EUROPEAN COMMISSION

Brussels, 25.5.2016

SWD(2016) 163 final

COMMISSION STAFF WORKING DOCUMENT

GUIDANCE ON THE IMPLEMENTATION/APPLICATION OF DIRECTIVE 2005/29/EC ON UNFAIR COMMERCIAL PRACTICES

Accompanying the document

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

A comprehensive approach to stimulating cross-border e-Commerce for Europe's citizens and businesses

{COM(2016) 320 final}

Contents

INTRODUCTION    

1.    Scope of the UCPD    

1.1    Commercial practices falling within the scope of the UCPD    

1.1.1    After-sales practices, including debt collection activities    

1.1.2    Traders buying products from consumers    

1.2    Commercial practices falling outside the scope of the UCPD    

1.2.1    Commercial practices which do not affect the consumer’s economic interests    

1.2.2    Commercial practices which relate to a business-to-business transaction or which harm only competitors’ economic interests    

1.3    Full harmonisation    

1.3.1    Sales promotions and price reductions    

1.3.2    Exceptions to full harmonisation    

1.4    Interplay between the Directive and other EU law    

1.4.1    Relationship with other EU legislation    

1.4.2    Impact on enforcement    

1.4.3    Information established by other EU law as ‘material’ information    

1.4.4    Interplay with the Consumer Rights Directive    

1.4.5    Interplay with the Unfair Contract Terms Directive    

1.4.6    Interplay with the Misleading and Comparative Advertising Directive    

1.4.7    Interplay with the Services Directive    

1.4.8    Interplay with the e-Commerce Directive    

1.4.9    Interplay with the Audiovisual Media Services Directive    

1.4.10    Interplay with the Data Protection Directive and the e-Privacy Directive    

1.4.11    Interplay with Articles 101-102 TFEU (competition rules)    

1.4.12    Interplay with the EU Charter of fundamental rights    

1.4.13    Interplay with Articles 34-36 TFEU    

1.5    The relationship between the UCPD and self-regulation    

1.6    Application of the UCPD to traders established in third countries    

2.    General concepts    

2.1    The notion of trader    

2.2    The concept of commercial practice    

2.3    The concept of ‘transactional decision’    

2.4    To ‘materially distort the economic behaviour of consumers’    

2.5    'Average consumer’    

2.6    Vulnerable consumers    

2.6.1    The vulnerability criteria in Article 5(3)    

2.6.2    ‘Foreseeability’ requirement    

2.7    Invitation to purchase — the concept    

3.    Provisions of the UCPD    

3.1    The functioning of the UCPD – Directive flowchart    

3.2    The general clause — the requirements of professional diligence    

3.3    Misleading actions    

3.3.1    General misleading information    

3.3.2    Confusing marketing    

3.3.3    Non-compliance with codes of conduct    

3.4    Misleading omissions    

3.4.1    Material information    

3.4.2    Hidden marketing/failure to identify commercial intent    

3.4.3    Material information provided in an unclear manner    

3.4.4    The factual context and limits of the communication medium used    

3.4.5    Material information in invitations to purchase — Article 7(4)    

3.4.6    Free trials and subscription traps    

3.4.7    Provision of certain information in another language    

3.4.8    Planned obsolescence    

3.5    Aggressive commercial practices    

4.    The black list of commercial practices (Annex I)    

4.1    Products which cannot legally be sold — banned commercial practice No 9    

4.2    Pyramid schemes — banned commercial practice No 14    

4.3    Products which cure illnesses, dysfunctions and malformations — banned commercial practice No 17    

4.4    Use of the word ‘free’ — banned commercial practice No 20    

4.5    Persistent marketing by a remote tool — banned commercial practice No 26    

4.6    Direct exhortations to children — banned commercial practice No 28    

4.7    Prizes — banned commercial practice No 31    

5.    Application of the UCPD to specific sectors    

5.1    Environmental claims    

5.1.1    Interplay with other EU legislation on environmental claims    

5.1.2    Main principles: Articles 6, 7 and 12 of the UCPD applied to environmental claims    

5.1.3    Application of Article 6 of the UCPD to environmental claims    

5.1.4    Application of Article 7 of the UCPD to environmental claims    

5.1.5    Application of Article 12 of the UCPD to environmental claims    

5.1.6    Application of Annex I to environmental claims    

5.1.7    Comparing environmental claims    

5.2    Online sector    

5.2.1    Online platforms    

5.2.2    The applicability of the UCPD to online platforms    

5.2.3    E-commerce platforms (marketplaces)    

5.2.4    App stores    

5.2.5    Collaborative economy    

5.2.6    Search engines    

5.2.7    Comparison tools    

5.2.8    User review tools    

5.2.9    Social media    

5.2.10    Collective buying platforms    

5.2.11    Dynamic pricing    

5.2.12    Price discrimination    

5.2.13    Personalised pricing    

5.2.14    Use of geo-localisation techniques    

5.3    Travel and transport sector    

5.3.1    Cross-cutting issues    

5.3.2    Package Travel    

5.3.3    Timeshare contracts    

5.3.4    Issues relevant in particular to air transport    

5.3.5    Issues specific to car rental    

5.4    Financial services and immovable property    

5.4.1    Cross-cutting issues    

5.4.2    Issues specific to immovable property    

5.4.3    Issues specific to financial services    

Annex I: Case-law from the CJEU on the UCPD (ordered by year)    

INTRODUCTION

The purpose of this guidance document is to facilitate the proper application of Directive 2005/29/EC on unfair business-to-consumer commercial practices in the internal market (‘the UCPD’). It provides guidance on the UCPD’s key concepts and provisions and practical examples taken from the case-law of the Court of Justice of the European Union (thereinafter 'The Court') and from national courts and administrations on how to implement it. It builds upon and replaces the 2009 version of the Guidance. 1  

The UCPD constitutes the overarching piece of EU legislation regulating unfair commercial practices in business-to-consumer transactions. It applies to all commercial practices that occur before (i.e. during advertising or marketing), during and after a business-to-consumer transaction has taken place.

The 2013 Communication on the application of the Unfair Commercial Practices Directive 2 and its accompanying Report 3 have shown that there is a need to step up enforcement of the UCPD provisions. To facilitate enforcement activities and ensure legal certainty, this Guidance highlights questions that are common to all Member States. This includes topics such as:

·the interplay between the UCPD and other EU legislation;

·the mounting case-law of the Court and national courts;

·how the UCPD applies to new and emerging business models, especially in the online sector.

This guidance is linked to the Commission's Communication on "a comprehensive approach to stimulating cross border e-Commerce for Europe's citizens and businesses" (COM(2016)320), in particular section 6 thereto. It was prepared by the Commission services and does not necessarily reflect the views of the European Commission. It is intended to facilitate the implementation of Directive 2005/29/EC on unfair commercial practices. However, it is itself not legally binding. Any authoritative reading of the law should only be derived from Directive 2005/29/EC itself and other applicable legal acts or principles. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law.

The assessment of whether a commercial practice is unfair under the UCPD must, except in the case of the practices listed in Annex I to the Directive, be performed on a case-by-case basis. The power to make this assessment rests with the Member States.

1.Scope of the UCPD

The Directive is horizontal in nature and protects the economic interests of consumers. Its principle-based provisions address a wide range of practices and are sufficiently broad to catch fast-evolving products, services and sales methods.

1.1Commercial practices falling within the scope of the UCPD

This section mainly focuses on examples of commercial practices for which there can be a need to clarify that they do fall within the scope of the UCPD. The application of the UCPD to online business models is discussed in Chapter 5.2.

1.1.1After-sales practices, including debt collection activities

Under Article 3(1), commercial practices occur not only during the marketing and supply stages, but also after the transaction has been made.

Recital 13 of the UCPD also refers to ‘unfair commercial practices which occur outside any contractual relationship between a trader and a consumer or following the conclusion of a contract and during its execution’.

Some national authorities stated that, irrespective of whether a trader has assigned a claim to a third party, debt collection activities should be regarded as after-sales commercial practices, because the debt collection is directly connected with the sale or supply of products. There are no objective reasons to differentiate that assessment based on whether a trader outsources it through specialised agencies or not.

This is also implied in No 25 of Annex I which considers the practice of ‘Conducting personal visits to the consumer’s home ignoring the consumer’s request to leave or not to return except in circumstances and to the extent justified, under national law, to enforce a contractual obligation’ as unfair in all circumstances.

1.1.2Traders buying products from consumers

Certain traders may, in the course of their professional activity, purchase products from consumers. Examples of this include car dealers, antique dealers and retailers of second-hand goods.

According to the definition provided in the UCPD, commercial practices are only those ‘directly connected with the promotion, sale or supply of a product to consumers’. The reverse situation, where traders purchase products from consumers, does not fall within the scope of the UCPD. However, there are cases where a link can be established between the sale of a product by a consumer to a trader and the promotion, sale or supply of a (different) product to the consumer.

For instance, trade-in agreements are common place in the motor vehicle trade. The trader purchases a used vehicle from the consumer who in turn buys a vehicle from the trader. In such cases, the trader’s purchase could be considered as part of the remuneration given by the consumer for the business-to-consumer part of the transaction. Trade-in agreements clearly fall within the scope of the UCPD.

The purchase and resale of gold could in some circumstances fall under the UCPD. For example, a trader, who offers consumers a professional evaluation for their gold before buying it, could be considered as providing a service to the consumers. When this is the case, the UCPD will apply and, as a consequence, the trader should not provide misleading information on the real value of the gold or on the price of the service offered (e.g. omission of ‘administrative fees’).

1.2 Commercial practices falling outside the scope of the UCPD

1.2.1Commercial practices which do not affect the consumer’s economic interests

The UCPD does not cover national rules intended to protect interests which are not of an economic nature. Therefore, the UCPD does not affect the possibility of Member States to set rules regulating commercial practices for reasons of health, safety or environmental protection. Also existing national rules on marketing and advertising, based on ‘taste and decency’ are not covered by the UCPD. According to Recital 7, ‘This Directive […] does not address legal requirements related to taste and decency which vary widely among the Member States. […] Member States should accordingly be able to continue to ban commercial practices in their territory, in conformity with Community law, for reasons of taste and decency even where such practices do not limit consumers’ freedom of choice. […].’

Therefore, in the context of commercial practices, the UCPD does not cover national rules on protecting human dignity, preventing sexual, racial and religious discrimination or on the depiction of nudity, violence and antisocial behaviour.

Conversely, national rules that aim to protect the economic interest of consumers, in conjunction with other interests, do fall within its scope.

1.2.2Commercial practices which relate to a business-to-business transaction or which harm only competitors’ economic interests

Business-to-business (‘B2B’) commercial practices do not fall within the scope of the UCPD. They are partly regulated under the Misleading and Comparative Advertising Directive. 12  Member States may also extend, under their national laws, the protection granted under the UCPD to B2B commercial practices. 13

Only measures which protect exclusively competitors’ interests fall outside the scope of the UCPD. Where national measures regulate a practice with the dual aim of protecting consumers and competitors, such national measures are covered by the UCPD.

Regarding the distinction between consumers’ and competitors’ interests, the Court considered that:

‘39    […] As is evident from recital 6 in the preamble to [the UCPD], only national legislation relating to unfair commercial practices which harm ‘only’ competitors’ economic interests or which relate to a transaction between traders is thus excluded from that scope.

40    […] that is quite clearly not the case with the national provisions [that] refer expressly to the protection of consumers and not only to that of competitors and other market participants.’ 14

It is for national authorities and courts to decide whether a national provision is intended to protect consumer interests.

The Court noted that:

‘29    It is therefore for the national court and not for this Court to establish whether the national provisions […] concerning price reduction announcements to consumers, actually pursue objectives relating to consumer protection, in order to determine whether such provisions are liable to fall within the scope of the Unfair Commercial Practices Directive […].’ 15

The Court has also found that the UCPD precludes a national provision prohibiting sales at loss only in so far as its aim is to protect consumers. 16

Regarding national rules prohibiting price reductions during pre-sales periods, the Court has clarified that such a prohibition is not compatible with the UCPD if it seeks to protect the economic interests of consumers. 17  

However it also found that a national provision does not fall within the scope of the UCPD ‘if it aims solely, as argued by the referring court, at regulating relations between competitors and does not aim at protecting consumers. 18  

1.3Full harmonisation 

The UCPD is based on the principle of full harmonisation. In order to remove internal market barriers and increase legal certainty for both consumers and businesses, a uniform regulatory framework harmonising national rules was established at EU level. 19

The Court has further clarified this. It held that ‘the Directive fully harmonises those rules at the Community level. Accordingly, […] Member States may not adopt stricter rules than those provided for in the Directive, even in order to achieve a higher level of consumer protection’. 20  

Consequently, the Directive was found to preclude a national general prohibition on combined offers.

1.3.1Sales promotions and price reductions

The UCPD covers commercial practices such as combined or tied offers, discounts, price reductions, promotional sales, commercial lotteries, competitions and vouchers.

