How the FTC Enforces Deceptive Sales

The Federal Trade Commission enforces a broad range of laws against deceptive sales. These include making misleading cost or price claims; bait-and-switch techniques; and misrepresenting the availability of a product. In evaluating whether an act or practice constitutes deception, courts and the Commission consider the totality of circumstances, including how a reasonable consumer would interpret the representation or omission, its effect on consumers acting reasonably under the circumstances, and the extent to which a representation is likely to affect their conduct or decision about a particular product.

Deceptive pricing and savings claims are commonplace in the daily bombardment of advertising we all encounter. Advertisers must adhere to a number of strict rules for these types of claims. The FTC publishes a series of “Guides against Deceptive Pricing” that can help to guide marketers through the minefield of price claims. These guides are not law, but they do provide clues to how the FTC may decide to rule in a case.

In determining whether a product is on sale, the FTC will compare its current price with the previous price. A current reduction in price from the prior price must be significant, and a former price must have been offered for a substantial period of time within the recent past. A sale price can not be based on the original manufacturer’s suggested or list price. Many members of the purchasing public believe that a manufacturers’ list or suggested retail prices are the exact price at which articles are generally sold at retail in the relevant trade area, and that any reduction from these prices represents a true bargain.

Unless a seller has sufficient inventory to meet anticipated demand, it cannot represent that a certain article is available when in fact it is not. Similarly, a seller must disclose in the advertisement that a substitute product will be used for all or part of an order when in fact that is not the case.

The alarm industry has made great strides in the last few years in raising consumer awareness of some of the deceptive tactics that some nefarious door-to-door sales reps use to manipulate consumers into purchasing an expensive alarm system. However, the pitfalls remain for unsuspecting consumers. As a result, the FTC continues to investigate and take action against companies that engage in this type of deceptive marketing, including awarding large sums to consumers who have been victimized. If you have experienced a deceptive alarm sale, we encourage you to file an FTC complaint. The FTC’s online complaint form is simple, fast and free to use. The FTC also provides tips for filing a complaint and links to the relevant statutes. The agency also has an information center dedicated to helping consumers understand the alarm industry and their rights. This website includes FAQs on the Federal Trade Commission’s unfair and deceptive practices laws, a list of recent cases brought by the agency, and tips for filing a complaint. The site is available in English and Spanish.

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