Wednesday, October 26, 2011

Charity Wednesday - The Harm that Comes with Donating 'Stuff'

A friend of mine just lost most of her posessions in a house fire.  Like many people, my first reaction was to think "Hmmm. . . what do we have around here that I could pass her way.  What stuff can I give her?" But because of the work I do, my next thought was "No, not stuff.  What she needs is money.  Maybe gift cards.  Not my excess junk."  See, my friend's life is being redefined in the wake of her tragedy.  While she sorts out what needs to be done and how she'll recover, the old flannel sheets I have in my closet probably don't fit into her recovery plan.  The bed she's sleeping on at her mom's house is probably the wrong size, and it may not be the right size for the new bed she'll get  after sorting through the bigger issues like how she'll pay for the rebuilding of her home. Giving her my old sheets would be an easy and low-cost way for me to give. But it wouldn't help her.  If anything, they'd be a burden for her store until maybe someday she does have a use for them.  

If my goal in giving is to help my friend, or anyone else facing hardship, then what I should do, what I will do, is give her resources that are actually helpful.  In my friend's case, that will be cash.

After every major disaster or well-publicisized tragedy, there is always a rush for people to 'collect stuff' for those affected.  I know some people who do it because it's a basic way to give that is easy for their kids to understand.  At their core, 'in-kind' donations evoke a quaint  simplicity and feeling of 'pitching in'.  Like Amish barn raisings.  But truth is, 'in-kind' donations often place a burden on recipients.  Stuff has to be transported. Stuff has to be sorted. If, as is often the case, stuff isn't needed immediately, stuff has to be stored.

And in communities where businesses have been affected - think Joplin - 'stuff' should be supplied by local retailers.  After the tornado, lots of people went to Wal Mart stores in Kansas City to buy toiletries for Joplin.  But it was the Joplin stores - the places that hire displaced people and the places that generate badly needed tax revenue - that needed the business.

The same goes for donations abroad. This article in Philanthropy Today mentions how when the US unloads its surplus abroad, ostensibly to help people, it actually hurts local economies by driving down prices and zapping the market for local goods.

Real relief comes when we focus more on those we wish to help than on our own experience of giving.

Friday, October 21, 2011

Scams of the Week: October 21, 2011

There are an array of different scams this week. First off, I want to get those people out of the way who claim to be affiliated with the BBB, but are not. Some companies try to lure customers into a false sense of security by claiming BBB Accreditation.  It's trademark violation and fraud.

Assured Recovery - [Edit] The company contacted the BBB, apologized for the logo misuse and provided the BBB with evidence that they've ceased the use of our Logo. We met with a representative of the company to ensure that further violations will be avoided.

Costume Hub, LLC - We've repeatedly told this F-rated company to remove our logo from their website. Every attempt at conversation has been rebuffed by silence. The company's complaints generally allege a failure to ship products in a timely manner, failure to ship products by the "guaranteed" delivery date, shipping the wrong product, wrong size, and refusing guaranteed refunds. They also make the unverifiable claim that they have the lowest prices.  Considering many consumers don't get what they pay for, the price doesn't matter anyway.

Now that we've got the logo-violators out of the way, here are the rest of the scams for the week.

Styling Tresses - An online wig store with striking similarity to the complaints received against Costume Hub, failure to deliver products, failure to ship in a timely manner, wrong sizes, etc. They, too, have an F rating with the Better Business Bureau.

US Protection - A traditional phishing scam that claims to be in Phoenix, AZ. They obtained the numbers to government issued unemployment prepaid cards, but don't seem to have access to the accounts. They are calling people to get their information so they can steal unemployment funds.







Thursday, October 20, 2011

The Grey Area of False Advertising

Most people don't realize the complexity of false advertising.  Many people assume when an ad is misleading, it is false advertising.  Not so.  For something to be considered "false advertising" it must meet additional criteria.

It must be interpreted from the viewpoint of someone who reasonably discerns the meaning of advertisements. If other consumers will likely interpret an ad in the same incorrect way, it would be considered a "misleading" advertisement. I have received phone calls from people who considered an advertisement misleading, but their interpretation of the advertisement was unreasonable. In fact, the term "false advertising" is flung around so often, I'm afraid it will lose its importance.