The UCPD includes several provisions on promotional practices (e.g. Article 6(d) on the existence of a specific price advantage, Annex I point 5 on bait advertising, point 7 on special offers, points 19 and 31 on competitions and prize promotion, and point 20 on free offers). 21

The Court has clarified that rules requiring a price reduction to refer to a reference price and the duration of the promotion are not compliant with the UCPD:

‘61. Consequently, national rules of this nature, which place a general prohibition on practices not referred to in Annex I to Directive 2005/29, without providing for an individual analysis as to whether the practices are ‘unfair’ in the light of the criteria laid down in Articles 5 to 9 of that directive, are not permitted under Article 4 thereof and run counter to the complete harmonisation objective pursued by that directive, even where they seek to achieve a higher level of consumer protection […]’  22

The UCPD does not expressly require traders to display price reductions in specific ways or to state the reasons for the reduced prices. Whether a trader acts contrary to the UCPD should be assessed on a case-by-case basis.

Questions on price promotions and the full harmonisation character of the UCPD have also been raised in light of the Price Indication Directive. 23  

The purpose of that Directive is to require traders to state the retail price, the unit price and the measurement of products in order to facilitate price comparisons by consumers.

It has been argued that, for pricing policies linked to promotional campaigns, that Directive's objectives can only be achieved by introducing more restrictive requirements on how the price should be indicated than what follows from the UCPD.

The Court found that:

‘59. […] the purpose of Directive 98/6 is not to protect consumers in relation to the indication of prices, in general or with regard to the economic reality of announcements of price reductions, but specifically in relation to the indication of the prices of products by reference to different units of quantity’. 24

The Court further concluded that keeping more restrictive national provisions on price reductions cannot be justified under the Price Indication Directive.

1.3.2Exceptions to full harmonisation

Article 3(5) and (6) of the UCPD laid down a temporary derogation from full harmonisation for six years starting from 12 June 2007. This applied to national provisions which implement directives containing minimum harmonisation clauses. 25 The Commission’s 2013 Report on the application of the UCPD concluded that there was no need to further extend this derogation. 26 Since 12 June 2013, Articles 3(5) and 3(6) of the UCPD are therefore no longer applicable.

Recital 14 clarifies that the full harmonisation does not preclude Member States from specifying in national law the main characteristics of particular products, the omission of which would be material when an invitation to purchase is made. It also clarifies that the UCPD is without prejudice to provisions of EU law which expressly afford Member States the choice between several regulatory options for the protection of consumers in the field of commercial practices.

Article 3(9) places a limitation on the full harmonisation character of the UCPD by stating that ‘in relation to ‘financial services’ […] and immovable property, Member States may impose requirements which are more restrictive or prescriptive than this Directive in the field which it approximates’. Consequently, in these sectors, Member States can impose rules which go beyond the provisions of the UCPD, as long as they comply with other EU law. Chapter 5.4 specifically deals with how the UCPD applies to financial services and immovable property.

1.4Interplay between the Directive and other EU law

Due to its general scope, the Directive applies to many commercial practices which are also regulated by other general or sector-specific EU legislation.

1.4.1Relationship with other EU legislation

Article 3(4) and Recital 10 are key features of the UCPD. They clarify that the UCPD complements other EU legislation ("Community rules") that regulate specific aspects of unfair commercial practices. Consequently, the UCPD works as a "safety net" ensuring that a high common level of consumer protection against unfair commercial practices can be maintained in all sectors, including by complementing and filling gaps in other EU law.

Where sector-specific or other EU law is in place and its provisions overlap with the provisions of the UCPD, the corresponding provisions of the lex specialis will prevail. Article 3(4) of the Directive clarifies indeed that "in case of conflict between the provisions of this Directive and other Community rules regulating specific aspects of unfair commercial practices, the latter shall prevail and apply to those specific aspects".

Article 3(4) read in conjunction with Recital 10 implies that a provision of EU law will prevail over the UCPD if all of the following three conditions are fulfilled:

Øit has the status of EU law,

Øit regulates a specific aspect of commercial practices, and

Øthere is a conflict between the two provisions or the content of the other EU law provision overlaps with the content of the relevant UCPD provision, for instance by regulating the conduct at stake in a more detailed manner and/or by being applicable to a specific sector.

Where all three conditions set out above are fulfilled, the UCPD will not apply to the specific aspect of the commercial practice regulated, for example, by a sector-specific rule. The UCPD continues nonetheless to remain relevant to assess other possible aspects of the commercial practice not covered by the sector-specific provisions, such as, for example, aggressive behaviour by a trader.

It follows from the above that, in general, the application of the UCPD is not per se excluded just because other EU legislation is in place which regulates specific aspects of unfair commercial practices. 

Therefore the UCPD can usually be applied together with sector-specific EU rules in a complementary manner; thus, the more specific requirements laid down under other EU rules usually add to the general requirements set out in the UCPD, typically to prevent traders from providing the information required by the sector specific legislation in a misleading or aggressive manner, unless this aspect is specifically regulated by the sector-specific rules.

1.4.2Impact on enforcement

Based on Article 11, in order to ensure the proper enforcement of EU consumer protection laws, Member States should ensure coordination in good faith between the different competent enforcement authorities. In those Member States where different authorities are responsible for enforcing the UCPD and sector-specific legislation, the authorities should closely cooperate to ensure that the findings of their respective investigations into the same trader and/or commercial practice are consistent.

1.4.3Information established by other EU law as ‘material’ information 

‘Information requirements established by Community law in relation to commercial communication’ are found in a number of pieces of sector-specific EU legislation. For example:

Øenvironment (e.g. Energy Labelling Directive, 34 Eco-design Directive, 35 Fuel economy Directive 36 );

Øfinancial services (e.g. Markets in Financial Instruments Directive, 37 Payment Services Directive, 38 Consumer Credit Directive, 39  Mortgage Credit Directive, 40 Payment Accounts Directive, 41 the Regulation on key information documents for PRIIPs 42 );

Øhealth (e.g. Directive 2001/83/EC 43 );

Øtelecommunications (e.g. Universal Service Directive 44 );

Øtransport (e.g. Air Services Regulation, 45 Passenger Rights Regulation 46 )

Such information requirements will often be more specific than the information requirements of the UCPD.

Article 7(5) of the UCPD clarifies that such information requirements ‘shall be regarded as material’. The concept of ‘material information’ within the meaning of the UCPD is discussed in Section 3.4.1.

Recital 15 provides that Member States can retain or add information requirements relating to contract law where this is permitted by minimum harmonisation clauses found in existing EU legal instruments.

1.4.4Interplay with the Consumer Rights Directive

The Consumer Rights Directive 47 entered into application on 13 June 2014. It applies to all business-to-consumer contracts including off-premises, distance and on-premises contracts. It also fully harmonises pre-contractual information requirements for distance and off-premises contracts, while allowing Member States to adopt or maintain additional pre-contractual information requirements for on-premises contracts (Article 5(4)).

This minimum harmonisation clause has consequences for commercial practices falling under the fully harmonised UCPD.

Indeed, under Article 5(4) of the Consumer Rights Directive, Member States may adopt or retain pre-contractual information requirements that go beyond the UCPD if these national requirements only apply to on-premises sales and only relate to pre-contractual information requirements, as opposed to advertising and marketing.

Both directives also complement each other.

For ‘invitations to purchase’, the Consumer Rights Directive provides more detailed pre-contractual information requirements than the information requirements in Article 7(4) of the UCPD.

An invitation to purchase under the UCPD refers to both the information provided at the marketing stage (advertising) and before the contract is signed. In the latter case, there is an overlap between the information requirements under Article 7(4) of the UCPD and the pre-contractual information requirements under the Consumer Rights Directive. The difference between pre-contractual information and an invitation to purchase is further explained in Section 2.7.

Given the more exhaustive character of the information requirements in the Consumer Rights Directive, complying, already at the stage of invitation to purchase, with the requirements laid down by the CRD for the pre-contractual stage should normally also ensure compliance with Article 7(4) UCPD, as far as the content of the information is concerned. 48 The UCPD will still be applicable when assessing any misleading or aggressive commercial practices by a trader on the form and presentation of this information to the consumer.

1.4.5Interplay with the Unfair Contract Terms Directive

The Unfair Contract Terms Directive 49 applies to all business-to-consumer contracts and concerns contractual terms which have not been individually negotiated in advance (e.g. pre-formulated standard clauses). In contrast to the UCPD, breaches of the Unfair Contract Terms Directive have contractual consequences: under Article 6(1) of that directive, unfair terms used in a contract with a consumer must ‘not be binding on the consumer’.

The Court has clarified certain elements of the relationship between these Directives in the Pereničová and Perenič case, 50 which concerned a credit agreement where the annual percentage rate of charge indicated was lower than the actual rate.

The Court concluded that such erroneous information provided in the contract terms is ‘misleading’ within the meaning of the Unfair Commercial Practices Directive if it causes, or is likely to cause, the average consumer to take a transactional decision that he would not have taken otherwise.

Finding that such a commercial practice is unfair is one factor that can be cited when assessing the unfairness of contractual terms under the Unfair Contract Terms Directive. Such a finding, however, has no direct effect on whether the contract is valid under Article 6(1) of that Directive. 51  

In the UK, in OFT v Ashbourne Management Services it was found that it was contrary to the UCPD to include an unfair term in a contract, and also unfair to seek to enforce it by demanding sums payable under the term. 52

Only a few Member States’ consumer protection authorities have similar powers against unfair commercial practices and unfair contract terms, in order to prohibit the use of non-negotiated standard contract terms which they consider to be unfair without having to take the trader to court. 53

1.4.6Interplay with the Misleading and Comparative Advertising Directive

The Misleading and Comparative Advertising Directive (MCAD) 54 covers business-to-business (B2B) relations.

However, its rules on comparative advertising continue to provide a general test, based on fully harmonised criteria, for assessing whether comparative advertising is lawful also in business-to-consumer (B2C) transactions. 55  

Article 6(2)(a) of the UCPD qualifies as misleading a practice which, including through comparative advertising, creates confusion with any products, trademarks, trade names or other distinguishing marks of a competitor. At the same time, under Article 4(a) of the MCAD, comparative advertising is not permitted if it is misleading under Articles 6 and 7 of the UCPD.

Hence, these two Directives cross-reference each other. Being relevant for both B2C and B2B transactions, the conditions for assessing the lawfulness of comparative advertising laid down by Article 4 of the MCAD are rather broad and include also some aspects of unfair competition (e.g. denigration of trade marks). Therefore, the MCAD will either provide conditions for such assessment under the UCPD for B2C transactions or impose additional requirements which are relevant for traders, mainly competitors, in B2B transactions.

For those Member States which have extended all (Austria and Sweden) or part (Denmark, France, Italy) of the provisions contained in the UCPD to B2B transactions, the UCPD provisions as transposed into national laws will in practice replace the relevant MCAD provisions in B2B relations. It should be noted that some countries (Belgium) have also adopted specific rules for B2B.

1.4.7Interplay with the Services Directive

Contrary to sector-specific legislation, the Services Directive 56 has a broad scope of application. It applies to services in general as defined in the Treaty on the Functioning of the European Union, with certain exceptions. It can therefore not be considered as lex specialis to the Unfair Commercial Practices Directive within the meaning of Article 3(4).

Accordingly, the information requirements in Article 22 of the Services Directive apply in addition to the information required for invitations to purchase under Article 7(4) of the UCPD.

1.4.8Interplay with the e-Commerce Directive

The e-Commerce Directive 57 applies to information society services, which can include the services provided by operators of websites and online platforms which allow consumers to buy a good or service.

Article 5 of the e-Commerce Directive lays down general information requirements for service providers, while Article 6 lays down information to be provided in commercial communications. The lists of items set out in these two articles are minimum lists.

Article 6 in particular requires Member States to ensure that traders clearly identify promotional offers, such as discounts, premiums and gifts, where permitted in the Member States where the service provider is established, and the conditions to qualify for such promotional offers.

The interplay between the UCPD and the e-Commerce Directive is further addressed, in particular, in section 5.2.2 on ‘The applicability of the UCPD to online platforms’.

1.4.9Interplay with the Audiovisual Media Services Directive

The Audiovisual Media Services Directive 58 applies to linear and non-linear audiovisual media services (i.e. TV broadcasting and on-demand media services), which can include audiovisual commercial communications which directly or indirectly promote goods or services (e.g. television advertising, sponsorship, teleshopping or product placement).

Article 5 of the Audiovisual Media Services Directive lays down general information requirements for service providers, while Article 9 lays down requirements with which all audiovisual commercial communications must comply. Articles 10 and 11 respectively lay down the conditions which sponsorship and product placement in audiovisual media services must respect. The Audiovisual Media Services Directive also provides for other stricter criteria which apply only to television advertising and teleshopping (Chapter VII on television advertising and teleshopping).

The UCPD applies to unfair commercial practices occurring in audiovisual media services, such as misleading and aggressive practices, to the extent that they are not covered by the provisions mentioned above.

1.4.10Interplay with the Data Protection Directive and the e-Privacy Directive

The protection of personal data is a fundamental right under Article 8 of the EU Charter of Fundamental Rights. Article 8(2) of the Charter contains key data protection principles (fair processing, consent or legitimate aim prescribed by law, right to access and rectification). Article 8(3) of the Charter requires that compliance with data protection rules be subject to control by an independent authority 59 .

The Data Protection Directive 60 regulates the protection of personal data and the free movement of such data. Data protection rules are enforced by national supervisory authorities and national courts.

The e-Privacy Directive 61 complements the Data Protection Directive regarding the processing of personal data in the electronic communication sector, as it facilitates the free movement of such data through electronic communication services. In particular, the e-Privacy Directive requires the user’s consent when ‘cookies’ or other forms of accessing and storing information on an individual’s device (e.g. tablet or smartphone) are used. 62

The Data Protection Directive applies to the processing of ‘personal data’.

