10 Sleazy Moves by Everyday Companies

BOSTON ( TheStreet) -- The world of business is rarely the domain of do-gooders. To get ahead, executives have to be bold and brusque.

This can backfire. Poor decisions, born of bad taste, can turn off customers, irritate the public and fuel lawsuits. It's the kind of risk you can imagine being taken by the companies desperate to get ahead -- the ones advertising on late-night television or dealing in questionable goods that, uh, fell off the back of a truck.

But those aren't the only companies making questionable moves. Sometimes they come from the brands we use every day and have trusted for generations.

The following are 10 examples of some of the sleaziest moves made in recent years by everyday companies and the people who run them.

We control the vertical ...
Back in 2003, computer hardware maker Belkin irritated customers by stealing their attention and bandwidth.

It seems that as frequently as once every eight hours some of its modems, hooked up to a local area network, would force-feed users spam, hijacking the website they wanted to visit, diverting them to a company site that goaded them into buying parental control software.

Not only was that bad news for users, but IT managers feared that the intrusion could trigger a chain reaction of other headaches related to proper Web browsing.

Although it all seemed pretty coordinated and intentional, Belkin apologized and tried to explain away what happened as a glitch that could be fixed by a firmware upgrade. It took weeks for that promised fix, and the software initially failed to work on some models.

It's bad enough all manner of hackers and shady software companies are messing with you. It's another thing to have the hardware you buy turn against you.

Can you read me now?
When you download software or upgrade a program, do you really read the terms of service before clicking "accept"? Probably not.

But when entering into a multiyear contract for your cell phone or smartphone, with a lot of cash on the table, the odds of you poring over a contract are greatly increased.

So what's a company to do if it's trying to sneak in some unfavorable terms? If you are AT&T ( T) you bury the offending legalese in a massive 8,000-word, 2,500-page "guidebook" outlining its terms and conditions. (That's more than twice the number of pages in the average Bible.)

That 2008 tome quickly drew fire from state regulators and consumer watchdogs who said the format made it nearly impossible for consumers to fully grasp and easily reference the pertinent details of their service agreement. Only available online, accessibility was another concern.

AT&T is in the midst of another contract controversy. This week, the Supreme Court validated the company's contention that a clause in its contract offering dispute arbitration can legally strip consumers of the option to enter into a class-action lawsuit. Lesson learned: Fine print is not your friend.

Apple wins at hide and seek
Apple ( AAPL) Apple has always had a stellar reputation among a fan base that thinks it can do no wrong. Its Teflon coating may be starting to wear off.

OK, consumers seemed pretty willing to forgive and forget when a verifiable antenna problem on the iPhone 4 was cavalierly dismissed by CEO Steve Jobs. "You're holding it wrong," he told users.

The latest brouhaha probably won't be so easy to brush off with a terse email "sent from my iPad."

By now you have probably heard that iPhones have a sneaky little file that periodically logs and time-stamps your location. While true a wide range of apps function via location-based services, they typically require the user to agree to share information. Apple's file -- "protected but not encrypted," it says -- is transmitted to the company and backed up in iTunes whenever you back up your iPhone.

Amid Congressional scrutiny, consumer paranoia and conspiracy theorists taking a break from looking for Photoshop layers in President Barack Obama's birth certificate, Apple had some explaining to do.

"Apple is not tracking the location of your iPhone," it offered in an official statement. "Apple has never done so and has no plans to ever do so."

The reason everyone is so worked up? The answer is a slightly less snarky variation of "you're holding it wrong" that could be phrased as: These pesky users just don't get it.

"Providing mobile users with fast and accurate location information while preserving their security and privacy has raised some very complex technical issues which are hard to communicate in a soundbite," Apple wrote. "Users are confused, partly because the creators of this new technology (including Apple) have not provided enough education about these issues to date."

Why they are doing this? Apple says it is mainly to help map out Wi-Fi hotspots and cell towers to "help your iPhone rapidly and accurately calculate its location when requested."

