European Union: Unfair Commercial Practices Directive

Last Updated: 5 September 2005
Article by Helen Pope

BACKGROUND

On 18 June 2003, the European Commission published a proposal for a directive on unfair business-to-consumer commercial practices (the "Directive"). The aim of the Directive is to replace the various national provisions currently regulating business-to-consumer ("B2C") unfair commercial practices with common provisions at Community level.

Under the Directive a number of specified misleading and aggressive B2C commercial practices will be banned EU-wide. Furthermore, it sets out the criteria for assessing whether other types of commercial practices are unfair and as such would also be prohibited.

The Directive was published in the Official Journal on 11 June 2005.

SCOPE OF THE DIRECTIVE

The Directive will prohibit unfair B2C commercial practices. A B2C commercial practice is defined as "any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers". Business-to-business commercial practices, health and safety aspects of products and contract law do not fall within the scope of the Directive.

Member States are permitted to continue to apply for eight years certain national provisions, for example in respect of timeshares, which are more restrictive than those set out in the Directive. Member States are required to notify the Commission of these national provisions. Where there is a conflict between the provisions of the Directive and existing Community legislation the specific legislation would take precedence.

BANNED PRACTICES

The Directive contains a list of 30 practices which will be prohibited, including:

  • creating the false impression that the consumer has already won, will win or will win on doing a particular act, a prize or other equivalent benefit when in fact either
    • there is no prize or other equivalent benefit
    • taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost
  • including in an advertisement a direct exhortation to children to buy or to persuade their parents or other adults to buy advertised products for them. This provision is without prejudice to Article 16 of the television without frontiers Directive
  • claiming in a commercial practice to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent
  • 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.

GENERAL CLAUSE

The Directive sets out the general criteria for assessing whether other commercial practices, not included in the list of prohibited practices, should also be considered as unfair. A commercial practice would be regarded as unfair, if:

  • it is contrary to the requirements of professional diligence
  • it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the "average consumer" whom it reaches or to whom it is addressed or of the average member of the group when a commercial practice is directed to a particular group of consumers.

However, where a commercial practice is likely to materially distort the economic behaviour of a clearly identifiable group of consumers who are particularly vulnerable to the practice, due to, for example, their age, and the trader could "reasonably be expected to foresee this", then the standard would be adjusted and assessed from the perspective of the average member of this group.

MISLEADING AND AGGRESSIVE UNFAIR COMMERCIAL PRACTICES

Two particular types of unfair commercial practices are explained further in the Directive: those that are misleading or aggressive.

An aggressive commercial practice includes harassment, coercion or undue influence that "significantly impairs or is likely to significantly impair the average consumer's freedom of choice or conduct in respect of the product, and which causes or is likely to cause the consumer to take a transactional decision that he would not have taken otherwise".

Misleading commercial practices include both misleading actions and misleading omissions. A misleading omission will occur where "material information" is omitted which the average consumer needs in order to be able to take an informed decision. Such information includes the geographical address and identity of the trader, the main characteristics of the product and the price.

A misleading omission would also occur where a trader hides or provides the material information in an "unclear, unintelligible, ambiguous or untimely manner". Information requirements established by Community law in relation to commercial communications are also regarded as material. A non-exhaustive list of these provisions is annexed to the Directive.

A misleading action will occur if the commercial practice contains false information or deceives or is likely to deceive the average consumer in relation to certain key elements, such as the main characteristics of the product, which causes or is likely to cause the consumer to take a transactional decision he would not otherwise have taken.

The misleading advertising Directive (84/450) will be amended so that it only relates to business-to-business practices.

ENFORCEMENT/CODES OF CONDUCT

Under the Directive, Member States will be allowed to "encourage" the control of unfair commercial practices by codes provided that this is in addition to court or administrative proceedings. The court or administrative authority will be able to require the trader to produce evidence to show the accuracy of a factual claim and to consider the claim as inaccurate in the event that the trader fails to produce this evidence.

Organisations and/or persons (including competitors) who are regarded under national law as having a "legitimate interest" will be allowed to take proceedings in relation to unfair commercial practices.

NEXT STEPS

Member States are obliged to adopt national implementing legislation by 12 June 2007 and to apply these provisions by 12 December 2007. Draft national legislation will in due course be published and stakeholder consultations will be launched in some Member States. The Commission has indicated that it intends facilitating the implementation of the Directive.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.