Personal data means any information relating to an identified or identifiable natural person (‘data subject’). An identifiable person is someone who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his or her physical, physiological, mental, economic, cultural or social identity. A person or organisation who determines the purposes for processing personal data is a data controller (Article 2(a)). The data controller must comply with the legal obligations in the data protection rules.

Processing, which includes collecting and storing personal data, must be fair and lawful. One aspect of fair processing is that the data subject is given relevant information, including:

Øthe identity of the data controller and of his representative, if any;

Øthe purposes of that processing;

Øany further information, such as:

1. the categories of personal data being processed;

2. the recipients of categories of recipients;

3. the existence of the right of access and the right to rectify the data concerning him;

4. whether the personal data will be provided to third parties, and;

5. information about whether replies to the questions are obligatory or voluntary and possible consequences of failure to reply, information on the existence of the right of access to and of the right to rectify own personal data;

in so far as such further information is necessary, having regard to the specific circumstances in which the data are collected, to guarantee fair processing in respect of the data subject. 63

Fair and lawful processing of personal data requires that data protection principles are complied with and that at least one of the six grounds for legitimate processing applies to any processing activity. Consent by the individual is one of these criteria. Other criteria will apply where necessary, depending on the circumstances and purposes of the processing.

Data protection principles require that personal data is:

Øcollected for specific and legitimate purposes and not further processed in a way incompatible with those purposes;

Øadequate, relevant and not excessive for those purposes;

Øaccurate and, if inaccurate, erased or rectified;

Ønot stored for longer than necessary.

Data-driven business structures are becoming predominant in the online world. In particular, online platforms analyse, process and sell data related to consumer preferences and other user-generated content. This, together with advertising, often constitutes their main source of revenues.

The collection and processing of personal data in these types of situations must comply with the legal requirements under the Data Protection Directive mentioned above. Individuals must be able to exercise their rights in respect of such processing. These include:

Øthe right to access their personal data;

Øthe right to object to processing (e.g. direct marketing);

Øthe right to have their data erased.

As of 25 May 2018, Directive 95/46/EC will be replaced by the General Data Protection Regulation adopted in 2016. 64 The new rules strengthen the existing rights and empower individuals with more control over their personal data.

Most notably, these include:

Øestablishment of a single, pan-European law for data protection: data subjects, public authorities and companies will have to simply deal with one EU Regulation, as opposed to 28 national laws;

Øeasier access to own personal data: individuals will have more information, on top of the existing requirements, as to how their personal data are processed, and this information will have to be made available in a clear and understandable way;

Øthe right to know, for instance, when personal data have been hacked: for example, companies and organisations must notify the national data protection supervisory authority of serious personal data breaches as soon as possible, so that users can take appropriate measures.

A trader’s violation of the Data Protection Directive or of the ePrivacy Directive will not, in itself, always mean that the practice is also in breach of the UCPD.

However, such data protection violations should be considered when assessing the overall unfairness of commercial practices under the UCPD, particularly in the situation where the trader processes consumer data in violation of data protection requirements, i.e. for direct marketing purposes or any other commercial purposes like profiling, personal pricing or big data applications.

From a UCPD perspective, the first issue to be considered concerns the transparency of the commercial practice.

Under Articles 6 and 7 of the UCPD, traders should not mislead consumers on aspects that are likely to have an impact on their transactional decisions. More specifically, Article 7(2) and No 22 of Annex I prevent traders from hiding the commercial intent behind the commercial practice.

The data protection information requirement of consumers about the processing of personal data, not limited only in relation to commercial communication, may be considered as material (Article 7(5)).

Personal data, consumer preferences and other user generated content, have a "de facto" economic value and are being sold to third parties.

Consequently, under Article 7(2) and No 22 of Annex I UCPD if the trader does not inform a consumer that the data he is required to provide to the trader in order to access the service will be used for commercial purposes, this could be considered a misleading omission of material information.

Depending on the circumstances, this could also be considered a violation of the EU data protection requirements to provide the required information to the individual concerned as to the purposes of the processing of the personal data.

1.4.11Interplay with Articles 101-102 TFEU (competition rules)

Regulation 1/2003 65 provides the legal framework for implementing the competition rules laid down in Articles 101 and 102 TFEU.

Article 101(1) TFEU prohibits in certain circumstances agreements between undertakings, decisions by associations of undertakings and concerted practices, such as fixing purchase or selling prices or other trading conditions, which have as their object or effect the prevention, restriction or distortion of competition in the EU. Its essential feature is that any collusive behaviour by two or more undertakings having anticompetitive object or effect is prohibited and automatically void.

Article 102 TFEU prohibits, in certain circumstances, the abuse of a dominant position by one or more undertakings. Its essential feature is to prohibit abusive conduct even by a single undertaking being dominant. Such an abuse may, for example, consist in applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, or directly or indirectly imposing unfair purchase or selling prices.

Although these practices are, under certain circumstances, prohibited under competition rules, they are not automatically considered as unfair under the UCPD. The breach of competition rules should, however, be taken into account when assessing their unfairness under the UCPD. In such situations, the general clause of Article 5(2) UCPD is relevant.

1.4.12Interplay with the EU Charter of fundamental rights

According to its Article 51(1), the EU Charter of fundamental rights applies to the Member States when they implement Union law, thus also when they implement the provisions of the UCPD. The Charter contains provisions, among others, on the protection of personal data (Article 8) 66 , the rights of the child (Article 24) 67 , consumer protection (Article 38) and the right to an effective remedy and a fair trial (Article 47).

The Court has stressed the significance of Article 47 of the Charter on access to justice in relation to remedies available to consumers in connection with consumer rights granted under EU directives. The principle of effectiveness, as referred to by the Court, means that national rules of procedure may not make it excessively difficult or impossible in practice for consumers to exercise rights conferred by EU law 68 .

1.4.13Interplay with Articles 34-36 TFEU

A national measure in an area which has been the subject of exhaustive harmonisation at EU level must be assessed in the light of the provisions of that harmonising measure and not those of the Treaty of the Functioning of the European Union (TFEU). 69 Thus, when a national measure falls within the scope of the UCPD (discussed in Sections 1.1 and 1.2 above), it should be assessed against the UCPD and not against the TFEU.

National measures that neither fall within the scope of the UCPD nor under any other harmonising instrument of secondary EU law are to be assessed under Articles 34-36 TFEU. The prohibition of measures having an effect equivalent to quantitative restrictions as laid down in Article 34 TFEU covers all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Union trade. 70  

The issue of when a national rule is capable of hindering intra-Union-trade has been dealt with extensively by the Court. Notably, in Keck 71 the Court held that national provisions restricting or prohibiting certain selling arrangements are not such as to hinder directly or indirectly, actually or potentially trade between Member States, so long as, first, those provisions apply to all relevant traders operating within the national territory and, secondly, they affect in the same manner, in law and in fact, the marketing of domestic products and those from other Member States. 72 The Court includes in the list of selling arrangements, measures relating to the conditions and methods of marketing, 73 measures which relate to the time of the sale of goods, 74 measures which relate to the place of the sale of goods or restrictions regarding by whom goods may be sold 75 and measures which relate to price controls. 76

Some of the examples of selling arrangements mentioned in the jurisprudence of the Court, notably national provisions that regulate the conditions and methods of marketing, would fall within the scope of the UCPD if they qualify as business-to-consumer commercial practices intended to protect the economic interest of consumers.

Many commercial practices that do not fall within the scope of the UCPD or other secondary EU law would appear to qualify as selling arrangements under Keck. Such selling arrangements fall within the scope of Article 34 TFEU if they, in law or in fact, introduce discrimination on the basis of the origin of products. Discrimination in law occurs when the measures are manifestly discriminatory, whilst discrimination in fact is more complex. Such measures would need to be assessed on a case-by-case basis.

If a measure or national practice violates Article 34 TFEU, it may in principle be justified under Article 36 TFEU or on the basis of one of the overriding requirements in the public interest recognised by the Court of Justice. It is for national authorities to demonstrate that the restriction on the free movement of goods is justified on one of these grounds. 77 Furthermore, the Member State must demonstrate that its legislation is necessary to effectively protect the public interests invoked 78 .

In order to be permissible, such provisions must be proportionate to the objective pursued and the objective must not be capable of being achieved by measures which are less restrictive of intra-EU trade. 79  More recently the Court held that "in determining whether the restriction at issue is proportionate, it is also important to ascertain whether the measures implemented in that context go beyond what is necessary to attain the legitimate objective being pursued. In other words, it is necessary to determine whether there exist alternative measures that are also capable of attaining that objective while at the same time having a less restrictive effect on intra‑Community trade". 80 Moreover, the Court held that "it should be borne in mind in that context that a restrictive measure may be regarded as complying with the requirements of European Union law only if it genuinely reflects a concern to secure the attainment of the objective pursued in a consistent and systematic manner”. 81

1.5The relationship between the UCPD and self-regulation

The UCPD recognises the importance of self-regulation mechanisms and clarifies the role that code owners and self-regulatory bodies can play in enforcement. Member States may encourage code owners to check for unfair commercial practices, in addition to enforcing the UCPD.

When the rules in self-regulatory codes are strict and rigorously applied by code owners, they may indeed reduce the need for administrative or judicial enforcement action. Moreover, when the standards are high and industry operators largely comply with them, such rules may be a useful reference point for national authorities and courts in assessing whether a commercial practice is unfair.

The UCPD contains several provisions which prevent traders from unduly exploiting the trust which consumers may have in self-regulatory codes. This is discussed in Section 3.3.3 on non-compliance with codes of conduct.

To improve compliance with the UCPD, in 2012 the European Commission launched two multi-stakeholder dialogue processes bringing together industry representatives, NGOs and national authorities. The multi-stakeholder group on environmental claims 82 and the multi-stakeholder group on comparison tools 83 provided useful input further discussed in sections 5.1 on Environmental Claims and 5.2.6 on Comparison Tools.

In addition, these groups drew up:

Ø'Compliance Criteria on Environmental Claims': multi-stakeholder advice to help traders apply the UCPD as regards environmental claims,

Øa list of key principles for comparison tools.

These documents, which are not legally binding as such, are available at:

http://ec.europa.eu/consumers/consumer_rights/unfair-trade/unfair-practices .

The stakeholders involved in these multi-stakeholder groups have committed to disseminate, promote and implement the criteria/principles and/or support their implementation.

1.6Application of the UCPD to traders established in third countries 

The applicability of the UCPD to non-EU traders is regulated by Regulation No 864/2007 on the law applicable to non-contractual obligations (Rome II). This Regulation applies "in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters". Rome II is applicable in civil or commercial disputes.

When the conditions of Article 6(1) of the Rome II Regulation are fulfilled, e.g. if misleading advertising is targeted to EU consumers and this harms the collective interests of EU consumers, the UCPD will be applicable.

2.General concepts

2.1The notion of trader

This definition covers not only traders who act on their own account but also persons, including consumers, acting ‘in the name of’ or ‘on behalf of’ another trader.

Hence, under Article 2(b) in conjunction with relevant national laws on liability and sanctions, a trader can be held jointly liable with another trader for infringements of the UCPD committed by the latter on his behalf. .

There may be situations where individuals who appear to be consumers selling products to other consumers could in fact be either traders themselves or acting on behalf of traders (‘hidden B2C’ sales).

Whether a seller qualifies as a "trader" or a consumer must be assessed on a case-by-case basis. Different criteria could be relevant, such as:

Øwhether the seller has a profit-seeking motive, including the fact that he/she might have received remuneration or other compensation for acting on behalf of a given trader;

Øthe number, amount and frequency of transactions;

Øthe seller’s sales turnover;

Øwhether the seller purchases products in order to resell them.

Persons whose main activity is to sell products online on a very frequent basis, purchasing products to resell them at a higher price, could for example fall within the definition of trader.

Organisations which pursue charitable or ethical goals may qualify as traders under the UCPD when they engage in commercial activities (e.g. the sale of products meeting certain ethical standards) towards consumers. Whenever they act as traders, they should comply with the UCPD insofar as their commercial activities are concerned. For instance, information about the origin of the product or its ethical aspects should not be misleading.

The fact that an organisation is structured as ‘non-profit’ is immaterial to the assessment of whether it qualifies as a trader.

The same applies to public authorities, which may, depending on the circumstances also qualify as a trader when carrying out commercial activities.

In the BKK Mobil Oil case, the Court confirmed that a public law body charged with a task of public interest such as managing a statutory health insurance fund, can qualify as a ‘trader’ as:

‘the EU legislature has conferred a particularly broad meaning on the term ‘trader’, which refers to ‘any natural or legal person’ which carries out a gainful activity and does not exclude from its scope either bodies pursuing task of public interest or those which are governed by public law’. 86

The Court also concluded that:

‘[...] BKK’s members, who must manifestly be regarded as consumers within the meaning of the Unfair Commercial Practices Directive, could be deceived by the misleading information circulated by that body thus preventing them from making an informed choice […] and leading them to take a decision they would not have taken in the absence of such information, as envisaged by Article 6(1) of that Directive. In those circumstances, whether the body at issue or the specific task it pursues are public or private is irrelevant’. 87

In particular, under Annex I of the UCPD (the ‘black list’) No 22, the following practice is prohibited:

2.2The concept of commercial practice

The Court held that the sole criterion in Article 2(d) of the UCPD is that the trader’s practice must be directly connected with the promotion, sale or supply of a product or service to consumers. 88  

A commercial practice can be ‘directly connected’ to the promotion of a product for example by providing ‘information relating to the availability of a product at an attractive price during a certain period’. 89 Based on the case-law currently available, it is difficult to define a limit for when a commercial practice would no longer be ‘directly connected’ to the promotion of a product. However, as an example, where a trader sells a street map not containing any promotional messages, and the consumer subsequently uses that street map to find his way to a given shop, it would seem unreasonable to qualify the selling of that street map as a commercial practice ‘directly connected’ to the promotion of a product in that given shop.

