Canadian banks are using all different means of advertising from online advertisements, magazine advertisements and television advertisements. They are also using advertising tactics which include the customer’s emotions and future goals to create target markets. For example, TD Bank has majority of advertisements which show families spending time together during holidays and festivals, students in their university life, the elderly after retirement and mainly business owners and startups. The most common method of advertisement is digital, and banks make sure they create digital ads that even a person who is not digitally active can easily understand. Next time you go to the bank, take a look, you will see they all have screens with advertising streaming all day long! This is not only to reset your clock in the lineup but also to make you think about what you may think you need.
Manipulation in advertising targets a problem faced by customers and advertises to fix it but may also have many hidden clauses which banks are not required to disclose during the advertisement. This is because many banks offer very personalized services that apply differently to everyone.
Ethical dilemmas that banks are currently facing in their advertising is manipulative advertising. It has many perspectives such as utilitarianism, more specifically the frustration of rational interbrand choice, and autonomy. Let’s first discuss manipulative advertising. Initially you may be wondering what makes an advertisement manipulating? Well, we have an answer for you! Manipulating advertising is defined as a deliberate attempt by a person to get a response from another person that alters that person’s actual choice (Tittle, 2017).
A great example of advertisement manipulation is the Toronto Dominion (TD) advertisement. They are telling small business consumers that if they get the Aeroplan Miles credit card they get bonus points. This is considered a manipulative advertisement as they are not advertising an incentive to the other credit cards they have available, so it is altering the business owner’s choice. More specifically, this is an example is utilitarian in the frustration of relational interbrand choices as they are leading the choice. With this marketing tactic, TD is not giving the small business consumers the advantage of exploring their options which would best suit their needs. Moreover, TD does not have any fine print in this advertisement. Therefore, information is limited and not fully disclosed for the consumers.
Another example of a manipulative advertisement is Royal Bank of Canada (RBC) telling business clients that they can save over $2400 by switching. They have not done any assessments, so this amount may not be realistic in savings. This describes autonomy as it is defined as “manipulative advertising can induce behavior with harmful long-term consequences” (Tittle, 2017). Without an individualized assessment is it fair to say you can save over $2400? RBC does have fine print to disclose any important details such as “savings based on first 12 months”. However, it still does not guarantee a $2400 worth of savings if a client switches banks.
Lastly, Bank of Montreal (BMO). This advertisement is very misleading as it is advertising instant approval on a business credit line. An ethical theory related to this is Kant’s theory specifically on impartiality where everyone is considered equal – which in this sense – the advertisement promotes the idea that businesses are treated equally; therefore, manipulating business consumers into applying thinking that they will be easily approved. Contrary to what was initially advertised, BMO has a small disclosure that it is subject to credit granting criteria. To the average business, this does not lead them to believe that it is not instantly approved.
Advertisements are meant to be short; eye catching and serve as a hook for customers. They are not intended to contain large amounts of information related to the service or product being advertised, “advertisements simply do the public service of informing people about what’s available” (Tittle, 2017). Banks take advantage of this fact and create advertisements that contain bits and pieces of information to attract customers and avoid using information that may not be as pleasing or desirable to the customer. This serves as a plus point for them to gain publicity.
Another perspective we will switch to briefly is the advertising done company to company or individual investment brokers. Banks in Canada, such as Royal Bank of Canada (RBC), are the parent company to mutual fund managers. In the case of RBC, their mutual funds are managed by Royal Mutual Funds Inc. and Global Asset Management. These mutual funds are then advertised out to individual investment brokers to sell on behalf of Royal Mutual Funds Inc. These advertisements are done internally and therefore are not available to the public. Based on mutual fund regulations, fund companies are not allowed to directly advertise specific mutual funds directly to clients. In general terms they can advertise a mutual fund but they cannot make a specific recommendation on a specific fund, for example, a growth fund. This is another example of autonomy. With no background information about mutual funds, clients are left with little to no option in which mutual fund would best suit their needs; prompting them to settle with mutual funds that are heavily advertised which often leaves the clients at risk and the fund companies to profit.
There have been articles in the news opening up to mutual fund breaches. A great example of this is the article from the Investment Executive:
Royal Mutual Funds reprimanded for violating sales practices rule
This article outlines the way businesses can run into ethical dilemmas that can alter the way an investment advisor sells mutual funds. They may sell funds with a higher load to make more money for themselves rather than benefit the clients.
We want to leave this one to you, please comment on what you think the ethical dilemmas were and what theory best describes this situation?
Financial Services Business to Business 