Business owners face unfair competition based on the actions of other businesses in their local area or online. These incidents may include a variety of events that make it difficult for the complaining company to generate profits because of unfair or unethical business practices. Allegations of unfair competition may provide the claimant with the opportunity to seek damages because of loss of profits or violations of federal laws. Reviewing unfair competition laws guide business owners through a legal claim and helps them seek compensation for their losses.
Presenting False Information in Advertising
False information in advertising presents one product as superior to others, and when the manufacturer presents unsubstantiated claims, it is unfair to other companies that manufacture similar products. All claims for products in advertising must be supported by facts. For example, when presenting a pain relief product to consumers, the manufacturer cannot claim that it works better than other pain relievers without documented proof.
This gives other manufacturers the right to file a claim for unfair competition based on a lack of credible evidence that supports the manufacturer’s claims. Companies that are the victims of unfair competition can start a claim by contacting a business law attorney now.
Using Bait and Switch on Consumers
The bait-and-switch model is when a retailer advertises a specific product to the masses to get them to come to the store and purchase it. When the customers arrive, the product has sold out or is out of stock suddenly. Instead of just informing the customers of when the item will be back in stock, they attempt to persuade customers to purchase a similar product instead. This presents an unfair advantage for the other manufacturer, and the producer of the advertised item suffers financially for the tactics. If discovered, the retailer could become the defendant in an unfair competition lawsuit.
Stealing A Company’s Trade Secrets and Using Them for Financial Gains
Theft of a company’s trade secrets presents unfair competition when the company that stole the information uses it for financial gains. When a company has a patent for a product, competition companies cannot use the product design to create similar products. It is a violation of federal laws, and the patent owner can sue anyone who uses their idea of the product design. Upon the discovery of the theft and patent violation, the manufacturer can seek damages for any profits generated from the sale of the products.
Selling Products Below Costs to Prevent Other Companies From Making Profits
Decreasing the price of a product below cost to prevent another company from profiting from the product is also unfair competition. The tactic discourages customers from buying the product at the suggested retail price since they can get it cheaper at the other business. While the business selling at a lower rate isn’t profiting from the decreased price, they are causing their competitor to lose profits on the same item.
When discovering this tactic, the competitor could file a legal claim for their economic losses. Under unfair competition laws, the business selling the product at lower than cost may be required to raise their prices to the suggested retail price to offer fair competition for other businesses selling the same products.
Getting Government Subsidies to Sell Products Abroad Cheaper
Some companies may choose to sell products way below cost to consumers or other businesses abroad. The action allows the business to collect subsidies to balance out any economic losses they face by selling the products at a lower price. This is unfair competition to companies that sell these products and cannot benefit from the same government incentives. Under the circumstances, businesses that sell the same products locally or abroad could file a claim to collect financial losses they incurred because of the unfair advantage. Under business laws and fair trade, the business receiving the subsidies may have to provide a settlement to the other businesses for these losses.
Creating Rumors About A Company or Product
Defamation or libel claims are often filed when a competitor starts a rumor about the company or its products. These allegations must be proven in court once the claims are filed. False rumors could decrease business for the company and damage its reputation among consumers. If the claim is disproved, the individual who spread the information must provide monetary damages to the claimant.
Posting False Customer Reviews
In digital marketing strategies, some competitors are posting fake customer reviews to give a negative impression of the company. Today, there is reputation management software that helps the business owner locate these false statements and have them removed from the search engine. When they find the fake reviews, the business owner can seek damages through a libel claim against the poster.
Copyright Infringement Claims
All materials protected under a copyright are used by the owner only. If another party wants to use the materials, they must secure legal permission from the owner. If anyone uses the materials without permission, the owner can seek damages through a copyright infringement claim. If the unauthorized user earned any money from using the materials, they may be required to repay the funds to the owner. Copyright infringement applies to all industries, and unauthorized users may face criminal charges for the violation of federal laws. The perpetrators face charges for each instance of copyright infringement they commit.
Business owners seek damages when there is evidence of unfair competition. When it comes to advertising, all businesses must present factual information about their products. If they use false claims, a competing company can seek compensation through a civil lawsuit. The laws apply to selling the products in retail stores and the actions of retailers, too. For example, retailers that use bait-and-switch tactics may face a lawsuit since they are discouraging consumers to buy a different product instead of the item they advertised. Understanding how these laws work helps the business owner seek damages when another party tries to cause a financial loss due to unfair competition practices.