The Court stated that the UCPD covers activities of a professional following on from a commercial transaction relating to any good or service and following the conclusion of a contract or during the performance of that contract. 90  

On this basis, the Court concluded that:

‘[…] the fact that the action of the professional concerned took place on only one occasion and affected only one single consumer is immaterial in this context.

Neither the definitions set out in Articles 2(c) and (d), 3(1) and 6(1) of the Unfair Commercial Practices Directive nor the latter, considered as a whole, contain any indication that the act or omission on the part of the professional must be recurrent or must concern more than one consumer.’

‘[…] the communication, by a professional to a consumer, of erroneous information, such as that at issue in the main proceedings, must be classified as a ‘misleading commercial practice’, within the meaning of that directive, even though that information concerned only one single consumer.’ 91

2.3The concept of ‘transactional decision’

The UCPD’s general provisions (Articles 5 to 9) cover unfair, misleading and aggressive commercial practices which are capable of distorting consumers’ economic behaviour, thereby causing or being likely to cause them to take a transactional decision that they would not have taken otherwise.

The wording used in Article 2(k) suggests that the definition should be interpreted in a broad manner and that the concept of transactional decision should cover a wide range of decisions made by the consumer in relation to a product.

The Court held that ‘transactional decision’ covers not only the decision whether or not to purchase a product, but also decisions directly related to that decision, in particular the decision to enter the shop:

‘Since the commercial practice at issue in the main proceedings concerns information relating to the availability of a product at an attractive price during a certain period, it must be determined whether the acts preparatory to the purchase of a product, such as the consumer’s trip to the shop or the act of entering the shop, may be regarded as constituting transactional decisions for the purposes of the directive.

[…] ‘any decision taken by a consumer concerning whether, how and on what terms to purchase’ is a transactional decision. That concept therefore covers not only the decision whether or not to purchase a product, but also the decision directly related to that decision, in particular the decision to enter the shop.

[…] Article 2(k) of the directive must be interpreted as meaning that any decision directly related to the decision whether or not to purchase a product is covered by the concept of ‘transactional decision’. 92

In that sense, the notion of transactional decision also encompasses pre-purchase and post–purchase decisions.

There is a wide spectrum of transactional decisions a consumer may take in relation to a product or a service other than the decision whether to purchase.

These transactional decisions may result in actions which have no legal consequences under national contract law and may be taken at any time between the moment the consumer is initially exposed to the marketing and the end of a product’s life or the final use of a service.

Many pre-purchase decisions could be considered transactional decisions.

Many post-purchase decisions made after having purchased a product or subscribed to a service can qualify as transactional decisions.

For misleading practices committed by third parties, Article 14 of the e-Commerce Directive determines under which conditions certain online platforms are not liable for such third parties' illegal information stored on the platform, when acting as an intermediary providing 'hosting' services within the meaning of that provision.

From a UCPD perspective, what is decisive is whether the relevant on-line intermediary qualifies as a trader and has or not engaged in a business-to-consumer commercial practice directly connected with the promotion, sale or supply of a product to consumers. It is only if that on-line intermediary qualify as a trader and engages in such commercial practices and does so in a manner that is prohibited under the UCPD that it can be found in breach thereof. In this connection the intermediary cannot invoke the liability exemption of Article 14 of the e-Commerce Directive where those practices concern the intermediary's own activities and not the information stored, nor where the intermediary has knowledge of or control over such information. 93

Many consumers first search for products using search engines or comparison tools or by studying online user reviews and subsequently move to the websites of the traders providing the best offers to make the actual purchase.

In addition, an unfair commercial practice directed at one consumer could lead to a transactional decision by another consumer, which the latter would not have taken otherwise.

Commercial practices related to search engines, comparison tools and user reviews are further discussed in Chapter 5.2 ‘Online sector’.

2.4To ‘materially distort the economic behaviour of consumers’

The UCPD’s general provisions (Articles 5 to 9) cover unfair, misleading and aggressive commercial practices which are capable of distorting consumers’ economic behaviour. These provisions use slightly different wording to express these requirements.

Under Article 5(2) UCPD, a commercial practice is unfair if it is contrary to the requirements of professional diligence and ‘materially distorts or is likely to materially distort’ the economic behaviour of the average consumer. However, Articles 6, 7 and 8 prohibit a misleading or aggressive commercial practice if it causes or is likely to cause the average consumer to ‘take a transactional decision that he would not have taken otherwise’.

The requirement that a commercial practice must be capable of distorting the consumer’s economic behaviour in order to be unfair is worded differently in Article 5(2) than in Articles 6, 7 and 8. At first sight, this apparent contradiction could pose problems of interpretation. However, Article 5(2) should be read in conjunction with Article 2(e), which states:

Consequently, on the basis of Article 5(2), what determines whether a commercial practice ‘materially distorts or is likely to materially distort’ the consumer’s economic behaviour is whether the commercial practice causes or is likely to cause the consumer to ‘take a transactional decision that he would not have taken otherwise’.

This is the same assessment that is to be made on the basis of Articles 6, 7 and 8. It follows that although the wording of Article 5(2) is different from the wording of the latter Articles, the requirement in relation to the material distortion of the consumer’s behaviour is the same.

The broad concept of transactional decision developed by the Court (see section 2.3) allows for the UCPD to apply to a variety of cases where a trader’s unfair behaviour does not cause the consumer to enter into a transaction or a service contract.

A commercial practice may be considered unfair not only if it is likely to cause the average consumer to purchase or not to purchase a product, but also if it is likely to cause the consumer to, for example:

Øenter a shop;

Øspend more time on the internet engaged in a booking process;

Ødecide not to switch to another service provider or product.

The UCPD does not limit this material distortion test to assessing whether the consumer’s economic behaviour (i.e. its transactional decision) has actually been distorted. It also requires an assessment as to whether a commercial practice is ‘likely’ (i.e. capable) to have such an impact on the average consumer. National enforcement authorities should therefore investigate the facts and circumstances of the individual case (i.e. in concreto), but assess also the ‘likelihood’ of the impact of that practice on the transactional decision of the average consumer (i.e. in abstracto).

2.5'Average consumer’

As indicated in Recital 18 and further specified in Articles 5 to 9, the UCPD’s benchmark for assessing the impact of a commercial practice is the notion of the ‘average consumer’, as previously developed by the Court:

‘…in order to determine whether a particular description, trade mark or promotional description or statement is misleading, it is necessary to take into account the presumed expectations of an average consumer who is reasonably well informed and reasonably observant and circumspect.’ 95

This concept was indeed developed by the Court of Justice prior to the UCPD. It was codified then by the UCPD to give national authorities and courts common criteria to enhance legal certainty and reduce the possibility of divergent assessments.

In the case-law of the Court, the average consumer is a reasonably critical person, conscious and circumspect in his or her market behaviour.

The average consumer under the UCPD is in any event not somebody who needs only a low level of protection because he/she is always in a position to acquire available information and act wisely on it. On the contrary, as underlined in Recital 18, the test is based on the principle of proportionality. The UCPD adopted this notion to strike the right balance between the need to protect consumers and the promotion of free trade in an openly competitive market.

Therefore, the average consumer concept under the UCPD should always be interpreted having in mind Article 114 of the Treaty, which provides for a high level of consumer protection.

At the same time, the UCPD is based on the idea that, for instance, a national measure prohibiting claims that might deceive only a very credulous, naive or cursory consumer (e.g. ‘puffery’ 98 ) would be disproportionate and create an unjustified barrier to trade. 99

As explicitly mentioned by Recital 18, the average consumer test is not a statistical test. This means that national authorities and courts should be able to determine whether a practice is liable to mislead the average consumer exercising their own judgment by taking into account the general presumed consumers' expectations, without having to commission an expert's report or a consumer research poll 100 .

Article 5(2)(b) of the UCPD further refines the average consumer test when the interests of specific groups of consumers are at stake. When the practice is directed at a particular group of consumers, its impact should be assessed from the perspective of the average member of the relevant group.

When designing their commercial messages, traders may, at times and in light of the specific nature of the products at stake, need to take certain social, linguistic and cultural features into account which are typical of the average consumers to which the products are targeted. In certain cases, such social, linguistic and cultural features, which can also be peculiar to a given Member State, may therefore also justify a different interpretation of the message communicated in the commercial practice by the competent enforcement authority or court. In a case relating to misleading cosmetics advertising, the Court held that:

‘In order to apply that test to the present case, several considerations must be borne in mind. In particular, it must be determined whether social, cultural or linguistic factors may justify the term ‘lifting‘, used in connection with a firming cream, meaning something different to the German [average] consumer as opposed to consumers in other Member States, or whether the instructions for the use of the product are in themselves sufficient to make it quite clear that its effects are short-lived, thus neutralising any conclusion to the contrary that might be derived from the word ‘lifting‘.’ 112

Moreover, the Court stated that:

‘a prohibition of marketing on account of the misleading nature of the trade mark is not, in principle, precluded by the fact that the same trade mark is not considered to be misleading in other Member States. […] it is possible that because of linguistic, cultural and social differences between the Member States a trade mark which is not liable to mislead a consumer in one Member State may be liable to do so in another.’  113

Therefore, on the basis of the average consumer test and despite the UCPD’s full harmonisation character, it could be theoretically justified to require a foreign trader to provide additional information on social, cultural or linguistic grounds. In other words, the omission of such information could mislead consumers in the country of destination, unlike those in the country of origin.

2.6Vulnerable consumers

The UCPD is based on the idea that, whilst it is appropriate to protect all types of consumers from unfair commercial practices, consumers who qualify as members of one of the groups listed in Article 5(3) should be ensured a higher level of protection than ‘the average consumer’ referred to in Article 5(2).

Recital 19 of the Preamble further clarifies the interpretation of Article 5(3): while Article 5(3) appears to exclusively qualify consumers as vulnerable because of their ‘mental or physical infirmity, age or credulity’, recital 19 provides a non-exhaustive list of characteristics that make a consumer ‘particularly susceptible’. 

2.6.1The vulnerability criteria in Article 5(3)

Infirmity (mental or physical) includes sensory impairment, limited mobility and other disabilities.

In this respect, it is worth mentioning that the EU ratified the United Nations Convention on the Rights of Persons with disabilities in 2010 117 . In the UN Committee's first concluding observations in October 2015, a recommendation was made for the EU to "take appropriate measures to ensure that all persons with disabilities who have been deprived of their legal capacity can exercise all the rights enshrined in the European Union treaties and legislation, such as (….) consumer rights (…)". 118

As regards age, it may be appropriate to consider a commercial practice from the perspective of consumers of various ages.

Elderly people may be more vulnerable to certain practices because of their age. Aggressive door-to-door selling methods may not affect the average consumer but are likely to intimidate a certain group of consumers, in particular the elderly, who may be more vulnerable to pressure selling.

In addition to Article 5(3) of the UCPD, children benefit from specific protection through the ban on direct exhortations in Annex I No 28 to the UCPD. This ban, which includes putting pressure on children to buy a product directly or to persuade adults to buy items for them (the ‘pester power’), is discussed in section 4.6.

As mentioned in section 2.5 on the average consumer, the capacities of children in understanding online and offline advertising will vary greatly from one child to the next and depending on age and maturity. To a certain extent, it is possible to take this into account under the UCPD, as Article 5(3) allows assessing a commercial practice from the perspective of an average member of a specific age group.

Teenagers represent another category of consumers often targeted by rogue traders. Promoting products which are particularly appealing to teenagers might exploit their lack of attention or reflection, as well as their risk-taking behaviour, due to their immaturity and credulity.

The concept of ‘credulity’ covers groups of consumers who may more readily believe specific claims. The term is neutral and circumstantial, so the effect is to protect members of a group who are for any reason particularly open to be influenced by a specific commercial practice. Any consumer could qualify as a member of this group.

The study on consumer vulnerability 121 found that people failing a credulity test are more likely than others to have problems choosing deals. Furthermore, people who consider themselves as credulous are less likely to complain when facing problems and are more likely to feel vulnerable as consumers.

2.6.2‘Foreseeability’ requirement

The ‘vulnerable consumer’ criteria apply if a commercial practice distorts the economic behaviour of a group of consumers who are particularly vulnerable ‘in a way which the trader could reasonably be expected to foresee’.

This criterion adds an element of proportionality to the assessment of a commercial practice in relation to vulnerable consumers.

It aims at holding traders responsible only if the negative impact of a commercial practice on a category of vulnerable consumers could reasonably be considered foreseeable by the trader.

This means that traders are not required to do more than is reasonable, both in considering whether the practice would have an unfair impact on any clearly identifiable group of consumers and in taking steps to limit such impacts.

As a consequence, a commercial practice would not be likely to be considered misleading if some consumers, because of their extreme naivety or ignorance, are misled by, or otherwise act irrationally in response to, even the most honest commercial practice.

