Each state has consumer protection laws prohibiting what are deemed unfair and deceptive trade practices. Within all that legalese of prohibited conduct there are many traps for the unwary. Fortunately, there are some things you can do to protect your business from these allegations—not to mention keep your customer ’s trust, and perhaps even avoid a lawsuit.
Consumer protection laws vary on what conduct is prohibited, but generally prohibit companies from representing that the goods or services they are selling have uses, benefits, qualities, approval or sponsorship that they do not have, or are of particular standard, quality, grade, style or model, if they are of another. The laws also usually include a catch-all provision prohibiting any other conduct that creates the likelihood of confusion or misunderstanding.
Typically, a violation of the law can either be enforced by the state’s attorney general, or in some instances by an aggrieved consumer. The penalty for violations can be steep: some state’s consumer protection laws allow the person suing to recover their attorney’s fees and triple damages.
The following tips—no-brainers though they are—bear mentioning because even the most scrupulous company can find itself on the receiving end of a consumer fraud claim due to an honest mistake or an untrained employee.
1. Don’t make promises you can’t keep.
Let proven facts sell your products and services. Don’t say, for example, “your house will never burn down” or “the police will be here in less than two minutes.” Rely on trusted sources of information regarding occurrences of crime and home fires, and the statistical decrease in crime and fire fatalities in homes with alarm systems, to sell your products and services. If available, use information specific to your company about how many actual burglaries and fires were reported, and share any true stories about good outcomes.
2. Keep up with your jurisdiction’s requirements for licensing, permits, and code compliance.
- Know and comply with any licensing laws, and the requirements for keeping and renewing the license (e.g., continuing education, insurance);
- Get all necessary permits to sell or install an alarm system;
- Sell and install the alarm products in compliance with state and local laws regarding what equipment is required and where (e.g., a lot of jurisdictions require a certain number and location of smoke detectors or carbon monoxide detectors in certain installations
3. Don’t claim affiliations you don’t have.
This is the ultimate no-brainer, but it does happen so it bears mentioning. If you let an association membership lapse, you cannot tell people you are a member of that association. And if you are no longer an authorized dealer, you cannot tell people you are an authorized dealer. Sometimes this means getting new marketing materials, which can be expensive and time-consuming. But it must be done to avoid a claim that you misrepresented your company.