Ethics in marketing has become a bit of a gray area, especially with the low barrier for entry afforded by the rise of digital and the shifts in political and cultural norms over the past decade. Brands are skating a fine line between what’s acceptable and what can threaten consumer satisfaction and brand reputation.
Table of Contents
- What Is Ethical Marketing and Why Does It Matter?
- Key Ethical Issues in Marketing
- Half-Truths
- Privacy Concerns
- Social Responsibility
- Exploiting Vulnerable Populations
- Anti-Competitive Tactics
- Perpetuating Harmful Stereotypes
- Conflict of Interest
- 5 Common Examples of Ethical Issues in Marketing
- 1. Misleading Advertising and Half-Truths
- 2. Data Privacy and Unauthorized Collection
- 3. Greenwashing and False Sustainability Claims
- 4. Targeting Vulnerable Populations
- 5. Creating Artificial Scarcity and FOMO
- How Can Brands Ensure Ethics in Marketing?
- Key Takeaways
As more scandals make the news, ethical issues in marketing have become a prime focus. Brands have to prepare to maneuver correctly to keep their reputation intact and avoid customer backlash and distrust.
What Is Ethical Marketing and Why Does It Matter?
Marketing is often thought of in terms of business success and profit, but it’s about more than that. There are powerful tools that can be used dishonestly, particularly with certain audiences. Marketing should not only support business goals but contribute positively to the stakeholders, public, and the industry as a whole.
For example, advertising claims that are partly true or come across as true encourage customers to buy harmful products and engage in behavior that is not in their own interest. Marketing in such a manner is ethically questionable, though there are no universal truths in ethics.
A great example is the pharmaceutical industry. It’s become more marketing-oriented to maintain high profits that offset the high costs of research and development. Some pharmaceutical companies will go as far as to influence medical professionals to prescribe drugs with events and kickbacks, while others have gone as far as to manipulate scientific research to obfuscate the safety concerns with their products.[1]
The American Marketing Association (AMA) does have standards for ethical norms and values, but ultimately, it’s up to the individual marketer or brand to determine what behaviors align with these established guidelines.[2]
Key Ethical Issues in Marketing
Some may consider behaviors unethical while others may see them as part of the role marketing plays in a business. Regardless, these are the key ethical issues in the marketing industry:
Half-Truths
For some of the public, marketing is synonymous with lying – and that’s largely because of marketing half-truths. From traditional marketing to the new digital landscape, ethical marketing has always stressed avoiding false or exaggerated claims that could mislead customers. This includes half-truths.
All advertising claims should be accurate, supported by evidence, and without exaggeration. Using unambiguous language that accurately represents the features, the benefits, and the performance of a product or service. Sufficient disclosures, such as disclaimers or fine print, are also important to avoid misinterpretation or ambiguity. As circumstances change, this information will need to be reviewed and updated.
One such example was the makeup brand L’Oreal, which faced fraudulent advertising charges in 2014 for claiming that its Lancôme Génifique and L’Oreal Paris Youth Code skincare products were clinically proven to get certain results. The brand used such phrases as products proven to “boost genes” and make skin look “visibly younger,” yet there were no studies backing these claims.[3]
Privacy Concerns
High-profile data breaches have been making the news in recent years, including details about the use of personal information for marketing purposes. Consumers are becoming more aware – and more protective – over their privacy rights.
Protecting consumer privacy in marketing is a key part of ethical and responsible practices. This means safeguarding personal information that’s collected during marketing activities and ensuring it’s stored and used ethically. Brands should be transparent about the data they collect, why it’s collected, and how it will be used, giving consumers an opportunity to opt out or provide explicit consent.
One of the high-profile examples of data concerns in marketing was the Facebook data privacy scandal involving the political consulting firm Cambridge Analytica, which allowed the collection of data from Facebook users in 2016.[4] Facebook faced legal issues over another data breach in 2021 that involved 533 million users.
Data protection measures are part of data ethics. Marketing teams should implement robust data protection measures, such as encryption and secure databases, which can prevent unauthorized access or breaches. Other ethical behavior includes regularly updating privacy policies, refraining from sharing or selling data to third parties without explicit consent, and promptly addressing consumer inquiries and concerns about data privacy.
Social Responsibility
Consumers have more options on the market than they once did, so purchasing decisions are governed by more than the product itself. They’re looking for brands that align with their values and contribute positively to society.
