Deceptive sales are practices that mislead consumers. They include making misleading cost or price claims, using bait-and-switch tactics, offering to provide a product or service that is not in fact available, and failing to provide promised services. The FTC Act defines unfair or deceptive trade practice as “an act or practice that misleads a consumer in a way that is not reasonably avoidable by the consumer and that is not outweighed by countervailing benefits to consumers or to competition.”
The most common form of deceptive sale involves omissions or misleading representations regarding price or availability. Examples of such omissions or representations are: refusing to answer questions about a product’s features and benefits; selling an unfit or defective product; or ignoring material limitations or conditions in an offer.
Many members of the purchasing public assume that a manufacturer’s list or suggested retail price is the price at which an article is generally sold. However, this is not always the case. SS 233.3 (c) For example, a manufacturer’s list price will not be deemed fictitious if the list price is merely the lowest price at which substantial sales in a particular trade area are made. On the other hand, a reduced price will be regarded as fictitious if the reduction is significantly below the highest price at which substantial sales in the trade area are made.
Similarly, a fictitious list price will not be deemed misleading if the reduction is a significant amount below the prevailing discount rate. It is, therefore, necessary to consider the relative impact of the alleged fictitious list price on the average purchase price of an article.
The sale of insurance to protect individuals or businesses against illness, accidents, fires and other events is an important part of the modern economy. Unfortunately, the sales of insurance can be harmed by deceptive sales practices. The result is that consumers waste time, money and may be exposed to liability.
In this paper, I argue that salespeople have prima facie duties to do the following: warn customers of potential hazards, refrain from lying and deception, fully and honestly answer questions about what they are selling, and refrain from steering customers toward purchases that they have reason to think will harm the customers. I also point out that a number of recent studies suggest that a large number of customers are cheated by deceptive salespeople and that this is an increasingly serious problem.
ADT, the Better Business Bureau, the Electronic Security Association and other industry organizations have gathered in Sacramento to discuss ways that they can help clean up the deceptive sales practices of companies that sell security products or services. During the discussion, David Smail, chief legal officer of ADT, discussed the company’s approach to dealing with deceptive sales, how to spot and report scams, and what consumers can do to keep themselves safe from a salesperson who’s attempting to deceive them into buying an unnecessary security product.
ADT has taken a number of actions to help clean up the deceptive sales practices in its industry. These actions have included a $25K reward program for hot tips and working closely with the Better Business Bureau to investigate and resolve complaints. In addition, ADT has launched a campaign to raise awareness about the risks of deceptive sales practices in its industry.