KNOWLEDGE BASE Sales - Billing Regulations In The US
The information on this page was current at the time it was published. Regulations, trends, statistics, and other information are constantly changing. While we strive to update our Knowledge Base, we strongly suggest you use these pages as a general guide and be sure to verify any regulations, statistics, guidelines, or other information that are important to your efforts.
Sales and Billing Regulations In The United States
What laws and regulations apply?
There are a number of federal and state laws and regulations that govern sales, billing, and pricing in the United States. Because they can differ significantly state to state, you should make sure you are familiar with both the federal laws and regulations and those of the state or states in which you conduct business.
Pricing Practices
The Federal Trade Commission (FTC) has published Guidelines Against Deceptive Pricing to give you practical advice on proper pricing practices. Under the Guidelines, the same standards for truthfulness that apply to advertising in the US also apply to pricing in the US. This means your pricing practices should be truthful, non-deceptive, and fair. The Guidelines specifically address price comparisons, including former price comparisons, retail price comparisons, comparable value comparisons, and established or suggested prices.
There are additional industry specific laws that governing advertising. Furthermore, each state has its own consumer protection laws that govern pricing practices within that state. For information on local practices, you should reach out to the Attorney General’s office in the state(s) you plan to do business.
You should ensure your advertised prices are accurate because many jurisdictions require that you charge no more than the advertised or shelf price for a product or service. This means pricing accuracy is important for both consumer satisfaction and your bottom line.
Going Out of Business Sale
You are permitted to have a “going out of business sale” only if you are actually going out of business. If you are not going out of business, it would be deceptive to advertise a “going out of business sale.”
Negative Option Offers/Plans
A “Negative Option Offer or Plan” is an arrangement where goods or services are sent to a consumer automatically unless or until he tells the seller he does not want them. These offers or plans are often offered to consumers free, as a free trial, or as a special deal.. Examples include being offered “10 CDs for a $1” or a free trial subscription to one of your favorite magazines. By accepting these offers, the consumer may be entering into a negative option plan.
If you use this business model, you must comply with the Negative Option Rule. The Rule requires that you:
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disclose the material information about the terms of the option/plan clearly and conspicuously;
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notify consumers that have enrolled about shipments before shipping to allow them to decline the merchandise;
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even if your automatic shipment or continuity program doesn’t fall within the Rule, you should be careful to clearly disclose the terms and conditions of the plan before billing consumers or charging their credit cards.
Guidelines Against Deceptive Pricing
California Department of Consumer Affairs
Georgia Consumer Protection Unit
Massachusetts Attorney General
New York Department of Consumer Protection
FTC Electronic Commerce: Selling Internationally A Guide for Businesses
KNOWLEDGE BASE Sales - Billing Regulations In The US