Sales & Marketing Law And Consumers Complaints
1. Sales & Marketing Law and Consumers Complaints Copyright © 2015 Orren Prunckun. All Rights Reserved.
2. What Is Sales And Marketing?
3. Good, Services, Solutions… • Solution. • Business move customers pain to gain in exchange for money. • Value for value i.e. price/pricing (will cover later). • Good. • Generally tangible. • A solution. • Service. • Generally intangible. • A solution. • Can be interchangeable.
4. Marketing… • Marketing. • Generating leads (will cover as SPAM ). • Converting suspects to prospects. • Often thought of as market research and advertising. • Advertising (will cover as false advertising). • A subset of marketing. • An offer, not just an advertisement (will cover as pricing and anti-competitive conduct). • Referrals. • Another subset of marketing: a lead through positive word-of-mouth. • Based on social proof (will cover as testimonials).
5. Sales… • Sales. • Converting a lead (prospect) into a paying customer. • Channel (or marketing channel). • A way of communication to a cohort of people. Could be: • Mass media such as television, radio, magazines, newspapers. • Signage in your place of business. • Door-to-door sales and telemarketing (will cover later.) • Home shopping such as internet sales, mail order and email marketing (will cover SPAM.)
6. The Marketing & Sales Process… Market Research. 1. Identify prospects (who are you customers). Marketing. 2. Suspect for prospects (finding your customers). Marketing/Sales. 3. Initiate outreach (bridging the gap with your customers). 4. Target outreach (qualify/disqualify your customers). Sales. 5. Needs analysis (find your customers specific needs). 6. Solution presentation (present your solution to your customers). 7. Trial Close (ask your customers to buy). 8. Negotiation (address any customer concerns – if required). 9. Close (ask your customers to buy again – if required).
7. Why Is Sales And Marketing Important To Small Business?
8. Importance Of Sales & Marketing… • Sales is life blood to business. • Nothing happens without a sale – you are not in business until you make a sale, you are playing business. • Happy customers mean repeat business, referrals and word-of-mouth (will cover as testimonials). • Disgruntled customers do not. • Think about referrals in light of Defamation – a positive version. • Lots of regulations: pre-paid funerals, sale of business etc., so we’ll cover the most common to small business.
9. Influence: The Psychology of Persuasion 1. Social Proof: People will do things that they see other people doing due to endorsements, testimonials, case studies, success stories, reviews (will cover as false or misleading representations, and guarantees an warrantees, refunds and returns). 2. Scarcity: time, quantity, limits (will cover as Internet Sales, Door- To-Door Sales & Mail Order.) 3. Reciprocity: people are more inclined to return free support/favours received. Give before you get (will cover as gifts). 4. Authority: people trust those with perceived authority. 5. Liking: people do things for those they know like and trust. 6. Commitment & Consistency: people act consistent with what they have committed to.
10. These factors of “influence” can create an imbalance of market power between consumers and business, particularly around the nature of commerce and contracts. Regulations by way of consumer protection are needed to responded to this.
11. What Is Australian Consumer Law?
12. Competition and Consumer Act 2010 (Cth) • Covers “the relationships between suppliers, wholesalers, retailers, and consumers.” • “Its purpose is to enhance the welfare of Australians by promoting fair trading and competition, and through the provision of consumer protections.” • Broadly, it covers: • Product safety and labelling. • Unfair market practices. • Price monitoring. • Anti-competitive conduct. – ACCC
13. Was The Trade Practices Act 1987 (Cth) • “False representation in connection to supply goods or services is a criminal offence.” – S53 • Not longer enacted.
14. Fair Trading Act 1987 (SA) • To apply the Australian Consumer Law to South Australia. • “To otherwise regulate unfair or undesirable practices affecting business and other consumers.”
15. Sales Of Good Act 1895 (SA) • Regulate the sale of goods. • Goods need to be fit for purpose and merchantable quality. • “Applies only to contracts for the purchase of goods.” • “No maximum value of the contract where protection stops.” • Applies to all kinds of consumers.
16. Why Is Australian Consumer Law Important To Small Business & Consumers?
17. Predatory Pricing… Predatory pricing is: 1. Reducing prices below supply costs (loss leader) to drive out competition. 2. Once not competition exists (priced out of market) prices put back up to recover costs. • Intended to hurt competition not consumers. • Short term helps consumers due to lower prices • Long term actually hurts consumers as there is less market choice (if choosing based on price alone.) • Hard to prove = not an effective regulation.
