This paper is focused on “consumer rumours,” which is defined as rumours centred around a specific product or company with an intended purpose of altering consumers’ purchasing habits.

Rumours present a compelling, albeit distorted, representation of deeply held human anxieties. Stories centred on common household products reflect not only the importance of those products to the ordinary consumer, but also that consumer’s mistrust of the large corporations that manufacture the majority of those goods. The subjects of “mercantile legends” are invariably companies that produce consumer goods rather than raw materials or goods for industrial consumption. Public health rumours most often focus on cancer, the most-feared disease in contemporary society. Cancer rumours generally focus on allegedly carcinogenic products. One example is the unsupported fear of sodium lauryl sulfate, a common cosmetic ingredient.

The transmission of information through rumor manifests a basic mistrust of official sources. Until the threat which the subculture perceives to be inherent in wider culture ceases to be a motive, narratives which articulate and validate the threat will be believed and communicated without question. Due to their existence outside the mainstream, these marginalized subgroups are unlikely to believe the logical refutations of a rumor by the majority of society. 

Internet technology is particularly well-suited to the spread of rumours and contemporary legends. A person who received an e-mail claiming sodium lauryl sulfate, an ingredient commonly found in shampoo and other cosmetic products, is a carcinogen, might try to verify the truth of that statement by entering the term “sodium lauryl sulfate” into an Internet search engine. The results of that search would range from legitimate web sites published by the American Cancer Society discrediting the rumor to more questionable web sites validating the story and promoting natural health products that do not contain sodium lauryl sulfate.

Similarly mixed results can occur for any Internet search, due to the self-regulated nature of the medium and the commercial nature of search engines. No outside entity rates web sites on the basis of reliability and accuracy, and the order in which web sites appear is often commercially determined by a fee paid to the operator of a particular search engine. The first ten hits you get on any search...have been paid for and [placement] is determined by how much they paid. The ready availability of false or misleading health-related web sites—undifferentiated from legitimate health information—represents a legitimate cause for concern.

The dual methods of Internet transmission—rumours forwarded by e-mail and “verified” by or sometimes originating from dubious web sites—are self-reinforcing and extremely difficult to counteract. The ease of transmission makes it nearly impossible to kill an Internet rumor, no matter how outrageous, defamatory, or potentially damaging. The following case study illustrates the operation of Internet hoaxes, their potential for consumer exploitation, and the difficulty faced by public and private actors in counteracting such rumours.

In the summer of 1998, an anonymous e-mail claiming that a common cosmetic ingredient, sodium laureth sulfate (SLS), was a carcinogen began circulating the Internet. The Urban Legends web site dismisses the e-mail as “[y]et another product scare in the form of an endlessly-forwarded anonymous e-mail message [that] hit the Internet in mid-1998.” The SLS e-mail actually represents a subtle marketing ploy.  Several monitors of Internet hoaxes have identified a handful of companies selling all-natural cosmetic products as the source of the rumor. “In trying to track down the source of concern about SLS, I found repeated instances of unsubstantiated, alarmist claims coming mostly from the purveyors of natural shampoos”. The producers of all-natural shampoos and cosmetic products who are the likely originators and intended beneficiaries of the hoax are not named in the e-mail message—but their web sites confront any concerned consumer who goes to the Web and searches for more information on the safety of SLS.

Consumers trying to substantiate or disprove the truth of SLS claims through their own Internet research will need to wade through a significant amount of misleading chaff to find accurate information on the safety of SLS. “[T]he majority of URLs returned in a standard Web search on the keywords ‘sodium laureth sulfate’ all point to versions of the same propaganda…Interestingly, all these Web sites are maintained by ‘independent distributors’ for various multi-level marketing companies hawking natural personal care products.” Examples include web sites maintained by Neways and an individual named Randy warning of “Cancer in the Bathroom.      In addition to helping shield the originators of the hoax from liability by avoiding a direct connection between the perpetrators of the false rumor and the sellers of the consequently attractive SLS-free product, potentially significant legal implications are attached to the methods in which consumers receive misleading product information. A consumer who receives misleading information through his or her own initiative (i.e. conducting a web search) may be less protected than a consumer who is misled by information foisted upon him or her (in the form of an unwanted forwarded or spam e-mail).

