The number of internet retailers of products and services has expanded enormously in the past few years. I am a part of this explosion, having acquired and operated an internet retailer of baby bedding and other baby products since 2003. I am continually surprised by the number of internet retailers who appear to have no knowledge of the rules meant to assure that consumers are not exposed to false and deceptive advertising and marketing practices. This article discusses the all too common practice of internet retailers using false price comparisons on their websites.
The Federal Trade Commission states clearly in its : "One of the most commonly used forms of bargain advertising is to offer a reduction from the advertiser's own former price for an article. If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison. Where the former price is genuine, the bargain being advertised is a true one. If, on the other hand, the former price being advertised is not bona fide but fictitious -- for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction -- the 'bargain' being advertised is a false one; the purchaser is not receiving the unusual value he expects."
The Better Business Bureau states clearly in its : "'List price,' 'manufacturer's list price,' 'reference price,' 'suggested retail price,' and similar terms have been used deceptively to state or imply a saving which was not, in fact, the case. A list price may be advertised as a comparative to the advertised sales price only to the extent that it is the actual selling price currently charged by the advertiser or by representative principal retailers in the market area where the claim is made."
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Yet, despite these clearly understandable guidelines, I see that numerous baby product retailers recklessly violate them. It appears to have become the accepted practice to display a high "list" or "regular" or "retail" price for an item alongside the retailer's actual selling price, despite the fact that the item has never been sold by the retailer at the displayed higher price.
Internet retailers of baby products, or any other product or service, should refrain from this deceptive pricing practice for simple reasons of fairness to consumers and ethical business practices. They are also opening themselves up to actions by the Federal Trade Commission which could result in significant fines being levied if it is determined that the retailer deceived consumers and profited from such practices. Competitors could also bring legal actions against them under the Federal Lanham Act and cause them to incur substantial legal expenses, including the plaintiff's legal expenses, and be held liable for three times the financial harm suffered by the competitor as the result of the deceptive pricing practices.
Attempting to build a business based upon deceptive comparison pricing tactics is unethical, illegal, and potentially financially disastrous. Internet retailers of baby products, or any other product or service, are well-advised to consult the readily available advertising and marketing guidelines before designing their website and any online advertising programs.
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