18. Product Safety… • Regulation makes business deliver safe products to consumers. • Governments intervene where there is evidence of actual or potential product safety problems. • They do this where intervention is justified in terms of costs and benefits to consumers and suppliers. • Governments contribute to safety outcomes by: • Establishing and ensuring compliance with mandatory safety standards for specific consumer products. • Promoting consumer awareness of particular product hazards. • Promoting good product safety management practices to suppliers. • Negotiating solutions between consumers and suppliers. • Encouraging research to improve the safety of products.
19. What Areas Of Consumer Law Exist In Australia & How Do Small Businesses Comply With Australian Consumer Law??
20. “False and Misleading Practices” “False and Misleading Practices” – Competition and Consumer Act 2010 (Cth) Schedule 2: 1. Misleading or deceptive conduct. A. False Advertising. B. Puffery & Predictions. 2. Unconscionable conduct. A. Internet Sales, Door-To-Door Sales & Mail Order. B. Telemarketing & Email Marketing (SPAM). 3. False or misleading representations. A. Rebates, Gifts, Prizes Or Free Items. B. Misleading conduct as to the nature etc. of goods (testimonials). C. Bait advertising. D. Wrongly accepting payment For Goods Or Services. 4. Other practices. A. Multiple pricing. B. Consumer guarantees – Guarantees, Warranties, Refunds & Returns.
21. Format For Explanations: 1. Area of consumer law. – Misleading or deceptive conduct. – Unconscionable conduct. – False or misleading representations. – Other practices. 2. Definitions.* 3. The regulations.* 4. Example(s).* *Definition, Regulation and Example wording is taken from various state business and consumer affairs agencies.
22. 1) Misleading Or Deceptive Conduct
23. 1) Misleading Or Deceptive Conduct… Definition • Mislead = “lead astray in action or conduct, lead into error, or cause to err.” • Weitmann v Katies Ltd (1977) 29 FLR 366 • Deceptive = a wrong impression to “believe what is false, mislead as to fact, lead into error.” • Conduct = actions and statements, such as: • Advertisements, promotions, quotations, statements, any representation made by a person. • Or “conduct which leads to a consumer into error as to its meaning.” • Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 • “Misleading or deceptive or likely to mislead or deceive.” • Trade Practices Act 1987 (Cth)
24. 1) Misleading Or Deceptive Conduct… Law • You cannot create a misleading overall impression among the intended audience about the price, value or quality of consumer goods or services. • It is your actions and statements that matter – not your intentions. • “A business can mislead and deceive, without intending to.”
25. 1) Misleading Or Deceptive Conduct… Examples • “A trader’s business name suggests an affiliation with a long-established institution. The name may mislead or deceive because of this similarity. “ • “A consumer who lives in a regional area is buying a mobile phone. The salesman knows where the consumer lives but fails to tell him that the coverage is poor in that area and the phone may be of no use.” • “A large department store engaged in misleading conduct when it advertised ‘25 per cent off all clothing’ and ‘15- 40 per cent off housewares’, but in small print excluded certain clothing and manchester.” • “A bank advertises low credit card interest rates for the first 12 months. The advertisement clearly indicates the low rates are only available to new customers who apply within a certain period. This disclaimer is sufficient because it clearly informs consumers about the terms and conditions.”
26. 1A) False Advertising… Definition • “A representation or statement in a brochure or media advertisement that is contrary to the fact it is not necessary for the person to know the term in false.” • Given v C V Holland (Holdings) Pty Ltd (1977) 15 ALR 439 • Trade Practices Act (Cth) 1974 s53 Law • Ads need to have the right information – claims, hidden costs, conditions, total including taxes. • “Whatever you are selling, make sure your descriptions are accurate regarding standard, quality, value, style or model, spare parts and repair services.” • Comparative ads are permissible.
27. 1A) False Advertising… Example • “Tell potential buyers if the goods have already been used (for example, as ‘demo’ models).” • “Don’t claim endorsements, sponsorships or associations with organisations that you don’t have.” • “Make sure that you and your staff know your products so you can describe or demonstrate them confidently.”
28. 1B) Puffery & Predictions… Definition • “‘Puffery’ is wildly exaggerated, fanciful or vague claims that no reasonable person could possibly treat seriously or find misleading.” • “A statement about the future that does not turn out to be true is not necessarily misleading or deceptive.” Law • Puffery is not misleading or deceptive. Example • “A cafe owner claims to make ‘the best coffee in the world’.” • “A business claims ‘all your dreams will come true’ if you use a certain product.”
29. 2) Unconscionable Conduct
30. 2) Unconscionable Conduct… Definition • Unconscionable = not reasonable. • Conduct = actions and statements, such as: • Advertisements, promotions, quotations, statements, any representation made by a person. • Or “conduct which leads to a consumer into error as to its meaning.” • Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 Law • “A business must not act unconscionably when selling or supplying goods and services to a consumer.”
