Misleading advertising

Editorial and advertising

How is editorial content differentiated from advertising?

Editorial content is defined by law as content in the media (to which mass communication characteristics are inherent, such as press, broadcasting or internet) representing periodical printed matters in words and pictures. However, such content should be relevant for the formation of public opinion. Advertising is generally understood as the making of representations in any form, especially in connection with a trade, business, craft or profession in order to promote the supply of goods or services. Under German law, the strict separation between advertising and editorial content is essential. To ensure the integrity of editorial content, advertising must be clearly identified. Pursuant to the general rules of the UWG, failing to identify the commercial intent of advertising and all other kinds of commercial practices is deemed to be a misleading omission and therefore unfair competition.

Additionally, the separation requirement is specifically regulated in section 7 of the RStV and the State Press Acts (‘obligation to identify paid publications’, mainly section 10). Within the scope of these provisions, advertising must be explicitly labelled as such and clearly separated from other content.

Advertising that requires substantiation

How does your law distinguish between ‘puffery’ and advertising claims that require support?

It is important to distinguish between factual claims (claims that can be proved) and mere value judgements. The latter are not covered by the regulations of the UWG. The decisive factor when distinguishing between the two is the target public’s viewpoint. If the respective statement is understood as a factual claim rather than mere puffery, it must be correct. This applies in particular to advertising using exaggerations, superlatives or unique selling propositions (like ‘the best’ or ‘the greatest’). Where such claims are taken seriously by the relevant consumers, the advertiser must be able to prove his or her alleged exceptional position. This may, however, only be reviewed on a case-by-case basis.

Eye-catching advertising is understood as advertising using specially highlighted claims (by specific graphic representation) to attract consumers’ attention. Case law has developed specific criteria for the admissibility of such advertisements: objectively incorrect claims are prohibited. Claims that are not objectively incorrect, but may lead to misconceptions, shall be accompanied by further information, usually presented in a footnote. The requirements regarding the content and format of this supplementary information depend on the respective product or service and the respective communication channel.

Rules on misleading advertising

What are the general rules regarding misleading advertising? Must all material information be disclosed? Are disclaimers and footnotes permissible?

The main provisions governing misleading advertising can be found in the UWG. Under these regulations, advertising is deemed to be misleading if it contains untruthful information or other information suited to deception regarding specific circumstances like the essential characteristics or risks of the products and services concerned. At the same time, advertising with facts that simply state the obvious is prohibited.

Section 5a of the UWG provides a duty to clearly and in due time disclose all essential information that is likely to affect the consumer’s decision. Within the meaning of the law, ‘essential information’ should include the identity and postal address of the company concerned, service conditions, terms of delivery, final costs and the right of withdrawal and revocation. The scale of information that is to be disclosed mainly depends on two factors: the understanding of the targeted members of the public and the actual technical capabilities of the communication channel used. Regarding the former, the average (reasonably well-informed and reasonably observant and circumspect) customer’s understanding is decisive.

In addition, the requirements depend on the respective communication channel. The limitation of information tools may lead to the limitation of information obligations. For instance, the use of reference to the advertiser’s website may be sufficient to meet the obligations. In this context, any other measures taken by the trader to make the information available to consumers shall be taken into account when deciding whether essential information has been omitted (see section 5a, paragraph 5 UWG).

Although the required amount of information can only be assessed on a case-by-case basis, sector-specific rules may provide for mandatory information that must be disclosed (eg, when advertising credit and financial products).

Substantiating advertising claims

Must an advertiser have proof of the claims it makes in advertising before publishing? Are there recognised standards for the type of proof necessary to substantiate claims?

As mentioned in question 17, advertising claims shall not be inaccurate or misleading. This does not always require prior proof. However, in the event of a dispute the advertiser must provide the necessary evidence as to the accuracy of the advertisement being challenged.

Further, sector-specific law may require proof for claims about particular products and services, such as the Advertising of Medicines Act (HWG) regarding medicinal products. According to section 3, No. 1 of the HWG, advertising statements about therapeutic efficacy are only permissible if there is scientific proof to support the claim.

Survey results

Are there specific requirements for advertising claims based on the results of surveys?

Advertising claims based on the results of surveys are subject to the general rules of the UWG. Since such advertising is not explicitly regulated, case law sets out the criteria about whether respective claims are misleading or not. Surveys must be representative and current. The claim must be clear so that it does not refer to the result of an independent study (see question 21). Under these conditions, advertising is even permissible if the survey has been commissioned by the advertiser itself. If the claim is based on comparisons with competing products, the rules on comparative advertising will also apply (see question 20).

Comparisons with competitors

What are the rules for comparisons with competitors? Is it permissible to identify a competitor by name?

Comparative advertising is explicitly regulated by section 6 of the UWG. It is legally defined as any advertising that explicitly, or by implication, identifies a competitor, or goods or services offered by a competitor. Such advertising is generally permissible, but may be deemed to be misleading where a comparison is used that does not relate to goods or services that meet the same needs or are intended for the same purpose, and that:

  • does not objectively relate to one or more:
    • materials;
    • relevant, verifiable and representative features of the goods concerned; or
    • to the price of those goods and services;
  • takes unfair advantage of, or impairs, the reputation of a distinguishing mark used by a competitor;
  • discredits or denigrates the goods, services, activities or personal or business circumstances of a competitor; or
  • presents goods or services as imitations or replicas of goods or services sold under a protected distinguishing mark.

