5.4 B2B and B2C Marketer Ethical Dilemmas

Classic Example: The LAUSD iPad Contract Controversy

In June 2013, Los Angeles Unified School District (LAUSD), the second-largest school district in the United States, announced a $30 million contract with Apple to provide students with iPads preloaded with educational software from Pearson PLC. It was an ambitious initiative that promised to modernize classrooms and enhance digital literacy.

By 2015, however, the program collapsed in scandal: the superintendent resigned, the contract was canceled, Pearson’s philanthropic foundation was shuttered, and the companies agreed to pay a $6.4 million settlement to avoid litigation. The FBI also launched a criminal probe into the procurement process. The case revealed serious ethical lapses, including circumventing the public bid process, inappropriate involvement of Pearson’s nonprofit foundation in sales, and poor execution that left students with outdated and incomplete educational tools.^{[1] [2]}

This case highlights the unique ethical challenges of B2B marketing, especially when selling to government institutions. Unlike B2C sales, the stakes often involve taxpayer funds, regulatory oversight, and long-term reputational consequences.

Emerging Ethical Dilemmas in the AI Era

While the LAUSD case is a cautionary tale of conflicts of interest, today’s marketing ethics are increasingly shaped by artificial intelligence (AI) and its impact on both B2B and B2C markets.

AI-Driven CEO Deepfake Scams (B2B Risk)

In 2025, businesses across the globe reported unprecedented losses due to AI-generated “deepfake” scams. Fraudsters created convincing audio and video impersonations of CEOs and executives, tricking employees into transferring millions of dollars or disclosing confidential information. High-profile victims included Ferrari, WPP, and a UK company that lost $25 million after receiving a fabricated video call from a fake executive. Overall, deepfake-related scams cost firms over $200 million in early 2025.^{[3] [4]}

For B2B marketers, this illustrates a new ethical responsibility: ensuring that AI tools are not weaponized in ways that erode trust within organizations.

GenAI Scams in the Creator Economy (B2C and B2B Overlap)

AI has also transformed the influencer and creator economy, where brand partnerships and social media marketing are increasingly common. According to the fraud-reporting platform Chainabuse, GenAI-powered scams quadrupled in 2024–2025, often targeting small businesses and creators. Scammers impersonated brands, infiltrated influencer campaigns, or hijacked followers using synthetic accounts and fake endorsements.^[5]

For marketers, this underscores the ethical duty to verify authenticity in influencer partnerships and to protect consumers and small business partners from deceptive practices.

The “Pandorogate” Influencer Scandal (B2C Ethics)

In Italy, fashion influencer Chiara Ferragni faced criminal indictment and fines exceeding €1 million after falsely claiming that sales of holiday cakes (“Pandoro”) would fund children’s hospitals. Dubbed “Pandorogate,” the scandal sparked national outrage and led to the passage of the “Ferragni Law,” requiring stricter transparency in influencer-led charitable promotions.^[6]

This case illustrates the reputational and legal dangers of misleading philanthropic marketing claims—an issue that applies directly to consumer-facing campaigns.

AI-Washing: Overstating AI Capabilities (B2B and B2C)

In early 2025, the U.S. Securities and Exchange Commission charged Delphia Inc. and Global Predictions Inc. with falsely marketing their investment products as AI-driven. Regulators labeled this practice “AI-washing,” warning firms that overstating or fabricating AI capabilities undermines investor and consumer trust.^[7]

This reinforces the need for marketers to present technology capabilities accurately and transparently, especially in industries where AI innovation is a competitive advantage.

Reflection

When businesses market to other businesses or government entities, ethical dilemmas often revolve around contracts, bidding processes, and long-term accountability. In B2C marketing, dilemmas frequently focus on transparency, authenticity, and consumer protection. The rise of AI introduces new complexities that cut across both contexts, from deepfakes in B2B negotiations to AI-washing in consumer promotions.

Ultimately, the ethical responsibility of marketers—whether in B2B or B2C—is to maintain trust, ensure transparency, and safeguard the interests of those they serve.

Creation note: This content was updated with the assistance of ChatGPT, a language model developed by OpenAI, and was subsequently reviewed and edited by the author for clarity and accuracy.