Advertising - beware the making of big promises!

Consumer protection laws provide for what can become quite substantial financial penalties against individuals or businesses found to be in breach of those laws. It is easy for an unhappy customer or client to file a complaint with Consumer Affairs and if more than one complaint is received, start a possible chain of investigation of all your business practices.


The legislation sets out a lot of the rules that businesses have to comply with in the negative, as in “a person must not, in trade or commerce, in connection with…” Since I prefer to state the positive of what you can and should be doing, that’s the way we’ll look at it now.


First things first - you want to advertise your services in a way that entices hordes of eager customers to your door. Direct response advertising is all about triggering the emotions of your buys by identifying their wants and giving them all the reasons, both positive and negative, they need to overcome any hesitancy to buy. In doing so you must be careful how you describe your goods and services. Here are some of the things you need to be aware of when describing your services. Make sure:

• Your services are of the particular standard, quality, value, history etc that you claim them to be.


• Your services have actually been used or bought by the people that you claim have used or bought them. (ie, don’t claim that you gave Ricky Ponting some coaching around the last cricket test if you didn’t!)


• If you claim to have sponsorship, approval or benefits to your services, the claims are true.


• You state the price clearly and in a way that cannot confuse people.


• You can provide what you say you can, when you say you can.


• If you claim your knowledge, experience or qualifications came from someone or somewhere that they actually did.


• You realistically state the need for a particular good or service.


• If you offer a condition, warranty, guarantee, right or remedy, you actually meet that commitment.


• You make claims that you can realistically substantiate.
  

Consider that this long list of requirements has been developed over the years and often in response to the activities of people whose business practices were considered to be unacceptable. I’ve left out a few dealing more with manufactured products and concentrated mainly on those dealing with services.

What consumer protection law does is identify all the tricky things that business people have done in the past, and attempts to identify some of the tricky things they might do in the future, to pry people away from their hard earned money. You might imagine that consumer protection law is written with the premise that people only purchase what they need, and wouldn’t otherwise spend their money, and it certainly does give that impression.

Next post we’ll have a look at Bait Advertising and how not to get caught.

What do you know about the legal regulations affecting your business?

Hello, its nice to be back. I’ve been busy the last couple of months giving some presentations about legal issues affecting small business, particularly coaching businesses, and preparing a few legal products and publications to assist people in small business, (particularly those running a business on their own) which should be available for purchase in the New Year. You can guess what I’ll be doing these holidays!

Somewhat discouragingly, (or should that be encouragingly?) I received a message today from a gentleman in his 60s who has been running his business for many years, has a full time staff equivalent of 6 people and turns over on average $4m per year. He said that as a small business person you gain experience about what to worry about in contracts, do a lot of business on shaken hands and trust and learn from experience when to be wary. He said that he doesn’t use legal advice at all!

It is great to hear that people are able to continue to do business on trust. As a lawyer, we rarely get to see that side of business because people come to us generally after they need assistance, rather than for prevention.

If we look at prevention for a moment, what are the areas of your business that could do with a quick review?

Anyone dealing with the public in the sale of goods or services for personal, domestic or household use (eg, not for business or trade purposes) is obliged to comply with the requirements of the Fair Trading Act relevant to their state or territory. The Fair Trading Acts are pretty similar across the country and any complaints or issues regarding Fair Trading matters are usually managed by Consumer Affairs in that state or territory. I’ve listed all of the Consumer Affairs websites in an earlier post, so that you can find them without too much trouble.

I’m going to write a series of blogs over the next month or so covering some of the key areas of consumer protection law that you, as a business person supplying goods or services, should be aware of. If you know about it, you can do something about it. If you don’t know about it, you might be surprised when someone from Consumer Affairs gives you a call and asks you about your legal compliance issues. In the first one, I’ll talk about describing your goods or services and making sure that you are only making promises that you know you can keep.

Until then, I wish you all the best for your holidays and hope that you get to spend them with the people you cherish.