RULE OF LAW
By: Atty. Gregorio B. Austral, CPA
“Ganging up” on customers is illegal
Sales are the lifeblood of any business. A company just starting to sell its
products and services invests heavily in marketing activities to generate sales that will
give the investors a reasonable return. Marketing professionals can testify to how the
company pressures them to achieve their sales quota.
Companies, however, do not have the absolute freedom to market their products
and services using any scheme designed to generate maximum sales. Like all other
freedoms, the privilege to sell products and services is subject to reasonable
regulations.
In Aowa Electronics v. DTI (2011), the Supreme Court ruled that “ganging up”
on customers is illegal. Through sales representatives operating in malls and
supermarkets, Aowa entices target customers by saying they are entitled to gifts and
giveaways, which upon acceptance, they would invite them to an outlet where they
would draw on a raffle or contest where they would win another price which they can
claim only if they buy products which are priced substantially high. While enticing
target customers to purchase additional products, they are physically surrounded by
Aowa’s representatives, otherwise known to many as “ganging up” on customers.
The Court declared Aowa’s practices violate the Consumer Code Act. Arts. 2 and
48 of the Consumer Protection Act set forth the State’s policy on consumer protection.
Art. 159 can be construed as granting the DTI the power to file formal charges to
effectuate the State policy to protect consumers against deceptive, unfair, and
unconscionable sales, acts, or practices defined in Arts. 50 and 52 of the Act.
(Reference: Commercial Law Review by Dean Cesar L. Villanueva and Gabriel S.
Villanueva)