It is said you are not really in business until you get sued. In business you certainly cannot please everyone so the likelihood of a client or customer taking legal action increases as your company expands and takes on more employees. While a lawsuit may be an implicit attainment of success, it is a milestone that can be avoided by knowing the laws of the state(s) your company is registered in.
For Ohio, the Consumer Sales Practice Act of 1972 protects consumers from businesses that take advantage. The Act ensures consumers are not asked to do unfair or deceptive actions for a purchase; the Act makes it illegal for a seller to misrepresent their business, product, service or the price of their transaction; the Act prohibits a seller from taking advantage of those illiterate or mentally disabled. The Act even prohibits sellers from selling a product or service to a consumer they know cannot afford or benefit from the purchase. Lastly, the Act requires sellers to honor guarantees, warranties and protects consumers from deceptive advertising.
When it comes to advertising, here are five laws you should learn and practice from year 1 in business.
- Gift Cards – As a small business growing your customer base, you may want to offer gift cards to your customers. Gift cards are a great way to influence a purchase for a buyer unsure of what to get for a friend or loved one, and they are a popular purchase during the holidays to save time. Under Ohio law, a gift card should not have an expiration date less than two years of the date it was issued. For a startup, the risk of this two-year requirement for expiration is the possibility of no longer offering that product or service by the time the gift card is redeemed.
- Rain Checks – In the age of social media, startups and entrepreneurs are notorious for offering sales online or as vendors at local events. If your business promotes a sale, you must list specific limitations such as “limited number in stock” or “while supplies last.” Otherwise if the seller runs out of the sale item, the consumer is entitled to a rain check – a ticket that will allow them to purchase the item at the sale price advertised whenever you have the item in stock again.
- Prizes – Ohio law prohibits advertising that a consumer has won a prize and then requiring the consumer to pay fees or perform any action to receive the prize. All terms and conditions of the prize offered must be disclosed in the advertisement.
- Repair and Service Rules – For any repair or service $25 or more, the seller must provide an estimate or notice of the consumer’s right to receive an estimate. If the total cost is found to be 10 percent or more of the estimate, the seller must get the consumer’s signed permission before beginning additional work.
- CAN-SPAM Act – In business, your contact list is king. In today’s age of technology, email marketing is still one of the top ten methods to advertise to your target audience. However the CAN-SPAM Act bans deceptive subject lines and requires an individual or business to provide an easy way for the consumer to opt-out of email messages.
While these laws are the most significant that businesses need to be compliant with, there are more specific laws that apply to certain industries. To learn more about business and advertising laws, visit Complying with Ohio Consumer Law: A Guide for Businesses.