Apple does say the data is anonymous, but notes, "Our iAds advertising system can use location as a factor in targeting ads."

Third-party apps do need your permission to triangulate where you are, and an upcoming OS upgrade will stop backing up this cache and delete it when Location Services is turned off.

Fair enough, perhaps. And yeah, sure, users may have overreacted or had false expectations of online anonymity.

But still, should Apple really be acting shocked and put upon just because it has the ability to track of your daily life by time and location? To many, it's a scary proposition, a dangerous precedent and an i-Invasion of i-Privacy.

Dressed for excess
How could any story using the keyword "sleazy" not include American Apparel ( APP)?

For those of you who might not regularly stock up on T-shirts and body stockings, this is the retailer whose print ads always look like Polaroids recovered from the shag-carpeted floor of a white van.

No single incident warrants the company's inclusion here. Think of this more as a lifetime achievement award.

To be sure, there are some ways American Apparel deserves kudos -- its resistance to sweatshop labor, for example. But like the soulless stare of its barely legal models, the word that best describes this chain is "creepy," and the sleaze factor starts at the top.

Founder and CEO Dov Charney has racked up a series of sexual harassment lawsuits and, infamously, thought it might be a good idea to visibly pleasure himself while being interviewed by a reporter for the now defunct Jane magazine.

Hiring practices? They would make any decent HR professional's skin crawl.

Leaked company memos reveal that job candidates must submit to taking a "well-lit, head-to-toe shot." These photos, and the attractiveness of the women in them, apparently play an important role in performance reviews. Those who qualify for a bonus are required to have their photos submitted as part of the review process.

Slick move
BP ( BP) would certainly deserve scorn for the Deepwater Horizon oil rig explosion that dumped 200 million gallons of oil into the Gulf of Mexico.

There were the ecological horrors and economic ruin that resulted from its cost-cutting, OSHA-enraging ways. We could even dwell on former CEO Tony Hayward's wish that all those pesky problems would just go away so that he could "get his life back" and kick back racing yachts.

Instead, we'll single out Transocean ( RIG), BP's partner in crime for the rig.

Here's why: Jason Anderson, Aaron Dale Burkeen, Donald Clark, Stephen Ray Curtis, Gordon Jones, Roy Wyatt Kemp, Karl Kleppinger, Keith Blair Manuel, Dewey Revette, Shane Roshto and Adam Weise.

Those are the 11 men who lost their lives in that explosion.

Was it sobering to Transocean executives to put a human face to the disaster? Not so much. The company has doled out healthy bonuses to top staff, crediting them for "significantly improving the company's safety record" and the "best year in safety performance in our company's history."

We'd hate to think about "the worst" year they had.

To their credit, perhaps guilted into it by media coverage, several of the recipients donated their bonuses to charity. Still, it was a jaw-dropping act of insensitivity by Transocean. You'd never see a financial institution reward its leadership for presiding over a disaster ... oh, never mind. Scratch that.

Anything in toddler size?
Abercrombie & Fitch ( ANF), known as much for its homoerotic shopping bags as its suburbanized concept of "fashionable," could rival American Apparel for sleazy clothiers.

At least in the latter's case, Charney just is what he is -- an unrepentant lothario. Abercrombie & Fitch's approach, though, has always felt very calculated, designed for maximum outrage. Engineered controversy doesn't get any sleazier than the retailer's decision to offer thongs for kids, children-sized underwear with words such as "wink, wink" and "eye candy" emblazoned on the crotch.

That was back in 2002, and there was a firestorm of controversy. So has the company learned anything? Nope.

Just in time for summer, the company drew fire last month for targeting kids as young as 8 with padded, push-up bikini tops.

Geek show
Cruise consumer-oriented websites and Best Buy ( SBBY) is almost always in the mix of their coverage.

