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

Slovene Consumers’ Association MIPOR- International Consumer Research Institute European Consumer Centre Slovenia ABOUT US

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.

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. Agressive Commercial Practices Harassment 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 On the 1 st of December 2007 the Act entered into force – maximum harmonisation in Slovenia! Minimum harmonisation: at least until 12 th 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 and  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 11 th 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, ’ magazine VIP 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. €

Falsely creating the impression of free offers is banned. Trader from Austria:  ECC SI ECC Austria

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 …