Complying with the Ohio Consumer Sales Practices Act
When a supplier of goods or services snookers a consumer, what happens?
For instance, after a big thunderstorm and the “hail damage experts” sweep through town, what recourse does a homeowner have when the promises of the installer are false or he does a lousy job?
The Ohio Consumer Sales Practices Act protects consumers from deceptive, unfair or unconscionable sales practices.
While this is laudable, many well-intentioned businesses find themselves unwittingly running afoul of the act to their considerable expense.
The Ohio Sales Practices Act defines “unfair or deceptive consumer sales practices” as those that mislead a customer in a “consumer transaction” about the nature of the product or service he receives.
“Unconscionable acts or practices” relate to a supplier manipulating a consumer’s understanding of the nature of the purchase transaction.
Without the sales practices act, it would usually be prohibitively expensive for consumers to justify the cost of suing a seller under traditional law.
With the act, however, a consumer gains leverage and can force a losing defendant to undo a transaction and pay:
• Treble damages.
• Up to $5,000 in non-economic damages and
• Attorney’s fees.
What does this mean for your business?
First, we need to address whether you are covered by the act. A bad actor in a sales practices case is called a “supplier,” defined as a seller, lessor, assignor, franchisor or other person engaged in the business of effecting or soliciting “consumer transactions.”
These are defined as the sale, lease, assignment, award by chance, or other transfer of an item of goods, a service, a franchise, or an intangible, to an individual for purposes that are primarily for personal, family, or household use. (Certified public accountants, attorneys, physicians, dentists, and veterinarians are exempted.)
Violations are what one would generally consider a bad and unfair business practice such as:
• Representing that merchandise is of a particular standard, quality, grade, style, prescription or model, when it is not.
• Claiming a good is new, when it is not.
• Stating that a good or service is needed, when it is not.
• Saying repair or replacement is needed, if it is not.
• Claiming the supplier has a sponsorship or approval (example, “backed by the Underwriters Laboratory”) when it does not.
• Claiming that a product bears a warranty, when it does not.
I frequently handle cases where there was no written estimate.
The supplier either gave an oral estimate or simply none at all. Then, after work was completed, the customer was hit with an astronomical bill, out of line with all reason.
If you operate a business, you must provide a written estimate when you work for your customers.
It is no defense to argue, “The customer never asked for one.”
Moreover, it is actually a violation of the sales practices act if you do not tell your customer that he is entitled to an estimate.
Therefore, always give a written one before you begin to work and have the customer sign off as having received it.
Finally, if there comes a time where you anticipate the costs of a project will be 10% more than the estimate, you need to obtain further written approval.
Far too many businesses – even those that try hard to be fair with customers – find themselves in expensive litigation because of failing to understand the act and its nuances. If our office can help set up a plan for your company to comply with the sales practices act and other consumer protection laws, please give us a call.
Copyright 2020 The Business Journal, Youngstown, Ohio.