Government Regulations That Affect Marketing in Retail
Marketing builds customer awareness of your business, draws the interest of prospective employees and pulls in sales. Your marketing plan covers the products and services you offer, the price you charge, your chosen place of business -- storefront, warehouse or website, for instance -- and any promotions you run. In order to protect end users and buyers, federal and state regulations govern how retailers advertise, how they present their prices to the public and what they must do when using email in their marketing strategy. Failure to comply exposes your business to penalties and consumer legal action.
As the nation's consumer protection watchdog, the Federal Trade Commission enforces the Federal Trade Commission Act, which contains rules governing advertising and marketing practices. Truth-in-advertising guides found in Title 16 of the Act prohibit retailers from misleading consumers through word choice, unfair comparisons and inaccurate illustrations. Advertisements cannot omit details such as disclosing whether a product is refurbished. Likewise, the FTC frowns upon "bait and switch" practices that promote bargains to lure customers into purchasing upgrades.
Certain retail segments such as jewelry and appliance sales have additional truth-in-advertising rules to follow. Advertising for jewelry must adhere to Guide 23 of Title 16 when describing metal content and gemstones. The law defines acceptable use of terms such as "semi-precious," "flawless" and "cultured pearl" to prevent consumer deception. Businesses that advertise product warranties or guarantees must meet the FTC's disclosure criteria outlined in Guide 239 and make the warranties available for review prior to purchase.
Paying attention to how your ads inform shoppers of your promotional prices can keep you out of legal trouble. Before you can say something's "on sale," the FTC says it had to normally carry a higher price tag for a substantial time period, which the Los Angeles County Department of Consumer Affairs further defines as within the previous three months. Raising the price temporarily in order to subsequently advertise it on sale represents deceptive pricing. "Buy One, Get One" and "gift with purchase" offers must clearly state any qualifying conditions. Promotions that include rebates must state the pre-rebate cost to let consumers comparison shop.
As retailers turn to email communication as a marketing tactic, they need to comply with another FTC-regulated law: The CAN-SPAM Act. CAM-SPAM, which applies to all commercial emails, dictates that the subject line must announce the promotional nature of the email and the message must correspond to the subject line. In addition, the sender must include a valid postal address and explain how the recipient can opt out of future mailings. The FTC suggests including both a reply email address and a working link for recipients to let you know their preference. When you receive a removal request, you must delete the individual from your email distribution list within 10 days. The penalties for ignoring CAN-SPAM Act run as high as $16,000 per violating email.