If you have a business that sells goods or services to consumers then you should know about the Unfair Commercial Practices Directive.
On 3 December 2009, the European Commission published a lengthy working document (the Working Document) offering guidance on the implementation and application of the Unfair Commercial Practices Directive (Directive 2005/29/EC) (the Directive). This Directive was implemented in Ireland by the Consumer Protection Act 2007. The Directive prohibits a large number of sharp practices throughout the European Union, including misleading and aggressive marketing. It is aimed at providing a consistent and high level of consumer protection across the European marketplace. Care should be taken by all traders of consumer products and services in Ireland to comply with the Consumer Protection Act 2007. For that reason the Working Document provides useful guidance to traders.
The Working Document is primarily aimed at national enforcement authorities, consumer associations, traders and other professionals in the consumer arena. The objective of the guidance is to clarify the interpretation to be given to certain provisions of the Directive, which have proven problematic to apply in practice.
The following is a selection of the points that are clarified by the European Commission in the Working Document:
- Commercial practices of social media websites (e.g. social networking sites and blogs) and price comparison websites fall within the scope of the Directive.
The Working Document notes that social media websites have become "important avenues for commercial practices, especially hidden ones". It highlights "astroturfing", where a trader publishes fake positive comments online which are represented as being published by consumers. The practice of "hidden traders" is prohibited by the Directive which blacklists the practice of "falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession or falsely representing oneself as a consumer".
Unfair commercial practices that contravene the Directive may also occur on price comparison websites, such as where that website belongs to or is linked to a trader and is used to advertise its products.
- After-sales practices come within the scope of the Directive. After sale activities must meet the same legal standards as commercial practices before sale.
- Where traders purchase goods from consumers as part of a sale to a consumer (for example a trade-in of an old vehicle when purchasing a new vehicle from the trader) the entire transaction comes within the scope of the Directive.
- Promotions connected with a sale (e.g. discounts, price reductions, commercial lotteries, vouchers and competitions) are regulated by the Directive.
- Commercial practices in relation to financial services (i.e. any service relating to banking, credit, insurance, personal pensions, investments or payments) are subject to the provisions of the Directive.
- All unfair business-to-consumer commercial practices are covered by the Directive. There are no exceptions for organisations that are "not-for-profit". The Directive will apply in every situation where a consumer transacts with a commercial trader on unfair commercial terms. Similarly, public authorities and charitable organisations will be regulated by the Directive insofar as they engage in commercial activities.
The European Commission intends to update its guidance on a regular basis and it has invited comments from interested parties on the operation of the Commercial Practices Directive. Any comments submitted will be considered by the Commission when it is updating the Working Document.
Is your business compliant? We can assist you in reviewing your business so that you comply with the Consumer Protection Act 2007 and consumer protection law generally or in preparing comments to submit for consideration by the European Commission.