A second clever element of the SLS e-mail is that it disparages an ingredient and not a product. In targeting a common cosmetic ingredient, used by numerous producers in multiple products, the rumor creates a collective action problem. Companies, particularly those whose products are not named in the e-mail, may not only lack sufficient incentive to rebut the rumor, but may also be reluctant to draw attention to the fact that their product contains an alleged carcinogen. While laws protect the disparagement of specific products, no legal protection is afforded to the chemical ingredients that may be present in those products. (ST: Read this carefully, not just at face value)

A third interesting feature is the exploitation of scientific uncertainty to shield rumourmongers from liability. The Neways web site deserves special mention for its adroit web construction. The first page of the web site is a legitimate news release detailing the dangers of diethanolamine (DEA), a cosmetic ingredient that poses a questionable but nonetheless scientifically arguable cancer risk.  At the end of the press release, visitors to the web site may click on a hyperlink listing other harmful ingredients to avoid.

The linked web site provides this description of SLS:

“Potentially, SLS is perhaps the most harmful ingredient in personal-care products. SLS is used in testing-labs as the standard skin irritant to compare the healing properties of other ingredients. Industrial uses of SLS include: garage floor cleaners, engine degreasers and car wash soaps. Studies show its danger potential to be great, when used in personal care products. Research has shown that SLS and SLES may cause potentially carcinogenic nitrates and dioxins to form in the bottles of shampoos and cleansers by reacting with commonly used ingredients found in many products. Large amounts of nitrates may enter the blood system from just one shampooing.”

Dr. Weil notes the distinction between rumours about DEA, which are supported by at least one scientific study, and the absolutely unfounded rumours surrounding SLS. Dr. Samuel Epstein, a frequent critic of DEA who is cited in the Neways press release, does not extend his criticism to SLS. “I am unaware of any evidence that sodium lauryl sulfate is carcinogenic.” (Don Oldenburg, Consummate Consumer: Rhetoric or Reality?, WASH. POST, Oct. 21, 1998)

The Neways web site mixes some truth—the use of SLS in high concentrations as an industrial cleaner—with numerous qualifications and the implausible claim that the reaction of SLS with other cosmetic ingredients can cause cancer. Neways president Tom Mower draws a fine distinction between claiming SLS is itself is a carcinogen and that it can react with other compounds to pose a risk of cancer. “While neither [SLS or SLES] is carcinogenic, they both can react with compounds and form compounds that are carcinogenic.”

No reliable source supports the contention that SLS is carcinogenic. The Canadian Health Protection Branch, the Canadian counterpart of the FDA, has issued an official statement on its web site discrediting the Internet rumor. “[T]his e-mail warning is a hoax…Health Canada has looked into the matter and has found no scientific evidence to suggest that SLS causes cancer.” Neway’s claim that SLS can become carcinogenic through interaction with other cosmetic ingredients is discredited by John Bailey, director of the FDA’s Office of Cosmetics and Colours, who states, “We cannot find anything that would indicate under conditions of use in cosmetics and over-the-counter drugs that the use of sodium lauryl sulfate is harmful as a cosmetic ingredient when the cosmetic is properly formulated.”

The SLS e-mail possesses at least enough superficial plausibility to create consternation among consumers. It looks like the ‘NEWAY’ company has come up [with] a brilliant idea to sell millions of dollars of theirs, and any other ‘la natural’ products to the accepting public. The self-regulating nature of the cosmetics industry diminishes the incentive for the FDA to engage in a full-fledged battle against Internet rumours directed at cosmetic ingredients and products.             

Potential Public and Private Responses to Consumer Rumours

While the economic harm of Internet hoaxes may be difficult to quantify, the case studies illustrate the damage such rumours can inflict on a product’s or corporation’s reputation, as well as the negative impact on consumer confidence. The likelihood that injury will result from the unrestricted circulation of false consumer rumours over the Internet should serve as a stimulus for the government to take action. Collective action problems frequently hinder an effective response in cases where there are multiple manufacturers of a product or ingredient targeted by an Internet hoax.  Such rumours are analogous to false or disparaging advertising and frequently are spread by business rivals.