2.7Invitation to purchase — the concept

For ‘invitations to purchase’, Article 7(4) of the UCPD regards certain pieces of information as ‘material’. This means that traders will need to provide consumers with this information if it not otherwise apparent from the context.

The ‘characteristics of the product’ are invariably present as soon as there is verbal or visual reference to the product. A different interpretation could incentivise traders to provide vague product descriptions or omit information in their commercial offers in order to circumvent the information requirements provided for by Article 7(4) of the UCPD.

The last part of the definition in Article 2(i) (‘and thereby enables the consumer to make a purchase’) does not require the commercial communication to provide the consumer with a mechanism to actually purchase (e.g. a phone number or a coupon). It means that the information given in the product marketing must be sufficient to enable the consumer to take the decision as to whether to purchase a specific product for a specific price.

In the Ving Sverige case, the Court held: 124  

‘It follows that, for a commercial communication to be capable of being categorised as an invitation to purchase, it is not necessary for it to include an actual opportunity to purchase or for it to appear in proximity to and at the same time as such an opportunity.’

An invitation to purchase is a narrower concept than advertising, and not all commercial communications will qualify as an invitation to purchase within the meaning of Article 2(i). 

However, an invitation to purchase is a wider concept than pre-contractual information. While pre-contractual information requirements refer to information that needs to be provided before the consumer enters into a contract, an invitation to purchase does not necessarily imply that the next step for the consumer is to enter into a contract with a trader.

This distinction is particularly important in relation to the interplay between the UCPD and the Consumer Rights Directive. A wide variety of commercial communications would normally qualify as invitations to purchase.

The UCPD leaves traders the choice as to whether to include the price in their commercial communications. A commercial communication or advertisement that includes an exhaustive description of a product or service’s nature, characteristics and benefits but not its price cannot be considered an ‘invitation to purchase’ within the meaning of Article 2(i) of the UCPD. An example of commercial communications which are not invitations to purchase would be advertisements promoting a trader’s ‘brand’ rather than any particular product (i.e. brand advertising).

Information requirements set out in Article 7(4) are discussed in Section 3.4.5, which deals with material information in invitations to purchase.

3.Provisions of the UCPD 

3.1The functioning of the UCPD – Directive flowchart

This flowchart illustrates the relationship between the ‘black list’ of commercial practices in the Annex and the general clauses of the UCPD, namely Articles 6 to 9 and Article 5 respectively.

In order to be considered unfair and therefore prohibited under the UCPD, it is sufficient that a commercial practice fulfils only one of these tests.

3.2The general clause — the requirements of professional diligence

Article 5(2) provides a general clause setting two cumulative criteria for assessing whether commercial practices should be deemed unfair. It functions as a ‘safety net’ to make sure that any unfair practice which is not caught by other provisions of the UCPD (i.e. that is neither misleading, aggressive or listed in Annex I) can still be penalised. The provision is also future proof as it allows for emerging unfair practices to be tackled.

Article 5(2) prohibits commercial practices that are contrary to the requirements of professional diligence if they are likely to materially distort the economic behaviour of the average consumer.

This is a self-standing criterion — it is not an additional cumulative test that needs to be met for a practice to be found in breach of any of the specific categories of unfair practices in Articles 6 to 9 or Annex I to the UCPD. This is illustrated by the UCPD flowchart.

This was confirmed by the Court:

‘45   […] having regard both to the wording and to the structure of Articles 5 and 6(1) of that directive, and to its general scheme, a commercial practice must be regarded as ‘misleading’ within the meaning of the second of those provisions if the criteria set out there are satisfied, and it is not necessary to determine whether the condition of that practice’s being contrary to the requirements of professional diligence, laid down in Article 5(2)(a) of that directive, is also met.

46   The interpretation above is the only one capable of preserving the effectiveness of the specific rules laid down in Articles 6 to 9 of the Unfair Commercial Practices Directive. Indeed, if the conditions for the application of those articles were identical to those set out in Article 5(2) of the directive, those provisions would have no practical significance, even though they are intended to protect the consumer from the most common unfair commercial practices […]’ 129

The notion of ‘professional diligence’ encompasses principles which were already well-established in the laws of the Member States before the adoption of the UCPD, such as ‘honest market practice’, ‘good faith’ and ‘good market practice’. These principles emphasise normative values that apply in the specific field of business activity.

It follows from Article 5(2)(b) that in order to be found contrary to the requirements of professional diligence, a commercial practice must also be considered likely to ‘materially distort the economic behaviour’ of consumers. This concept is discussed in section 2.4 above.

For specific issues concerning the professional diligence of online platforms see section 5.2 ‘Online sector’.

3.3Misleading actions

Together with Article 7 on misleading omissions, Article 6 is by far the most frequently used provision for enforcement purposes.

Insights from behavioural economics show that not only the content of the information provided, but also the way the information is presented can have a significant impact on how consumers respond to it.

For this reason, Article 6 explicitly covers situations where commercial practices are likely to deceive consumers ‘in any way, including overall presentation’ ‘even if the information provided is factually correct’.

It is for the national courts and administrative authorities to assess the misleading character of commercial practices by taking into account the most recent findings on behavioural economics.

For example, the use of default settings (choices consumers are presumed to make unless they expressly indicate otherwise) or providing unnecessarily complex information may be considered misleading.

3.3.1General misleading information

Article 6(1)(a) to (g) prohibit misleading actions which are capable of deceiving the average consumer on a wide range of elements, including:

Øthe existence of the product;

Øits main characteristics (e.g. its composition, method of manufacture, geographical or commercial origin, the risks and results to be expected from its use);

Øthe price or the manner in which it is calculated or the existence of a specific price advantage;

Øthe nature, attributes and rights of the trader.

Article 6 clearly covers any commercial practice which ‘contains false information and is therefore untruthful’.

For IT products, such as external hard disks, USB sticks, mobile phones and tablets, the storage capacity, or memory, indicated by traders does not always reflect reality. While the Consumer Rights Directive 133 stipulates that the consumer must provide clear and comprehensible information about such main characteristics before the purchase, Article 6(1)(b) UCPD prohibits providing incorrect information about the main characteristics of a product if it is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.

Information provided to consumers should also not deceive or be likely to deceive the consumer in any way, including in the overall presentation, even if the information is factually correct.

While the UCPD does not provide for any formal requirement to indicate the geographical (or commercial) origin of a product or its composition, 138 misleading the consumer on such elements could fall under the ban laid down in Article 6(1)(b) of the UCPD if such false or deceiving information is likely to make the consumer take a purchase decision he would not have taken otherwise.

Some decisions by national courts specifically relate to the application of the UCPD over misleading origin claims.

Goods of the same brand and having the same or similar packaging may differ as to their composition depending on the place of manufacture and the destination market, i.e. they may vary from one Member State to another.

Under the UCPD, commercial practices marketing products with a different composition are not unfair per se. However, the UCPD needs to be considered in cases where traders promote a product as having the same quality and composition as the products of the relevant brand marketed in other Member States. If such commercial claims are incorrect or misleading, they could be considered misleading under Article 6(1)(b) of the UCPD if they could cause the average consumer to take a transactional decision that he would not have taken otherwise.

Under Article 6(1)(d), price information should not be misleading. 141

Recommended retail prices and references to previous prices could be contrary to Article 6(1)(d) of the UCPD. This could be the case if a trader uses an unreasonably high or otherwise misleading recommended retail price or reference price for the purpose of price comparisons, giving consumers the impression that they are being offered a more significant discount than what is really the case.

Under Article 6(1)(g), traders should not mislead consumers over their consumer rights.

A commercial practice, often referred to as ‘up to claims’, implies traders putting forward, as a marketing argument, the maximum benefit consumers can expect from the use of a product.

An ‘up to claim’ may be found misleading within the meaning of Articles 6 and 7 if it does not reflect the reality of the offer made by the trader and if it is likely to cause the consumer to take a transactional decision he would not have taken otherwise. 147

‘Up to’ claims could be misleading if traders are not in a position to substantiate that consumers are likely to achieve the maximum results promised under normal circumstances.

Whether an ‘up to’ claim is misleading must be assessed on a case-by-case basis. Different criteria could be relevant, such as:

ØWhether they clearly disclose results and benefits that the average consumer can reasonably expect to achieve, including any applicable condition or limitation. Not doing so could qualify as misleading in relation to the product’s ‘main characteristics’:

-by omitting material information within the meaning of Article 7(4)(a) (in the case of an invitation to purchase);

-as a misleading action within the meaning of Article 6(1)(b) of the UCPD;

ØWhether the trader has adequate evidence readily available to substantiate the claim within the meaning of Article 12 of the UCPD.

A useful definition of ethical claims is provided in the Danish Consumer Ombudsman’s Guidance on the use of environmental and ethical marketing claims: 149

‘Ethical claims’ means in particular the use of statements, etc., which convey the impression that the manufacturing of a product or planning of an activity of a trader is made according to generally recognised and accepted standards, for example concerning child labour and general working conditions, nature protection, health, animal welfare, corporate social responsibility (CSR) initiatives and charity donations. Such claims are typically based on the trader’s wish to accommodate general or specific developments and trends that can be inferred from consumers’ behaviour.

Corporate social responsibility refers to companies taking responsibility for their impact on society by having in place a process to integrate social, environmental, ethical and consumer concerns into their business operations and core strategy.

This has become a marketing tool used to meet the growing concern of consumers that traders comply with ethical standards. Companies use this approach to show that they take into account ethical and human rights concerns. This may have an impact on the transactional decision of a consumer who has to choose between two competing products of similar quality and price.

For this reason, such initiatives will, in most cases, be ‘directly connected with the promotion, sale or supply of a product’ and therefore qualify as a commercial practice within the meaning of the UCPD.

Because there are often significant similarities between ethical/corporate social responsibility claims and environmental claims, the key principles applying to green claims should also apply to ethical and corporate social responsibility claims. These key principles are further discussed in section 5.1 on environmental claims.

3.3.2Confusing marketing

Article 6(2)(a) of the UCPD addresses confusing marketing.

A practice which raises issues of compatibility with this provision is ‘copycat packaging’. This refers to the practice of designing the packaging of a product (or its ‘trade dress’) to give it the general ‘look and feel’ of a competing well-known brand.

Copycat packaging is distinct from counterfeiting as normally it does not involve copying trademarks. The risk posed by copycat packaging is consumer confusion and, consequently, the distortion of their commercial behaviour.  

Consumer deception caused by copycat packaging can take a number of forms:

ØOutright confusion — the consumer buys the copycat product having mistaken it for the brand;

ØDeception over origin — the consumer recognises the copycat product is different but believes, due to the similar packaging, that it is made by the same manufacturer;

ØDeception over quality or nature — again, consumers recognise the copycat is different but believe, due to the similar packaging, that the quality is the same or closer to that of the copied product.

The similar packaging suggests to consumers that the quality or nature of the copycat product is comparable to the quality or nature of the brand in question or at least that it is more comparable than they might otherwise assume. As such, similar packaging gives the impression to consumers that the price alone is the only term of comparison between the products (rather than the combination of price and quality).

Several studies are available on the impact of copycat packaging. 153  

Annex I to the UCPD prohibits in all circumstances some specific commercial practices that involve confusing marketing in relation to trade marks, brands and related features:

3.3.3Non-compliance with codes of conduct

The UCPD contains several provisions to prevent traders from unduly exploiting the trust which consumers may have in self-regulatory codes. It does not provide specific rules on the validity of a code of conduct, but relies on the assumption that misleading statements about a trader’s affiliation or about an endorsement from a self-regulatory body may distort the economic behaviour of consumers and undermine the trust that consumers have in self-regulatory codes. Firstly, Article 6(2)(b) obliges traders to comply with codes of conduct to which they have committed themselves in commercial communications.

Secondly, Annex I to the UCPD prohibits certain practices in all circumstances to ensure that traders make responsible use of codes of conduct in marketing (Annex I points 1 and 3 on codes of conduct, point No 2 on trust marks and point No 4 on endorsement by a public or private body). Some examples are provided in Section 5.1.6 (application of Annex I to environmental claims).

3.4Misleading omissions

3.4.1Material information

Articles 7(1) and (2) establish in very general terms a positive obligation on traders to provide all the information which the average consumer needs to make an informed purchasing decision. This is what is called ‘material information’ in Article 7.

The UCPD does not define ‘material information’, except for in the specific case of an ‘invitation to purchase’, which is dealt with in Article 7(4). Material information for an invitation to purchase is discussed in section 3.4.5. In addition, as discussed in Section 1.4.3, Article 7(5) UCPD clarifies that ‘information requirements established by EU law in relation to commercial communication, including advertising’, shall be regarded as material.

In order to assess on a case-by-case basis whether key items of information have been omitted, national authorities and courts need to take into account all features and circumstances of a given commercial practice, including the limitations of the medium used to communicate it.

As noted in Section 1.4.9 on the interplay with EU data protection rules, there is an increasing awareness of the economic value of information related to consumers’ preferences, personal data and other user-generated content. If a trader fails to inform a consumer that such information will be used for commercial purposes going beyond the transaction at hand, this could possibly qualify as a misleading omission of material information.

3.4.2Hidden marketing/failure to identify commercial intent

Under Article 7(2), failing to identify the commercial intent of a commercial practice is regarded as a misleading omission, when this failure is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.

