Who: The Italian Competition Authority (ICA) and GoFundMe Ireland Ltd (www.gofundme.com).
Where: Italy.
When: 22 March 2020.
Law stated as at: 6 April 2020.
What happened:
On 22 March, the ICA ordered an interim measure against the crowdfunding website GoFundMe to change certain practices as detailed below.
During Covid-19 emergency, the GoFundMe website promoted the possibility of making donations to hospitals and hospital wards in the areas most affected by coronavirus emergency, “free of charge” and “without any cost” to the donor.
Yet, ICA found out that there were costs associated with credit and debit card transactions and moreover the platform allowed consumers to pay optional commissions on each transaction to finance the running of the site. Accordingly the donation mechanism was not “free of charge”.
Furthermore, when making the donation the commission was pre-set at a value equal to a percentage share of the donated amount (10%) that consumers could only cancel by clicking on the button “other” in an adjacent drop-down menu and entering zero.
The anti Covid-19 crowdfunding campaigns have been widespread and one campaign in particular (donation for intensive care unit at the San Raffaele Hospital in Milan) has raised more than €4 million funds, circumstance that highlights the possibility for a fundraising platform to make significant profits during these times.
According to ICA the means of acquiring commissions advertised as optional are likely to exert undue influence on donors who may be unaware of the possibility of changing or cancelling the amount set by the platform, or consider it necessary for its operation. This has been considered a misleading and aggressive practice.
Therefore, ICA has ordered that the pre-selection mechanism of the optional commission should be removed immediately, leaving donors full freedom of choice through the indication of “zero” as a pre-set value which can then be changed if the consumer wishes to do so.
Why this matters:
The importance of correctly using the wording “free of charge” or “without any cost” has been highlighted by ICA, especially during Covid-19 emergency where consumers are more induced to donate for public health protection purposes.
The transparency and the truthfulness of businesses communication should be always taken into account, in particular in the framework of these tragic times affected by the Covid-19 pandemic.
