Introduction
In a capitalist economy the law of demand and
supply or the "invisible hand" tends
to govern the market. The focal point in this
market is the consumer. To gain profitability,
companies tend to force the consumers to buy products
and services that they do not require through
attractive advertisements and campaigns. Sometimes
advertisers do not differentiate between right
and wrong, thereby crossing legal boundaries.
Fortunately there are laws that protect the consumers
from such persuasive and at times fraudulent marketing
tactics. One such law is the Florida Deceptive
and Unfair Trade Practices Act (FDUTPA). The FDUTPA
provides for the recovery of actual damages to
those who suffers losses as a result of violation
of this act. Cases of unfair competition, fraud,
antitrust and deception all come under the jurisdiction
of FDUTPA. (Federbush 2004). According to Federbush
(2004) the Act provides for antitrust precedents
that outlines damages measured in terms of unlawful
overcharge extracted from the consumer. In the
case of deception however the Act provides that
claims be limited for compensation of specific
categories. FDUTPA is the basis for consumers’
protection in the State court of Florida. In the
following discussion the researcher attempt to
trace out how the FDUTPA helps consumers to achieve
awareness and prevent them from becoming victims
of bait and switch tactics.
Discussion
The need for inclusion of FDUTPA in business law
has been to ensure honest transactions and commercial
activities. As competition becomes fierce, companies
tend to engage in unfair practices that not only
harm the consumer but also other players in the
industry. The provisions given by FDUTPA clearly
outline the participation of the consumers and
the business leaders in fair trade and business
endeavors. One of the reasons for the inclusion
of the FDUTPA and its strict follow up is due
to the fact that companies, despite the legal
framework continue to practice consumer fraud.
Forgery, deceit, fraud in retail sales and advertisements,
etc. all contribute to the consumer damages in
monetary term as well as otherwise. One of the
most common practices is "bait and switch"
tactic adopted by advertisers and campaigners.
Bait and switch tactics involve the advertisement
of a product on television or such other mass
media at an extraordinary low price. Upon visiting
the premises of the retailer, the consumer finds
that the seller has limited or no stock of the
product advertised. Instead the seller diverts
the attention of the consumer and tries to sell
other high priced products. The trick is to draw
the consumer to the shop using the low price advertisements
as "bait" and "switch" over
to other high priced products. This practice has
been common among car dealers, electronics retailers
and furniture sellers etc. In some states it is
considered unlawful to "bait and switch"
and comes under the statutes such as FDUTPA, while
other states merely categorize it under fraud.
A typical bait and switch case could be illustrated
through Florida's Attorney General Bob Butterworth's
charge of a gas masks selling company that engaged
bait and switch (Butterworth 2002). A gas mask
company established after the event of September
11, marketed gas masks for $49. However, when
consumers went to purchase the company did not
have stock for the masks. Instead they were convinced
to buy pricier merchandise. Not only this, the
company also claimed it sold new products whereas
the products were used or expired. The CEO Joseph
had been served with subpoena.
The case illustrates that companies often engage
in unfair trade transactions to capitalize on
consumer emotions as well as vulnerability. The
law on the other hand ensures that citizens be
safe and protected from such malpractices. Furthermore,
consumers who are the ones that drive the market
should be provided with the maximum benefits from
the products they pay for. They should not be
made to pay for the damages that companies incur
and transfer to the consumers to ease costs.
Another case of bait and switch is of Eyeglass
World. The company offers one-stop shopping for
eye exams and corrective lenses to consumers.
The company operates a chain of retailing outlets
where the customers can have their eyes examined
by independent eye specialist. However, pressured
by the company the eye specialist started to prescribe
unnecessary prescriptions that encouraged consumers
to purchase outdated or used lenses and purchase
of solution starter kits etc. The company willfully
misquoted low prices of products over the telephone
and failed to refund the customers when these
gimmicks were discovered (Butterworth 2000). Not
only the company has been responsible for the
damages incurred to the consumers but they have
also been responsible for the deteriorating ethical
trade practice. Hence, bait and switch and such
other malpractices prevalent in the industries
have been the result of failure to implement corporate
ethics and conduct policies.
Retailing trade especially engage in stock outages
and underselling so that the competitors cannot
compete. In the process they are likely to market
products and services using bait and switch tactics
to drive customers to the point of sale. Fraud
associated with bait and switch can be curtailed
by law provided that claimants can provide evidence
(Gerstner 1998). Competition is not the only problem
for generating fraudulent practices. In Roylee
Miller vs. Hospice of the Florida (2003) for example
the plaintiffs have been donors/contributors to
Hospice a non-for profit organization involved
in "good and laudatory work". However,
the organization has been channeling funds to
a for-profit software company Suncoast Solutions
without the knowledge of the contributors. The
bait Hospice marketed as a non-for profit organization
have been dealing with HIV patients. But the funds
received on behalf of these patients were being
switched to the software company which has been
running at a loss with not future of profitability.
The basic premise is that organizations need not
be competitive to engage in bait and switch tactics
which deceive "customers" or donors
(in this case) using their sympathetic nature.
The question that comes to mind is how consumers
can protect themselves. According to Trudy Lieberman
consumer reporting has diminished over the years
so that consumers are left with the law only to
protect them from fraudulent companies. Not only
need they be aware of the law but they should
also be aware of the marketing tactics that companies
engage in to lure customers to their outlets.
In the process, companies may go to the extent
of compromising the health and safety of the customers
along.
In Clayton Eugene Schauer vs. General Motors
Acceptance Corp (GMAC) and Morse Operations (2002)
the plaintiff is a co-signer for a vehicle loan
for his stepdaughter from GMAC through Morse Operations.
Schauer claims that the corporation and dealer
have violated the FDUPTA based on fraud and deceit
on agency principles and forgery. The plaintiff
appealed the Court "the corporation willfully
harassed him and his family; but the individual
could not use the Federal Trade Commission Holder
Rule as a sword in the fraud and deceit claim."
The plaintiff filed that GMAC harassed him and
his family in an attempt to collect debt. However,
Schuer's allegation had not been effective on
several counts. Firstly, his claim categorized
GMAC as the debt collector whereas GMAC extended
credit facility to Schuaer's family. In Florida
the definition of debt collector and creditor
differ from other states and cannot be the same
person. On top of that the plaintiff amended his
complain three times with regard to GMAC as well
as Morse Operations with prejudice. Nevertheless
the Court dismissed the latter claims. Furthermore,
the plaintiff claims that he has been fraudulently
treated and that GMAC has been engaged in unscrupulous
practices under the Federal Trade Commission Holder
Rule. Since Schauer did not bring into account
of the actual damages, the claim too have been
dismissed based on Section 559.77 Florida Statutes
(1999) which "provides that a debtor may
bring a civil action against a person violating
the Act for actual damages, costs and reasonable
attorney's fees, punitive damages, and other equitable
relief." From this case one observes that
claimers must be aware that the Florida Statutes
provides for actual damages before the court can
offer equitable relief. Claimant should not have
multiple claims lodged for one case unless the
case is dismissed. This not only compromises the
claimant's position but it also negates the effectiveness
of the Act.
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