The point of sale (POS) is a crucial moment for both businesses and their customers. As a customer is about to make a transaction, the POS is an opportune moment to let them know about any special offers, sales or rewards programs your business may be hosting.
For customers, it’s a great way to secure any additional savings and decide whether or not they want to continue shopping with a particular business.
POS is a great way to increase your sales, market your business and improve customer engagement generally. However, it’s important to make sure that every POS tactic is applied in compliance with the relevant laws.
In this article, we’ll take a look at POS within the legal framework and see how it can apply to your business’ advertising practices.
What Is Point Of Sale (POS) Advertising?
POS advertising is a marketing strategy aimed at customers who are going to check out with their items, whether this is online or in person. POS advertisements don’t necessarily need to be at the counter, on or near the place of transaction (such as on the EFTPOS machine). However, they most certainly can be.
POS advertising can be arranged all across the store or on your businesses website using signs, posters or displays. The main purpose is to let consumers know of any special offers they can take advantage of during their transaction, thereby increasing the sale amount.
Point Of Sale Advertising Examples
POS can take many different forms as it’s a largely versatile way of marketing. Common examples of POS advertising you may have seen include displays near a shop counter where a customer is about to checkout, “buy one, get one free” posters and signs near a product signalling 3 for the price of 1.
Ted runs an online candle store. He’s having a promotion for floral scented candles. On the website homepage for his store, Ted has a sign that lets customers know about the free gift they will receive when purchasing a floral scented candle.
Hannah owns a service station franchise. In order to increase the sale of her chocolates, Hannah places a display of them on the checkout counter at a discounted price.
What Laws Apply To POS Advertising?
When utilised correctly, POS can be a useful marketing technique. However, it’s important to uphold your legal obligations towards consumers and make sure you’re not violating any laws that protect their rights.
The main area of law that looks out for consumers is the Australian Consumer Law (ACL).
Australian Consumer Law
The purpose of the ACL is to protect the interests of consumers as they are often found to have less bargaining power in a transaction. Businesses have a lot of power over what consumers see and rely on for their purchasing behaviour.
To restore balance, these laws allow consumers to enforce their rights against a business that engages in unfair advertising or trading practices to sell their products.
The key takeaway from this law is that businesses should be truthful and transparent with their customers when advertising their products using POS methods. In other words, businesses dealing with customers should comply with these regulations to avoid penalties and maintain a healthy relationship with their consumers.
Let’s explore this in more depth below.
Misleading Or Deceptive Conduct
Acts that mislead or deceive consumers are considered illegal by the ACL. This includes any statement or behaviour that is likely to mislead or deceive customers.
Even if there was no intention to deceive customers, a business can still be accused of misleading and deceptive conduct.
Therefore, when putting out advertisements or training staff, it’s in your business’ best interests to ensure that everyone is on the same page and any promotions cannot be interpreted differently by a reasonable person.
Remember, even actions can be considered misleading and deceptive, so it’s important to be aware of body language as well. A simple shrug, smile and even omission when dealing with customers can lead them to believe something that is not true – clear communication is essential!
Consumer guarantees are the rights consumers automatically have when purchasing an item or a service. These rights cannot be taken away by businesses through signs, contracts or waivers as they are cemented in consumer laws.
Consumer guarantees include:
- Products that are safe to use and of an acceptable quality
- The item being bought can be used for the purpose it is being purchased for
- All products match their description or advertisements
- Repairs and spare parts are available for goods being sold to consumers
- Services are carried out with reasonable care and provided within a reasonable timeframe
There are some exceptions to consumer guarantees, so it’s worth familiarising yourself with these.
Unfair Contract Terms
Unfair contract terms put one party at a disadvantage to the other party in a contract. As the term suggests, the terms are unfair in nature and can be enforced under the law.
Unfair contract terms cover both consumer contracts and standard form contracts. Generally, a contract term will be considered unfair if it does the following to only one party:
- Allows them to limit or dismiss their contractual obligations
- They retain the power to penalise the other party
- Possess the power to terminate the contract at any time
- Change the terms of the contract
Previously, if a contractual term was found to be unfair, it would be considered void under the law. However, the ACCC introduced additional penalties for businesses in breach.
Now, there are penalties for having unfair contract terms in standard form contracts with small businesses and consumers, commenting that “businesses have 12 months to review and update their standard form contracts before these penalties apply.”
If your business needs help reviewing contracts to avoid these penalties, contact our team of expert lawyers who will happily review your contracts and answer your legal questions.
Bait advertising is where a business offers the sale of a product that isn’t actually available in the promised quantity, or they fail to disclose to customers that there is limited supply.
In addition, some businesses go further and offer an alternative option where the promised item is unavailable. Often, this alternative is offered at a higher price. This is known as bait and switch advertising.
Bait switching is a breach of the ACL and is therefore illegal. It is unfair to the consumer as it misleads them into making a purchase.
Unsolicited Consumer Agreements
You might want to look into Unsolicited Consumer Agreements if your business plans on hiring people to approach customers about the sale of goods or services. Unsolicited consumer agreements are usually required when salespeople approach consumers unexpectedly, often by door to door sales or telemarketing.
An Unsolicited Consumer Agreement is required by the ACL and includes matters such as the cooling off period, pricing and details about your business.
It’s best to have one drafted by a legal professional so that the details are tailored to your business’ needs.
How Does POS Advertising Work Online?
As we briefly mentioned earlier, POS advertising isn’t just for brick and mortar stores. It can also be used by businesses that are online.
It simply means that promotions that are connected to a transaction can be advertised to consumers through your website. This can be on the home page when checking out or next to a list of items.
Olivia runs an online clothing store. When her customers are checking out with their purchases, she offers them the chance to sign up to her newsletter and a 10% discount off their next order if they sign up.
Olivia’s promotion is likely to be considered POS advertising through an online platform.
What Are Labelling Requirements?
Labelling requirements refers to the information on the packages of goods. Depending on the products, labelling requirements are likely to vary. So, if you’re selling items either as a manufacturer or seller, it’s important to make sure all labelling requirements are met for that item.
Information that can be required to be disclosed on a package includes:
- Weight measurements
- Ingredients list
- Country of origin
- Manufacturer details
- Contacts details of the supplier
POS advertising can be beneficial for your business, but it’s important to make sure you are following the relevant laws. To summarise what we’ve discussed:
- POS advertising is marketing aimed at customers about to go through a transaction
- Principles of the ACL apply to POS such as misleading and deceptive conduct as well as bait advertising
- POS advertising can also be utilised online
- Labelling requirements is the information you are legally required to provide on the packages of products
If you would like a consultation on POS advertising rules, you can reach us at 1800 730 617 or firstname.lastname@example.org for a free, no-obligations chat.
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