Unfair Commercial Practices15 December 2009
by Ina Dimireva -- last modified 16 December 2009
Unfair commercial practices by businesses in their relations with consumers will be prohibited throughout the EU. Unfair commercial practices comprise misleading and aggressive practices, and practices which use coercion as a means of selling.
The EU affords the same level of protection to all consumers irrespective of the place of purchase or sale in the EU. It thus protects the more vulnerable consumers, such as children, against advertising that directly encourages them to buy.
Directive 2005/29/EC of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Directives 84/450/EEC, 97/7/EC, 98/27/EC and 2002/65/EC and Regulation (EC) No 2006/2004 (Unfair Commercial Practices Directive).
The Directive applies to all business-to-consumer transactions whereby the consumer is influenced by an unfair commercial practice which affects decisions on whether or not to purchase a product, on the freedom of choice in the event of purchase and on decisions as to whether or not to exercise a contractual right. It does not apply to business-to-business transactions. Nor does it address matters relating to taste and decency, health and safety, or contractual law.
It comprehensively harmonises legislation in this field by creating a general prohibition. Member Sates do not have the option of using the minimum clauses provided for by other directives to impose additional provisions in the area coordinated by this Directive.
This Directive incorporates provisions on the business-to-consumer transactions covered by the Directive on misleading advertising.
The average consumer is the average consumer as defined by the Court of Justice. This 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.
It amends Directive 84/450/EEC on misleading advertising, (repealed by Directive 2006/114/EC), Directive 97/7/CE on the protection of consumers in relation to distance contracts and 2002/65/EC on the distance selling of financial services.
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. It also establishes the difference between misleading practices and aggressive practices and describes the criteria for identifying such practices.
A commercial practice may mislead by commission or by omission. A practice is misleading by omission if it fails to provide the minimum information or factual information that the average consumer needs prior to purchase. It accordingly establishes a list of the information the consumer needs before purchasing, e.g. the main characteristics of the product, the price (inclusive of taxes), delivery costs (where applicable) and the right of withdrawal.
A practice is misleading by commission if it gives false information or deceives or is likely to deceive the average consumer, even though the information given may be correct.
The Directive also sets out criteria to determine whether or not a commercial practice is aggressive: i.e. practices using harassment, coercion and undue influence.
Blacklist of prohibited practices
Annex I contains the list of those commercial practices which must in all circumstances be regarded as unfair throughout the EU, in a sort of 'blacklist' of unfair practices, e.g. 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). This list can be modified only by revision of the Directive.
Vulnerable consumer groups
Consumer groups considered to be 'vulnerable' are afforded a higher level of protection. Children, for instance, are protected against advertising directly encouraging them to buy. 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.
This framework directive is a follow up to the 2001 Green Paper on consumer protection and the Green Paper published in 2002. In addition to the guarantees it gives the consumer, it allows smoother development of cross-border trade within the internal market.
Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on injunctions for the protection of consumers' interests [Official Journal L 166 of 11.06.1998].
Directive 98/27/EC makes it possible to bring an action for an injunction in respect of a series of practices which harm consumers' interests, such as unfair commercial practices.