Transcript "unfair commercial practice"?

Case study 2 – Unfair commercial practices
Solving consumer complaint by the NGO
sector
Breda Kutin,
Director of MIPOR – International Consumer Research Institute,
President of ZPS - Slovene Consumers’ Association
ABOUT US
Slovene Consumers’
Association
MIPORInternational
Consumer Research
Institute
European
Consumer
Centre
Slovenia
Slovenian Consumers’ Association
• ZPS is non-profit, independed and internationaly recognised NGO
• Established in 1990
• Member of Consumer International-CI, The European Consumers’ Organization-BEUC,
International Consumer Research and Testing-ICRT, The Transatlantic Consumer
Dialog-TACD
• Founder of consumer magazine VIP in 1991
• Our mission are informed consumers who are aware of their rights and know how to
assert them. We are active in creating consumer friendly society.
• 20 ft and approx. 20 pt experts
• Known by 91% of Slovenians
• Media coverage: 22 press clipping per week (1152 in y. 2009)
Main activities
INFORMATION DESEMINATION
INDEPENDEND CONSUMER ADVICE, LEGAL AID
TESTING
EDUCATION
CONSUMER REPRESENTATION AND ADVOCASY
NATIONAL AND INTERNATIONAL CO-OPERATION
What is an "unfair commercial practice"?
A commercial practice is an activity (such as
advertising and marketing) linked to the
promotion, sale or supply of a product to
consumers. A commercial practice is unfair if it
is deemed to be unacceptable with regards to the
consumer, according to specified criteria.
http://www.isitfair.eu
GENERAL CLAUSE
 The Directive sets out the general criteria for determining
whether a commercial practice is unfair, in order to establish a
limited range of dishonest practices prohibited throughout the
EU.
 These criteria apply if the practice is contrary to the
requirements of professional diligence and
 if it materially distorts or could materially distort the behaviour
of the average consumer.
Average Consumer
 Reasonably well informed and reasonably observant and
circumspect, taking into account social, cultural and linguistic
factors.
 Most consumers, targets of such practices are especially those
least protected (vulnerable consumers).
The "average consumer" criterion is adjusted when a
commercial practice specifically targets a particular group (e.g.
children), in which case the average member of this group
becomes the reference point
Professional Diligence
 The standard of special skill and care which a
trader may reasonably be expected to exercise
towards consumers, commensurate with
honest market practice and/or the general
principle of good faith in the trader’s field of
activity.
Material Distortion
 Using a commercial practice to appreciably
impair the consumer’s ability to make an
informed decision
 Causing the consumer to take a transactional
decision that he would not have taken
otherwise
Misleading actions
 contains false information and is therefore untruthful,
or
 in any way, including overall presentation, deceives or
is likely to deceive the average consumer, even if the
information is factually correct,
 and
 causes the consumer or is likely to cause him to take a
transactional decision that he would not have taken
otherwise
 The possibility of deception alone can be considered
misleading (no need to prove a financial loss!)
Missleading omissions
 Omits material information;
 Hides information;
 Provides information unclear, unintelligible,
ambiguous or untimely;
 Needed for the average consumer;
 Fails to identify the commercial intent;
 causes the consumer or is likely to cause him to take a
transactional decision that he would not have taken
otherwise
Agressive Commercial P.
Harassment
Agressive Commercial Practices
Coercion
Undue Influence
Significantly impairs the average consumer free of choice or
conduct;
causes the consumer or is likely to cause him to take a
transactional decision that he would not have taken otherwise.
Black List
 Commercial practices considered unfair in all
circumstances!
– Applies in all Member-States
– Only modified by revision of the UCP Directive
•pyramid schemes,
•unsolicited supply or use of bait advertising (when
the low-priced product is not available) or
•the use of advertorial (an advertisement written in
the form of editorial copy) …
UPC Directive - Directive 2005/29/EC
The Directive was passed to strengthen the
confidence of European consumers in cross-border
transactions. European citizens weren't taking full
advantage of the European Internal Market.
How do consumers benefit from
the Directive?
Unfair Commercial Practices Directive clarifies consumers'
rights and simplifies cross-border trade by replacing the
existing multiple volumes of national legislation and court
rulings with a single set of common rules. As of the
implementation of the Directive, the same bad practices will
be banned throughout Europe and the same criteria will apply
to determine whether a practice is unfair or not.
Consumers enjoy the same protection against unfair
practices whether they are buying from their corner shop or
from a website based in another country.
Impementation of the UPC Directive in Slovenia
The Directive was implemented in Slovenia by the Consumer
Protection against Unfair Commercial Practices Act (= Zakon
o varstvu potrošnikov pred nepoštenimi poslovnimi praksami
(ZVPNPP)) in June 2007. On the 1st of December 2007 the
Act entered into force – maximum harmonisation in Slovenia!
Minimum harmonisation: at least until 12th June 2013 (6 years
period – then maximum harmonisation).
The role of ZPS as a Consumer Organisation
in case of UCP

