Misleading Advertising in the EU

MISLEADING & COMPARATIVE
ADVERTISING IN THE EU
course project for European Integration/UNWE

Just two weeks before Christmas 2007, sweeping new EU rules to
crackdown on misleading advertising and aggressive selling
practices came into force across the EU
Protection against unfair commercial practices is ensured by the
unfair commercial practices Directive of 12 December 2007
Unfair Commercial Terms
4/3/2010
2
http://ec.europa.eu/consumers/archive/cons_int/safe_shop/fair_bus_pract/in
dex_en.htm

The Directive
 The Directive applies to all B2C transactions whereby the
consumer is influenced by an unfair commercial practice in his
decision on whether or not to purchase a product
 The directive does not apply to B2B transactions
 The directive affords the same level of protection to all
consumers irrespective of the place of purchase or sale in the EU.
4/3/2010http://ec.europa.eu/consumers/archive/cons_int/safe_shop/fair_bus_pract/index_en.htm
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You will perhaps ask what is considered an unfair
commercial practice
Unfair
commercial
practices
Misleading
practices
By action
By omission
Aggressive
practices
 The practice materially
distorts or is likely to
materially distort the
average consumer’s
economic behaviour
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http://ec.europa.eu/consumers/archive/cons_int/safe_shop/fair_bus_pract/index_en.htm

Misleading practices
 A commercial practice is misleading if it either:
 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 correct
 and causes or is likely to cause him to take a transactional decision
that he would have otherwise not taken.
5

Criteria are objective
1. there is no need to prove that a consumer was actually
misled.
2. The possibility of deception alone can be considered
misleading, if the other elements are present as well.
3. There is no need to prove a financial loss.
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Misleading practices
 A practice is misleading by
action if it gives false
information regarding the
product, the price, the
delivery costs and the right
of withdrawal.
 A practice is misleading by
omission if it fails to provide the
minimum information or factual
information that the average
consumer needs prior purchase.
 hide or provide material
information in an unclear,
unintelligible, ambiguous or
untimely manner
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By action By omission

Aggressive Commercial practices
 A practice is considered aggressive if the average consumer’s
freedom of choice or conduct is significantly impaired.
 A practice that uses harassment, coercion, including physical
force, or undue influence.
 “Undue influence” = “exploiting a position of power” to apply
pressure, even without using or threatening to use physical force
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Example of undue influence
 A g g r e s s i v e p l u m b e r
Mr Sepe contracted a plumber to fix a faulty
radiator. He was initially told that the job would
cost €80. Instead, the bill came to €450.90. When
he refused to pay the additional amount, the
plumber disconnected his hot water supply.
 D i r e c t i v e i n a c t i o n
The Directive would class this behaviour as an
aggressive practice. The plumber is using undue
influence to exploit a position of power over the
consumer.
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Undue influence?
 YES: If a consumer is already indebted to a trader and behind
with payments, the trader would be using undue influence if he
said he would reschedule the debt on condition that the consumer
bought another product.
 NO: Offering an incentive to a consumer, such as a free bus to
an out-of-town store, or refreshments while shopping, is not undue
influence. The consumer’s ability to make an informed
transactional decision would not be impaired.
In the same way, it would be acceptable to offer a sales promotion.
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Blacklist of prohibited practices
1. Bait advertising
2. Fake “Limited" offers
3. Direct exhortations to children
4. False claims about curative
capacity
5. Advertorials
6. Pyramid schemes
7. Prize Winning
8. Misleading impression of
consumers’ rights
9. Decoy: “Reputable brand, or
maybe not?”
10. Language of after-sales service
11. False claims regarding moving
premises or cessation of business:
“End of lease! All stock must go!”
12. Europe-wide guarantees
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Bait advertising
 Advertising a mobile phone at a very low
price compared to other offers on the
market, without having a reasonable stock
in light of the demand that could be
expected on the basis of the advertising.
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Fake “Limited” Offers
 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 deprive
consumers of the ability to make an
informed choice
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Misleading impression of
consumers’’ rights: “Special for you”
 Stating “When you buy from United
Trade we provide you with our special
United Trade offer to cancel the
contract within 10 days after receipt
of the good and get your money
back.”
 Such advertising is banned if such
rights follow from legislation.
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Prizes: “Congratulations! You have
won a prize”
 “Claiming in a commercial practice to offer a competition or
prize promotion without awarding the prizes described or a
reasonable equivalent.”
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Decoy: “Reputable brand, or maybe not?”
 This is 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.”
4/3/2010
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False claims regarding moving premises or cessation of
business: “End of lease! All stock must go!”
 A store selling carpets has big
signs on the window stating “End
of stock”, “Closing down sale”,
“End of lease – all must go” and
the trader is not moving or it is
not the end of stock.
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Misleading & Comparative advertising
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Misleading advertising is controlled by Directive 84/450/EEC, repealed
by Directive 2006/114/EC with effect from 12 December 2007.
Any advertising which, in any way, either in its wording or presentation:
 deceives or is likely to deceive the persons to whom it is addressed or whom it
reaches.
 by reason of its deceptive nature, is likely to affect their economic behaviour.
 or for those reasons, injures are likely to injure a competitor.

How do we determine if advertising is
misleading?
 the following factors are taken into account:
 the characteristics of the goods or services;
 the price;
 the conditions governing the supply of the goods or the provision of services;
 the nature, qualities and rights of the advertiser.
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How would misleading advertising be
controlled?
 the Member States will ensure that those persons or
organisations with a legitimate interest may:
 bring a court action against misleading advertising;
 bring the advertising before a competent administrative body
to rule on the complaints or to institute the appropriate legal
proceedings.
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What is comparative advertising?
 Any advertising, that
explicitly or by
implication, identifies a
competitor or goods or
services offered by a
competitor.
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Sometimes comparative advertising
may be permitted if:
 it compares goods or services
meeting the same needs or
intended for the same purpose;
 it objectively compares one or
more, relevant, and
representative features of those
goods or services, which may
include price;
 it does not create confusion in the
market place between the
advertiser and a competitor;
 it does not discredit or denigrate the
distinguishing signs of a competitor;
 for products with designation of
origin, it relates to products with the
same designation;
 it does not take unfair advantage of
the distinguishing sign of a
competitor;
 it does not present goods or services
as imitations or replicas of goods or
services bearing a protected trade
mark or trade name.
4/3/2010
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http://ec.europa.eu/consumers/archive/cons_int/safe_s
hop/fair_bus_pract/index_en.htm
23

Misleading Advertising in the EU

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