Deceptive sales occur when a seller does not give consumers the information they need to make informed purchases. Some of these acts and practices can be considered legal, while others are not. Regardless of whether the act is legal or illegal, it is important to remember that a deceptive sales practice can cause serious harm to customers and damage the reputation of the industry in which it occurs.
Failure to Disclose Facts
There are many different factors that can be used to make a deceptive sales practice, such as: (a) misleading or inaccurate information, and/or (b) failure to disclose facts that may have a material impact on the decision of a consumer to purchase or not purchase a product. Often these factors can be easily overlooked or misunderstood by consumers, but they can also be difficult to verify.
One of the most effective ways to deceive a consumer is by depicting an expensive item in a way that suggests that it is less expensive than its actual price. Examples of this can be depicting a white-coated “doctors,” seals of the British monarchy, and plush offices in advertisements. The FTC has ruled that some of these representations can be deceptive, even if the manufacturer has not explicitly stated that the products shown are less expensive than the advertised prices.
The FTC has issued a series of guides that address specific issues and principles related to determining the legitimacy of these claims. The guides are not laws, but they provide guidance for courts when hearing deceptive pricing cases.
Former Price Issues
Advertisers are always careful to avoid implication that a former price is a selling, rather than an asking, price. However, this does not apply in cases where substantial sales at the advertised price were actually made by the advertiser, i.e., where the advertised price was in fact a lower price than was charged by the manufacturer of the article at the time it was sold to the advertiser.
This is particularly true where the former price was charged by a retailer or wholesaler that is no longer in business. The manufacturer’s suggested or list price is an indicator of the price at which a significant amount of sales were made by retailers or wholesalers in the area at the time of the sale to the advertiser.
Similarly, the FTC has held that an advertisement for a brand of paint is not deceptive or unlawful if the advertised price for the paint is significantly lower than the price for paint by the manufacturer of that same brand sold at retail to other retailers and wholesalers in the area.
It is important to note that the FTC has held several instances where a single can of paint was priced and sold at a price higher than the recommended retail price or list price, and thus, it could be difficult for a consumer to make an informed purchasing decision. This can be a significant concern when it comes to home improvement products, as it can be difficult for a consumer to determine whether the price is accurate or not.