How Some Fortune 500 Companies Deceive Customers (And Practices to Avoid) 

It is a coveted but no easy feat to be ranked among the Fortune 500 of America. According to the Corporate Finance Institute, companies are ranked based on their revenue in a given fiscal year. 

To make it to the list of Fortune 500, companies must be among the highest-earning in the United States. Investopedia shares that Walmart has held the number one position on this for 12 consecutive years, including 2024. 

With great privilege comes great responsibility, something which the Fortune 500 may fail to uphold at times. They may resort to certain deceptive practices due to a mix of factors like pressure to maximize profits, prioritizing shareholder interests, and temptation to exploit regulation loopholes. 

This article will discuss three of the most common ways Fortune 500 deceive customers. There are lessons to be learned for small and mid-sized enterprises so they don’t lose customer trust. 

Planned Obsolescence 

Have you had people from the Baby Boomer or Gen X generation claim how products in the past were sturdier and longer-lasting? It turns out there is a lot of truth in those nostalgic remarks. 

Companies in those days did design their products to deliver a lifetime of worth. This is precisely why some vintage cars are in better shape than many modern ones. 

Today’s businesses, especially those among the Fortune 500s, develop their products with ‘planned obsolescence’ in mind. It is a tactful business strategy of designing items in a way that they become obsolete or stop working within a definite period. 

The goal is clear and simple – encourage customers to keep buying for higher profits. One name that rings in our ears when planned obsolescence is mentioned is Apple. The tech giant even faced a class-action lawsuit back in 2017 for this strategy. 

Plaintiffs had alleged that the company had deliberately slowed down older iPhone models to increase sales for newer launches. Sometimes, it can seem that the only language tech juggernauts understand is the ‘bottom line.’ 

This practice is often associated with the auto industry but has now permeated all sectors. Today, examples of planned obsolescence include – 

• Batteries that run out within a set period 
• Clothes that rip easily or fade in color 
• Light bulbs that burn out after a certain period 

This practice is destructive and has been banned across some countries. France was the first to ban it in 2015. On a global scale, this process is moving slowly but steadily. 

For instance, Ecuador took measures in 2017 where manufacturers were required to disclose information about spare parts. The Canadian province of Quebec passed a consumer protection bill in 2023 banning planned obsolescence. It also made it mandatory to sell replacement parts at reasonable prices. 

Key Strategies to Avoid Planned Obsolescence 

• Designing products with a longer lifespan 
• Using modular components that can be easily repaired or replaced 
• Ensuring ready availability of spare parts at affordable prices 
• Providing regular software updates to maintain product functionality and compatibility 
• Implementing circular economy initiatives 

Prioritizing Profits Over Customers 

One can scarcely understand the full magnitude of temptation that a status like Fortune 500 can bring. On top of that list is the drive to make business decisions solely from a profit perspective. 

Many high-profile companies take a short-sighted approach where immediate profits triumph over customer satisfaction, product quality, and even safety at times. The latter is particularly a problem with Fortune 500s within the healthcare industry. 

Pharmaceutical medicines and medical devices are already products that easily become a matter of life and death. Any move that keeps profits over customers quickly turns into an attack on customer health and life. 

Let’s take the example of one such medical product that has led to hundreds of patient injury cases – Bard PowerPort. This device was originally developed by C.R. Bard, which was a Fortune 500 before being acquired by Beckton, Dickinson, and Company in 2017. 

Even today, the parent company sits among the ranks of Fortune 500s, occupying the 211th position in 2024. The Bard PowerPort was used to access a patient’s vascular system to deliver fluids and medicines. 

Patients and healthcare providers started reporting cases of catheter fracture and migration which led to injuries like deep vein thrombosis and blood clots. According to TorHoerman Law, it was later found that the Bard PowerPort has a design flaw that makes it prone to weakness and breakage. 

Injured patients began filing the Bard Power Port lawsuit, which has been consolidated in the District of Arizona.  Besides the design flaw, it has been alleged that Bard was aware of the manufacturing defect but hid the same from consumers. 

Some healthcare providers even notified Bard of the issue when patients developed blood clots. Even then, nothing was done to make the design safer. This was clearly a case of keeping profits over customers. Many such cases exist, especially among Fortune 500s. 

How to Create a Balance 

• Understanding customer needs and prioritizing their pain points 
• Focusing on generating profits through the development of high-quality products or services 
• Using loyalty programs for customer retention 
• Implementing value-based pricing strategies 
• Maintaining transparency and ethical business practices to build trust 

Exploiting Data Privacy Concerns 

Data breaches are a major concern among customers. Many Fortune 500 companies have been accused of exploiting data Privacy concerns including Facebook, Uber, Google, and Coca-Cola. 

The reason behind this is exposing sensitive customer information, including personal details, financial data, and emails. By data privacy violation, we refer to a company or individual that fails to protect its clients’ personal details. 

Instead of upholding customer privacy, such a company exposes sensitive information to potential theft. Some practices of the likes include the following – 

• Allowing unauthorized access to view customer data 
• Exposing customer data intentionally or accidentally due to poor security practices 
• Gathering excessive data, over and above the intended purpose 
• Not stating clearly to customers how their data is collected or used 
• Failing to obtain client consent before using their data 
• Selling customer data to third parties without their knowledge 
• Failing to implement appropriate security measures to protect customer data 

Even this practice can have severe consequences. No matter the size or revenue of the company, exploiting data privacy can lead to loss of customer trust, legal repercussions, and reputational damage. As a result, Fortune 500s may face significant financial losses. 

Ways to Avoid Data Privacy Exploitation 

• Collecting only necessary customer data, and that too, with consent 
• Establishing clear data retention policies 
• Encrypting sensitive data to prevent unauthorized access 
• Conducting periodic assessments to address potential vulnerabilities in data security 
• Establishing clear contracts with third parties regarding how the data is to be used 

Under Federal law, any practice that misleads the customer into believing the company is operating on behalf of customers is considered deceptive. 

Brands that wish to protect their reputation, avoid legal issues, and maintain client trust must be transparent with their operations. Any leeway for fraud and deception may become the beginning of downfall.

This article has been published in accordance with Socialnomics’ disclosure policy.