Pepsi had a commercial in the 90s for their Pepsi Stuff rewards system. At the end of the commercial, it claimed that a Harrier jet would be 7,000,000 Pepsi Points and showed a kid land one in front of his school.  Some guy tried to claim the jet by buying $700,000 worth of Pepsi.  A federal court ruled that "no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier jet." For reference, each Harrier Jet costs $30,000,000 (30M) and the program to develop them cost $6,500,000,000 (6.5B), putting the actual cost of each harrier at about $85,000,000 (85M).

It must be likely to affect a consumer's buying decision. It has to have the ability to sway their decision of whether or not to buy. It has to be enticing. The advertisement may have incorrect information, but if it is not essential to the product being sold, then it's probably not going to be considered false advertising. This criteria has all but vanished. Nearly every defendant in a false advertising case used to say that the case against them was trivial and had little effect on consumers' buying decisions.  Because so many defendants claimed this, judges stopped taking the plea seriously.  The FTC rarely has to establish this criteria in court cases.What it means in actual practice is that the FTC or other consumer protection agencies rarely prosecute over small amounts of money obtained through false advertising.

It must be likely to mislead a "substantial number" of customers who read the ad. According to the BBB's resources, "Neither the FTC nor the courts have identified a threshold level or percentage of consumers that will satisfy the "substantial number" test."  Instead, The FTC tries to identify the reaction of the group targeted by the advertisement.  If that group is likely to be misled, the advertisement will probably be challenged. So, it has basically been turned into an addendum to the first criteria.

It must be intentional. Typos don't count. If a customer sees a brand new Cadillac Escalade on sale for $6,317, a reasonable consumer should assume that the advertiser simply forgot to put a zero on the end of the price.  The consumer cannot demand that the dealer sell the vehicle for $50,000 below sticker price because of a typo. If an advertiser does not include information because he thinks it unimportant, only to find that people were misled by its omission, the advertiser is responsible for misleading his customers. Mostly, businesses are not held liable for honest mistakes, as long as they are rectified in a timely manner.

False Advertising is a tricky beast to tackle. There is so much information about it, that it's difficult to become an expert on the subject.  There are city ordinances, state laws and regulations, federal laws and regulations, and a considerable number of court cases that set precedent for how laws are interpreted. For instance, there are many state laws that say only that ads can't be "misleading" and don't give any details.  At that point it is up to lawyers and courts to determine if the advertisement was, in fact, misleading. Court cases set precedent for the cases to follow until they have successfully defined what actually is misleading and what is not.  To give an idea of how much information on advertising law exists, I have included a picture of my reference materials for Advertising Review.


In those books and papers are about 4000 pages of laws, regulations, policies and court decisions involving misleading advertisements. Even with extensive rules, regulations and laws, ethical grey areas simmer just below the brim of false advertising, neither honest, nor illegal, surfacing and receding, flirting with our tolerance threshold.

I ran across a company that offered coaching sessions to help people get their website-based businesses up and running.  The website said the sessions were hosted by professional consultants. The program cost $4000 for 8 sessions--$500 for each half-hour session. Steep, but people were willing to pay for professional consultations.  It turned out that the "consultation sessions" were Q&A sessions via phone with low-wage operators who read from a script.  For $1000 an hour, budding entrepreneurs could hire a top-notch expert business consultant to personally address the issues for their individual websites.  They got ripped off.  But it would be hard to prosecute this company for engaging in "false advertising." After all, they did give coaching sessions, even though they were second-rate, and the company only claimed that a "professional" would coach them, not an "expert."

There is also a group of meaningless words in advertising. "Best" is chief among the meaningless words.  Advertisers figured out that the word "best" is completely subjective.  When someone says they got the "best deal" on some thingamajig, others my have a different opinion of the price or value of said thingamajig.  So ads constantly and perpetually use "Best." Best deal. Best Store in Town. Best Prices. Best Value. Etc. On occasion, I have challenged the use of the word, but rarely. After all, it is subjective.

Another meaningless advertising word is "unique." Technically, everything is unique in some way. A flaw in a pair of blue jeans makes it unique. Two side-by-side red Lego® pieces, identical in every way, are both unique because only one of them is to the left and only one of them is to the right.  Advertisers picked up on this and started advertising the "unique" tastes of mass produced food products. It may be terrible, but if you make "unique" sound like a compliment, then it gives the impression of superiority....sometimes. The worst is when firms say that they offer a unique experience for their clientele. It can give the impression that the client will have information and expertise lacking in their competitors.  This can be very close to false advertising because they may not offer anything particular that other companies do not.  They get away with it because something, somehow is a just a little different, and therefore "unique." Consumers should just keep in mind that "unique" does not mean "better."

