SACRAMENTO — The security industry has come a long way since the trunk-slammers of the 1970s, but deceptive sales tactics remain a problem. Door-to-door alarm salespeople continue to employ misleading high-pressure tactics that frighten consumers, and some companies are still engaging in this behavior after being caught and punished by the Federal Trade Commission (FTC).
The FTC has taken several steps to help people avoid falling prey to deceptive marketing, including establishing its Guides against Deceptive Pricing, which describe the kinds of price and savings claims that the agency will find problematic. However, the guides do not replace the law, and many states have laws that provide more specific guidance on what can be said about a product’s price.
One of the most common deceptive practices involves “bait and switch.” Retailers use this strategy by advertising an alluring offer that, once a customer gets to the store, disappears or is disparaged in favor of a higher-priced product.
This type of deception is particularly troubling when it is used to sell insurance, because insurance premiums are often a significant part of people’s household budgets. Many of these policies cover catastrophic events, such as house fires or car accidents, and the loss of those premiums can be devastating to a family’s financial situation.
In the case of homeowners’ insurance, false or misleading information can be particularly damaging because homeowners are not only losing money in premiums but may also have to pay for costly repairs that they don’t need and couldn’t afford. For example, purchasers of a home in Texas sued sellers and their real estate agent for concealing the fact that the carpets in the house were soaked with pet urine, a serious health hazard. The purchasers also alleged that the seller failed to conduct agreed-upon repairs before closing, which is a violation of the state’s deceptive practices statute.
Consumers are also vulnerable to deceptive marketing through television demonstrations and other advertising. For example, the FTC has found that a television commercial showing a knife cutting through nails is deceptive if the nails are precut and different knives are used for the before and after shots. In some instances, the FTC has even required companies to disclose pertinent facts to consumers in their advertisements.
Door-to-door selling has been a useful tool in the marketplace for decades, but it needs to be practiced responsibly and with honesty and integrity. The FTC encourages everyone to be an advocate for good business by contacting the agency to file a complaint or to get more information about how to spot deceptive practices. People can also file a complaint with the ESA Monitoring Association, a nonprofit trade group that provides education about deceptive marketing and helps consumers report bad agents.