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This article reports on a program of exploratory research aimed at examining the practice of mystery shopping in service organizations. Mystery shopping, a form of participant observation, uses researchers to deceive customer service personnel into believing that they are serving real customers or potential customers. The research focused on the views of senior managers responsible for commissioning mystery shopping research and directors of market research agencies responsible for the provision of such research. The research findings identify the manner in which mystery shopping is used and the methods used to maximize the reliability of the technique. The study also revealed that employees' acceptance of this form of deception appears to be critical if the results are to be taken seriously by service personnel and if industrial relations within the organization are not to suffer. © 2001 John Wiley & Sons, Inc.