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I still think there are some problems with your definition, and I'm thinking strictly from a legal point of view.
There's so much manipulation that can happen from a sole proprietorship that wouldn't be allowed by your definition, simply based upon the quantity of sales (which is fine, if you think that's an acceptable demarcation line, but it will still lead to lots of cases where large companies are legally treated differently, which, in and of itself does happen, but any new text added to a given law will simply pad the lining of lawyers pockets whose job it is to argue over the minutae of each word). But if I pepper a market crowd with my family members all randomly talking about how amazing the food/widgets/whatever over at Bob's Widget Stand are, so that over hearing bystanders can hear is a form a psychological manipulation that may fall into a gray area. Ultimately, each time you say "this is fine, this isn't", you're adding an exception and branching logic that will be argued about ad infinitum. Laws, like lines of code, have a technical debt to them, except the lines of law are likely to impact more people generally, enough so to ruin lives and industries (which can happen with code, of course, but code doesn't have the same global application to every member of society backed up with the use of force). I'm not saying that reaching an acceptable compromise is unachievable, but conceptually, it's a lot more involved than simply laying out the broad strokes, with tons of ramifications, implicit and otherwise, that have to be considered. |
In re to your example. If you were to pay your family members (in any way) that would be wrong in my book. If your family does this out of the goodness of their hearts then so be it. It's their unpaid labor. I fully realize that no solution will stop every avenue of abuse. However, seeding crowds with people up selling your widgets only works for so long. you'll never be able to reach scale with those methods because eventually the irs will audit you or your family members and even though you wouldn't go down for illegal advertising you would go down for not paying taxes. Or you'd find that having enough family family members to seed every crowd is getting you unwanted attention, or is just too darn expensive.
By banning all advertisements except advertising in person, at the location of sale and for only items sold at that location there would be very little room for manipulation. Obviously the time share/used car methods would still work, but I haven't ever seen a way to make that profitable with low margin items, where many consumers get fleeced by huge ad budgets.
Basically, I think everything but shouting about your products from your shop should be illegal. I can see concessions made for websites that don't sell anything, and charge transparent/flat fees for listing their info in a web directory that is intentionally bland. However, writing legislation for that would be a whole lot harder to draft than what I've already stated.
I realize my desires are unrealistic. That being said, advertisings days of doing whatever creepy crap they want to without punishment are numbered. Either the industry will reform itself (unlikely, it's too easy to delude oneself when pulling $500k for selling fidget spinners) or, eventually, some people are going to be nailed to the walls of Congress as examples.