Spending - Head Matters

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4. Consumer Protection

c. Know your rights under deceptive advertising and deceptive pricing laws (continued)


Common types of deceptive advertising practices
Even with the laws in place, there are some deceptive advertisers out there. It’s important to know what to look for. Here are a few common types of deceptive advertising:

  • Bait and switch: It's illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price.  Although this is illegal, it still happens – beware of this sales tactic!
    •  Example:  A store advertises an air conditioner at a certain price but when you go to buy it, the store doesn’t have them and won’t issue a rain check .  In fact, they never did have that air conditioner in stock and are featuring a higher price model. 

       

  • Contests and sweepstakes: Sweepstakes-type promotions that require a purchase by participants are illegal in the United States. Specific disclosures are required, such as the odds of winning a prize, how to participate without buying anything, and that no purchase or payment is required to win. The bottom line is that if a company requires you to buy something to enter in their contest or sweepstakes, it’s illegal.
    • Example:  If you pay $10 to XYZ Cruise Company, you will be entered to win a cruise to Mexico’s Puerto Vallejo. 

       

  • Disclosures and disclaimers:  Some laws and regulations enforced by the FTC, such as the 900 Number Rule, the Truth in Lending Act, and the Consumer Leasing Act, have specific requirements that apply to advertising, including that certain information must be "clearly and conspicuously" disclosed. Advertisers tend to do their best to make this information as inconspicuous as they can get away with, so be sure to read the whole ad, including any fine print.
    • Example:  The warranty on your car only applies if you follow the service schedule exactly as it is outlined in the owner’s manual.

       

  • Endorsements and testimonials: All endorsements must reflect the honest experience or opinion of the endorser. Endorsements may not  contain representations that would be deceptive, or could not be substantiated, if the advertiser made them directly. Endorsements by consumers must reflect the typical experience of consumers who use the product, not the experience of just a few satisfied customers. If an endorsement doesn't reflect users' typical experience, the ad must clearly disclose either what consumers can expect their results to be or the limited applicability of the endorser's experience. That’s why you’ll often see “Results not typical” included on ads for weight loss products and other products.
    • Example:  An athlete using a hair product claims that his hair grew back in six weeks and that your bald uncle’s will too if he uses it.

       

  • "Free" claims:  When a "free" offer is tied to the purchase of another product, the price of the purchased product should not be increased from its regular price. The ad should clearly and conspicuously disclose the terms and conditions of the offer.
    • Example:  You get a free printer when you buy a computer but the computer costs $49 more than it would have without the printer. 

       

  • Rebates:  Ads that include rebate promotions should prominently state the before-rebate cost, as well as the amount of the rebate. Rebate promotions also should clearly disclose any additional terms and conditions that consumers need to know, including the key terms of any purchase requirements, additional fees, and when consumers can expect to receive their rebate. The trick with rebates is that most people never claim them. So, if you buy something that offers a rebate, be sure to fill out all the paperwork and send it in on time to get your rebate!
    • A rebate advertised as a “mail-in rebate” requires you to mail a form, the UPC code, and the receipt.  An instant rebate means a rebate at the time of sale.
       
  • Guarantees: When a company advertises that products are sold with a guarantee or warranty, the ad should clearly disclose how consumers can get the details (such as a time limit or a requirement that the consumer return the product).
    • You buy a watch with a warranty but it doesn’t say that you have to mail the product back to the manufacturer and pay a handling charge, costing almost as much as the watch.

       

  • Free trials: These ads must clearly disclose information about the terms of the plan (for example, the cost after the free trial and the length of the free trial). Once consumers agree to enroll, the company must notify them before shipping to allow them to decline the merchandise. These can be tricky because companies often ask for credit card information before your “free” trial begins and tell you that they won’t charge your card until the free trial is over. The catch is that many people forget to cancel their subscription or send back the item before the free trial ends so they end up buying the item or subscription whether they want it or not. Be sure you really understand the terms before you agree to any “free” trials and think twice before giving out your credit card number.
    • You get a text offer for free ring tones for 3 weeks and 99 cents a ringtone after that.  The offer says you can cancel at anytime but doesn’t tell you how.  You forget to cancel it week four and your cell phone bill has $9.99 in charges the next month for ringtones after the offer expired.

       

  • 900 number, pay-per-call and pay-per-text services: Ads for these services must clearly disclose the cost of the call or text. Ads directed at consumers under age 18 must also disclose that parental permission is required before calling. Costs for these services can really add up and are often charged to your phone bill so that you don’t realize how much you’ve spent until you get the bill. Be very wary and very careful with these services and if you ever see something you don’t agree with on your phone bill, call the phone company. They can often help you dispute a claim.
    • You are watching late night T.V.  The ad comes on to get the latest sports scores by calling the 900 number on the screen. What you don’t know is that each minute is costing you $3.00 and will show up on your next phone bill. 

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