31. 2) Unconscionable Conduct… Example • “Not allowing sufficient time to read an agreement, ask questions or get advice.” • “Using a friend or relative of the customer to influence the customer’s decision.” • “Getting a person to sign a blank or one- sided contract.” • “Taking advantage of a low-income consumer by making false statements about the real cost of a loan.” • “Failing to disclose key contractual terms.” • “Using high pressure tactics, such as refusing to take ‘no’ for an answer.”
32. 2A) Pressure selling – Internet Sales, Door-To- Door Sales & Mail Order… Definition • An unsolicited agreement is: • “When a salesperson approaches or telephones you without you inviting that contact.” • “When negotiations take place over the phone or at a location other than the suppliers premises.” • “When the total value of the agreement is more than $100, or the value was not established when the agreement was made.”
33. 2A) Internet Sales, Door- To-Door Sales & Mail Order… Law Traders must not contact you: • “On a public holiday.” • “On weekdays, before 9.00 am or after 6.00 pm (8.00 pm for telemarketing).” • “On a Saturday before 9.00 am or after 5.00 pm.” • “10 business days cooling of if decided to change mind = next business day after written.” • “Door, phone, internet, TV, mail order = same regulations apply when bought from a store, plus extra protections.” • “Do not call/knock – must be obeyed.” • “But there is pressure selling – not illegal.”
34. 2A) Internet Sales, Door- To-Door Sales & Mail Order… Example • “Explain up-front the purpose of their visit and show you some identification.” • “Inform you that you can ask them to leave at any time.” • “Give you written information about your cooling-off rights.” • “Explain upfront the purpose of their call.” • “End you written information about your cooling-off rights.”
35. 2B) Telemarketing & Email Marketing… Law Continued… • Spam Act 2003: http://www.comlaw.gov.au/Series/C200 4A01214. • In essence, you need: • “Gained consent for commercial communication.” • “Clear identification of who sent the communication.” • “The ability to stop any further the communication.”
36. 2B) Telemarketing & Email Marketing… • All links, phone numbers or contact information in the message should be intended to identify you by being placed in the signature and do not lead to content with a commercial purpose. • Only find email addresses that are publically published. Don’t guess email addresses or harvest them. Don’t contact emails which say they don’t want to be contacted publically.
37. 2B) Telemarketing & Email Marketing… • When you reactivate old email lists, gain inferred consent by asking to be directed by colleagues to the related person who holds the relevant role or function. • Publish your business name, address, website, phone number and email in the email signature for the sole purpose of identifying the sender of the message and make sure they do not lead to content with a commercial purpose. • Staff should use their name both in the body and field • Your email address should stay active for 30 days after ceasing contact. • Have unsubscribed information in the P.S. of email. Do this because the P.S. section is the one of the most read parts of an email. • Remove unsubscribes immediately. • Unsubscribing should cost recipient nothing.
38. 3) False Or Misleading Representations
39. 3) False Or Misleading Representations… Definition • False = Not true. • Mislead = Wrong impression. • Representations = A portrayal. Law • “Must not make false or misleading representations about the standard, quality, value or grade.” • “he composition style, model or history of goods.” • “Whether the goods are new.” • “The price of goods or services.” • “The availability of repair facilities or spare parts.” • “The place of origin of a product.” • “Manufacturing process.” • “Characteristics.” • “Suitability for purpose.” • “Quantity of any goods or services.” • Etc…
40. 3) False Or Misleading Representations… Examples • “A manufacturer sold socks, which were not pure cotton, labelled as ‘pure cotton’.” • “A retailer placed a label on garments showing a sale price and a higher, crossed-out price. However, the garments had never sold for the higher price.” • “A business made a series of untrue representations about the therapeutic benefits of negative ion mats it sold.” • “A motor repairer told a customer more repair work was needed on their car than was necessary.” • “On the front of their product packaging, a business claimed their batteries lasted as long as those of two other competitors. The claim was supported by tests, but only against some (not all) of the competitors’ batteries.”
41. 3A) Rebates, Gifts, Prizes Or Freebies… Definition • Something given without payment. • Based on reciprocity. • Use to convert prospects from suspects. Law • “Must intend to provide them within a reasonable time.” • “Do not disclose special terms and conditions to be met before the gift or prize is available.” • “Supply gifts or prizes substantially different from those promised.” • “Do not supply gift or prize at all.”
