

Ask HN: Our competitor scams their clients - what should we do?  - vgurgov

Ok, here is the story. We are young company in online ads space making less that 100k sales/month.<p>We just found that one of our competitors are clearly scaming their clients. They are company with 30M+ funding, famous investors, few products etc.<p>They are charging their clients (big brands) x2-3 more for more expensive things while in practice delivering cheap thing. We collected all the evidence, screenshots etc.<p>We are in relatively small niche market, where all players are well known and so they are effectively stealing our clients/money.<p>What should we do?<p>1) Bring the evidence to press(techcrunch etc) and try to start another scamville? If so, should we do this anonymously or ask to name ourself? Would it harm our reputation as we are their competitors?<p>2) Prepare report and send it to their clients?<p>3) Contact them or their investors<p>4) Start doing the same thing :) This is not really an option since method is quite obvious and it will be uncovered sooner or later by someone.<p>5) Something else?<p>Thanks in advance!
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CantDecide
Apple can charge a premium for their equipment because they are known as a
premium brand. Even if they could make their products for 1/3 the cost, they
would still charge the same price because they need to be seen as premium
products, and because they can.

If you are sure you're competitor is over charging, maybe it is for the same
reason. As dandandan said, maybe you are pricing your product too low.

Going after them publicly, accusing them of scamming or unethical behavior
will only backfire. Either your company will be branded crackpots and
unreliable, or you will actually get negative press.

The best you can do is in your marketing and sales pitches, say "our prices
aren't as inflated as our competition but our product is better than theirs."
Then prove it with examples of product quality. Your customers will do their
own pricing research.

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dandandan
Overcharging customers who are willing to pay that rate isn't "scamming" them
per se. It could be considered unethical though and will probably come back to
bite them even without going to the media about it. Are you sure your rates
for whatever you provide aren't too low?

~~~
slig
Yep <http://en.wikipedia.org/wiki/Price_discrimination>

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jnorthrop
If you have evidence of fraud contact the FTC or the FBI. If they aren't
committing a crime then let it go. You will not win any favors by bashing your
competition.

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ig1
How do you know who they're selling the premium product to ?

You need to be careful that you're not misunderstanding the situation, because
if you go public and find out you're mistaken they could sue you out of
existence for libel.

What you could do is present the data (say in the form of an industry analysis
comparing the industry players) including case studies showing what their
client are receiving and publish it.

You could then send it around to their clients (X is what you're receiving
from Y, you could be receiving Z from us). And let the client make the
deduction that they're being scammed and not getting what they paid for.

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vgurgov
Thanks for all the feedback. I guess i posted op in a hurry and my points were
not clear. 1) Know for sure that they are misleading their clients. We know
how this industry works very well and we collected all evidence. 2) Scam is
like this. They are saying to clients that they will get bananas and charge
charge them for bananas. Market price for bananas in this industry is 20-30
cents. In fact they are shipping them peanuts with price of 7 cents at most.
In fact they are selling them very bad peanuts that cost even less and noone
really wants them.

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MattBearman
I think people maybe misunderstanding the original post (either that or I am).

My understanding is that their competitor offers 2 products, a basic and a
premium (this is an example, I've no idea how many products their competitor
offers).

The scam is that the people paying for the premium service are only getting
basic. Ie, they would get exactly the same service if they were paying for the
basic.

