Fraud is the deliberate deception of someone else with the intent of causing damage. The damage need not be physical damage—in fact, it is often financial.^[1]

Provisions under the criminal regime of the Competition Act prohibit:

• materially false or misleading representations made knowingly or recklessly,

• deceptive telemarketing, and

• deceptive prize notices.

^[2] A representation, omission, or practice is deceptive if it is likely to:

• mislead consumers, and
• affect consumers’ behaviour or decisions about the product or service.

Under the criminal regime, individuals convicted of fraud-related offences may be liable to fines of up to $200,000 and/or imprisonment for up to one year. More serious fraud cases may be prosecuted under the Criminal Code of Canada, which carries harsher penalties (up to 14 years in prison for large-scale fraud).

For marketing professionals, the core principle is clear: the goal of marketing is not to deceive the customer—it is to build trust.

When we consider the elements of the marketing mix—product, price, promotion, and distribution—there are opportunities for deception in each area.

Product: Is the product designed and manufactured as the customer would expect, given the other elements of the marketing mix? Is the customer warned about the product’s limitations or uses that are not recommended?

Price: Is the total price of the product fairly presented to the customer? Is the price charged for the product the same as the price posted or advertised?  Has something been marketed as “free”? Does the company disclose information about finance charges?

Promotion: Can claims made to consumers be substantiated? Are disclaimers clear and conspicuous? For products marketed to children, is extra care taken to accurately represent the product?

Place (Distribution): Does the distribution channel deliver the product at the price and quality promised? Do other companies in the distribution channel (wholesalers, retailers) perform as promised and deliver on expectations set for product, price, and promotions?

Marketing Fraud

From a marketer’s point of view, the story demonstrates a number of different types of fraud, which had devastating consequences for both shareholders and stakeholders. Deliberate deception was part of the company’s strategy, and it played a dominant role in all aspects of marketing. Here are the top 10 fraud scams in 2016 as recorded by Bloomberg.

FAKE ONLINE ENDORSEMENTS

Fake Celebrity Endorsement & AI-Driven Advertising Scams

One of the most common fraudulent schemes is when consumers are enticed to purchase a product or service based on reviews by social media influencers. Unfortunately, these reviews may not be genuine—an influencer may have been paid by a company to misrepresent a product, or their likeness may even be faked using AI “deepfake” technology.

^[3]

This problem has grown far beyond simple endorsements:

• AI-generated fake reviews can flood platforms like Amazon, Google, and TripAdvisor, making products appear more trustworthy than they are.

• Deepfake videos can put words into the mouths of celebrities, politicians, or trusted figures—without their consent—falsely promoting products or investments.

• AI chatbots may impersonate real customer service reps or influencers, steering consumers toward scams.

Deceptive endorsements using both human influencers and AI technologies are reported to have cost consumers billions worldwide.

Watch the VIDEO: Fake online influencers in Social Media steal celebrity identities to sell products

Fraud Monitoring in Canada

The Canadian Anti-Fraud Centre (CAFC) tracks and records fraud complaints nationwide.

• In recent years, fraudsters have exploited COVID-19 fears, offering fake PPE, government benefit scams, and fraudulent “investment opportunities.”

• In 2022–2023, fraud losses in Canada exceeded $500M annually, with investment scams and online impersonations among the fastest-growing categories (CAFC data).

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.