The e-Commerce Directive 156 , the Audiovisual Media Services Directive 157 and the e-Privacy Directive 158 similarly lay down certain requirements in this regard with respect to commercial communications and the sending electronic mail for purposes of direct marketing.

A specific aspect of hidden marketing is also regulated by Article 8(5) of the Consumer Rights Directive. 159  

While these provisions focus on specific commercial practices or sectors, Article 7(2) has a general and broader scope and addresses any commercial practice.

In addition to Article 7(2), the UCPD bans in all circumstances certain specific practices that involve failure to disclose commercial intent.

Point No 11 of Annex I bans the use of ‘editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer (advertorial)’.

Point No 22 of Annex I prohibits ‘falsely claiming or creating the impression that the trader is not acting for purposes related to his trade, business, craft or profession or falsely representing oneself as a consumer’.

Article 7(2), together with points 11 and 22 of Annex I, can be particularly relevant for online traders. This is discussed further in Chapter 5.2 — Online Sector.

3.4.3Material information provided in an unclear manner

According to Article 7(2), providing material information ‘in an unclear, unintelligible, ambiguous or untimely manner’ is a misleading omission, if this is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.

3.4.4The factual context and limits of the communication medium used

Article 7(1) underlines that to assess whether a commercial practice is misleading, it needs to be considered ‘in its factual context, taking account of all its features and circumstances and the limitations of the communication medium’.

Article 7(3) should be read in conjunction with Article 7(1). Under Article 7(3), when assessing whether material information has been omitted, account should be taken of:

Øthe limits of space and time of the communication medium used;

Øany measures taken by the trader to make the information available to consumers by other means.

The above provisions apply to all sections of Article 7. In addition, under the introductory part of Article 7(4), traders do not need to provide information in invitations to purchase that is already apparent from the context.

According to Article 7(2), providing material information ‘in an unclear, unintelligible, ambiguous or untimely manner’ is a misleading omission, if this is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.

Article 7(4)(a) also states that, in invitations to purchase, account should be taken of ‘the medium and the product’ when clarifying whether the main characteristics of the product is one of the elements to be regarded as material information.

Given their importance for the consumer’s purchasing decision, information about a product’s full price and main characteristics should be prominently displayed.

The overall extent of the required information on a product’s main characteristics must be assessed based on the context of the invitation to purchase, the typology of product and the communication medium used.

3.4.5Material information in invitations to purchase — Article 7(4)

Article 7(4) lists a number of information requirements which are considered material. This is to ensure the maximum amount of legal certainty for consumers at this critical point. 168 Failing to provide consumers with information required by Article 7(4) in the case of an invitation to purchase is a misleading omission, if this failure is likely to cause the average consumer to take a transactional decision he would not have taken otherwise. 

The aim of Article 7(4) is to ensure that, whenever traders make commercial offers, they make available simultaneously, in an intelligible and unambiguous manner, enough information to enable the consumer to take an informed decision to purchase and do not mislead the consumer by the omission of important information.

However, in order not to place unnecessary or disproportionate information burdens on traders, the requirements of Article 7(4) are not static and require different pieces of information depending on the situation. This follows, in particular, from the clarifications made both in Articles 7(1), 7(3) and 7(4) that the factual context and limits of the communication medium used should be taken into account, as discussed in the previous section.

Article 7(4)(a) specifically clarifies that, when assessing whether there is an omission of material information as regards the main characteristics of the product, account should be taken of ‘the medium and the product’.

Establishing what constitutes a product’s main characteristics as referred to in Article 7(4)(a) may vary. Firstly, it may depend on the product concerned.

Secondly, the amount and type of information on the product’s main characteristics may vary depending on what can be considered ‘appropriate’ given the ‘medium’ used by the trader to make the commercial communication.

Certain restrictive conditions which limit the offer should in principle be considered as part of the product’s main characteristics.

Safety warnings may, subject to a case-by-case assessment, constitute a main characteristic of a product within the meaning of Article 7(4). Currently, EU sector-specific legislation on product safety usually requires traders to inform about safety issues on the product itself and/or on its packaging. In the case of online sales, it may therefore be difficult for consumers to take truly informed transactional decisions in case the relevant online website does not provide a legible picture of the product/package labelling. An important exception to this approach is contained in Article 11(2 of the Toys Safety Directive 2009/48/EC 169 , which explicitly requires that safety warnings for toys, such as those specifying the minimum/maximum age of the user, must be clearly visible before the purchase, including where the purchase is made online. For most other products, the UCPD can be used as a legal basis to require traders, especially when promoting products on-line, to inform consumers about those safety aspects that can, taking into account the nature of the product, be considered as main characteristics within the meaning of Article 7(4).

Under Article 7(4)(b), failure to inform consumers of the trader’s geographical address and identity can constitute a misleading omission.

On the other hand, omitting to provide information about the identity of the trader could sometimes be considered as ‘apparent from the context’ within the meaning of Article 7(4).

Based on a case-by-case assessment, stating the commercial name of a trader could be enough to comply with the requirement in Article 7(4)(b) on the trader’s identity. The legal name must be stated in the terms and conditions of sale, but it may not necessarily be considered material information within the meaning of Article 7(4).

In addition to the requirement in Article 7(4)(b), the Consumer Rights Directive lays down further information requirements on the trader’s contact details, specifically in:

ØArticle 5(1) (on-premises sales) and Article 6(1) (off-premises and distance sales) of the Consumer Rights Directive 171 .

Article 5(1)(c) of the e-Commerce Directive requires online service providers to render accessible to recipients of their services and competent authorities information about ‘the details of the service provider, including his electronic mail address, which allow him to be contacted rapidly and communicated with in a direct and effective manner’.

E-commerce traders’ email addresses may therefore be material information under Article 7(5) of the Unfair Commercial Practices Directive. This information should be easy to find (i.e. not only in the general terms and conditions) and directly and permanently accessible.

Also, under the Data Protection Directive 95/46/EC (and the future General Data Protection Regulation), a data controller must provide to the data subject certain mandatory information, which inter alia includes the identity (and the contact details) of the controller and of his representative, if any (except where the data subject already has that information) (see for details section 1.4.10).

Experience shows that these requirements are not always complied with.

In ‘drip pricing’, traders add costs along the purchase process for example by first showing the price exclusive of taxes, fees or charges or by adding charges which are unavoidable after first having presented them as ‘optional’. This can lead consumers to take transactional decisions they would not have taken, had the full price been provided as the first ‘invitation to purchase’. Such practice may hence amount to a misleading action or omission in breach of the UCPD.

The issue of drip pricing is further discussed in section 5.3 on Travel and Transport.

Under Article 7(4)(c) of the UCPD, using ‘entry-level prices’, i.e. indicating the price 'as from' a specific minimum amount, is permitted if the final price cannot ‘reasonably be calculated in advance’ due to the nature of the product.

The minimum price should, however, be a real price applicable to certain products, in accordance with the advertisement.

Commercial practices where traders advertise prices that do not exist could also be in breach of points 5 and 6 of Annex I to the UCPD, as they may be considered instances of bait advertising (point 5) or bait and switch (point 6).

Under Article 7(4)(d), traders must provide information about arrangements for payment, delivery, performance and complaint handling policy if these depart from the requirements of professional diligence. This means that such information only needs to be displayed if such arrangements are to the consumer’s disadvantage compared with the standard of special skill and care a trader may be reasonably expected to exercise towards consumers.

Under Article 7(4)(e), the existence of a right of withdrawal or cancellation must be mentioned in invitations to purchase whenever applicable. Under this requirement, traders are only required to inform consumers about the existence of such rights, without detailing the conditions and procedures to exercise them.

The Consumer Rights Directive lays down more rules on the pre-contractual information to be provided to the consumer before the contract is signed, for example on e-Commerce websites, during a seller’s home visit or during a sales call over the telephone 177  

For example, that Directive requires the trader to provide information about ‘the total price’ before the consumer is bound by a contract. 178 In addition, the consumer is entitled to the reimbursement of any extra payment where the consumer has not given express consent for such a payment, but the trader has inferred it by using default options e.g. by using ‘pre-ticked boxes’. 179  

For distance or off-premises contracts, the trader must provide information about the conditions, time limit and procedures for exercising the right of withdrawal. It must also provide the model withdrawal form set out in Annex I(B) to the Consumer Rights Directive. 180  

3.4.6Free trials and subscription traps

Free trials are marketing tools that allow consumers to order a product or subscribe to a service without costs or for a small amount (i.e. postage of the sample).

If a trader fails to provide his geographical address and identity in an invitation to purchase it can be contrary to Article 7(4)(b) UCPD. In addition, Article 6(1) of the Consumer Rights Directive and Article 5(1)(c) of the e-Commerce Directive require online traders to render accessible information that allows consumers to contact them. The requirements of these Directives qualify as material information under Article 7(5) UCPD.

If a trader does not make it clear to consumers that they may enter into subscriptions by signing up to a free trial, he may infringe Article 7(1), 7(2) and 7(4)(a) (in the case of an invitation to purchase) of the UCPD by omitting material information. Depending on the circumstances, there may also be an infringement of Article 6(1)(a) UCPD.

Omitting or providing information about the true costs of free trial offers in an unclear manner may be contrary to Articles 6(1)(d) and/or 7(1), 7(2) and 7(4)(c) UCPD.

Moreover, the Consumer Rights Directive contains a specific rule to improve the transparency of subscription offers on the internet in its Article 8(2). According to this rule, in distance contracts, information relating to the main characteristics of the service, the price inclusive of taxes, the duration of the contract and of the consumers' obligations must be provided in a clear and prominent manner, and directly before the consumer places his order. In addition, the consumer must be given the possibility to explicitly acknowledge that the order implies an obligation to pay, e.g. by activating an unambiguously labelled ordering button.

In addition, describing a products 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’ is a commercial practice which is in all circumstances considered unfair and thus prohibited under the UCPD. This follows from No 20 of Annex I of the Directive, which is further explained in Section 4.4.

Inertia selling (demanding payment for or the return or safekeeping of products not solicited by the consumer) is also a commercial practice which is in all circumstances prohibited under the UCPD. This follows from No 29 of Annex I of the Directive.

3.4.7Provision of certain information in another language

Under Article 7(2) of the UCPD, the trader has to provide material information in a clear, intelligible and unambiguous manner. This requirement can come into play where part of the material information is displayed on a website in a particular language targeting consumers in a specific country, as assessed on a case by case approach, while other pieces of material information are only available in a different language in the standard terms and conditions.

The Consumer Rights Directive allows Member States to require contractual information to be provided in their national language. 183 Article 7(5) of the UCPD confirms that information requirements in other EU legislation on commercial communications ‘shall be regarded as material’. Therefore, in countries that have taken up this option, a trader could be in breach of both the Consumer Rights Directive and the UCPD if it fails to provide the consumer with, for example, confirmation of the contract in the national language of the consumer’s country. In such a situation, the Consumer Rights Directive would prevail as sector-specific legislation as concerns failure to provide information in the relevant language at the pre-contractual stage of transactions, whilst the UCPD would apply at the advertising stage.

Section 1.4.3 contains further discussion of other EU information requirements regarded as ‘material information’ on the basis of Article 7(5).

3.4.8Planned obsolescence

Planned obsolescence, or built-in obsolescence in industrial design, is a commercial policy involving deliberately planning or designing a product with a limited useful life so that it will become obsolete or non-functional after a certain period of time.

From the UCPD point of view, planned obsolescence is not unfair per se. However, under Article 7, a trader who fails to inform the consumer that a product has been designed with a limited lifetime might, according to the specific circumstances of the individual case, be considered to have omitted to provide material information.

Existing EU legislation provides means of combating planned obsolescence.

The Ecodesign Directive 184 allows the Commission to establish mandatory minimum requirements for reparability, the life-time of products as well as information requirements on their estimated life-time.

There are Ecodesign requirements on life-time in place for a limited number of product categories, such as components of vacuum cleaners 185 and light bulbs 186 . Moreover, the Commission proposal for a revised Energy labelling framework 187 enables the future inclusion of information on the durability of products in the EU Energy label.

The EU Action Plan on Circular Economy, adopted in December 2015 188 , highlighted that the Commission will promote reparability, upgradability, durability, and recyclability by developing further product requirements in its future work under the Ecodesign Directive, as appropriate and taking into account the specificities of different product groups.

Where a lack of conformity with the contract, i.e. a defect, becomes apparent within two years from delivery of the good, the consumer can invoke the legal guarantee under the Consumer Sales and Guarantees Directive 189 . This also applies where the defect is caused by planned obsolescence practices, if this planned obsolesce is not in conformity with the contract. Under this Directive, within the first six months after delivery it is the seller who has to prove that no lack of conformity existed at the time of delivery.

3.5Aggressive commercial practices

The UCPD provides a single definition of aggressive commercial practices that can be applied across the EU. The Directive prevents traders from adopting selling techniques which limit the consumer’s freedom of choice or conduct with regard to the product, thereby distorting their economic behaviour.

Aggressive commercial practices are those which make use of harassment, coercion, physical force or undue influence. They can involve behaviour at the marketing stage but also practices which occur during or after a transaction has taken place.

Aggressive practices can involve conducts already covered by other national legislation, including contract and criminal law. The UCPD adds an additional layer of protection which can be activated by public enforcement means without necessarily having to start criminal or civil law proceedings.

