Sales and marketing is a phrase that depicts the business aim of promoting a particular product and making it attractive to customers.
Sales and marketing can include activities and business purposes such as:
- Designing advertisements for the product
- Securing a base of customers and clients
- Packaging and organizing the product in an attractive manner
- Advising the public about the product’s advantages
- Preparing, completing, and closing deals
Sales and marketing are essential aspects of operating any business. It is governed by federal, state, and local regulations, which dictate what the business can and can’t do.
What Are Some Standard Sales and Marketing Violations?
Sales and marketing is an area that is prone to many kinds of infractions. Some of these may include:
- False advertising
- Infringements through online advertising
- Shady trade practices (such as the use of fraud to gain consumers)
- Copyright and trademark infringements (such as stealing or mimicking another business’ logo)
- Revealing confidential information of customers
- Making illegal referral arrangements (particularly for the provision of professional services)?
False advertising is one of the more standard types of marketing violations. This is where an ad is misleading, contains incorrect information, or deceives customers. Federal and state laws strictly govern advertisements, and breaches can lead to legal liabilities.
What Are the Legal Consequences for Sales and Marketing Violations?
Punishments for sales and marketing infractions are expansive and may depend on the infraction committed. For example, the defendant may be directed to pay damages for a copyright infringement for losses caused by the violation. They may also have their products seized, and they may be subject to penalties.
Other damages may include criminal violations (particularly for federal violations), loss of business license, and civil charges.
Consumer Protection Laws and Your Business
Be mindful of rules against misleading advertising and pricing and when they apply.
If you are a business owner, make sure you know about and observe the state consumer protection laws involved in your business.
These regulations safeguard customers from dishonest or misleading practices. They go beyond the standard legal remedies for warranty breaches to help consumers. Rules like these are on the books in almost every state, although the details differ.
Hundreds of cases have been brought under consumer protection laws, including these:
- A man sued a department store that ran out of advertised waffle iron and didn’t give him a rain check – a breach of the consumer protection regulation in his state.
- A homeowner sued a roofing contractor that falsely advertised that it could negotiate to finance roof repair jobs.
- A woman sued a health spa that rescinded its promise to return her deposit and revoke her contract if she changed her mind within three days. (Health spas have been singled out for special regulation; if you’re going to start one, get the Federal Trade Commission pamphlet on this subject at www.ftc.gov.)
To evade these lawsuits, you need to understand the components of your state’s consumer protection laws and inform your workers about practices that could get you in trouble. These state regulations usually allow a client to sue even if the violation was not willful.
Most consumer protection regulations contain a general prohibition on “unfair or deceptive practices.” In addition, many statutes list detailed practices that are prohibited, such as misleading advertising and pricing, discussed below.
Under federal and state law, an ad is prohibited if it tends to deceive or mislead, even if it doesn’t trick anyone. If your ad is misleading, you’ll face legal issues whether you plan to mislead the client or not. What counts is the overall impression created by the ad, not the technical honesty of the separate parts.
FTC Enforcement of Deceptive Advertising Laws
Over the years, the Federal Trade Commission (FTC) has taken action against many businesses accused of engaging in false and deceptive advertising.
Consumers’ Privilege to Sue for Fraudulent and Misleading Advertising
Customers often have the privilege to sue advertisers under state consumer protection laws. For instance, someone who purchases a product relying on a misleading ad might sue in small claims court for a refund or join others (sometimes tens of thousands of others) to sue for a considerable sum in another court.
What Is Deceptive Pricing?
The two pricing methods most likely to get your company into trouble are making false price comparisons with other merchants or with your own “regular” prices or offering something supposedly “free” but has a cost.
Offering a drop from your usual selling price is a common sales strategy. But the reduced price is deceptive unless the former price is the actual, bona fide price at which you offered the article. For instance, if you promote a new product for $129 but sell it to wholesalers as if it were a $79 product and discounted it to direct clients, the $129 price never really existed, and you have violated the law. It deceives consumers into believing they are obtaining a discount.
It’s even more blatant to buy a particular batch of merchandise, especially for sale, and make a pretend “regular” price or one you stuck to for only a day or two. Some sellers are enticed to do this when they buy seconds or discontinued product lines at a deep discount and want to pretend clients are getting a deal.
If your ad compares your price with what other merchants are assessing for the same product, be sure of two things:
- The other merchants are selling the identical product, and
- The other merchants had enough sales at the higher price in your area so that you’re offering a fair bargain.
In other words, make sure that the higher comparison price isn’t isolated or unrepresentative.
Less-Than Free Offers
Regarding offers of “free” products or services, you can offer gifts only if no strings are attached.
For instance, if you provide a free paintbrush to anyone who buys a can of paint for $14.95, the brush isn’t free if you:
- Usually charge less than $14.95 for this kind of paint, or
- Usually deliver a service (such as free delivery) with a paint purchase, but don’t when the customer gets a “free” brush.
What Are Punitive Damages?
Consumer protection regulations place a powerful weapon in the hands of buyers – punitive damages. In an everyday lawsuit, a plaintiff can recover only their actual losses. But many consumer protection regulations permit consumers to ask for additional penalties, which can drastically boost the damage award, sometimes to triple or more of the amount of actual damage. In addition, these ordinances usually require the defendant to pay for the consumer’s lawyers’ fees.
The potential for large verdicts provides buyers and their attorneys an incentive to sue if it looks like a law has been broken.
Do I Need a Lawyer for Help with Business Violations?
Sales and marketing laws tend to be very stringent. They can also differ by jurisdiction and the type of product or service involved. You may wish to hire a qualified business attorney if you need help with a legal claim.
Your attorney can provide you with guidance and representation for your claim. Also, if you need to appear in court hearings, your attorney can be on hand to guide you during the meetings.