Reputation Laundering Explained – Types and Tactics
A niche industry has sprung up around what is referred to as “reputation laundering.” A growing number of PR firms, ad agencies, lobbyists, and lawyers have begun catering to corporate and private clients who aren’t happy with how the public sees them. With billions of dollars at stake, they are often willing to pay a great deal of money to change that view.
Sometimes, these companies merely want to change an opinion of their business practices, while other times, they are obfuscating how they do business. In extreme cases, the companies cover up illegal activities or commit crimes while trying to portray themselves better to the public.
The rise of reputation laundering
The term reputation laundering was first used in the 1990s with a nod to the classic concept of money laundering, when illegal profits are funneled through legitimate sources to “clean” them.
However, using the public appearance of positive acts to change opinion is nothing new. It can be seen in the actions of industrialists Andrew Carnegie and John D. Rockefeller at the turn of the 20th century. At the time, these men and their businesses were seen as great donors because the public saw their names on universities and other charities. However, with the passage of time and scrutiny of their business practices and misdeeds, their true motivations came to light. Historians now argue how their actions were to cement their name in the public consciousness as do-gooders.
As corporate conglomerates grew larger and the rise of the information age arrived, companies needed to find a way to keep their image in a positive light with the explosion of the internet and changing social values. With this, the growth of an industry of publicity firms, lawyers, and “fixers” arose. Using the explosion of social media and “fake news,” the task of laundering reputations began an entirely new age.
Types of reputation laundering
Astroturfing and greenwashing
The act of “astroturfing” creates a fake grassroots movement that seems to support a certain agenda or company. In reality, the movement is created by a company or its PR team to form a positive public opinion, even though it is based on a false agenda. A commonly seen version is for companies to hire people to attend events or protests and support the company that secretly brought them in.
In 2008, the FCC held hearings about media companies, net neutrality, and the free flow of information. Comcast was discovered to have hired people to fill the hearing and support the company. While Comcast claimed the people were only “seat warmers” holding space for late-arriving employees, media investigations didn’t agree. Not only did this appear to create a groundswell of support for Comcast, but it also kept legitimate opponents out of the room.
Another approach to change public sentiment is “greenwashing.” Greenwashing is when a company makes itself appear environmentally friendly when its actual practices are far from it. One recurring example is when companies claim their packaging is recyclable when it is not.
Several companies have been caught touting their green practices in commercials until their actual environmental practices were revealed. In 2022, Coca-Cola fell into this when they launched a campaign about their ecologically friendly practices. Their “World Without Waste” campaign claimed they were a sustainable business, and the ads used prominent green imagery. Citing public studies, environmental watchdog groups argued that Coca-Cola creates three million tons of plastic products a year, double the next companies on the list.
Political influence
Lobbyists are nothing new. Corporations hire advocates not only to influence politicians to create laws in their favor but to vote against investigations that may reveal negative information or criminal activities of the company.
For years the tobacco industry was one of the biggest culprits of this, spending billions of dollars to have laws changed, head-off investigations, and work to cause a level of mistrust of regulations. The industry was also infamous for putting reasonable doubt into government hearings with the “not sure” movement when it came to cancer. They even paid doctors to testify that smoking didn’t cause cancer. In 2006, a court found the tobacco industry guilty of at least 145 acts of bribery, racketeering, and other unlawful activities.
Working with the media
Another powerful way companies launder their reputation is through the media. Often they give news outlets access to information or connections in the hope of using this relationship to shape news stories. While the large majority of journalists and media outlets don’t take part in this or put disclaimers on broadcasts announcing their connection to companies and potential conflicts of interest, there are cases where it has happened on a grand scale.
With the growth of large-scale corporate mergers, many companies began to place their products on networks they now owned. For years, General Electric was accused of using NBC television to present the company in a positive light. It even became a joke on the sitcom 30 Rock.
Sometimes the laundering of a reputation is simply done to create plausible deniability, giving a seed of doubt to the public. With the current social media landscape, this is common as companies hire and pay influencers and other media accounts to provide alternative ideas and stories. They can even go as far as casting doubt on competitors to draw attention away from the truth.
Legal strong-arming
One tactic used in laundering is to hire legal firms to threaten those who make accusations, even if they are correct. Because of deep pockets, corporations can often outlast smaller, less well-funded organizations or individuals who are making the accusations. Lawyers even threaten them with countersuits or libel cases.
