The Dangers of Deceptive Sales
SACRAMENTO—The laws of this state and the federal courts have prohibited a broad range of activities that are generically called deceptive sales. False advertising and odometer tampering are just two of the many specific forms that this category of behavior takes. Deceptive sales can also include misleading pricing or savings claims, bait and switch tactics and deceiving consumers about the product’s nature and performance.
In the past, deceptive sales practices were often a matter of common sense and petty fraud; now the industry is abuzz with techniques that are more sophisticated. It is important for both businesses and consumers to understand the dangers of these practices so that they can act to prevent them.
The Federal Trade Commission (FTC) has spelled out some important guidelines regarding price and saving claims, which should serve as a guide for those seeking to comply with the law. For example, the FTC guides state that a former price must have been “openly and actively offered for sale for a substantial period of time in the recent, regular course of business” for a seller to be justified in making a comparison claim that refers to it. The guides further point out that an advertised reduction must be at least 10 percent of the former price for a comparison to be truthful.
Other rules cover pictorial representations of products, which are often used to mislead. A picture can convey false inferences, such as a white-coated “doctor,” the seal of the British monarchy or a plush office. Pictorial representations can be especially problematic for retailers, who must be careful to ensure that their ads are truthful and do not mislead consumers.
Another important issue involves the use of manufacturers’ suggested retail or list prices in advertisements. These would have little to no relevance if all articles were regularly sold at the list prices, but changing competitive conditions have rendered these figures less and less reliable as indicators of actual selling prices. It is therefore important for marketers to ensure that the prices they advertise do not appreciably exceed the prices at which substantial sales of the article are regularly made in the market area.
In addition to these rules, the FTC has a general rule that prohibits the false and misleading statement of any material fact concerning a product. These include claims about the product’s merit, fitness or health benefits and other features that may be important to a consumer. It is critical for marketers to carefully review and edit any such statements before they are published.
Door-to-door selling is a legitimate and useful tool in the marketing of products, but only when it is done with honesty and integrity. Those involved in this marketing should be encouraged to take advantage of the training available through ESA’s Code of Ethics program, and they should always be aware that they are interacting with customers who may have very different values than they do. This interaction can create the potential for mistrust and distortion of the truth, which can ultimately damage the industry.
