Unlawful business practices are practices that are conducted in a business setting and are against the law (i.e., illegal practices). Some examples of unlawful business practices may include:

  • Employment Discrimination or Harassment: Employment discrimination occurs when an employee or prospective employee is treated less favorably than their colleagues due to certain legally protected characteristics, such as race, national origin, sex, and age. Employment harassment is found when an employer creates a hostile work environment.
  • Breach of a Business Contract: This will depend on the terms of the contract, but generally involves failing to perform the duties listed in a business contract. It can also involve a breach in how the contract was formed (e.g., by misrepresentation) that benefits the breaching party.
  • Bribery: This can mean bribing a certain person to influence a business decision in exchange for money, or offering a valuable favor to receive a better deal on products or services.
  • Consumer Fraud: This generally encompasses any unfair or deceptive tactics that are used to illegally lure consumers into purchasing a product or service. Types of consumer fraud include false advertising, pyramid schemes, and bait and switch (i.e., luring the customer in with a great deal that is no longer available and offering an alternative product instead). 
  • Unfair Competition: The definition of unfair competition will vary depending on the federal or state law that applies, but some common examples include trademark infringement and discriminatory treatment of customers.
  • Financial Fraud: Making changes to a company’s financial statements or “books” that makes it seem like a company is generating more money than it actually is, in order to get investors to buy stock and increase its market value. 
  • Theft: Theft can take a variety of forms, such as failing to refund customer returns, embezzling company funds, stealing warehouse equipment, and so on. 

The laws concerning unlawful business practices may vary according to whether state or federal laws apply. Therefore, if you are experiencing an issue that involves unlawful business practices, you should contact a local business lawyer to learn more about the specific laws that may apply in your jurisdiction.

What is the Difference Between Unlawful and Unfair Business Practices?

Unlawful business practices are not the same thing as unfair business practices. Unfair business practices are usually legal. They typically involve the business behavior of an owner or corporation that is considered unethical or immoral.

For example, if the owner of a company destroys or takes credit for a competitor’s work product, or deliberately violates a company policy, then these actions may be viewed as unfair business practices. 

The key difference between the two is that an unlawful business practice actually violates the law, and an unfair business practice does not, but it may violate a person or company’s moral standing.

Is an Unlawful Business Practice the Same Thing as Puffery?

Unlawful business practices are not the same thing as puffery. Puffery occurs when an exaggerated statement is made strictly for the purpose of attracting consumers. The statements are used to “puff up” or promote the quality of a particular product or service.

Since puffery statements are usually viewed as subjective opinions that most reasonable persons would not take to mean literally, the Federal Trade Commission (FTC) does not consider them to be unlawful.

Instead, puffery is typically deemed a legal practice that is frequently associated with the language found in advertising or promotional sales.

For instance, if a person advertises their beach house rental as a place that is “heaven on Earth,” then they are not engaging in any unlawful business practices. Rather they are simply advertising their property in a manner that, although possibly exaggerated, would be attractive to customers.

In contrast, the unlawful business practice of false advertising is not considered legal. False advertising differs from puffery in that it is a factual statement (as opposed to an opinion) that is used to intentionally deceive the general public (as opposed to attract consumers).

For example, if a company advertises one of their food products as being extremely healthy or having high quality ingredients, but in reality it is full of sugar and chemicals, then there may be a case for false advertising.

Should I Consult an Attorney About Unlawful Business Practices?

Unlawful business practices can have severe penalties. If you have any questions or concerns, or are involved with a matter concerning unlawful business practices, you should contact a business lawyer immediately.

An experienced business lawyer will be able to explain what types of practices are considered unlawful, the laws that can apply to your matter, and whether there is anything you can do to resolve your issue.  

Additionally, some of the above practices may result in criminal penalties, such as a prison sentence. If you are involved in a matter that has been elevated to a criminal offense, then you should also consider contacting a criminal defense attorney for assistance.