Can a Wholesaler Be a Retailer?
An advertising case study shows who can advertise what
Smith Wholesaler sells jewelry to the trade. Its customers must have a federal tax ID number on file to ensure they are retailers.
Its been an OK year for Smith, so hes thinking about expanding and selling to the public too. To let the public know about his new division and to begin making sales, he places a newspaper ad.
Whats the appropriate way for Smith to begin advertising to the public? What can he say? What should he not say? Below are two possible scenarios.
Smiths ads are clear that he sells wholesale to the trade and at great prices to the public. Competitors dont complain because he ensures his ads correctly depict the situation.
The ad isnt clear. Smith advertises at wholesale prices, and it looks as though hes selling wholesale to the public. The Jewelers Vigilance Committee is flooded with complaints, reviews the ads and finds theyre confusing. JVC alerts Smith to this violation of the Lanham Act and the FTCs Guidelines for the Jewelry Industry. Happily, he complies, changes his advertising and no further action is necessary.
Ignoring JVC Advice
What would happen if Smith didnt follow JVC advice? Non-compliance can result in a number of possible actions, most of them involving the local Attorney Generals office, the Better Business Bureau and other local agencies. In extreme cases, it also may involve the FTC. In some cases, it can result in costly legal fees.
Generally, JVCs advice is enough to educate wholesalers like Smith about the rules and laws governing advertising. In fact, the organization resolves 400+ cases yearly, many involving advertising.
When a company advertises, it does so either as a retailer or a wholesaler. Who buys most of its companys goods (the trade or the public) determines the category. That category also determines where and how the company advertises. Wholesalers cannot advertise in a section of the newspaper or phone book designated for retailers and vice-versa.
JVC, New York City; (212) 997-2002, www.jvclegal.org.
Caroline Stanley, Director Marketing/Development, Jewelers Vigilance Committee
|Wholesale to the Public
Can you say that? No. Never. No exceptions. This statement violates the Lanham Act and the FTC Guidelines. If you see a company advertising in this manner, forward a copy of its ads to JVC.