Who's that selling at your (online) door?

Whether it's Microsoft paying a journalist to edit the company's entry on Wikipedia or the CEO of Whole Foods giving an anonymous online thrashing to competitor Wild Oats or Sony Corporation funding an "independent" fan blog, deceptive marketing practices on the Internet are a growing problem, new-media analysts say.

This type of consumer manipulation is known as "astroturfing," and efforts to stomp it out are growing. The Word of Mouth Marketing Association (WOMMA) has been honing a set of voluntary ethical guidelines for its members, and the European Union recently banned the practice altogether.

"The Internet functions on trust," says Joel Postman, a corporate communications specialist and founder of Socialized PR, in Boulder Creek, Calif. "As more and more people do business in the digital world, more consumers than ever need to know who they can rely on to tell the truth."

Astroturfing, a word widely attributed to former US Sen. Lloyd Bentsen, is an umbrella term for any sort of fraudulent message masquerading as grass-roots word of mouth. It comes alongside a continued explosion in the world of viral marketing – self-replicating techniques that use text messages, video clips, images, and other means to encourage people to pass along a marketing message voluntarily and spontaneously. According to WOMMA, viral marketing has grown 39 percent in the past year alone, generating nearly $1 billion. Some 65 million American consumers shared their personal views on products with others online, according to a 2006 study by EMarketer, an Internet research firm.

Such peer-to-peer marketing is more important than ever because consumers are much savvier than they used to be, says Paull Young, a new-media strategist with Converseon, a media marketing firm in New York. Businesses have to be much more sophisticated to speak to a generation that has learned to tune out traditional advertising messages. It's harder than ever to get past the "sniff test" of today's consumers, says Mr. Young. That, he says, can put companies in a danger zone.

"Businesses have to be very careful, because the line between a creative ad campaign and unethical manipulation can be very fine," he adds. Many companies have found this out – sometimes the hard way.

Dan Gillmor, director of the New Knight Digital Media Center at Arizona State University, points to the incident with the CEO of Whole Foods. In the summer of 2007, the company was interested in acquiring rival grocer Wild Oats. CEO John Mackey appeared anonymously in an online chat forum and delivered extremely negative information about the rival. It was perceived as an effort to suppress the company stock price in advance of the Whole Foods takeover.

When his identity was unmasked, Mr. Mackey was taken to court for unethical market manipulation. Mr. Gillmor suggests that while legal action is one way to deal with deceptive behavior, the court of public opinion may be more effective.

"Reputation is so much more important to a public company," he says. "I'm a Whole Foods customer but now, after I know what the company tried to do, I would think twice about shopping there again."

The WOMMA guidelines address the core concerns for the Digital Age – transparency and trust, says strategist Young. And the three key words for any online marketer these days are relationship, opinion, and identity. Companies must disclose the relationship they have to the message, whose opinion they're actually voicing, and their real identity.

What's at stake is far more important than a single transaction. One disillusioned consumer can reach a vast universe of fellow shoppers in a single message, Young says. "A company's reputation is so much more important than a single sale, it doesn't make sense not to be transparent in the digital world."

This observation is echoed again and again by online business strategists.

"It's so easy to bust people online these days … they just can't hide," says Doc Searls, a fellow with Harvard's Berkman Center for the Internet and Society. "It's beyond me why anyone would even try to hide who they really are."

Among countless examples of so-called "online identity reveals" is last year's outing of Dan Lyons, a Forbes magazine staff writer, as the author of a fantasy Web diary known as "Fake Steve Jobs blog."

"Why not figure out better ways to be ethical in business instead?" asks Mr. Searls.

Unethical and deceptive practices have existed for a long time in the analog world, of course. But they are "migrating and adapting to the new digital environment [while] the tools for combating it in cyberspace are still being created," says New Knight Center's Gillmor.

He is leery of governmental intrusion into the Internet environment. "If it means stepping on the First Amendment, I'd be completely against any kind of government oversight," he adds.

An educated and empowered consumer is a far better countermeasure against astroturfing, he and others say.

"We all need to develop a healthy skepticism and the ability to question messages we receive on the Internet," he says.

• Monitor intern Alison Tully contributed to this report.