It’s been a long time coming, but finally the Unfair Business to Consumer Commercial Practices Directive has been approved by the EU Council of Ministers. Joy for marketers looking for a level playing field in Europe or yet another regulatory burden for responsible advertisers?
Topic: Consumer protection
Who: The European Commission
When: May 2005
After getting on for four years, EU Directive 2005/29/EC "concerning unfair business to consumer commercial practices in the internal market" was finally signed off by the Council of Ministers.
The intention of the legislation is to clarify consumers' rights across the Union and facilitate cross-border trade by establishing common rules against aggressive and misleading marketing.
The law must be implemented across all EU Member States by 12 December 2007.
Member states are required to ensure that any business to consumer practice which is caught by the definition in the directive of "unfair commercial practices" is contrary to law in their country. Alongside the worryingly broad definition of such practices, there are also specific "sharp practices" which must in any event be prohibited EU wide.
These practices are in two broad categories, "misleading commercial practices" and "aggressive commercial practices".
The original list of 19 in earlier drafts has become 31. Although the list is lengthy, we believe it is worth marketinglaw readers enjoying the benefit of them all, so we will list them below, marking with an asterix the new arrivals and showing one particular practice that did not make the cut:
Misleading commercial practices
1. Claiming to be a signatory to a code of conduct when the trader is not.
2. * Displaying a trust mark, quality mark or equivalent without having obtained the necessary authorisation.
3. Claiming that a code of conduct has an endorsement from a public or other body which it does not have.
4. * Claiming that a trader (including his commercial practices) or a product has been approved, endorsed or authorised by a public or private body when he/it has not or making such a claim without complying with the terms of the approval, endorsement of authorisation.
5. Making an invitation to purchase products at a specified price without disclosing the existence of any reasonable grounds the trader may have for believing that he will not be able to offer for supply or to procure another trader to supply, those products or equivalent products at that price for a period that is, and in quantities that are, reasonable having regard to the product, the scale of advertising of the product, and the price offered (bait advertising).
6. Making an invitation to purchase products at a specified price and then:
(a) refusing to show the advertised item to consumers; or
(b) refusing to take orders for it or deliver it within a reasonable time; or
(c) demonstrating a defective sample of it……
with the intention of selling a different product, i.e. bait and switch.
7. Falsely stating that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice.
8. Undertaking to provide after-sales service to consumers with whom the trader has communicated prior to a transaction in a language which is not an official language of the Member State where the trader is located and then making such service available only in another language without clearly disclosing this to the consumer before the consumer is committed to the transaction.
9. Stating or otherwise creating the impression that a product can legally be sold when it cannot.
10. * Presenting rights given to consumers in law as a distinctive feature of the trader's offer.
11. Using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer (advertorial).
12. Making a materially inaccurate claim concerning the extent of the risk to the personal security of the consumer or his family if the consumer does not purchase the product.
13. * Promoting a product similar to a product made by a particular manufacturer in such a manner as deliberately to mislead the consumer into believing that the product is made by that same manufacturer when it is not.
14. Establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that it is derived primarily from the introduction of other consumers into the scheme rather than for the sale or consumption of products.
15. Claiming that the trader is about to cease trading or move premises when he is not.
16. * Claiming that products are able to facilitate winning in games of chance.
17. * Falsely claiming that a product is able to cure illnesses, dysfunctions or malformations.
18. * Passing on materially inaccurate information on market conditions or on the possibility of finding the product with the intention of inducing the customer to acquire in conditions less favourable than normal market conditions.
19. * Claiming in a commercial practice to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent.
20. * Describing a product as "gratis", "free", "without charge" or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item.
21. * Including in marketing material an invoice or similar document seeking payment which gives the consumer the impression that he has already ordered the marketed product when he has not.
22. * Falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer.
23. * Creating the false impression that after-sales service in relation to a product is available in a member state other than the one in which the product is sold.
Aggressive commercial practices
24. Creating the impression that the consumer cannot leave the premises until a contract is formed.
25. Conducting personal visits to the consumer's home ignoring the consumer's request to leave or not to return except in circumstances and to the extent justified, under national law, to enforce a contractual obligation.
26. Making persistent and unwanted solicitations by telephone, fax, email or other remote media except in circumstances and to the extent justified under national law to enforce a contractual obligation.
27. Requiring a consumer who wishes to claim on an insurance policy to produce documents which could not reasonably be considered relevant as to whether the claim was valid, or failing systematically to respond to pertinent correspondence in order to dissuade a consumer from exercising his contractual rights.
28. Including in an advertisement a direct exhortation to children to buy advertised products or persuade their parents or other adults to buy advertised products for them.
29. Demanding immediate or deferred payment for or the return or safe keeping of products supplied by the trader, but not solicited by the consumer except where the product is a substitute supplied in conformity with Article 7 (3) of Directive 97/7/EC (inertia selling).
30. * Explicitly informing a consumer that if he does not buy the product or service, the trader's job or livelihood will be in jeopardy.
31. * Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either:
(a) there is no prize or other equivalent benefit; or
(b) taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.
Why this matters:
Many of these practices are already contrary to law in the UK, but others are worryingly widely worded and we will have to wait and see how the UK Government proposes to implement this potentially far-reaching legislation.
We will be returning to this Directive in other reports, because there are other crucial provisions which marketers will need to be aware of, particularly in the area of the overall definition of unfair commercial practices.
For the moment, we will leave readers with the thought that after many long years of lobbying for new legislation to criminalise "look-a-like" packaging, brand owners may now finally be getting what they had sought through the new aggressive commercial practice number 13.