I'm sure you've heard the expression "caveat emptor" or "let the buyer beware." While that phrase used to be true, it is no longer the case. Today, a phrase that better describes the current legal maxim might be "businessesius–emptor" or "let the business beware." A smart business is cognizant of the many laws that are designed to protect consumers.
The first set of laws falls under "consumer protection." These statutes are meant to protect consumers from unfair or deceptive practices and often go beyond traditional legal remedies. Laws like these are on the books in nearly every state, although the details vary. Here's an example: a Chevrolet dealer in Florida promised a free vacation to Acapulco to anyone who bought a car or van. Relying on this special promotion, a customer bought a van from the dealer. When the vacation voucher arrived, he found that the "free vacation" was nothing but a time–share sales promotion. The vacation trip was loaded with conditions and restrictions. Believing he had been cheated, the customer sued the dealer, using Florida consumer protection laws. The jury awarded him $1,768 in compensatory damages (the value of the trip)...and $667,000 in punitive damages to punish the business.
Beyond consumer protection laws, it is also important to know that under both federal and state law, deceptive advertising is illegal. An ad is unlawful if it tends to mislead or deceive, even if it doesn't actually fool anyone. Your intentions don't matter, either. If your ad is deceptive, you may face legal problems even if you have the best intentions. What counts is the overall impression created by the ad, not the technical truthfulness of its individual parts.
Finally, deceptive pricing is also illegal. The two pricing practices most likely to get your business into trouble are making false price comparisons with other merchants or with your own "regular" prices, or offering something that is supposedly "free" but in fact has a cost.
You can find out more about consumer protection laws by contacting the Federal Trade Commission and/or by contacting an attorney licensed to practice in the state where your business operates.
Steven D. Strauss is a leading business expert, attorney and author. To learn more about him, click here.