Gives consumer INFORMATION / ADVICE (national aspect: ZPS;
cross-border aspect: ECC SI (ECC-NET),

Makes media pressure,

Brings such unfair commercial practices before the Codex Owner
(Arbitration Court within the Slovenian Advertising Chamber)

Brings such unfair commercial practices before the Administrative
Authority (Market Inspectorate-TIRS),

Takes a legal action against such unfair commercial practices.
 Advice/Information/Help provided by Consumer
Organisation (national, cross-border level):
 Consumer organisations are usually aware of the rogue
traders in their domestic country.
 ECC-Net helps consumers specifically with cross-border
disputes. The centers provide information and give advice
and assistance to consumers with their complaints and the
resolution of disputes.
Information for consumers: Information online (up to date)
WHO Recommendations


to guide efforts by Member States in designing new
and/or strengthening existing policies on food
marketing communications to children.
for Member States “to prepare and put in place, as
appropriate, and with all relevant stakeholders, a
framework and/or mechanisms for promoting the
responsible marketing of foods and non-alcoholic
beverages to children, in order to reduce the impact of
foods high in saturated fats, transfatty acids, free
sugars, or salt.”.


Impact on legislation (Media Act)
Impact on Advertising Code



Soft law:
Not legally binding
No control
No legal sanctions
Consumers International Recommendations
 There should be no marketing to children
of energy-dense, nutrient poor foods that
are high in fat, sugar or salt and brands
associated with such foods.
 This restriction (broadcast marketing)
should include, but is not limited to, all
advertisements and promotions broadcast
between the hours of 06.00 and 21.00.
 Energy-dense, nutrient poor foods that
are high in fat, sugar or salt or brands
associated with such foods should not be
promoted to adults responsible for
children as being suitable for children.
 11 major food and beverage companies announced on
11th December 2007 a common commitment to change
the way they advertise to children. The move follows
calls by the EU for the food industry to use commercial
communications to support parents in making the right
diet and lifestyle choices for their children.
Information for consumers: Leaflets, Consumers’ magazine VIP
Case Study No 1:
False claims about curative capacity
 An interview (advertisement in different newspapers),
 Mrs Margarita Drozg said: “I have lost 30 kg without any diet”.
Advertisement for a book and a mix of different spices for losing
weight.
ZPS brought this case before the Arbitration Court (within the Slovenian
Advertising Chamber).
The Arbitration Court decision:
“This advertising infringes the Advertising Code (missleading practice)”.
The trader had to stop with this practice.
Case Study No 2: Inertia selling
 Slovenian journalist received a book (not
ordered).
 The consumer did not care about it, because he had not
ordered it
 After a month he received an invoice in the amount of
30,00 EUR
 After refusal of payment Trader threatened him with legal
action, since the book is so important (enables higher level
of human realization) that it has to be paid and presented
on the National TV
 ZPS made a statement for the national Television (inertia
selling is banned under the UCP Act).
 Consumer was advised to bring the case before the
Administrative Authority (Market Inspectorate)
Case Study No 3:
Falsely creating the impression of free offers
 When browsing on the internet consumers are often linked to another
website by a huge and colorful banner advertising free services
 Small print, hidden on the bottom of webpage
 For the results please enter your mobile phone number …
 Consumers are not aware of membership in SMS/Mobile Club till they
receive the bill for the telecommunication sevices for the previous
month.
Case Study No 4 : Missleading adveritsing
 Spar Slovenija:
 Trader: “The claim is based on the independent research of GFK
Research company- leaflet monitoring.”
 ZPS: “In the leaflet monitoring different time period was included”.
 ZPS brought the case before teh Administrative Authority
MARKET INSPECTORATE (=TIRS) to initiate appropriate
legal proceedings.
DECISION of the Market Inspectorate:
The practice of the trader is missleading (Art 5 of the UPC
Act).
The trader had to stop the practice and pay the fine.
Thank you for your attention!
Questions, comments …
[email protected]
www.zps.si