5 Examples of Unfair Trade Practices and How to Avoid Them

The Federal Trade Commission (FTC) is the primary federal agency responsible for enforcing consumer protection laws against unfair and deceptive trade practices. In essence, these laws require that consumers be given a fair chance to make informed, rational decisions about the goods and services they purchase. With that in mind, how can you improve the way your company interacts with your customers? Generally speaking, you can protect yourself from litigation when you make sure your customers have all the information they need to make good decisions. It’s important to remember that if you’re accused of an unfair trade practice in a civil action, the plaintiffs don’t have to prove your intentions; they only need to show that the practice itself was unfair or deceptive. The following examples illustrate some common mistakes that lead to accusations of unfair trade practices—and how you can avoid those mistakes.

  1. Taking Advantage of Customers

Some telemarketing ploys have earned the FTC’s ire for targeting particularly vulnerable consumers, like seniors and individuals who aren’t fluent in English. Many of them have fallen prey to false claims made by telemarketers. Others have been subject to intense pressuring tactics. While you aren’t necessarily trying to mislead potential purchasers, you should always use your best judgment and common sense. Be as clear as possible and plainly answer any questions your customers might have.

  1. Misrepresenting a Product

If you’re selling goods over the phone, make sure your product descriptions are clear and honest. The FTC takes issue with the use of certain words. For example, you cannot use the word “new” if your product is more than six months old. Other terms are often debated in court, so be careful when you claim that your face cream will “rejuvenate” skin or that your pill can “cure” baldness. The same idea applies to your claims about the product’s composition. For that reason, you can’t call your sweater “wool” unless it’s made of 100 percent wool. Make sure you describe your goods and services honestly, paying close attention to your claims about the product’s quality, ingredients, and effectiveness.

  1. Faking Endorsements and Guarantees

Much like the point about product misrepresentation, you need to be able to deliver on your promises of guarantees and assurances. If you advertise a 100 percent money-back guarantee, you should be prepared to issue it to any dissatisfied customers. Similarly, you must be able to back up your claims about endorsements and testimonials. You can’t invent a Jane Doe and write a glowing testimonial on her behalf, nor can you pretend that Brad Pitt loves your products if he has never said any such thing.

  1. Giving Misleading Price Information

The FTC warns against deceptive claims or lies about pricing. Are you running a new promotion, like a “buy one, get one free” deal? Make sure you deliver on your promises, and make it easy for your customers to understand any restrictions that might apply. Avoid using misleading language to describe sales or promotions. For example, don’t call it a “limited offer” if it will be available forever, and don’t call it a “going out of business” sale if your business isn’t going anywhere.

  1. Failing to Disclose Pertinent Information

Withholding information can be just as bad as using overtly incorrect or deceptive information. For instance, you should always disclose the price of your products or services before you accept payment information from your customers. If you choose to omit something from your product description, and if that omission might influence the consumer’s decision to make a purchase, you could be accused of a deceptive or unfair trade practice.

Again, an unfair trade practice doesn’t have to be intentional for a lawsuit to be filed. One may have the very best intentions and, by virtue of a mistake or misunderstanding, end up in legal trouble. If you’re facing a lawsuit, or if you’d like to plan ahead and prevent one, you should seek out the specialized knowledge and guidance of a telemarketing lawyer. The professionals at Cove Law can help. Contact us for preventative advice and save yourself the time and expense of litigation. Get educated and make sure your business is protected.

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Written by Andrew Cove

Cove Law has significant experience defending federal investigations and formal actions by the Federal Trade Commission, the Consumer Finance Protection Board and the U.S. Department of Justice, as well as similar matters on the state level by the respective state Attorney General’s Offices and other local agencies.