Unfair Business Practices

The consumer law practice at the Law Offices of Steven L. Martin in southern California also fights for the rights of businesses who are being harmed by unfair practices perpetrated by their competitors. In addition to the numerous ways in which businesses may harm customers through false, misleading, or fraudulent sales tactics, businesses may also harm their competitors through similar means. Unfair competition ultimately harms the public as well, which the California legislature recognized in establishing the Unfair Practices Act in the California Business & Professions Code. This law prohibits actions by businesses to prevent or destroy competition and seeks to protect the public from unfair, dishonest, deceptive, fraudulent and discriminatory practices by businesses.

Some of the main ways in which businesses engage in unfair practices is through the use of loss leaders or locality discrimination.

Loss Leaders

A loss leader is an item which is sold at less than cost when the purpose is actually to encourage the customer to purchase other merchandise, when the sale tends to mislead or deceive the consumer, or where the sale diverts trade from or otherwise injures competitions. It is unlawful in California to sell an item as a loss leader, including selling an item below cost or giving away a product in order to injure competitors or destroy competition.

Locality Discrimination

It is also generally unlawful to sell a product at a lower price in one community or section of a city than the retailer sells the product for in another section of the city or community. If the retailer is selling the product for different prices in different localities, it must be able to justify the disparity by accounting for differences in grade, quality or quantity of the product based on the cost of manufacture, sale, delivery or transportation to different areas.

Right to Sue

The law allows any person to bring a civil action to stop a business from violating the law and to recover any damages caused by the unlawful practice. Officers, directors and agents can be held personally liable for damages along with the corporation. In addition to civil liability, officers, directors and agents may also be held criminally liable and sentenced to up to $1,000 in fines and up to six months in jail.

Determining the actual cost of a product in a loss leader or locality discrimination case can be a complicated matter; it is important to retain an attorney who knows the law and understands the business world and can properly investigate and prepare a successful case. In Los Angeles and southern California, contact the Law Offices of Steven L. Martin for assistance.