Are Businesses Losing Billions to Market Research Fraud?

Fraud in Research

The debate over market research fraud and its impact on businesses has intensified recently, fueled by two contrasting viewpoints. On the one hand, everyone agrees that 30% to 40% of all market research data is fraudulent. There is more uncertainty, however, about whether this fraud has a measurable impact on the outcomes of market research studies. One perspective, showcased in a recent report, alleges that fraud is a significant drain on corporate revenues, with billions of dollars in estimated losses. In contrast, another viewpoint posits that while fraud is indeed a problem, it’s one that professional market research firms are addressing effectively.

Exploring the Research Fraud Controversy

Both viewpoints present thought-provoking perspectives on the impact of market research fraud. However, the scenarios playing out in the real world are increasingly showcasing a growing body of evidence suggesting that fraud is not just present, but actively affecting outcomes in significant ways. To grasp the magnitude of this issue, it’s necessary to delve into concrete instances where fraud has had profound real-world implications. These instances serve as ‘canaries in the coal mine,’ signaling a larger, more pervasive problem lurking beneath the surface.

Illustrative Examples of Online Fraud

Corporate Market Research Fraud: This example was presented at Quirks New York in 2022 by researchers from Proctor & Gamble and PepsiCo. A prominent multinational company had launched a multimillion-dollar marketing campaign based on fraud-infused research data. This occurred despite the fact that they had a well-designed study, and used reputable market research panel sources for data collection. They erroneously concluded that there was considerable consumer interest in a new product, leading to significant financial losses and a misdirected marketing strategy.
 
Public Health Impact: A study conducted by the Center for Disease Control initially claimed that millions of people were consuming bleach as a preventative measure against COVID-19. This CDC report was quoted by more than 150 news outlets around the world. Upon closer inspection, we discovered that the alarming statistics were based entirely on fraudulent respondents. The initial study was published in the CDC’s flagship journal Morbidity and Mortality Weekly Report (MMWR), and provides a stark example of how online research fraud can have severe public health implications. For more information, you can read the Harvard Business Review’s coverage of this story.

Political Science Implications: The political arena has not been immune to the implications of research fraud. A scientific paper published in the Proceeding of the National Academy of Sciences shows the distortion of public opinion regarding political violence. The paper titled “Current research overstates American support for political violence” discusses that provocative survey data initially reported that up to 40% of Americans support politically motivated violence. In contrast, later research revealed that, once fraudulent responses were removed, the actual support for political violence was less than 3%. This example illustrates how fraudulent data can distort public perception and potentially impact public policy.

Conclusion

While there are claims that existing measures and an investment in data quality efforts are robust enough to prevent massive losses to fraud, the examples above demonstrate that fraud is having a significant real-world impact. These instances are likely the tip of the iceberg, indicating that an over reliance on extant anti-fraud measures lulls researchers into a false sense of safety.

It’s crucial for all sectors reliant on market research to recognize that this problem still exists, and take steps to ensure that they’re collecting high-quality, reliable data. The proactive involvement of all stakeholders can help tackle this problem and will lead to more reliable insights for strategic decision-making.

It is critical to acknowledge that, despite best efforts of the industry, online fraud is a real problem with large-scale societal consequences. Assuming that the problem has been largely solved by current practices will lead to dangerous health practices, misinform public policies, and misallocate resources in the corporate world. Society needs to reach accurate conclusions when it conducts research. To make sure that’s what we get, let’s stay informed and alert, continue to think critically about where sample comes from, and keep innovating in the fight against fraud.