The ability to identify the parties responsible for an Internet hoax is a necessary prerequisite to the exercise of either government enforcement or private legal remedies. The anonymity of the Internet, as well as the shadowy nature of rumours, makes this a difficult but not impossible task. The task faced in tracking down the originator of a consumer rumor is slightly easier, since in most cases there will be an obvious beneficiary of the rumor, giving a logical starting point in their investigation. If an agency elects to use its resources to discover the source of an Internet hoax, it will likely be successful in the attempt, enabling more robust enforcement measures.

The key question is whether Internet rumours have enough of a connection to a product to be considered labelling. In order to be considered labelling, the printed matter must “accompany” the product for sale.  Regulatory interpretation and case law, which have liberally interpreted the meaning of labelling, support the FDA’s ability to regulate the home pages of pharmaceutical companies as labelling. Past precedents could be extended to support the regulation of Internet sources—pamphlets promoting the efficacy of a product, books advocating certain health regimes, and even a radio program generally touting the benefits of vitamins have all been considered fair game for regulation as misbranding. The FDA could likely regulate, for example, the unfounded bashing of SLS found on Neways’ home page as misbranded labelling accompanying the company’s products.

Consumer rumours are in some ways similar to the negative advertisements that increasingly mar political campaigns. Rather than building up one candidate (or product), the choice is made to attack the alternative. While the agency statutes and regulations generally are designed to constrain excessively positive claims about a manufacturer’s own product, they also govern the unfair disparagement of a competing good.

Under §5 of the Federal Trade Commission act, the agency possesses broad authority to ban “unfair or deceptive acts or practices.” Additional sections of the Act prohibit the dissemination of misleading claims about food, drugs, medical devices, health care services, or cosmetics. The FTC Act has been interpreted to apply with equal force to Internet advertising. “The FTC Act prohibits unfair or deceptive advertising in any medium.” If classified as an advertisement, Internet hoaxes that contain a misrepresentation or omission likely to mislead a reasonable consumer to his or her detriment would be considered misleading under the §5 of the FTC Act; hoaxes that do not present a countervailing benefit to consumers or competition fall under the statutory definition of unfair.

The crux of the problem is whether Internet hoaxes can be classified as advertising. Promotional web sites listing or even linking to misleading consumer information that benefits their product presumably would be covered, but anonymous e-mails and posted messages are more problematic. The FTC does have the ability to regulate false or deceptive statements made by third parties, which include advertising agencies, catalogue marketers, or web site designers.

One remedy of particular value to the victims of an Internet hoax is the FTC’s power to order corrective advertising in cases where the mere cessation of a false or misleading advertisement is insufficient to dispel lingering consumer misperceptions. Corrective advertising generally involves the retraction of a positive claim about a manufacturer’s own product, but can include corrections of disparaging claims about another’s product. In addition to enjoining the dissemination of false or deceptive Internet advertising, the FTC can impose a lifetime ban on participation in Internet commerce for repeated or especially egregious violations.

Private legal remedies are available to maligned companies when the government is unable or unwilling (as with the SLS scare) to step in. While government agencies are concerned with the impact on consumers or perhaps an indirect attack on their own reputation, corporations are much more directly impacted by Internet hoaxes. “Next to an act of terrorism, what corporations fear most is that they may be targeted with an outlandish tall tale.”? If preventive strategies fail, corporations targeted by a rumor may choose to pursue different strategies. One option is ignore the rumor.  Other rumours, however, may require more aggressive measures. Companies can sue under a variety of legal theories: defamation, common-law unfair competition, business disparagement, tortious interference with economic relations, fraud and various state statutes. Available claims will vary based on the factual particulars of a specific hoax.

Conclusion

Internet hoaxes present a new twist on the classic problem of rumor as a tool of unfair competition. The overall response, while adequate, is cautious and strictly reactive. The current strategies employed to combat Internet hoaxes may serve to contain the consumer confusion and reputational damage caused by a specific rumor, but do nothing to deter other unscrupulous operators from launching whisper campaigns of their own. A tailoring of regulations and a concerted enforcement effort will be necessary to address the increasing problem of consumer rumours.