42. 3A) Rebates, Gifts, Prizes Or Freebies… Example: • “A stereo equipment retailer held a promotion. Customers went into a draw to win prizes when they bought stereo equipment. The retailer felt the promotion had not been a financial success, so fake names were added to the draw (among other things) and those fake names were declared the winners. This meant no prizes were awarded by the retailer.”
43. 3B) Testimonials… Definition • A statement from a customer used to persuade other customers to buy based on implied trust or social proof. • “Can give consumers confidence in a product or service on the basis that another person – particularly a celebrity or well-known person – is satisfied with the goods or services.” – Competition and Consumer Act 2010 (Cth) Law • “Testimonials need to be true and correct.” • “They need to be from real customers about their experience with your product, service or solution.” • “By law you are required to have proof that testimonials are true and correct and from real customers about their experience with your product, service or solution.” • “Overseas same laws don’t apply – Laws of the country they are trading in.”
44. 3B) Testimonials… Example: • “A supplier published a newspaper advertisement about a ‘nasal delivery system’ to treat impotence or erectile dysfunction. The advertisement quoted an interview with a celebrity that falsely claimed he had suffered from impotence and the nasal delivery system had assisted in dealing with this condition.” • “An advertisement where an actor is portrayed as a real person and falsely claims to have reaped financial benefits from distributing health care products.”
45. 3C) Bait Advertising… Definition • Advertisement = A notice or announcement in a public medium promoting a product, service, or solution. • Is an offer, not just an ad. • Bait = A trap. • Bait and switch = “The action advertising goods which are an apparent bargain, with the intention of substituting inferior or more expensive goods.” Law • “Bait advertising is where a trader advertises only a limited number of goods to entice customers to the premises, knowing that the number for sale will not meet anticipated demand.” • “‘Bait advertising’ usually happens when a business advertises goods at certain price but does not have a reasonable supply for customers to buy.”
46. 3C) Bait Advertising… Example • “An electronics retailer runs a major national campaign advertising 50-inch televisions at a low price of $799 for a week-long sale. The retailer usually sells about 30 televisions of this type every week.” • “The retailer only stocks two televisions at the advertised price and refuses to take customer orders.” • “When customers attempt to buy the television at the advertised price, they are told it is out of stock and offered a more expensive unit for $999. This is likely to be bait advertising as the retailer does not have a reasonable supply of the advertised television.”
47. 3D) Wrongly Accepting Payments For Goods Or Services… Law • “Businesses must not accept payment for goods or services they do not intend to supply.” Example: • “A landscaper contracts to provide yellow paving stones, knowing that only grey paving stones are available at the time of the agreement.”
48. 4) Other
49. 4A) Misleading Or Multiple Prices… Law • Having more than one price on a product can be misleading. • Cannot display component pricing – must be a total. • If part payments, they need to be the most visible. • All charges plus tax and GST if applicable need to be displayed. Example • More than 1 price for same item – lowest price displayed – happens a lot in retail with large inventory and hard to keep track. • Publish a retraction if in catalogue – display price – in a similar channel.
50. 4B) Guarantees & Warranties… Definition • Guarantee – An undertaking the something will be done in regards to quality/standard as a right in law. Not time bound. • “A formal assurance that certain conditions will be fulfilled, especially that a product will be of a specified quality. Match description, fit for purpose.” • Warrantee – A voluntary undertaking that something will be done. Time bound. • Extra promise on top of a guarantee. • “A written guarantee promising to repair or replace an article if necessary within a specified period.” • Doesn’t replace guarantee. • Once accepted, a contractual right. • Examples include extra cover, time, amount etc. • Can be useful for authority and influence.
51. 4B) Guarantees & Warranties… Law • “It is unlawful to make false or misleading representations about consumer guarantees.” • Goods need to be “of acceptable quality – they will be safe, durable and free from defects. They will be acceptable in appearance and finish, and do the job such things are usually used for.” • “Match any description given to the consumer.” • “That are fit for any disclosed purpose – the goods will do the job the consumer was told they would with due care and skill – they will use an acceptable level of skill or technical knowledge, and take care to avoid loss or damage.” • “Which are fit for any specified purpose – the service will achieve the result the consumer was told it would.”
52. 4B) Guarantees & Warranties… Law Continued… • Achieve the consumer’s stated purpose. • Sufficient quality to achieve desired results. • Can’t contract your way out of consumer guarantees. Not covered by guarantees: • Private sellers/garage sales/fates – are not “traders.” • Auction (as they are once off sales). • More than $40k i.e. a business not consumer item. • Ingredients.