Provided these conditions are met, the competitor’s name may be used. Even the use of third-party trademarks is permissible, provided it does not lead in the course of trade to a risk of confusion between the advertiser and a competitor, or between the products or services offered or the distinguishing marks used by them.

Test and study results

Do claims suggesting tests and studies prove a product’s superiority require higher or special degrees or types of proof?

The following requirements must be ensured:

  • precise reference of the respective study is to be given;
  • the result must be summarised correctly;
  • the test must refer to the particular product being advertised; and
  • the study must be conducted by an independent body.

If a product was rated best, the respective claim is generally permissible. Where a competing product has achieved a higher rating, the rank of the advertised product must be specified.

The popular consumer magazine Stiftung Warentest has published recommendations on advertising using test results.

Demonstrating performance

Are there special rules for advertising depicting or demonstrating product performance?

For advertisements depicting or demonstrating a product’s performance, the general principles for misleading advertising are applicable. Such advertising is therefore subject to the restrictions of the UWG and may be deemed to be unfair competition if the pictures are arranged in such a way to cause the observer to misunderstand.

In addition, advertising depicting product performance is subject to sector-specific regulations. The HWG prohibits the use of improper, repugnant or misleading pictures of the human body. The same applies to plastic surgery advertisements with ‘before and after’ pictures.

Third-party endorsements

Are there special rules for endorsements or testimonials by third parties, including statements of opinions, belief or experience?

Advertising claims based on endorsements or third-party testimonials are subject to the general rules of the UWG, particularly regarding misleading advertising. Such advertising is generally permissible. However, sector-specific regulations may provide for stricter limitations. Broad restrictions for advertising medicinal products using third-party testimonials can be found in the HWG.

The use of testimonials or pictures of third parties must be approved by the persons concerned. The use of celebrities’ photographs for advertising purposes without consent may be permissible under specific circumstances.

Adherence to a code of practice may be advertised if the advertiser is actually bound by the respective code and complies with the provisions.

Advertising using an actual existing quality mark is only permissible if the competent body has authorised the use. In all other cases, the use of quality marks for advertising purposes is misleading if the advertiser itself has awarded the mark or no objective verification has taken place.

Guarantees

Are there special rules for advertising guarantees?

No special rules apply to advertising guarantees. Pursuant to the general provisions of the UWG, such advertising is permissible if it does not contain false or deceptive information. Further, it must be distinguished between statutory warranties and voluntary guarantees. Because the former are already granted by law, advertising would be deemed to be misleading. If a voluntary guarantee is granted, the advertiser must ensure that the consumer can easily determine whether a guarantee case exists, what rights he or she has under the guarantee against whom and in what form and within what period he or she can assert them (section 479 paragraph 1 German Civil Code).

Environmental impact

Are there special rules for claims about a product’s impact on the environment?

The admissibility of such claims will be determined in accordance with the provisions of the UWG. Terms such as ‘environmentally friendly’ are only permissible if the consumer is clearly informed about the advantage of the product or service. According to the rules for the use of quality marks, the use of eco labels must state the exact product or service for which the label has been awarded. Abusive use of a European eco label is a breach of competition law. Regarding other eco labels, advertising is only permissible if the environmental compatibility is clearly proven and the consumers are not misled. In some cases, the use of eco labels is regulated by contractual provisions.

Free and special price claims

Are there special rules for describing something as free or a free trial or for special price or savings claims?

Special rules for information on prices can be found in the Ordinance Regulating the Indication of Prices (PAngV). This act requires, inter alia, the disclosure of the final prices including value added tax and other price components in relation to consumers. Violations of these provisions shall be treated as unfair competition.

Moreover, the general rules of the UWG apply. Describing products or services as ‘free’ or a ‘free trial’ is misleading advertising when actual costs are incurred. However, this shall not apply to the unavoidable costs of responding to the offer, or of collecting or paying for delivery, or of using the services.

The Drug Advertising Law (HWG) contains special regulations for the advertisement of remedies (eg, with ‘free trials’). For example, the distribution of free samples of medicinal products is prohibited. For other grants and advertising gifts that advertise a company or product, the HWG contains individual case-related labelling requirements.

Advertising with discounts and price savings is permissible only if clear and comprehensive information about the conditions is provided, such as the duration of the sales period, the exact scope of goods and services covered or potential restrictions.

Further, it is misleading to advertise a price reduction where the price concerned has been used only for an incommensurably short period of time.

New and improved

Are there special rules for claiming a product is new or improved?

Such advertising claims are governed by the general rules of the UWG. It would be misleading advertising to use a term such as ‘new’ or ‘first-time’ if the product or service had been introduced in the market some time ago. The same applies to the use of the term ‘improved’. The period of time for which such a claim is permissible depends on the particular market and the particular product or service and can only be reviewed on a case-by-case basis.

Claims of origin

Are there special rules for claiming where a product is made (such as country of origin)?

In Germany there are no explicit regulations for claiming where a product is made (such as the country of origin). However, according to the UWG, the labelling must not deceive the customer about the origin of the product and raise false expectations regarding the quality. Depending on the nature of the information (a distinction is made between geographical indications and designations of origin), the legal community has different expectations of the advertised product, which may also affect the quality.

For example, advertising with designations of origin is allowed only for products that have undergone a treatment that is critical to the product quality in the respective country. In the case of industrial goods, the value of the industrial product is important. This is determined by the processing operation. The place of origin of such goods is thus the place where the goods are essentially manufactured. Under which conditions a production is essential, can be measured on the basis of a value added share. The value of the processing of a substance must not be significantly less than the value of the substance. According to the case law, this added value share is about 45 per cent.