Managing Partner
Unfair trade practices come with a high price. Consequences can involve legal proceedings, fines and damages, and a damaged business reputation. Oftentimes, unfair trade practices are enacted intentionally. However, it’s also possible to find yourself in hot water over an unfair trade practice you didn’t intend to commit.
It’s best to become informed about the common unfair trade practices businesses accidentally commit. That way, you can learn from the mistakes of others and avoid making these expensive errors in your business.
Keep Product Presentations Clear
Businesses frequently find themselves in trouble over unfair trade practices in the area of product misrepresentation. Misrepresenting a product can happen in many ways. Some common ones include:
- Exaggeration of a product’s ability, safety, or function
- Failure to adequately warn of risks
- Failure to list all ingredients
- Untrue claims of product origin, materials, or quality
When you make these types of mistakes, you put your business at risk of product liability claims. If you’ve done this accidentally, you can still be held responsible for innocent misrepresentation. When you do it knowingly, you can be found guilty of fraudulent or negligent misrepresentation.
Don’t Make Promises You Can’t Keep
Another common business practice that is considered an unfair trade practice involves the words you use to convince your customers about a product’s quality. It’s normal to try to sell a product by convincing customers of how great it is.
However, be careful not to exaggerate a product’s protections or impact. Areas that can get a business in trouble include:
- Guarantees
- Promises
- Warranties
- Endorsements
- Testimonials
When your business makes a claim, it needs to be truthful and your company needs to stand behind it. Making promises that you can’t back is considered false advertising, and it’s an unfair trade practice that can leave you with legal trouble and fines. Review your wording carefully.
Don’t Confuse Your Customers
Another mistake to watch out for is engaging with your customers in a way that leaves them confused. Seek to have a policy of clear communication. Make sure customers understand things like the following:
- Terms, limitations, and conditions
- Pricing
- Business contact information
- The process for submitting complaints
- Fines, fees, and additional costs
Use clear wording and make sure customers are well-informed. Businesses often get into trouble for taking advantage of demographics more susceptible to confusion, like the elderly or those who don’t speak English fluently. Accusations of deceptive pricing and breach of warranty can result from unclear communication with customers.
Know Your Contract Terms Well
You probably don’t conduct business in a vacuum. Most businesses have contracts in place with other parties, whether they’re customers, clients, manufacturers, or distributors.
Failure to know and honor your contract terms can land you in a lot of trouble. Sometimes contracts are broken on purpose. Other times, this happens accidentally. Whatever the reason, a breached contract can lead to all sorts of consequences, including lawsuits, fines, and hefty payments for damages.
Contract issues related to unfair trade practices can also come out of having unclear, confusing, or deceptive wording written into a contract. Make sure that all contracts are phrased clearly so that all parties involved understand the contract terms.
Intentionally making contract terms vague or misleading can leave you facing a fraud accusation over misrepresentation. You should review the terms of all of your contracts and make sure business is conducted in a way that honors contractual agreements.
Watch Your Wording
These common unfair trade practices all have something in common: deceptive wording. When you own a business, much of your communication with customers is through the written word. This communication includes signs, emails, promotions, flyers, signage, and paperwork.
Monitoring your marketing department and running materials past your lawyer are two ways to keep your business clear of legal trouble over unfair trade practices.
The legal team at Woods Lonergan can help you identify potential issues in your organization, including unfair trade practices. To learn more about how a business attorney can help you keep your company in compliance, reach out today.