Deceptive sales are those practices that involve false, misleading or inaccurate representations and omissions in connection with the sale of consumer goods or services. They can be made by an individual or a company and may include written, oral, electronic or visual statements.
The term deceptive sales is a broad category of practices that violate Federal and state laws against misleading or deceptive business practices. These practices include misrepresentation of the price or savings, false statements of superiority and failure to provide consumers with information about the product they are buying.
“Bargain” advertising is a common form of deception in the retail industry, where a reduction from the manufacturer’s list or suggested retail price is offered in an effort to lure customers to a store. The FTC has a series of guides against deceptive pricing that can help to protect the public from a wide range of misleading pricing claims.
A price claim can be misleading in a number of ways, but the most important consideration is whether the advertised reduction is truly significant. The FTC has established guidelines to determine whether a price reduction is substantial enough to be considered deceptive.
If the list price is the price at which articles are generally sold in a trade area, then the advertisement of a reduction from that list is not likely to be deceptive because many members of the purchasing public will think that a reduction at that price means they are getting a good deal.
However, if a reduction from that list price is significantly greater than the average price at which the article in question is sold in the advertiser’s trade area, then it is more likely to be deceptive. This is because people who are buying at a discount in a discount retailer’s store will assume that the retailer is offering them a bargain at the manufacturer’s list or suggested retail price.
It is also deceptive if the former price was artificially inflated to enable the seller to offer a reduction. A price that never actually sold for more than $50 would be a fictitious price under the FTC guides and cannot be hawked at “the former price of $50.”
Pictorial advertisements, such as the ones shown on television, also create problems because they can belie the announcer’s words or caption. The picture of a man in a white coat, the seals of the British monarchy, and plush offices can all be used to create a false impression that a particular product is expensive or that the company has its operations there.
In addition, a retailer may deceive the public by offering a “bait and switch” in which the advertiser dangles an attractive offer in front of a potential customer, only to disparage it once the customer arrives at the store. Then, the retailer will try to sell them a more expensive product.
The practice of deceptive selling has become an epidemic in the life insurance industry, as evidenced by the many complaints filed with the Better Business Bureau (BBB) and other government agencies. While the exact extent of the problem has not been well documented, it appears to be an increasingly common issue across the country. The BBB and ESA are working together to educate consumers about these practices and seek solutions.