Social responsibility in marketing is the ethical obligation of businesses to consider the broad impact of their marketing activities on society. According to the AMA, this is to “acknowledge the social obligations to stakeholders that come with increased marketing and economic power” and “consider environmental and societal stewardship in decision-making.”[5]
In practice, this means integrating social and environmental considerations into marketing strategies to promote positive change and address societal issues. Products and services should benefit society and serve customer needs, not just create profits. Brands should also engage in cause-related marketing initiatives, treat employees and suppliers fairly, support diversity and inclusion, and reduce their carbon footprint.
Exploiting Vulnerable Populations
Targeting vulnerable populations, such as children or the elderly, with marketing messages that are exploitative is a clear ethical issue in marketing. Doing so can contribute to unfair or potentially harmful outcomes, promote unhealthy behaviors, or create financial strain.
Furthermore, the AMA asserts that the marketing industry should recognize the needs of vulnerable market segments and their commitment to it. One such example is the Nestle food and drink corporation, which aggressively marketed infant formula as a substitute for breast milk in underdeveloped countries.[6] In doing so, the company created a demand where none existed, made claims not based in science, and exploited a vulnerable or impoverished population.
Anti-Competitive Tactics
Numerous strategies are anti-competitive. One example is “bait and switch,” which is a sort of fraud in which consumers are baited with advertisements for products or services at a low cost, but when it’s not available, they are switched to a more expensive product or service.
Another example is the pyramid scheme, which is a non-sustainable business strategy that offers participants payment or services in exchange for enrolling others. There are no real investment opportunities or a general market. Instead, the initial investor recruits further members for a price, who in turn recruit additional members to be compensated by the company.
One of the most famous examples of a pyramid scheme is LuLaRoe, a fashion company known for leggings and other athletic clothing. The company has been accused of running a pyramid scheme, selling faulty products, and engaging in unethical and unfair practices. In 2020, the average gross profit for LuLaRoe retailers was $10,073.41, but half the retailers earned less than $5,000.[7]
Perpetuating Harmful Stereotypes
Many marketing scandals have arisen from marketers representing groups of people in a manner that perpetuates a stereotype. For example, a commercial for laundry detergent that features a woman as the mother and homemaker follows traditional gender roles that aren’t relevant in modern society.
Some stereotypes are more overt, however. In 2002, the clothing brand Abercrombie & Fitch removed a line of graphic tee shirts from its shelves after receiving dozens of complaints from Asian Americans.[8] The shirts featured racist depictions and slogans, leading to activism against the brand from the Asian-American community.
Source: NBC News
Source: NBC News
Conflict of Interest
A conflict of interest is when a person or organization has two or more competing interests that can prevent them from performing their duties appropriately. There may seem to be a conflict of interest inherent to marketing, as brands are trying to maximize profit while consumers are trying to maximize purchasing power.
One example of a conflict of interest in marketing is the case of Jay Alix, the restructuring guru, against McKinsey & Co for allegedly concealing conflicts of interest to secure lucrative corporate bankruptcy work.[9] The case was initially dismissed by lower court for failure to prove his claims, but the decision was overturned by a higher court. Alix is still seeking federal racketeering claims against McKinsey & Co.
5 Common Examples of Ethical Issues in Marketing
Understanding ethical issues in theory is one thing, but seeing them in practice makes the concepts much clearer. Marketers can inadvertently cross ethical lines when faced with pressure to deliver results, making awareness of these scenarios crucial. The following examples illustrate common ethical dilemmas that brands face and highlight the potential consequences of their marketing decisions. These are not just abstract problems; they are situations that have tangible impacts on consumers, competitors, and society as a whole.
From misleading product claims to the misuse of personal data, these examples cover a spectrum of ethical challenges. By examining them, we can better understand the gray areas in marketing and learn how to navigate them. The goal is to build a marketing practice that is not only effective but also principled, fostering long-term trust and loyalty with your audience. Each scenario underscores the importance of transparency, fairness, and social responsibility in every campaign.
1. Misleading Advertising and Half-Truths
One of the most common ethical pitfalls is advertising that isn’t entirely truthful. This doesn’t always mean outright lying; more often, it involves using “half-truths” to create a misleading impression. For example, a food company might label its fruit-flavored snacks as “made with real fruit,” leading consumers to believe they are a healthy choice. In reality, the product might contain only a minuscule amount of fruit concentrate while being packed with processed sugars and artificial ingredients. The claim is technically true but is designed to deceive.
This tactic erodes consumer trust and can lead to significant backlash. When consumers discover they’ve been misled, they feel betrayed, and the damage to the brand’s reputation can be long-lasting. Regulatory bodies like the Federal Trade Commission (FTC) can also impose hefty fines for deceptive advertising. The ethical approach is to be transparent about product ingredients and benefits, focusing on honest value propositions rather than manipulative claims.
