Personal Selling: Legal & Ethical Issues

Instructor: Savannah Samoszuk

Savannah has over eight years of hotel management experience and has a master's degree in leadership.

Companies have turned to personal selling to help sell their products and services. We will take a look at the definition of personal selling and the legal and ethical issues that can arise.

Personal Selling

What is personal selling? Avon is a company that uses personal sellers to promote and sell their beauty products. Let's consider Sally, a personal seller for Avon who visits customers in person at their houses in order to sell the Avon products. Personal selling is when a company uses people to sell their products (which differs from a company putting their products in a store to be sold to the public). In this situation the sales people are commission-based and may even earn rewards for selling a certain amount of the product. While this entices the sales people to sell for the company, it can also come with legal and ethical issues. Let'sl take a look at a few common legal and ethical issues that can occur with personal selling.

Deception & Misrepresentation

First, there can be both legal and ethical consequences if a personal seller is not honest with their customers. Deception is when someone intentionally presents incorrect facts. As mentioned above, many companies that use personal sellers have incentives for their sellers to hit certain sales goals. This could lead sellers into using deception in order to achieve these goals. For example, Sally is selling beauty products for Avon and she tells a customer that her skin will show improvements in a week if she uses a certain beauty product. This claim could be deceptive in an attempt to get the customer to buy the product.

On the legal side of things, misrepresentation is when someone misleads someone else in order to gain from it. In this instance, if Sally said that a certain beauty product would get rid of every wrinkle, it would be considered a misrepresentation. If Sally knew that this could not be guaranteed, her claim could become a legal issue. Personal sellers have to be careful that they do not deceive customers or misrepresent the product they are selling to avoid ethical and legal issues.

The Lack of Licensing and Regulations

Another issue that can arise with personal selling is the lack of licensing and regulations. Personal sellers are not typically employees of the company which is selling the product. For example, the Avon sales people are not hired on by the company to sell the product. They earn commissions by selling the products for the company. There are no licensing requirements or regulations for these personal sellers to follow. The company might send them information about ethics and how they want the sellers to represent the company. However, the company does not have direct control over the actions personal sellers take to sell the products.

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