53. 4B) Guarantees & Warranties… Example • “Imagine you bought a microwave oven for $400, which had 12 months warranty. After 13 months, it stopped working. You would have rights under the Australian Consumer Law to have the microwave repaired or replaced because it’s likely you expected it to last longer.” • “If you bought a microwave for $45 and the same thing happened, the same rights might not apply. The price of the microwave compared to the time that it was likely to last is different.”
54. 4B) Guarantees & Warranties… • “Imagine you bought a 12 month membership at your local gym. Two months into the contract, the gym closes down. You have rights under Australian Consumer Law to get a refund, or compensation for the 10 months that you won’t be able to use the gym.” • “If the gym closed 10 months into your contract, the same rights might not apply because you have used the gym for most of the time stated in the contract.” • “A consumer hires a painter to paint her house. Before starting the job, the painter does not remove all of the old, flaking paint. Six months later, the new paint starts to flake. The painter has not met the ‘due care and skill’ guarantee, as he did not use a level of skill that would be expected of a reasonable painter.” • “While painting the consumer’s house, the painter knocks over a can of paint, which spills over her newly paved driveway. The painter has not met the guarantee and must fix the damage.”
55. Basically, Don’t Be: • Fake. • Misleading. • Deceptive. • Unconscionable.
56. What Remedies Exist For Consumers When Small Businesses Do Not Comply With Australian Consumer Law?
57. Refunds On Goods A customer can seek a remedy under certain circumstances and may be entitled to a refund if the goods: • Have a fault that the customer could not have known about at the time of the purchase. • Do not do what the customer was led to believe. • Do not match the sample they were shown. • Are not as they were described. • Has a problem that would have stopped the customer from buying the product • Is substantially unfit for its use and can’t easily be repaired (within a reasonable time). • Does not meet the specific purpose the customer asked for and cannot easily be repaired (within a reasonable time). • Create an unsafe situation.
58. Remedies…Types of Remedies: 1. Refund/return. 2. Repair. 3. Replacement/exchange. 4. Reimbursing the consumer for repairing or replacing the goods. 5. Re-supplying services. 6. Compensation if the value has dropped. May return if: • Used but not obvious. • Not worn/used. • Proof of purchase. • Online. • Second hand. • Depends on time ago, age, condition, price.
59. Remedies Continued…May not return if: • Fault is prior to purchase and purchased regardless. • Inspected and no faults found. • Used incorrectly- fault was wasn’t for unintended use (Hills Hoist.) • Used a lot and fault is from natural wear and tear. • Changed mind. Particulars: • Not in original packaging, but protected – liable for any extra damage. • Ask for policy. • Seller pays for cost of return when too expensive like a bed – faulty. • Non faculty cost = must give them option, inflate cost to be prohibitive. However, goodwill due to economies of scale.
60. Product Safety • Right to inspect product. • Must be fit for purpose. • If unsafe you or regulator issue recall. • Permeant or temporary. Obligation to ensure that only safe products are marketed. They should: • “Provide clear instructions for proper use (this includes warnings against possible misuses).” • “Be aware of, and meet, industry and mandatory safety standards.” • “Develop product recall plans and procedures, including effective communication strategies to the public (eg advertisements in papers).” • “Incorporate safety into product design.” • “Develop appropriate safety standards through product improvement.” • “Implement a quality assurance program which includes consumer feedback.” • “Respond quickly to safety concerns that arise.”
61. Context Is Important “People concerned about their body image may be more vulnerable to products claiming to enhance beauty. Whether a representation about a beauty product was misleading would depend on whether it would mislead a reasonable person within this group.”
62. What Is The Process For Making Consumer Complaints In Australia?
63. Consumer Complaints What is the process for making consumer complaints? • Visit, write, phone the business with issue, receipt, contracts, paperwork, records of contact, guarantee etc. • If not suitable, formal complaints with Consumer and Business Services. – Tribunals for consumers quick remedy. • Small claims in South Australia in Magistrates Court if under $6,000.
64. What Are The Consequences For Small Business That Do Not Comply With Australian Consumer Law?
65. Consequences For Business Civil remedies including: • Injunctions. • Damages. – Consequential loss. – Compensation for their reasonably foreseeable costs in time and money because something went wrong. – It is usually financial but can include other costs, such as lost time or productivity. • Compensatory orders. • Orders for non-party consumers. • Non-punitive orders. • Adverse publicity. • Disqualification orders. • Accept court-enforceable undertakings. • Issue public warning notices. • Require a business to provide information that will support claims or representations made about goods or services. Can be criminal as well, depending on circumstances.
Do you want more like this?
Join below to be notified immediately about new content and more. No annoying daily emails and no spam – just good content when it’s posted.