Is it illegal to pose as a customer to learn competitive pricing?

[sldesigno]

Hi,
I'm moving forward with a business idea, and I have contacted a competitor and have posed as a customer to learn how they price their services. Obviously this lacks in ethics, but is it illegal?

Thanks.

[jasaunders]

In the United States, yes this is illegal. You can not misrepresent yourself. You can call up and ask how much they charge, but if they ask who you are or what company you are calling from, you must disclose.

[snowgoose]

As far as i know its not illegal.

[BusinessAdviser]

In the United States, yes this is illegal. You can not misrepresent yourself. You can call up and ask how much they charge, but if they ask who you are or what company you are calling from, you must disclose.

I'm pretty sure the answer would depend, at least partly, on the state in which you are, as each state within the U.S. has its own laws, however similar they may be.

[edwardhalim]

I don't think it is illegal too.

It does give you a first hand experience on your competitor's customer service.

[sldesigno]

Thank you for your responses. I did fully disclose my name and the name of one of my corporations, which is why I'm asking. I'm a partner in another corporation and we are developing a competitive service.

Six months down the road when the competitor sees my name as a direct competitor, I want to know whether to have the lawyers prepped and ready to fight.

Thanks again for your insight.

[Xanifur]

I'm pretty sure the answer would depend, at least partly, on the state in which you are, as each state within the U.S. has its own laws, however similar they may be.

A lot of stores have a big sign that says if they suspect you of being a competitor scouting out prices, they have the right to ask you to leave the store... I know my Wal-mart does. Not sure about legality.

[dfveteran]

A lot of stores have a big sign that says if they suspect you of being a competitor scouting out prices, they have the right to ask you to leave the store... I know my Wal-mart does. Not sure about legality.

Your Walmart? You own a Walmart???

[jasaunders]

It is illegal. Consult an attorney, I am not here to give legal advice, but I am telling you from experience it is very likely illegal. Refer to Federal Statutory Unfair Competition Law, part of it may be covered under the Lanham Act.

Federal Antitrust and Competition law pretty much says 'Information about a competitor’s pricing, surcharges and other matters of competitive significance should be obtained from public sources, and not from discussions or other communications with competitors.'

Also reference the Sherman Antitrust Act.

Unauthorized access to confidential information (which is what this is) can also be covered by a number of common law theories. "Misappropriation" of information can be actionable as a tort under state law.

The use of a "trade secret", even if it may have innocently come into the possession of a competitive intelligence professional, can be restricted. One definition of a "trade secret" is "any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable to afford an actual or potential economic advantage over others". A trade secret is "property", and its acquisition by way of fraud, deceit, or breach of a contractual obligation is subject to civil damages and, in some cases, criminal action. For example, a customer list can qualify as a trade secret.

[snowgoose]

WHat if you ask the company questions about themselves and they dont ask who you are. Thats fine then?

[sldesigno]

jasaunders is correct. I spoke with our counsel and he echoed jasaunders' thoughts to some degree. While I didn't misrepresent myself or my company, I did misrepresent my intended actions with relation to the competitor.

Snowgoose, your scenario, as it is stated, is legal and fine.

[jasaunders]

Law is not a black and white subject. It can be approached in a number of ways.
You are safer (but may not be exempt) if you do not practice deceit.

[Nigami Enterprise]

In the United States, yes this is illegal. You can not misrepresent yourself. You can call up and ask how much they charge, but if they ask who you are or what company you are calling from, you must disclose.

Technically you do nothing illegal until you don't disclose.

And in all honestly i wouldnt worry about it. This happens every day and i have never seen someone taken through the justice system because of it.

[BusinessAdviser]

So I'm reading here that it is illegal to lie about anything? I don't think that's correct. Maybe there is more to a misrepresentation claim. Such as that one is injured as a result of the misrepresentation. And where the misrepresentation only gains knowledge that is in the public domain, it might be awfully hard to succeed on a claim for misrepresentation. I'm definitely headed somewhere with this. Anyone who previously asserted that any misrepresentation is illegal want to change their mind and jump in?! It might be advisable.

[jasaunders]

Worded badly at first. Anyone who misrepresents themselves to obtain confidential information or information not otherwise in the public domain may have legal issues here.

I am currently working on a new business development case at my employer to present a business case on a new service offering to our core team. Part of my case includes competitor pricing on the same offering. I have been instructed by our legal department that I can not call competitors to ask what they charge and misrepresent who I work for. Instead, I have opted to call their customers directly and ask if they would be willing to share how much they pay for this service.