Scary Business Practices: The Tricks That Haunt Your Brand

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Scary Business Practices Halloween Header
Scary Business Practices: The Tricks That
Haunt Your Brand

🕒 4 min read

By Desiree Grace


TL;DR

Bad business practices like hidden fees, privacy violations, labor abuses, and late supplier payments can do lasting damage to a brand, and they happen in both private and public companies. Private firms can hide misconduct longer because they disclose less, while public firms feel the fallout faster through markets and regulators. Either way, leadership sets the ethical tone, and personal responsibility is what keeps a scary practice from becoming an even scarier outcome.

Think ghosts and goblins are scary? Try bad business practices for a truly frightening shock to your system. Serious damage to your brand can occur, and in many cases, the damage cannot be undone. Both private and public companies can behave in harmful or unethical ways, but the scope, detection, and consequences differ. It's all due to regulatory and transparency challenges. Whether you are an investor, customer, supplier, or employee, ethical business practices matter. Funding, loans, new business development, and recruiting can all be affected.

Common Scary Practices in Private and Public Companies

Several bad business tactics can occur in either private or public firms:

  • Hidden fees and surprise charges: This could be late fees, expedite fees, or other added products or services without clear disclosure.

  • Excessive data collection and privacy violations: Harvesting personal data without consent, as seen in FTC cases against Meta and others.

  • Political or social issue exploitation: Using controversial causes in marketing to influence public opinion. An example of bad behavior would be repackaging in America to get around Buy American legislation.

  • Labor-related abuses: Refusing overtime pay or offering stagnant raises to long-term staff while hiring cheaper new workers.

  • Other: Late payments to suppliers are another example of bad business practices. This could be part of a larger initiative to falsify cash flow.

These practices can harm consumers, employees, and partners, and in some cases lead to legal penalties or reputational damage.

Private Company Risks

Private companies are not subject to the same public disclosure requirements as public firms, which can make misconduct harder to detect. Examples include:

  • Securities fraud: Theranos was a private firm sued by the SEC for fraud. The SEC's anti-fraud rules apply to both private and public companies, but private firms have less transparency. You don't want your company depicted in an unflattering movie.

  • Undisclosed conflicts of interest or misrepresentation: Without public filings, investors and customers may not see red flags until the damage is done. Some distributors, for example, do their own testing or panel-building, but they are careful to disclose that to potential customers and keep distinct lines between business units as a reassuring business practice.

  • Regulatory arbitrage: Private firms may exploit looser oversight to avoid compliance costs. This could be scrap practices, recycling, or waste disposal, for example.

The UC Davis Law Review notes that the decline in public listings reduces the information available to detect and punish fraud, and it suggests expanding whistleblower protections for private firms to minimize bad behavior.

Public Company Risks

Public companies face greater scrutiny from the SEC, regulators, and the public, but they also face:

  • High-profile scandals: Enron, WorldCom, and Fisker show how unethical behavior (fraud, quality failures, mismanagement) can lead to collapse. Showing preference for your brother-in-law's rep agency could be a career-killer, at a minimum.

  • Market and investor backlash: Public disclosure of misconduct can trigger stock price crashes, loss of trust, and legal action.

  • Regulatory enforcement: Public firms are more visible to regulators but may also use complex structures to obscure wrongdoing until it is exposed. Claim you meet the small-business requirement? That had better be true. Not only could you kiss those government contracts goodbye, but you had better be prepared to pay hefty fines.

Key Differences: Private vs. Public Companies

Aspect Private Companies Public Companies
Disclosure Limited; no public filings Extensive; SEC filings, quarterly reports
Regulatory oversight Less direct; SEC anti-fraud rules still apply High; SEC, CFTC, and other agencies
Detection of misconduct Harder; relies on whistleblowers, media Easier; public data and audits
Consequences Often private legal action, reputational harm Public market fallout, fines, delisting

The Takeaway

Scary business practices can occur in both private and public companies, but private firms may hide them longer due to lower transparency, while public firms face more immediate public and regulatory consequences. For consumers and investors, vigilance, due diligence, and support for whistleblower protections are key to reducing the impact of such practices. For businesspeople working in both private and public companies, personal responsibility and professional accountability prevent scary business practices and even scarier outcomes.

Leadership in companies sets the tone for ethical behavior by example, culture, and training. Lapses in professional ethics, in ways small and large, could have unintended negative consequences, creating a nasty trick for all involved. Treat your business practices and relationships with care, and you will reap the benefits (no cavities, either!).


Need help separating the tricks from the treats? Need help onboarding? Need help with a neutral legal review of your business practices? Give River Heights Consulting a call: 563-514-1104. We have resources to help you enjoy the sweets that come with hard work, without nasty penalties or brand damage.



About the Author

Desiree Grace Trick-or-Treat | River Heights Consulting
Desiree Grace writes the Marketing Moment column for The Distributor Channel
and River Heights Consulting, where she reminds distributors that a brand takes years to build and one bad trick to haunt. She is far more frightened by surprise fees and late supplier payments than by anything that shows up on her porch on October 31. Her advice for the season: hand out the good candy, and keep your business practices just as sweet.













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