Article 9(c) outlaws practices which exert undue influence on consumers, such as where a trader exploits a specific misfortune or circumstance of which it is aware to influence a consumer’s decision on a product.

Article 9(d) prevents traders from imposing disproportionate non-contractual barriers that are detrimental to consumers who wish to exercise their rights under a contract, including the right to terminate the contract or switch to another product or trader. This provision is important in particular to prevent non-contractual barriers to switching in telecoms and energy utilities contracts.

Article 9(e) covers any threat to take any action that cannot legally be taken. Aggressive practices often occur in doorstep sales or other off-premises sales of consumer goods and in the timeshare sector. Aggressive practices can also occur in debt recovery, where third parties are mandated to collect debts. Onerous or disproportionate switching barriers should also be regarded as aggressive practices.

The general rules in Articles 8 and 9 are complemented by eight specific aggressive practices described in the ‘black list’, which are banned in all circumstances. Some of these practices are further discussed in Chapter 4 on ‘the black list of commercial practices’. Certain practices towards elderly people, such as aggressive door-to-door selling methods, are discussed in Chapter 2.6 on vulnerable consumers.

4.The black list of commercial practices (Annex I)

The list in Annex I was drawn up to enable enforcers, traders, marketing professionals and customers to identify certain practices and give a more immediate enforcement response to them. It therefore leads to greater legal certainty. If it can be proved that the trader has carried out a blacklisted commercial practice, national enforcers can take action to sanction the trader without having to apply a case-by-case test (i.e. assessing the likely impact of the practice on the average consumer's economic behaviour).

In addition to the blacklisted commercial practices described below, Section 5.1.6 describes some practices listed in Annex I to the UCPD that could be particularly relevant to environmental claims.

4.1Products which cannot legally be sold — banned commercial practice No 9

This practice has been banned to prevent situations where a trader markets a product or a service and omits to clearly inform the consumer that there are legal rules which may restrict the sale, possession or use of a given product. This involves products or services for which the sale is banned or illegal in all circumstances, such as the sale of illegal drugs. Since such practices often involve criminal activities and/or dishonest operators, they are easy to identify. Such practices are usually also serious violations of other laws that usually are more specific and which take precedence over the UCPD.

A second category of practices concerns products or services which are not illegal but which may be legally marketed and sold only under certain conditions and/or subject to certain restrictions.

4.2Pyramid schemes — banned commercial practice No 14

This practice has been banned to prevent traders from luring consumers into a scheme promising them compensation when in fact the consumer will actually be compensated primarily for bringing new members into the scheme, rather than from the sale or consumption of products. The pyramid structure of the scheme is generally devised in such a way that it will deliver benefits only to the organisers at the top, whereas recruited consumers usually do not stand any reasonable chance to recover what they have invested. The Court has clarified the conditions under which a system of trade promotion can be considered a ‘pyramid promotional scheme’ within the meaning of Point No 14 of Annex I. The Court noted that:

‘the prohibition of pyramid promotional schemes is based (…) on three common conditions. First, such a promotion is based on the promise that the consumer will have the opportunity of making a commercial profit. Next, the realisation of that promise depends on the introduction of other consumers into the scheme. Finally, the greater part of the revenue to fund the compensation promised to consumers does not result from a real economic activity’. 198

In the same case, the Court clarified that:

‘a pyramid promotional scheme constitutes an unfair commercial practice only where such a scheme requires the consumer to give financial consideration, regardless of its amount, for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products’. 199  

In the case at hand, a company had advertised a bonus to new customers for every other customer they would recruit. Any newly recruited customer had to pay a registration fee. The Court expressed doubts as to whether the possibility for the consumer to receive compensation was derived primarily from the introduction of other consumers into the scheme, noting that the bonuses paid to existing members were funded only to a small extent by the financial consideration required from new members. The Court also recalled that, if a given practice is not prohibited by the provisions of Annex I, it may still be concluded that the practice is unfair within the meaning of the Directive’s general provisions (Article 5 to 9)’.

Hierarchical structures such as pyramid schemes are complex and it may be difficult to quantify the benefits of new members for the company. There may also be different methods for calculating the compensation received by existing members.

It seems necessary to distinguish between banned commercial practice No 14, where participants make money mostly or solely by recruiting new participants into the programme, and multilevel marketing, where the sales force is compensated mostly for sales they personally generate and also for the sales of the other salespeople they recruit.

It is also difficult to draw the line between consumers and traders: after a consumer has entered into a scheme, that person could, from the moment he starts promoting it , be considered as a trader and become subject to the prohibition of the UCPD himself, as regards the professional conducts carried out in the framework of the scheme. 204  

4.3Products which cure illnesses, dysfunctions and malformations — banned commercial practice No 17

This ban covers situations where a trader claims that its product or service can improve or cure certain physical or psychological ailments.

Such claims are already partly covered under specific EU legislation. The UCPD is also without prejudice to EU rules on the health properties of products. Point 17 therefore applies only in addition to existing EU rules on health and wellness claims. However, any misleading practices with regard to health and wellness products can still be assessed in the light of Article 6 of the UCPD (e.g. where the overall presentation is deceptive).

The prohibition relates first of all to claims regarding physical states classified as pathologies, dysfunctions or malformations by medical science. However, as such claims are also regulated by sector-specific EU legislation, the practical utility of point 17 in relation to these practices is marginal.

Indeed, under Article 7(3) of the Food Information Regulation, 206  information about a food provided by a trader to a consumer ‘shall not attribute to any food the property of preventing, treating or curing a human disease, nor refer to such properties’. This general provision applies to food business operators at all stages of the food chain, where their activities concern the provision of food information to consumers. The term ‘food information’ means information concerning the food and made available by means of labelling other accompanying material, or any other means including technology tools or verbal communication.

In addition, the EU’s Nutrition and Health Claims Regulation lays down detailed rules on the use of nutrition and health claims on foods in commercial communications such as advertising. 207 Under the Regulation, claims which imply that a food has particular beneficial nutritional properties (‘nutrition claims’) or that a relationship exists between health and a food category, a food or one of its constituents (‘health claims’) cannot be made without prior EU authorisation. The Regulation also specifically bans the following health claims: 208

Øclaims which suggest that health could be affected by not consuming the food;

Øclaims which make reference to the rate or amount of weight loss;

Øclaims which make reference to recommendations of individual doctors or health professionals and other associations.

Health-related claims are also covered by EU health and pharmaceutical legislation. Article 6(1) of Directive 2001/83/EC on medicinal products 209 makes it clear that no medicinal product may be placed on the market of a Member State unless a marketing authorisation has been issued. This Directive also sets out specific provisions on advertising medicinal products to the general public, which must: 210  

Øbe set out in such a way that it is clear that the message is an advertisement and that the product is clearly identified as a medicinal product;

Øinclude the following minimum information:

othe name of the medicinal product, as well as the common name if the medicinal product contains only one active substance,

othe information necessary for the correct use of the medicinal product,

oan express, legible invitation to read carefully the instructions on the package leaflet or on the outer packaging, as the case may be.

In addition, Article 90(a) to (k) of Directive 2001/83/EC bans certain specific advertising techniques. For example, the advertising of a medicinal product to the general public must not contain any material which;

a)gives the impression that a medical consultation or surgical operation is unnecessary, in particular by offering a diagnosis or by suggesting treatment by mail;

b)suggests that the effects of taking the medicine are guaranteed, are unaccompanied by adverse reactions or are better than, or equivalent to, those of another treatment or medicinal product;

c)suggests that the health of the subject can be enhanced by taking the medicine.

In addition, specific limits (i.e. bans) exist on promoting pharmaceuticals and medical treatments. These mainly concern relations between professionals i.e. traders and doctors. The choice of the product/treatment depends on the doctor or specialist who prescribes it. Any misleading advertising in this area (whether it concerns an authorised trader or not) will trigger the relevant EU or national rules and be subject to the respective systems of enforcement and sanctions. These will take precedence over the UCPD.

Banned commercial practice No 17 also applies to products or services such as cosmetics, aesthetic treatments, wellness products and similar. Based on the way they are marketed, such products and services are intended to produce certain improvements in the physical conditions of human or animal bodies but their marketing is not necessarily covered by sector-specific EU legislation.

As regards cosmetic products, Article 20(1) of Regulation 1223/2009 on cosmetic products 211 requires Member States to prohibit the wording, use of names, trademarks, images or other signs (figurative or otherwise) suggesting a characteristic the products in question do not possess in the labelling, making available on the market and advertising of cosmetic products.

A trader’s failure to produce the appropriate and relevant evidence on the physical effects a consumer can expect from a product’s use will fall under banned commercial practice No 17 on the grounds that a false claim has been made, if it is not covered by sector-specific EU legislation.

In order to avoid the ban, traders must be able to substantiate any factual claims of this type with scientific evidence. The fact that the burden of proof rests on the trader reflects the principle, more broadly formulated in Article 12 of the UCPD, which states that ‘Member States shall confer upon the courts or administrative authorities powers enabling them in the civil or administrative proceedings [...]: (a) to require the trader to furnish evidence as to the accuracy of factual claims in relation to a commercial practice if, taking into account the legitimate interest of the trader and any other party to the proceedings, such a requirement appears appropriate on the basis of the circumstances of the particular case’.

4.4Use of the word ‘free’ — banned commercial practice No 20

This ban is based on the idea that consumers expect a ‘free’ claim to be exactly that, meaning they receive something without giving money in exchange. This means that an offer can be described as free only if consumers pay no more than:

a)the minimum, unavoidable cost of responding to the commercial practice (e.g. the current public postage rates, the cost of telephoning up to and including the standard national rate or the minimum, unavoidable cost of sending a text message);

b)the true/real cost of freight or delivery;

c)the cost, including incidental expenses, of any travel involved if consumers collect the offer.

As a consequence, traders should not charge for packaging, handling or administration of a product marketed as "free". When traders make ‘free’ offers, they should also state clearly in all material what the consumer’s liability is for any unavoidable costs, as referred to above.

It is harder to determine whether the commercial practice is unfair when the word ‘free’ is used in combined offers, which are commercial offers involving more than one product or service. Combined offers are usually conditional purchase promotions or package offers.

The following are some principles which national authorities could take into account when assessing combined offers. They are already largely reflected in some advertising regulatory codes:

ØTraders must not try to recover their costs by reducing the quality or composition or by inflating the price of any product that must be bought as a pre-condition for obtaining a separate, free item.

ØTraders should not describe an individual element of a package as ‘free’ if the cost of that element is included in the package price.

The ban does not prevent traders from using the word ‘free’ in conditional purchase promotions where customers are required to buy other items (i.e. ‘buy one get one free’-type offers), provided that:

I.it is made clear to consumers that they have to pay all costs;

II.the quality or composition of the paid-for items has not been reduced; and

III.the price of the paid-for items has not been inflated to recover the cost of supplying the free item.

The key distinguishing feature of a conditional purchase promotion is that the item described as ‘free’ must be genuinely separate from and additional to the item(s) that the customer is required to pay for.

Hence, in such conditional purchase promotions, traders must be able to show:

I.that the free item is genuinely additional to the item(s) usually sold for that price or that the free item is genuinely separable from the paid-for item(s);

II.that they only supply the ‘free’ item with the paid-for item(s) if the consumer complies with the terms of the promotion; and

III.that consumers are aware of the stand-alone price of the item(s) they are paying for and that that price remains the same with or without the free item.

Point 20 of Annex I prohibits the use of the word ‘free’ to describe an individual element of a package offer if the cost of that element is included in the package price. A ‘package offer’ here means a pre-arranged combination of features offered for a single, inclusive price where customers cannot exercise genuine choice on how many elements of the package they receive for that price.

However, traders sometimes add new elements to existing packages without increasing the overall price of the package or reducing the quality or composition of the elements included. In those circumstances, consumers are likely to regard the element that has been added to the package as additional to the established package for a period after its introduction. However if the price of a package increases or its quality or composition is reduced after a new element is added, the new element may not be described as ‘free’.

One-off up-front costs incurred, for example, to buy or install equipment, do not negate claims that products or services supplied without subscription are ‘free’ within the meaning of No 20 of Annex I.

For example, digital free-to-air television channels are available only to consumers who have the necessary digital receiving equipment; similarly, call packages are available only to consumers who have a telephone line.

Likewise, connection fees payable to a third party to activate an internet service will not negate claims that the internet service is free, provided the connection fee has not been inflated to recover the cost of supplying the free internet service. Traders must always adequately inform consumers about the requirement for any of such up-front payments.

Products presented as ‘free’ are especially common in the online sector. However, many such services are only accessible for consumers on the condition that they provide personal data such as their identity and email address. This is an area where there is interplay between European data protection legislation and the UCPD.

As noted in Section 1.4.9 on the interplay with EU data protection rules, there is an increasing awareness of the economic value of information related to consumers’ preferences, personal data and other user-generated content. The marketing of such products as ‘free’ without telling consumers how their preferences, personal data and user-generated content are going to be used could in some circumstances be considered a misleading practice.

The application of the UCPD to games advertised as ‘free’ but also offering in-app purchases is discussed more in detail in Section 5.2.4 on ‘App stores’.

4.5Persistent marketing by a remote tool — banned commercial practice No 26

This ban aims to protect consumers against pestering by distance marketing tools. Point No 26 of Annex I does not prohibit distance marketing per se but rather persistent and unwanted solicitations.

