If you advertise, sell, provide, or offer products or services through your blog, you want to read this. It is all too easy for a blogger to think they are just cleverly advertising their products, without any real intent to deceive consumers, but still potentially violate state or federal consumer protection laws.
The two governing bodies that oversee your blog’s compliance with business practices are the Federal Trade Commission and your state’s consumer protection agency. The Federal Trade Commission, known as the FTC, has a specific mandate to protect consumers from fraud and deceptive and unfair business practices, discussed in more detail below. State laws are commonly titled as consumer protection or deceptive trade practices acts and are usually enforced by state attorneys general. This post mainly focuses on sales and advertisements, but the consumer protection laws are broad and cover many other types of business practices, so it is important to know your state’s laws as well as the FTC’s guidelines and jurisdiction.
The bottom line? This is your guide on how to avoid deceptive sales tactics!
Federal Trade Commission
The FTC specifically enforces laws governing franchising, multi-level marketing companies, credit and financing issues, environmental claims, free products, jewelry, mail and telephone orders, sellers of subscription plans, 900 numbers, telemarketing, endorsements, warranties and guarantees, and “Made in the USA” claims.
If your advertisements run afoul of the FTC’s rules, you could be subject to an enforcement action by the FTC, another government agency, or a civil suit, and could be responsible for fines, enjoined from continuing your advertisements or business practices, and ordered to refund money to consumers.
Consumer protection laws at the state level provide consumers with causes of actions for unfair or deceptive advertisements and business practices. If a consumer is a victim of your deceptive advertisement, they can recover from you not just their money back and any other compensatory damages, but also punitive damages that can be three times the consumer’s compensatory damages. These laws apply whether you intend to violate them or not – ignorance of your state’s consumer protection laws does not absolve you of liability. Some common ways that sellers run afoul of consumer protection laws are when advertising for price reductions, product comparisons, and free offers.
If you sell a product at a reduced price, despite never having sold it at the “full” retail price, you could be held liable for violating your state’s consumer protection laws. Let’s say your website selling exercise DVDs is advertising a special for a certain brand – on sale for $15 down from the usual retail price of $20. If you normally price those DVDs for $20 and have sold them for $20 in the past, then you are not violating any laws. However, if you have never actually priced or sold them for $20 before but want your consumers to think they are getting a sale price at $15, you are pricing your product in a deceptive way and may be subject to a law suit.
Similarly, if you want to highlight your cheaper price over a competitor’s, you must be certain that your competitor is selling both the same item and that they have sold enough of it at the higher price to make your price a legitimate “deal.” If your competitor is offering exercise DVDs for an inflated price but hasn’t actually sold any DVDs at that price, then your “cheaper” price isn’t really cheaper at all and could be considered a deceptive advertisement.
A final common area that sellers violate consumer protection laws is when they offer something free with purchase. For example, offering a free yoga mat with your purchase of exercise DVDs is not, by itself, a violation of the law. But if you raise the price of the exercise DVDs to higher than the regular price, then you are not really offering a free yoga mat, and you are violating the law. Additionally, if you normally provide a service, like free shipping, with the purchase of DVDs, but you eliminate that free service because you are including the “free” yoga mat, you are not really offering the yoga mat for free and are violating the law.
These are a few of the ways sellers violate their state consumer protection laws. Remember, these laws apply whether you intentionally mean to violate them or not, so it is smart to get to know them. You can learn more about consumer protection and deceptive business practices by visiting the FTCs website (check out https://www.ftc.gov/tips-advice/business-center) and your state’s consumer protection agency’s website, found here: http://www.usa.gov/directory/stateconsumer/.