When CBS president Les Moonves was accused of sexual assault, he used the full powers of the company and legal teams in an attempt to protect himself and keep the truth from investors. In the long run, the tactics were unsuccessful and it not only damaged his reputation and career but caused major problems with a merger the company had been working on. Eventually, CBS and Moonves had to pay a $30.5 million settlement.
Donations to charities, social organizations, and schools
Philanthropy is a valid effort when a company gives back to the community through money, time, or product donations. While they do often receive tax breaks or other financial incentives as well as positive publicity, this is different than creating a social image change due to improprieties or bad business practices.
Often, wealthy CEOs or business owners will donate to a university and receive press, access, or, at times, even a building in their name. For many, this is a pursuit of publicity and legitimacy, but for others, it allows them to cement their legacy and often connect the name of their business with that school and higher education for generations.
Sometimes, these individuals are labeled as “tainted donors,” leaving institutions in a difficult position of turning down badly needed funds in order to make a moral stand.
Investing in sports teams or events
Also called “sportwashing,” this is the practice of a company sponsoring or partnering with a sports team or placing their name on a stadium in an attempt to raise the level of positive connection with their corporation or brand. This is by no means a new practice. Sporting events have been used as a political tool by countries, oppressive regimes, and corporations for over a century as a tool to make them look better.
While not a company, recently, the country of Qatar came under fire for this practice when it hosted the 2022 World Cup. Accused of human rights violations and without a history of soccer as a national presence, the country poured endless money into the event with mixed results and amidst public scrutiny.
From a corporate angle, one example of sportwashing is AIA, a Chinese insurance company that partners with the Tottenham soccer team in the United Kingdom. AIA has been accused of supporting anti-human rights and strong-arm political activities in Hong Kong. Many watchdog groups have seen their sponsorship as an attempt to gain favor in other countries and sweep their political stances under the rug. Tottenham has been called upon to drop them as a partner.
Although done in a more comic form, television personality Jeremy Clarkson sponsored his local soccer team to raise his reputation for his farm featured on the Amazon show “Clarkson’s Farm.” On the show, he openly hinted that it was a way to create a better reputation with the local community who did not take to his farm or many of his business practices.
Laundering vs. reputation repair
There is a difference between reputation laundering and repairing a reputation.
Usually, a reputation needs repair because of a misstep that a company owns up to and wants to fix. It could be an advertising mistake, the actions of an employee, or a misguided policy. Sometimes, it’s not even something that is their fault, such as an external group that has raised concerns or even an unfounded accusation.
The main point of reputation repair is that the company recognizes the problem, is working to fix it, and is usually striving to become a better company.
In contrast, reputation laundering is usually about covering up actions that a company doesn’t want the public to see. It could be ongoing policies or past deeds. Often the approach is unethical and sometimes illegal. Laundering is often when a company is simply trying to cover up its activities and go on with business as usual.
Companies that use reputation laundering may just be involved in an industry that has a negative appearance, such as tobacco or oil. In order to stay profitable in changing social times, these companies need to find ways to shift public perception of themselves. They may also have supported unpopular political or social policies and want to divert attention from those choices. Sometimes, they get away with it, but often, they are caught in the act.
Make no mistake, reputation repair and laundry are two completely different things. Hiring a firm to get your best foot forward or to promote your real values is far different than having a publicist or media firm cover up your misdeeds and actions.
Conclusion
- Reputation laundering is the action of covering up or erasing misdeeds, negative business practices, or illegal actions of a company
- Often this includes donations to universities, institutions, or other charities
- An industry has grown up around the need, including PR firms, lawyers, and lobbyists
- Misinformation is another tool and can be called astroturfing when it is a fake grassroots movement created by a company
- Greenwashing is often used to cover up non-environmental practices with claims of the contrary in commercials and advertisements
- Companies will make donations to schools and charities or align themselves with athletic teams in an effort to turn public opinion in their favor
- Reputation laundering is much different from reputation repair: Laundering seeks to cover up illegal activities and bad practices while reputation repair involves fixing problems within a company or brand and developing a positive image based on the true actions of the company
Tags: Business Reputation Marketing, Business Reputation Repair.