Since the demise of Circuit City, even a casual shopper can attest that the sales staff has become far more aggressive in pushing nearly worthless extended warranties and the services of the much-maligned Geek Squad.

Founded in 1994, Geek Squad was once a great idea -- a mobile team of tech support pros. Now, as a subsidiary of Best Buy it is seen as a racket by critics, who view this potentially helpful service as having devolved into a means to fleece those who lack tech know-how.

Atop the critic's hit parade: optimization.

For an extra $40 to $70 Geek Squad promises to boost your computer's speed and performance, tweak the operating system, remove unwanted software, set up basic functions and, for the higher price, install anti-virus software.

Engineers for Consumer Reports (part of Consumers' Union, which also owns the site The Consumerist) compared a selection of "optimized" computers with ones with default factory settings and found no performance improvement. In one case, an optimized laptop performed 32% worse than the factory model.

As bad, if not worse, is Best Buy's habit of "pre-optimizing" stock, meaning that if you want to go home with the computer you wanted, or take advantage of a sale price, just taking something off the shelf means you are automatically stuck with added fees and questionable "upgrades." If you want to pay extra for a system restore disc, just like the one your computer comes with, you can hand the boys in blue even more extra green.

Fuel for fire
Adding Enron to a roster of sleazy company moves may be a bit of a cliche at this point, but how can you not?

Its shenanigans (like those of the similarly fallen WorldCom) still set the gold standard for business corruption.

Long story short: The Texas energy company and its auditing/accounting firm Arthur Andersen were driven out of business when it was discovered that creative bookkeeping hid billions in debt and losses.

The repercussions went far beyond trouble in the C-suite. The stock went from $90 a share to breaking the buck, losing shareholders an estimated $11 billion. Employees holding company stock were devastated and their pension fund pummeled by more than $2 billion in evaporated funds.

The wrong note
Sony ( SNE) is a giant electronics company with a big problem -- a recent PlayStation network's hacker attack, ongoing outage and potential loss of customer data. But that's not an example of Sony sleaze.

For that, think back to 2005, when people still bought compact discs.

In an opening salvo against those no-goodniks who stash copyrighted songs onto their computers, Sony decided it might be a great idea to bury "rootkit" copy protection software into its CDs. Unfortunately, that software made unauthorized changes to the operating system of anyone who so much as played the music on their computer. These changes not only crashed many computers and slowed their performance, but cracked open an easy exploit for hackers (and exploit it they did).

Class-action lawsuits and action by state attorneys general followed, and Sony eventually paid out a $4 million settlement that included $175 payments to customers it inconvenienced.

GoDaddy, go away
GoDaddy, an Internet registration company that also hosts websites, is known for its raunchy ads.

CEO Bob Parsons also sparked outrage in early April for posting videos of himself shooting an elephant while on safari in Zimbabwe. "Everybody is focused on shooting the elephant, but it's completely out of context," he complained. "It's as though I shot it in a zoo or something."

But the sleaze we're looking at is GoDaddy not delivering on promised sleaze.

For years, GoDaddy, particularly with its Super Bowl ads, has made a big fuss about how its full, unedited commercials can't get past censors. To see the sexy, no-holds-barred, adults-only content, you have to visit its website.

If you do visit, lured by hopeful thoughts of Danica Patrick, you will find, well, not much -- just a few extra seconds of material, a bad joke or two and a lame "conclusion." Nothing impresses as being very scandalous at all.

At one time, it was a tactic that surely worked, driving hordes to hunt and peck the address. But now, year after year with the same gimmick, does anyone really care?

Is this really such a bad thing? Maybe not, but the sleaze sells approach has opened a Pandora's box. Now, every Super Bowl season is littered with companies intentionally trying to be rejected so they too can claim they are "too hot for TV" and sucker mass media into giving them the sort of publicity money couldn't buy.

-- Written by Joe Mont in Boston.

>To contact the writer of this article, click here: Joe Mont.

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