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New EU Rules Crackdown On Misleading Advertising

Consumers: New EU rules crackdown on misleading advertising and aggressive sales practices

Just two weeks before Christmas, sweeping new EU rules to crackdown on misleading advertising and aggressive selling practices - including a ban on fake "free" offers and a ban on "pester power" advertising (direct exhortation) to children on the Internet - will come into force across the EU (December 12 2007).

These restrictions are part of an extensive black list of schemes which are banned by the new Unfair Commercial Practices (UCP) Directive - targeting in particular a "dirty dozen" of the some of the most abusive practices, from bait advertising, to pyramid schemes, advertorials and false curative health claims which are used against consumers.

The UCP Directive substantially reinforces existing EU standards on misleading advertising and sets new EU standards against aggressive commercial practices - covering harassment, coercion, undue influence.

The Directive aims to boost consumer and business confidence in the Single Market so people can fully benefit from shopping cross border. To date only 14 Member States have implemented the directive. The Commission has launched proceedings against Member States that have not yet adopted any national rules.

EU Consumer Commissioner, Meglena Kuneva said: "Unfair practices rip-off consumers and distort competitive markets. There can be no place in Europe's Single Market for traders who pressure, bully or mislead people, particularly at Christmas the busiest shopping time of the year. That's why Europe is taking the lead; these are some of the toughest rules on misleading and pressure selling in the world."

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The new rules

There are 4 key elements in the new Directive:

* A General Clause: A far reaching general clause defining practices which are unfair and therefore prohibited

* Misleading Practices (Actions and Omissions) and Aggressive Practices - the two main categories of unfair commercial practices - are defined in detail.

* Safeguards for vulnerable consumers: The Directive contains provisions that aim at preventing exploitation of vulnerable consumers

* Black List: An extensive black list of practices which are banned in all circumstances.

The "Dirty Dozen" - the Black list

A black list sets out over 30 schemes that are in all circumstances considered unfair. It includes a "dirty dozen" of schemes which are well known to cause consumer detriment:

1. 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.

2. Fake "Free" offers: Falsely creating the impression of free offers by describing a product as "gratis", "free", "without charge" or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item.

3. Direct exhortations to children to buy advertised products "Go buy the book now" or to persuade their parents or other adults "pester power" to buy advertised products for them. "A new video Alice and the magical book from Fondi is now out - tell your mum to get it from the local news agency." Direct exhortation to children is banned for television; the black list extends it to all media, most importantly to internet advertising.

4. False claims about curative capacity - from allergies to hair loss to weight loss.

5. Advertorials: Using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear.

6. 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.

7. Prize Winning: Creating the false impression that the consumer has won a prize when there is no prize or taking action to claiming the prize is subject to the consumer paying money or incurring a cost.
8. Misleading impression of consumers' rights: Presenting rights given to consumers in law as a distinctive feature of the trader's.

9. 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.

10. 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.

11. 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.

12. 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.

"Free" should mean free - case study

In September 2007, Mr. Folcini from Italy signed for a new e-mail address. He noticed a small box at the bottom of the internet screen saying 5 free texts per day. He clicked and went to another page which said, 5 FREE TEXTS PER DAY. He followed the instructions and a second text informed him that he was registered and that the charge for the service was three euros per week. He went to back to check and the site did state in tiny letters that it was a paid service.


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