2. Data Privacy and Unauthorized Collection
In the digital age, data is a marketer’s most valuable asset. However, how that data is collected and used is a major ethical concern. An example of an ethical breach is a mobile app that requests access to a user’s contacts, location, and photos without clearly explaining why it needs this information or how it will be used. The app might then sell this data to third-party advertisers without the user’s explicit consent, leading to unsolicited ads and a profound sense of violated privacy.
This practice not only damages the brand’s relationship with its users but also runs afoul of data protection regulations like GDPR and CCPA. The ethical standard is to practice data minimization—collecting only what is necessary—and to be fully transparent with users. Brands must provide clear, easy-to-understand privacy policies and obtain explicit consent before collecting or sharing personal information, treating user data as a privilege, not a right.
3. Greenwashing and False Sustainability Claims
As consumers become more environmentally conscious, many brands have started marketing their products as “eco-friendly,” “green,” or “sustainable.” Greenwashing occurs when a company spends more time and money marketing itself as environmentally friendly than it does on minimizing its environmental impact. For instance, a clothing brand might launch a “conscious collection” made from a small percentage of recycled materials but continue to rely on polluting manufacturing processes for the vast majority of its products.
This misleads consumers who are trying to make responsible purchasing decisions and undermines the efforts of genuinely sustainable companies. It’s a form of corporate hypocrisy that can lead to public relations crises and boycotts when exposed. True ethical marketing requires a genuine commitment to sustainability that is integrated throughout the company’s operations, not just used as a superficial marketing tactic. Brands should back up their claims with transparent data and third-party certifications.
4. Targeting Vulnerable Populations
Some marketing campaigns unethically exploit the vulnerabilities of specific population segments. This can include targeting children with ads for unhealthy foods, marketing high-interest loans to individuals in financial distress, or promoting gambling apps to people with addictive tendencies. For example, a fast-food company might create a mobile game aimed at young children that includes frequent branding and rewards them with coupons, conditioning them to prefer unhealthy food options from a young age.
This type of targeting is predatory because it takes advantage of an audience’s limited ability to make critical judgments or their desperate circumstances. It prioritizes profit over the well-being of the consumer and can cause significant harm. Ethically responsible marketing involves a commitment to “do no harm.” Brands should carefully consider the potential impact of their campaigns on all audiences and establish clear guidelines to avoid exploiting vulnerable individuals.
5. Creating Artificial Scarcity and FOMO
Marketers often use scarcity to drive demand, but there is a line between legitimate promotions and manipulative tactics. An unethical example is an e-commerce site that uses a countdown timer and a “only 2 items left in stock!” message on a product page, even when there is ample inventory. This creates a false sense of urgency, pressuring the consumer to make a quick purchase based on the fear of missing out (FOMO) rather than on a rational assessment of their need for the product.
While limited-time offers are a standard marketing tool, fabricating scarcity is deceptive. It manipulates consumer psychology and can lead to impulse buys and subsequent regret, which ultimately reflects poorly on the brand. Ethical marketers build excitement through genuine value, quality products, and authentic brand stories. They respect the customer’s decision-making process and avoid using high-pressure or deceptive tactics to force a sale.
How Can Brands Ensure Ethics in Marketing?
The key to monitoring the effectiveness of ethical marketing practices is through the measurement of results. Brands should have a robust ethical framework that guides their marketing decisions and actions – just like brand guidelines – and ensure that every marketing initiative aligns with these values. With a structured framework in place, marketing teams can review their activity within the construct of ethical marketing and evaluate their decisions before they go live.
Allowing campaigns to go live without this evaluation can result in an ethical scandal. Customers will react to the campaign and provide feedback, as will regulatory bodies if applicable, and the only response is damage control. While brands can rebound from a crisis, it’s better to take a proactive approach and reduce the risk of reputational damage from unethical marketing practices – whether intentional or unintentional.
Key Takeaways
At its core, ethical marketing is about “doing the right thing,” though there are no universal rules for what the right thing is. It’s influenced by cultural or political climates, current laws, and individual opinions. However, the AMA offers a framework to evaluate marketing campaigns within the ethical construct and work toward the ideal.
Sources:
[1] https://www.ucsusa.org/resources/merck-manipulated-science-about-drug-vioxx
[2] https://www.ama.org/ama-statement-of-ethics/
[4] https://www.nytimes.com/2018/04/04/us/politics/cambridge-analytica-scandal-fallout.html
[5] https://www.ama.org/ama-statement-of-ethics/
[7] https://www.vanityfair.com/hollywood/2021/09/amazon-lularoe-documentary-lularich
[8] https://www.nbcnews.com/news/asian-america/abercrombie-fitch-asian-men-masculinity-rcna25026