Use of the words above is commonly referred to as "puffery"--exaggerations expected to be made by the seller based on his or her own opinion of the product or service.  Sometimes the use of these words are acceptable and accurate. Other times, they blur the line between false advertising and acceptable boasting.

If something just sounds too good to be true, but you can't place your finger on why that is, look for the above examples. Look for details about the product or service before buying. Ask friends. Look at Consumer Reports and Angie's List if you're a subscriber.  Contact the BBB and obtain a business review. These things will help you evaluate the information you're provided from an advertisement.

Saturday, October 15, 2011

Too Much Pink?

Driving around Kansas City last weekend, I couldn't help but notice the pink flowing from our treasured fountains. And retail outlets of all types these days are awash in an interesting mix of pink products and orange pumpkins.  Yes, it's breast cancer awareness month and you can't miss it. 

Since Susan G. Komen for the Cure introduced pink ribbons as symbol of the fight against breast cancer in 1991, the color pink has become linked to the cause.

Looking for a way to connect with consumers, many companies have jumped at the chance to connect their brands and products the breast cancer fight through cause-related marketing.  Typically, products - ranging from yogurt to handguns - used in this manner will have pink packaging and wording indication how the purchase of the product will help Komen or other charities fighting breast cancer. 

Does the influx of all the pink help people stop and think about what they can do to help fight breast cancer (Has mom had a mammogram?  Did I give enough to my neighbor when she did that walk?), or as asked in this Associated Press report, has it become a distraction?  Is it just another way to differentiate between products?

For it's part, Susan G. Komen for the Cure stands behind the pink madness. It says all that pink helps the organization fund research for better treatments and cures.  Says Leslie Aun, a Komen spokeswoman, "We don't think there's enough pink. We're able to make those investments in research because of programs like that."

The BBB advises that consumers take caution when purchasing products advertised as helping charities.  All products touting support of a charity should clearly disclose how much of the purchase price (i.e. 50 cents, 10%, etc.) of the product will be donated to a cause, any donation limit (for example, up to $100,000) and the duration of the cause-related marketing campaign.

Wednesday, October 12, 2011

Scams of the Week: October 12, 2011

Indivision Consulting Company - This business is a work at home scheme. They claim to be at "600 Broadway" in Kansas City, but like most scams, they don't give a suite number, making it difficult to verify if they are there.  The building has multiple suites and no one, not even the property manager of the building can use the address without adding a suite number and expect to get any mail. The website has some testimonials on there. However, the website has only been around for 20 days.

Facebook Chat Window Phishing - This is a small twist on the normal phishing scams. This one doesn't show up on a person's wall, but a chat window. The window says that the user's Facebook information needs to be verified or the account will be closed.

MBA - A foreign lottery from Auckland, New Zealand.  At any point that anyone claims that you've won the lottery or a sweepstakes from outside the country, know that it is a scam. It is always a scam and always will be.

Thursday, October 6, 2011

Scams of the Week: October 6, 2011

Bottom Dollar Payday Loans - An unlicensed online payday loan business that has a PO Box in Overland Park, KS.  We've received quite a few complaints on them in the past few months about unauthorized debits from people's accounts. The consumers find it impossible to get a hold of the business to straighten it out. In response to all complaints, the company says that they're sorry and the customer should just give them a call. So, even though no one can get a hold of them, they're proposed resolution is for the consumer to call the number that they actively ignore.

Imperial Distribution Company - From Ontario. They send mailing stating that consumers have won $10,000 and ask for a "processing fee" of $29.95. Consumers haven't won anything. They pay the money and they get nothing in return.

Burkhart Mobile Homes - Scam may be accurate, maybe not.  Steve Burkhart takes money from people who want to purchase mobile homes and rarely delivers.  He tells customer after customer that after a few weeks of repairs, the mobile home will be ready.  Most customers call Burkhart for months on end and are given excuses as to why the mobile home isn't ready.  On the occasions that the buyer actually gets to move in, they are rarely given the title. The liens aren't paid. Nobody but Steve Burkhart seems to know where the money is at any given time. Problem Solvers and Linda Wagar did a segment on one of Burkhart's unlucky customers. Here are parts one, two and three.

Wednesday, October 5, 2011

Charity Wednesday - Upcoming Trainings at Nonprofit Connect

Need help with your grantwriting skills? Want to learn how to better market your nonprofit?  Wish you could just hire an intern to do all the gruntwork?  Then check out the upcoming trainings at Nonprofit Connect.