Today’s Draw the Law will be brief (as I will be also posting about the next talk at The Box Jelly), but it will get us rolling in dealing with customers. For the past several weeks I have talked about mainly the employer-employee side of things of the business. While, there are a lot of other things to talk about in that kind of HR vein, as a way to break up the subject, I will now focus on the business-customer relationship.
Ads and Consumer Protection
Nowadays, there are a lot of consumer protection laws on the books as opposed to the old days where it was caveat emptor (“Let the buyer beware.”) This can sometimes restrict the methods that you market or sell your products. However, one thing not to worry about is a simple advertisement.
Often, business owners ask me if I put out this ad, is it a contract between me and the potential customers?
In general, your regular ad is not going to create contracts with everyone who reads it. It does depend on the words used. However, for a contract to be formed you need an (1) offer, then (2) acceptance, and finally (3) consideration. A store’s ad is not considered an offer, but “an invitation to bargain.”
Exceptions: “Free Gift” or “First Hundred Customers Get Special Discount”
Unless, you intend to actually give a free gift or give a special discount for some special action taken by a customer don’t make these kinds of promises. In this cases, the customer can accept the offer, and their consideration is taking the extra or special action.
Without going too deep into the various laws just realize there are laws that counteract “lying.” For example, don’t label a product from somewhere that it is not and don’t state that your service is of a certain level or caliber (i.e. master carpenter) when it is not. These will lead you to give a false impression.
What you should do is be accurate about material aspects of the product or services that you offer. The word material means a representation, statement, or depiction (so pictures) in the ad would likely affect a consumer’s purchase or use of the advertised products. Basically, does the aspect you are talking about important to a reasonable person to make a decision to purchase your product or service?
It is one thing to say your cake is the “best one on the block” versus your cakes will “always be enough to serve a party of 10.” Puffery is that act of exaggerating things that we all understand is someone just promoting their product or service. Mere puffery is ok, but when you start stating things as fact or categorically true and it is not you have entered deceptive advertising waters.
We know about “bait-and-switch” practices thanks to the numerous lawsuits and complaints against car dealerships. However, it can be applied to most other situations. In general, do not place the “bait” in an ad luring the customer to the storefront knowing full well you won’t have that product, and intend to “switch” it by focusing the customers attention to something else (in general more expensive than the deal “bait”).
If you really have a limited supply it is best to tell that in the ad. The deal lasts as long as supplies are available, and that supplies are limited rather than leaving out the deal dangling out.
Have a process when making an ad. Here is an example of a checklist to go through to consider when making an ad and trying to avoid headaches:
- Consider the product or service – what do you want to emphasize in an ad?
- Is what your emphasizing trying to be factual?
- Are you making it a material claim?
- If you decide to compare your material aspects against a competitor’s be very careful of the claims you make – in short they better be true.
- If you are trying promotional sales or discounting be clear about what it is you are offering
- Don’t do a bait-and-switch!
- Lastly, be sure to double check the prices and pictures.
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*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.