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Trojan horse (business)
Encyclopedia
In business, a trojan horse is an advertising offer made by a company that is designed to draw potential customers by offering them cash or something of value for acceptance, but following acceptance, the buyer is forced to spend a much larger amount of money, either by being signed into a lengthy contract
, from which exit is difficult, or by having money automatically drawn in some other method. The harmful consequences faced by the customer may include spending far above market rate, large amount of debt
, or identity theft
.
The term, which originated in New England
during the 2000s, and has spread to some other parts of the United States, is also sometimes misused in reference to an item offered seemingly at a bargain price. But through fine print
and other hidden trick, the item is ultimately sold at above market rate.
Some of the items involved in trojan horse sales include cash, gift card
s or merchandise viewed as a high-ticket item, but the item actually being given away is made cheaply, has a very low value, and does not satisfy the expectations of the recipient. Meanwhile, the victim of the trojan horse is likely to end up spending far more money over time, either through continual withdrawals from the customer's bank account, charges to a debit or credit card, or add-ons to a bill that must be paid in order to avoid loss of an object or service of prime importance (such as a house, car, or phone line).
Victims of trojan horses include those who are searching for bargains or the best price on an item or poor people. Many of these victims end up with overdrawn accounts or over-the-limit on their credit cards due to fees that are automatically charged.
Some of the businesses using trojan horse marketing include banks, internet and cell phone service providers, record and book clubs and other companies in which the customer will be expected to have a continuing relationship. Banks often offer cash initially for opening an account, but later charge fees in much larger amounts to the account holder. Auto-manufacturers
and car dealership
s will often advertise free or subsidized gas to car buyers for a certain amount of time, but increase the cost of the car in other ways. Cell phone companies use trojan horse marketing by attempting to sell items like ringtones to customers, who unknowingly are sold many more ringtones over time.
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
, from which exit is difficult, or by having money automatically drawn in some other method. The harmful consequences faced by the customer may include spending far above market rate, large amount of debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
, or identity theft
Identity theft
Identity theft is a form of stealing another person's identity in which someone pretends to be someone else by assuming that person's identity, typically in order to access resources or obtain credit and other benefits in that person's name...
.
The term, which originated in New England
New England
New England is a region in the northeastern corner of the United States consisting of the six states of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut...
during the 2000s, and has spread to some other parts of the United States, is also sometimes misused in reference to an item offered seemingly at a bargain price. But through fine print
Fine print
Fine print, small print, or "mouseprint" is less noticeable print smaller than the more obvious larger print it accompanies that advertises or otherwise describes or partially describes a commercial product or service...
and other hidden trick, the item is ultimately sold at above market rate.
Some of the items involved in trojan horse sales include cash, gift card
Gift card
A gift card is a restricted monetary equivalent or scrip that is issued byretailers or banks to be used as an alternative to a non-monetary gift....
s or merchandise viewed as a high-ticket item, but the item actually being given away is made cheaply, has a very low value, and does not satisfy the expectations of the recipient. Meanwhile, the victim of the trojan horse is likely to end up spending far more money over time, either through continual withdrawals from the customer's bank account, charges to a debit or credit card, or add-ons to a bill that must be paid in order to avoid loss of an object or service of prime importance (such as a house, car, or phone line).
Victims of trojan horses include those who are searching for bargains or the best price on an item or poor people. Many of these victims end up with overdrawn accounts or over-the-limit on their credit cards due to fees that are automatically charged.
Some of the businesses using trojan horse marketing include banks, internet and cell phone service providers, record and book clubs and other companies in which the customer will be expected to have a continuing relationship. Banks often offer cash initially for opening an account, but later charge fees in much larger amounts to the account holder. Auto-manufacturers
Automotive industry
The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's most important economic sectors by revenue....
and car dealership
Car dealership
A car dealership or vehicle local distribution is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary. It employs automobile salespeople to do the selling...
s will often advertise free or subsidized gas to car buyers for a certain amount of time, but increase the cost of the car in other ways. Cell phone companies use trojan horse marketing by attempting to sell items like ringtones to customers, who unknowingly are sold many more ringtones over time.