Unfair Commercial Practices

The unfair commercial practices provisions under the Consumer Affairs Act

Commercial Practice

• A commercial practice is an activity linked to the promotion, sale or supply of a product to consumers;

• ’Commercial Practice’ covers any act, omission, course of conduct, representation or commercial communication – including advertising and marketing – which is carried out by a trader.

Unfair Commercial Practice

• A commercial practice is deemed to be unfair when:

• (i) it is contrary to the requirements of professional diligence, and

• (ii) it materially distorts or is likely to distort the economic behaviour, with regard to the product, of the average consumer whom it reaches or to whom it is addressed.

Main categories of Unfair Commercial Practices:

• Misleading Practices (actions)

• Misleading Practices (omissions)

• Aggressive Commercial Practices

A commercial practice (action) is misleading if:

• • it either contains false information; or
  • in any way, is likely to deceive the average consumer;
  • it causes, or is likely to cause, anyone to take a transactional decision, which otherwise would not have been taken.

A commercial practice (omissions) is misleading if:

• • it omits material information that the average consumer needs, according to the context, to take an informed decision;
  • hide or provide material information in an unclear, unintelligible, ambiguous or untimely manner;
  • fail to identify the commercial intent of the commercial practice, if not already apparent from the context.

Aggressive Commercial Practices

A practice is considered aggressive if the average consumer’s freedom of choice or conduct is significantly impaired through harassment, coercion, including physical force, or undue influence.

Undue influence means ’exploiting a position of power in relation to the consumer, so as to apply pressure, even without using or threatening to use physical force, in a way which significantly limits the consumer’s ability to make an informed decision’.

Black List

• The legislation provides a list of 31 practices which are prohibited. The commercial practices on the Black List are unfair in all circumstances.

• This list includes a “dirty dozen” of schemes which are well known to cause consumer detriment:

• • Bait advertising: Lures the consumer into buying from a company by advertising a product at a very low price without having a reasonable stock available;
  • Prize winning: Creating the false impression that the consumer has won a prize or taking action to claiming the prize is subject to the consumer paying money;
  • Misleading impression of consumers’ rights: Presenting rights given to consumers in law as distinctive feature of the trader’s;
  • Fake “free” offers: Falsely creating the impression of free offers by describing a product as “free”, “without charge”, or similar, if the consumer has to pay anything other than the unavoidable cost of collecting, or paying for, the delivery of the item;
  • Limited offers: Falsely stating that a product will only be available for a very limited time to deprive consumers of sufficient opportunity to make an informed choice;
  • Direct exhortations to children: to buy advertised products, or to persuade their parents or other adults to buy advertised products for them (pester power);
  • Language of after-sales service: Undertaking to provide after-sales service to consumers, and making such service available only in another language, without clearly disclosing before the consumer is committed to the transaction;
  • False claims about curative capacity: from allergies, to hair loss, to weight loss;
  • Inertia selling: Demanding immediate or deferred payment for, or the return or safekeeping of, products supplied by the trader, but not solicited by the consumer;
  • Europe-wide guarantees: creating the false impression that after-sales service in relation to a product is available in a Member State, other than the one in which the product is sold;
  • Advertorials: Using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear.
  • Pyramid Schemes: A pyramid promotional scheme where compensation is derived primarily from the introduction of other consumers into the scheme, rather than from the sale or consumption of products.