropriated to order from catalogs by phone-- to the tune of $8000 in a three day period).
"Using your personal information, identity thieves can become you," notes John Smith, Administrator for Georgia's Department of Consumer Affairs. "They can enter or remain illegally in the US, access your financial accounts, create new accounts, buy a house or car, be arrested and purchase almost anything on credit." The impact on the victim can be severe including bad credit reports, spending time regaining financial health, collection agency harassment, personal embarrassment, possibility of criminal/traffic history, not being hired or promoted because of negative credit rating, difficulty in obtaining loans, renting apartments and writing checks, and false civil/collection action. For more information on combating this pernicious crime go to www.stopidentitytheft.org.
The Nigerian Scam
By now, just about everyone has received an anguished plea from a "government official" in Nigeria (more recently South Africa, the Congo or Zimbabwe) requesting help in releasing funds from recalcitrant banks or government coffers. All it takes is the release of one's personal financial information in order to release the funds and have them delivered to a safe place for disbursement, with, of course, a hefty percentage earmarked for the Good Samaritan. The criminal masterminds behind this scam are impossible to track. Email solicitations, by the thousands, originate from anonymous servers and email addresses are changed on a regular basis in order to keep police authorities at bay.
From a marketing perspective, it's a number's game, not dissimilar to the practice and principles followed by legitimate direct marketers. It operates on the belief that there will always be an interested party, in this case a sucker born every minute. And since the conversion/response rate remains steady (albeit small), it's simply a matter of sending out more solicitations, which email communication readily and easily permits.
In the halcyon days of the stock market boom we all received urgent phone calls from stock brokers pushing the latest pharmaceutical wonder drug or high tech breakthrough. Time was of the absolute necessity. Buy now or miss the deal of the century. Nowhere was the scene more accurately portrayed than in the aptly titled movie Boiler Room. In the legitimate marketing world it goes by the name outbound telemarketing. In the lairs and dens of its illegal relative, it generates a staggering amount of fraud-based revenue. The FTC's Consumer Sentinel report (www.consumer.gov/sentinel) documents 218,284 reported complaints to the FTC in 2002 involving $343 million in disputed payments. And that's just the reported complaints.
The biggest offenders are the sweepstakes scams (Congratulations! You've won…just send $ to process the claim, etc.) which target the elderly as well as the gullible. Charity fund-raising is the other notable offender with pleas on behalf of unwitting churches netting the church $10 out of every $100 raised. The other $90 gets skimmed off in a fashion reminiscent of the action in a Fifties Vegas casino. Today the bulk of the boiler room solicitations come via the Web (29%) or email (25%), then by phone (23%) and by mail (13%).
Unfortunately, marketing exhibits no favoritism or bias when it comes to product, subject or beneficiary. The bad boys stand to reap equal reward as the honest and the ethical. Whether it's a pyramid scheme or a shady email come-on, the common element of success, aside from enormous chutzpah, is sound marketing strategy and flawless implementation. Regrettably, honest marketers may have much to learn from their dishonest counterparts.