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5 Ways to Avoid Unfair Business Practices While Protecting Your Business and Customers Building your business on a firm, fair and ethical foundation helps reduce risk and protect your brand over the long haul.

By Jeffrey Kaliel Edited by Micah Zimmerman

Key Takeaways

  • Proactive entrepreneurs can easily avoid the pitfalls of unfair business practices.
  • Companies can safeguard against costly lawsuits and ensure customer satisfaction through transparency and routine due diligence.

Opinions expressed by Entrepreneur contributors are their own.

While many businesses can find it tempting to cut corners, any short-term benefits come at a significant cost. Whether intentionally or not, companies looking to maintain a competitive edge in the global marketplace can engage in an array of trade practices that aren't just unfair but illegal. As a result, both the business and their customers suffer.

Luckily, proactive entrepreneurs can easily avoid the pitfalls of unfair business practices. Companies can safeguard against costly lawsuits and ensure customer satisfaction through transparency and routine due diligence.

Here are five tips on how to avoid unfair business practices that could land your business in hot water.

Related: 3 Key Legal Issues Online Marketers Need to Know About

1. Establish solid business practices from the jump

Establish clear operational protocols to ensure your business is set up for success from the get-go. These guidelines should be built into the framework of your business and aligned with the laws set out by the Federal Trade Commission (FTC). Employees at all levels should be required to read and operate according to these protocols.

However, this initial setup and onboarding aren't enough. To maintain fair business practices, companies should regularly hold employee workshops covering applicable laws, including pertinent updates. This continued training ensures that fair business standards are top of mind for employees in every department and safeguards against poor practices, whether deliberate or unintentional.

It also helps to review the trade practices of critical vendors. Ensuring that primary partners are on the same page can prevent tricky business situations and bolster consumer confidence.

Related: What Is Marketing Compliance and Why Should You Care About It? Here's What You Need to Know.

2. Don't take advantage of customers

Though this tip may seem simple, it's perhaps the key lesson in avoiding unfair business practices. No profit should come at the expense of a vulnerable customer. Business practices that target vulnerable demographics like the elderly, infirm, or those who don't speak English as a first language can be deemed by the FTC to be unfair.

Whether you're engaging with customers via online marketing or telemarketing, it's critical to have a strategy in place that communicates effectively with potentially vulnerable customers. Ensure that your marketing strategy doesn't pressure customers into handing over financial information or that your marketing will be easily understood. Use your best judgment in these scenarios and cross-check your marketing strategies with numerous departments.

Related: Protect Your Business From Regulatory Pitfalls, With 'Practical Compliance'

3. Don't misrepresent your product

Transparency is crucial when it comes to maintaining fair business practices. Unfortunately, it's all too common for businesses to engage in misrepresentation when advertising products. This could be either overpromising a product's benefits or failing to disclose information on a product.

For instance, businesses should not exaggerate a product's abilities. Any marketing must show realistic product functions and results. On the other hand, companies must not hide any negative aspects of the product. All ingredients and components must be listed, and related risks must be disclosed, regardless of how this may impact customer perception.

Additionally, ensure that all reviews and testimonials are authentic. Customers deserve a realistic look at how others perceive your product or services, and fake satisfactory feedback is a misrepresentation. This also applies to celebrity endorsements. When falsified, these can lead to costly legal issues.

Related: FTC Proposes Rule to Crack Down on Fake Reviews and Deceptive Marketing Tactics

4. Don't make false promises or guarantees you can't fulfill

When it comes to advertising, businesses must be able to deliver upon marketing commitments. This includes one-time sales, discounts and evergreen promises like return policies. Your company should be transparent about these types of interactions from the get-go so that you aren't misleading customers into purchasing products.

Wording matters here: It's unfair to trick customers by burying exclusionary terms in the fine print of a return policy, for instance. Similarly, it can be dangerous territory to misrepresent sales or discounts in a way that forces a customer's hand. Using inaccurate "limited time" language or insinuating that your company is going out of business just to drive sales tends to qualify as unfair business practices.

Related: 5 Ways to Build Brand Customer Trust (and Why It Matters More Than Ever Before)

5. Don't withhold necessary information

Finally, a fundamental way to protect your business and your customers is to share pertinent information that could potentially affect consumer behavior. As mentioned above, this can include ingredients or other product specifications that customers may consider harmful.

But this can also be as simple as omission (which can often happen by accident!). For instance, failing to disclose that certain items are sold separately is an unfair business practice. Withholding information about the product's country of origin, its condition, or use cases can also fall under this category.

This practice can also pertain to your business as a whole. If your business is filing for bankruptcy or facing other financial issues that could affect an order, this information should be disclosed. Similarly, share any breaches in cybersecurity with customers to ensure they understand any risks involved when engaging with your business.

Jeffrey Kaliel

Entrepreneur Leadership Network® Contributor

Co-Founder of Kaliel Gold PLLC

Jeff Kaliel is a practicing attorney and the Co-founder of Kaliel Gold PLLC, a plaintiffs-side law firm based in Washington, D.C. Kaliel represents clients in state and national class action lawsuits.

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