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3 unfair business practices companies need to avoid

Fair trading laws need to be taken seriously by retailers.

When businesses are operating in a competitive industry, managing their responsibilities and ensuring they are operating legally is an important consideration. Many of these will fall under the broad legal category of unfair business practices, which are covered by State and Federal Legislation and which cover a number of anti-competitive activities that companies will need to avoid.

To help, here are three unfair business practices for companies to steer clear of:

1) Inaccurate testimonials

Organisations need to ensure that any testimonials or other information used to display the value of a product are accurate and can be attributed to the stated source.

This consideration recently led to legal action in Queensland, after an automotive warranty company was found to have copied the testimonials of a competitor's website and passed them off as their own. 

2) Misleading customers

There are a range of different ways that companies can accidently or deliberately mislead their customers.

This will usually involve spreading information which is not an accurate description of the goods you are selling. For example, providing inaccurate information on the age and history of a product, its country of origin or any accessories that might come with it will fall under the category of misleading customers.

3) Unfair returns policies

Legislation imposes statutory warranties on the sale of goods and services and the terms of those warranties are the minimum that can be offered.

Depending on your sales model, it will be necessary to consider how different costs are within a business including the cost of meeting warranty claims. In addition, every company that is selling products will need to have a dedicated system for handling returns, whether this is a replacement policy, cash back offer or providing individuals with a gift card.

However, there are real issues that can arise if a company's advertised returns policy differs from the one they offer or from their statutory obligations. If a business is suggesting they have a cash-back returns policy, but is actually offering individuals a gift card, this will be a violation of fair trading and warranty laws.

For any company that is regularly selling products or services to the public, it will be important for them to have the right legal advice from a commercial lawyer to ensure they are meeting their obligations as retailers.