1. Unfair Trade Practices: A Summary
Elisa Holmes Monckton Chambers
London
1-2 Raymond Buildings, Gray’s Inn, London, WC1R 5NR, UK
+44 (0)

2. What are ‘Unfair Trade Practices’?
No universal definition
General idea - cause economic injury to others, including through practices designed to confuse buyers
‘Lay’ views vary between cultures and individuals, reflecting cultural and community practices and ethics
Legal definitions vary between countries, and reflect local views of appropriate moral conduct in business
Some unfair trade practices are covered by specific legislation
Law generally aimed at protecting relatively weak individuals against powerful corporations
Eg Germany against the law to give free DVDs in newspapers whereas common practice in UK

3. Examples of Unfair Trade Practices
False or misleading advertising
Misleading or deceptive conduct
Imposition of unfair terms for acquiring goods or services
Contracts in restraint of trade
Infringement of intellectual property rights
State aid (important in the EC)

4. Definitions of Unfair Trade Practices
World Bank / OECD Model Law (1998)
Prohibits unfair competition including false or misleading information harming another firm, or misleading consumers
Commonwealth Model Competition Law (2005)
Prohibits unfair practices in consumer transactions involving false or misleading claims
Australia and New Zealand
Generally prohibit misleading and deceptive conduct or claims
US Trade Commission Act
Talks about “unfair methods of competition”
Indonesia
Unfair business competition

5. Some examples of consumer protection
Availability of advertised goods & services (eg no bait advertising)
Claims on qualifications and skills
Claims on success
Comparative advertising
Condition: quality, new or used
Fine print conditions
Origin of goods
Pictorial representations
Sponsorships and endorsements
Words with special meanings
Eg false eyelashes penelope cruise, “interest rates”, celebrities wearing watches
actual false statement in advertisements about a products quality, ingredients, or effectiveness
fake testimonials and endorsements
pictures of the wrong merchandise in ads trying to sell some other item that imply the picture is of the item being sold
faked pictures of the product performing in a way that it cannot actually perform
Use of prices in ads that are not the real price of the merchandise described or pictured
Advertising sale items that are not actually available to convince people to visit the sellers store or business or sending flyers with some sale items and some sale items where the actual items that are on sale are not clearly identified.
"Bait and Switch" advertising - this is a technique by which the seller advertises an item for sale at a particularly good price or on particularly good terms but does not really want to sell that item. When the consumer comes to their business after seeing the advertisement the seller discourages the purchase of the advertised item and instead tries to convince the buyer to purchase a different item for a higher price or on less favorable terms. The seller's techniques for discouraging the purchase of the object can vary and can include refusing to demonstrate, show or discuss the advertised item, representing that the item is not a good product or it has a poor guarantee or doesn't work properly, demonstrating a defective or poorly performing example of the product, and failing to have the item available to purchase (unless the advertising accurately and clearly stated the limitations on availability).
Deceptive statements of guarantees in advertisements - the statement must identify the nature of the guarantee and who is offering it (the manufacturer, the seller or someone else), what parts of the product are covered and what is required of the consumer to make a claim under the guarantee.
If an ad says that a product is "unconditionally guaranteed" or says "satisfaction or your money back" or words to that effect, the use of the term is deceptive unless the seller will refund the full purchase price, replace the product or repair the product and the BUYER has the right to choose which of these alternatives he or she wants.

6. False or Deceptive Claims on Price
Comparative pricing
“Duty free”
“Free” goods or services
Additional taxes
Hidden or additional costs
Price displays
Price ranges
Quote and estimates (legal effect)
Sales and promotions
Special offers
Claiming that the item is on sale by artificially and untruthfully pretending the product usually sells for a price higher than its normal price. The price represented to be the products "regular" price must be a real price that the product in fact sold for during some significant time in the recent past in the seller's own stores.
Misrepresenting the price that the same product is sold at by competitors
Placing fake price stickers on merchandise with higher than actual prices so that the product appears to be marked down when in fact it isn't
Claiming that a product may be purchased for one price when in fact the actual price is higher
Advertising an item at a very good price to induce customers to come in and then only selling the item at that price if the purchaser also buys another more expensive product.
Using the terms "special price" or "priced for sale" or "clearance priced" or similar terms when the items are not being sold at reduced prices and without clearly disclosing the actual former price or the percentage reduction from the former price that is actually being offered.

7. Unfair sales techniques
Debt collection methods
Delivery terms
Inertia selling
“Interest free” claims
Harassment and coercion
Telecommunications – mobile phones, minors, inadequate information
Gifts and prizes
Deceptive packaging
False billing
Pyramid selling, chain letters
Guarantees and warranties

8. Some arguments for limited restrictions on trade practices
Creates uncertainty in application of law
Deters investment
Inhibits job creation and product and service innovation
Should be limited to practices that have predictable effects on competition
Should be measured by impact on consumer welfare
Should not be designed to protect competitors from innovation or efficiency

9. Conclusions
The underlying assumption is that competition in markets promotes fairness
But competition has to be fair
Legislation and enforcement must reflect national and cultural attitudes
The focus is ultimately on consumer protection, whether directly or indirectly