Consumers have more options for making purchases than before, and that means the demand for a bargain is higher than it's ever been. Consumers expect to find incredible deals, bonuses, and exclusive sales. All that consumer expectation places merchants are under intense pressure to make offers that might be hard for them to fulfill, particularly if they want to stay financially solvent. The temptation to meet consumer demand for deals is especially problematic for California merchants because of the state's Consumers Legal Remedies Act, more commonly known as the CLRA.
About the CLRA
The CLRA is one of the most powerful consumer protection laws in the United States. It was passed into law by the California legislature in 1970, partially because of the recommendations from the Kerner Commission, which determined that unethical businesses were taking advantage of unsophisticated consumers. The Kerner Commission looked into these matters in the wake of the Watts riots in 1965, which were partly due to anger from consumers who believed that they were being sold inferior products for very high prices.
Thus, the legislature included provisions that make unethical business practices illegal, making it easy and economical for consumers to seek restitution from merchants who violate the CLRA.
Not only does the CLRA make practically every type of misrepresentation illegal, but it also requires companies that are found guilty of violating the Act to pay the attorney's fees and court costs of a consumer who is successful in showing that the company violated the Act.
Avoiding CLRA Pitfalls
There are several mistakes merchants frequently make that can cause them to run afoul of the CLRA. These include:
Price deception. Price deception is a false advertising strategy that happens when a business gives misleading or inaccurate information about a product or service. Businesses can get in trouble under the CLRA and with the Federal Trade Commission (FTC) if they don't accurately disclose the price of a product or service in advertising and don't present sales, discounts, and rebates honestly.
Origin or quality deception. Consumers are increasingly interested in both where and how their products are made. Under the CLRA, a manufacturer cannot claim that a product was made within the United States if most of its components were made outside the United States. Manufacturers also cannot promote a product as having features that it doesn't have, and they cannot encourage consumers to use a product for purposes for which it was not designed.
Environmental deception. An ever-growing number of consumers is passionately interested in buying environmentally-friendly products. The CLRA and the FTC forbid businesses from making misleading claims about the environmental impact of their products.
Bait and Switch. It's an age-old tactic, and it's not allowed under the CLRA. Businesses cannot advertise a product or service at a low price only to raise the price or substitute the product when a consumer attempts to make a purchase. Certainly, items do sell out and become unavailable, but it violates the CLRA for a merchant to advertise a product that does not exist. Similarly, if a merchant intends to sell a product for only a limited time, the CLRA requires that the specific length of time must be stated in the advertising.
To avoid violating the CLRA, and paying the steep costs associated with a consumer complaint, don't engage in any of these tactics. If you're not sure that your practices are allowed under the CLRA, a lawyer specializing in these issues can help you understand the Act and protect your business against any complaints.