US federal and state laws prohibit unfair and deceptive business practices, including false advertising, misleading prices, and unfulfilled prizes. Federal law is enforced by the Federal Trade Commission, while states may provide additional consumer protections. Violations include false or deceptive advertising, undisclosed fees, and failure to identify the purpose of a sales call.
In the United States, federal and state laws prohibit unfair and deceptive practices by those engaged in business and commerce. While the precise definition of unfair and deceptive practices can be very long and full of legal ones, it generally boils down to exactly what it sounds like: business practices that exploit or attempt to deceive consumers. Common examples of a company’s practices that may be considered unfair and deceptive include: false or deceptive advertising; misleading prices; advertising prizes not actually awarded; claiming a non-existent sponsorship or affiliation; and failing to identify the purpose of a telemarketing call.
In the United States, federal law prohibits unfair and deceptive practices through the Federal Trade Commission. In addition to federal laws governing the conduct of a business, most states have also passed laws addressing unfair and deceptive practices. As with many areas of the law in the United States, states may make laws that provide additional protections to consumers, but no less than those provided by federal law.
Under federal law and most state laws, advertising that is considered false, misleading, or deceptive is a violation of the law. Advertisers, for example, cannot claim they know they are false. Advertisers may also not be allowed to claim sponsorship or endorsement of a product they don’t actually have. Furthermore, sales tactics where a product is advertised but the seller actually only has a different product available for sale can be considered an unfair and deceptive practice.
Pricing is another area where unfair and deceptive practices can be found. Bank loans, for example, must clearly state how much is being lent, at what interest rate and with what fees the consumer is paying. Advertisements that indicate a sale price that does not actually apply to the product available could also be illegal.
Advertising an opportunity to win a prize is acceptable, provided the prize is actually awarded. Also, the seller of a product usually needs to be clear about what the odds are and what the real purpose of advertising is to avoid a violation of the law. Similarly, many state laws restrict telemarketers or door-to-door salesmen. Often, a salesperson must immediately identify himself and let the consumer know what the purpose of the call is, or face claims that unfair and deceptive practices are being used.
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