Consumer Protection Law in Retail Management: A Guide to Sales Promotions
Consumer Protection Law in Retail Management
Sales Promotion Activities under Law 7/1996 (LOCM)
Title II (Articles 18-35) of the Retail Commerce Law 7/1996 (LOCM) addresses sales promotion activities. These activities offer consumers additional incentives like lower prices (rebates, sales, clearances) or added benefits (gifts or bonuses). They utilize persuasive communication to promote products and services and are characterized by their exceptional and temporary nature.
Article 18 specifically mentions sales rebates, promotional offers, stock clearances, gift sales, and direct sales. All promotional sales must adhere to Articles 18-21 of the LOCM to prevent consumer deception. Key requirements include:
- Terms like “sales discounts,” “discount,” and “promotion” should only be used for legitimate sales complying with legal definitions (Art. 18.2).
- Special offers must include at least half of the offered products. If not, the promotion must clearly state it applies only to specific products (Art. 19.2), and these products must be clearly separated (Art. 21) for easy identification.
- Reduced prices must be clearly displayed (Art. 20).
- The offer’s duration must be specified (Art. 19) to prevent lure deals where discounts are advertised to attract consumers, but products are unavailable at the discounted price.
Types of Promotional Sales
Promotional sales fall into two categories: price reductions and additional services.
Price Reduction Sales
- Sales Rebates (Arts. 24 & 25): Rebates are linked to a timeframe determined by the Autonomous Communities.
- Sales Promotions or Offers (Art. 27): These are a residual category encompassing promotions not specifically covered elsewhere in Title II. They involve lower prices or more favorable terms to boost sales or promote businesses. Article 27.3, referencing Articles 33 and 34, allows for offers like multi-unit discounts, complimentary products, or participation in sweepstakes and contests. Due to minimal legal restrictions, this is a popular promotional technique.
- Stock Sales (Art. 28): Price reductions due to product deterioration, damage, obsolescence, or being out-of-date. The product cannot be defective or unsafe. The trader must have owned the stock for at least six months, unless they are professionally engaged in such sales. Article 29 mandates advertising these sales as “stock sales” or “sale of remains.” The promotional nature of stock sales is debatable, as there’s no real added incentive for the consumer.
- Clearance Sales (Art. 30): Originally intended for liquidating businesses, clearance sales now occur for various reasons (e.g., business line changes, property transfers). Article 30.1 lists specific circumstances. Article 30.3 mandates stopping clearance sales once the motivating factor ceases or all products are sold, preventing continuous clearance sales. However, this regulation can discourage traders from this practice.
Additional Service Sales
LOCM regulates sales with gifts (Arts. 32-34). While Article 8 of the LCD considers premiums unfair in certain cases, Articles 32-34 allow offering another product or service for free or at a reduced price, automatically or through contests. Gifts must be delivered within a timeframe set by the Autonomous Communities (maximum 3 months). Joint offers are generally prohibited unless there’s a functional relationship (e.g., shampoo and conditioner), a set quantity is sold (e.g., a dozen eggs), or for gift sets (e.g., a Christmas basket).
Articles 36 and following protect consumers regarding special sales (distance selling, vending machines, auctions), but these sales methods are not prohibited.