Specific rules on unsolicited communications using electronic communications networks (i.e. by telephone or email) are laid down in Article 13 of the e-Privacy Directive 2002/58/EC. Automatic calling machines, fax machines or email may be only used for the purposes of direct marketing to contact users who have given their prior consent. These sector-specific provisions prevail over the UCPD, meaning that such solicitations do not have to be persistent and that Member States must penalise solicitations from the first call or email.

There are no similar sector-specific EU rules for marketing by post and other printed advertising. These are exhaustively regulated by the UCPD, and by point No 26 of the Annex in particular. Therefore, national provisions prohibiting all kinds of unaddressed printed advertising go beyond the fully harmonised provisions of the UCPD, unless consumers give prior consent (opt-in).

Such a prohibition would be allowed only if it falls outside the scope of the Directive, i.e. it does not have the aim of protecting the economic interest of consumers.

Some Member States have defended such prohibitions on different grounds, e.g. protecting the environment (reducing paper wasted on marketing material).

If for marketing purposes a controller uses personal data (e.g. the name and/or address of the recipient or other data relating to an identifiable person), this constitutes processing of such data under EU data protection law.

The safeguards and obligations under the Data Protection Directive (95/46/EC) must be complied with, including informing individuals that processing will be carried out before any marketing taking place and allowing individuals to object to having their personal data processed for this purpose. 218

4.6Direct exhortations to children — banned commercial practice No 28

This ban includes putting pressure on children to buy a product directly or to persuade adults to buy items for them (‘pester power’). A recurrent claim made by many traders about this ban is that it can be difficult to distinguish marketing directed at children from marketing directed at other consumers. Similarly, it could sometimes be unclear whether a commercial practice includes a direct exhortation to children.

Nevertheless, the check to determine whether a commercial practice falls under point 28 of Annex I must be carried out on a case-by-case-basis. A national enforcement authority or court is not bound by the trader’s own definition of the target group for the commercial practice in question, although that definition may be taken into account.

Some national authorities have developed criteria to guide case-by-case assessments of whether commercial practices include direct exhortations to children.

As an example, the ‘Principles for online and app-based games’ published by the UK Office of Fair Trading in January 2014, 223 contain the following example of commercial practices that are ‘less likely or unlikely to comply" with the prohibition on direct exhortation to children:

‘A game that is likely to appeal to children requires the consumer to ‘spend’ in-game currency, which may be either earned through gameplay or bought for real money. When the consumer runs out of that in-game currency, he/she is prompted — or encouraged or incited through in-game statements or images — to, for example, ‘buy more’, visit the shop to ‘get more’ or ‘become a member’.

These UK principles include the following criteria to determine whether games are likely to appeal to children:

‘It may be reasonably foreseeable that a game is likely to appeal to children through its content, style and/or presentation. Consideration should be given to the likely audience before designing commercial messages communicated to consumers and deciding whether a direct exhortation is to be included. A significant determinative factor is whether children are known to play the game or if the game is marketed to children. However, other factors or attributes that may mean a game is likely to appeal to children are set out in this indicative and non-exhaustive list:

•inclusion of characters popular with or likely to appeal to children

•cartoon-like graphics

•bright colours

•simplistic gameplay and/or language

•the game concerns an activity that is likely to appeal to or be popular with children

•the game is available to be downloaded, signed up to or purchased by anyone and is not age-restricted

•the game is featured in a children’s section of an app store’

According to the Nordic Consumer Ombudsmen: 224

‘Traders must not directly exhort or invite children to buy or persuade their parents or other adults to buy the traders’ products. Whether the marketing exhorts or invites children to buy must be assessed in each case. Such assessment must be made from the individual child’s perspective by taking into consideration its age, development and other factors rendering children particularly vulnerable. Importance will be attached, among others, to:

•How clearly the exhortation to buy has been phrased, including the impression created. Marketing containing text such as: ‘go buy the book’ or ‘ask your mum to pick up the product in the nearest shop’ will be a direct exhortation to buy.

•How the marketing is directed at children. Has the marketing been sent through a medium targeting children directly and individually, for example?

•How easy it is to buy the product marketed. As an example, is it possible to click a link, thereby making a purchase? Marketing with a text stating ‘buy here’ and linking to a page on which a purchase can be made will be a direct exhortation to buy.’

In 2013 and 2014, European national consumer protection authorities, acting through the Consumer Protection Cooperation (CPC) Network, carried out a joint enforcement action on online games that offer possibilities to make purchases while playing (in-app purchases) and that are likely to appeal to or to be played by children. 225  

In their common position paper of July 2014, the CPC authorities considered that Article 5(3) and (5) and point Nr 28 Annex I to the UCPD apply to games that are likely to appeal to children, not only those solely or specifically targeted at children. A game or application, and the exhortation contained within it, may be considered as directed at children within the meaning of point Nr 28 of Annex I if the trader could reasonably be expected to foresee that it is likely to appeal to children.

4.7Prizes — banned commercial practice No 31

The assessment of the first category of situations (i.e. no prize) is fairly straightforward. In order not to breach the ban, traders must always be able to demonstrate that they awarded the prize/s or equivalent benefit/s in the exact terms stated in their announcement to the consumer. Failing this, the practice would fall under the ban.

The second part of point No 31 (i.e. the prize or benefit is subject to the consumer paying money or incurring a cost) covers dishonest practices where, for instance, consumers are informed that they have won a prize but have to call a premium rate line to claim it, or where consumers are initially informed that they have won a prize but then learn that they must order another good or service to receive the advertised prize or the equivalent benefit.

The Court has clarified that even when the cost imposed on the consumer for claiming the prize (i.e. requesting information on the nature of that prize or taking possession of it) is minimal, as in the case of a stamp, compared to the value of the prize, and regardless of whether the payment of such costs procures any benefits to the trader, such practices are prohibited by point No 31 of Annex I. 228

5.Application of the UCPD to specific sectors

5.1Environmental claims

The expressions ‘environmental claims’ and ‘green claims’ refer to the practice of suggesting or otherwise creating the impression (in a commercial communication, marketing or advertising) that a good or a service has a positive or no impact on the environment or is less damaging to the environment than competing goods or services. This may be due to its composition, how it has been manufactured or produced, how it can be disposed of and the reduction in energy or pollution expected from its use. When such claims are not true or cannot be verified, this practice is often called ‘greenwashing’.

‘Greenwashing’ can relate to all forms of business-to-consumer commercial practices concerning the environmental attributes of goods or services. According to the circumstances, this can include all types of statements, information, symbols, logos, graphics and brand names, and their interplay with colours, on packaging, labelling, advertising, in all media (including websites) and made by any organisation, if it qualifies as a "trader" and engages in commercial practices towards consumers.

The UCPD does not provide specific rules on environmental claims. However, it provides a legal basis to ensure that traders do not present environmental claims in ways that are unfair to consumers. It does not discourage the use of ‘green claims’. On the contrary, the UCPD can help traders investing in the environmental performance of their products by enabling them to communicate these efforts to consumers transparently and by preventing competitors from presenting misleading environmental claims.

5.1.1Interplay with other EU legislation on environmental claims

As pointed out in Section 1.4, Article 3(4) and Recital 10 are key features of the UCPD. They set out the principle that the UCPD is designed to complement other EU legislation as a ‘safety net’ ensuring that a high common level of consumer protection against unfair commercial practices is maintained in all sectors.

Here are a few examples of the interplay between the UCPD and specific EU legislation concerning environmental claims:

5.1.2Main principles: Articles 6, 7 and 12 of the UCPD applied to environmental claims

The application of the UCPD to environmental claims can be summarised in two main principles:

I.Based on the general clauses of the UCPD, particularly Articles 6 and 7, traders must present their green claims in a clear, specific, accurate and unambiguous manner, to ensure that consumers are not mislead.

II.Based on Article 12 of the UCPD, traders must have the evidence to support their claims and be ready to provide it to competent enforcement authorities in an understandable way if the claim is challenged.

These principles are also reflected in several national guidance documents on environmental claims, notably the Danish Guidance on the use of environmental and other claims in marketing, 244 the UK Green Claims Guidance 245  and the French Practical Guide to Environmental Claims for traders and consumers. 246  

Other useful criteria and examples can be found in the Commission’s guidelines published in 2000 for making and assessing environmental claims. 250 The guidelines, which are consistent with the international standard ISO 14021-1999, contain references to environmental claims which should be deemed misleading.

5.1.3Application of Article 6 of the UCPD to environmental claims

Article 6 of the UCPD implies that consumers must be able to trust environmental claims put forward by traders. Consequently, in order not to be misleading, environmental claims should be presented in a clear specific, unambiguous and accurate manner.

An environmental claim can be misleading if it ‘contains false information and is therefore untruthful’ in relation to one of the elements listed in Article 6(1)(a) to (g).

An environmental claim can also be misleading if it ‘deceives or is likely to deceive the average consumer, even if the information is factually correct’ in one of the items referred to in Article 6(1)(a) to (g).

Environmental claims can be misleading if they are based on vague and general statements of environmental benefits such as ‘environmentally friendly’, ‘green’, ‘nature’s friend’, ‘ecological’, ‘sustainable’, ‘environmentally correct’, ‘climate friendly’, or ‘gentle on the environment’. Such claims could fall under Article 6(1)(a) and 6(1)(b) UCPD if they are likely to deceive the average consumer and to cause him to take a transactional decision he would not have taken otherwise.

Vague and general claims could be difficult, if not impossible, to substantiate. At the same time, they could convey the impression to consumers that a product or an activity of a trader has no negative impact or only a positive impact on the environment. Some action has been taken on the national level against unsubstantiated vague and general environmental claims.

When assessing an environmental claim, the product’s main environmental impacts over its lifecycle, including its supply chain are relevant. An environmental claim should relate to aspects that are significant in terms of the product’s environmental impact 256 . Moreover, claims should be clear and unambiguous regarding which aspect of the product or its life cycle they refer to. 257 If a trader makes an environmental claim by highlighting just one of several impacts the product has on the environment, the claim could be misleading within the meaning of Article 6 of the UCPD.

Codes of conduct may include commitments in relation to environmental protection or "green behaviour". If a trader that has undertaken to be bound by such a code breaches it he may perform a misleading action. This situation is covered by Article 6(2)(b).

The average consumer would expect code signatories to sell products which comply with that code. National enforcement authorities may then assess whether the average consumer is likely to take his or her purchase decision on this basis.

Certain misleading commercial practices in relation to codes of conduct are considered unfair per se under Annex I to the UCPD. These practices are treated in Section 5.1.6 – ‘Application of Annex I to environmental claims’.

In their ‘Compliance Criteria’, the multi-stakeholder group on environmental claims consider that:

‘If a trader or industry chooses to use own labelling schemes, symbols or certificates for marketing purposes, these labels must only be applied to the products/services or traders which meet the criteria set to qualify for use. The criteria should demonstrate clear environmental benefits compared with competing products or traders and should be easily publicly accessible. Otherwise, the labelling is likely to be misleading. Moreover, traders should consider third party verification to ensure the credibility and relevance of the label. The meaning or significance of the label must also be made clear to the consumer. Finally, such labels must not be capable of being confused with other labels, including, for example, labels of publicly run labelling schemes or schemes of competitors.’

5.1.4Application of Article 7 of the UCPD to environmental claims

Article 7 UCPD lists specific elements that are relevant when assessing whether a commercial practice involves a misleading omission.

Green claims can be misleading if based on vague and general statements of environmental benefits. Such claims could be less likely to be misleading under Article 7 if they are supplemented by prominent specifications or explanatory statements on the product’s environmental impact, for example by limiting the claim to specific environmental benefits.

If traders provide such supplementary information, they could ensure that they do not act in breach of Article 7(4)(a) (in the case of an invitation to purchase) by hiding or providing material information related to the ‘main characteristics of the product’ in ‘an unclear, unintelligible, ambiguous or untimely manner’.

In their ‘Compliance Criteria’, the multi-stakeholder group on environmental claims considers that:

‘Some products may be subject to detailed and ambitious rules and achieve such an excellent environmental performance that the use of a general benefit claim (presented without further qualifications) may be justified.

oThis could be the case if a product is covered by a license to use the ecolabel of a publicly run ecolabel scheme (such as the Nordic Ecolabel ‘the Swan’, the German 'Blue Angel' or the European Union Ecolabel ‘the Flower’) or other robust and reputable labelling schemes subject to third party verification.  259

oThis could also be the case if the life cycle assessment studies of the product have proven its excellent environmental performance. These studies should be made according to recognised or generally accepted methods applicable to the relevant product type and should be third-party verified. 260  If such methods have not yet been developed in the relevant field, traders should refrain from using general benefit claims (…).

For such products, traders should nevertheless ensure transparency concerning the relevant environmental aspects, and make sure that such information is easily available to consumers, including by displaying the relevant logo.’

Similarly, an environmental claim could be misleading under Article 7(2) if it is presented in an unclear, unintelligible or unclear manner. On the basis of a case-by-case assessment, this could be the case if the scope and boundaries of the claim are not made clear.

When making an environmental claim, the product’s main environmental impacts are relevant. The UK Department for Environment, Food and Rural Affairs ‘Green Claims Guidance’ 261 provides the following examples:

5.1.5Application of Article 12 of the UCPD to environmental claims

Article 12 of the UCPD clarifies that any claim (including environmental claims) should be based on evidence which can be verified by the relevant competent authorities.

Traders must be able to substantiate environmental claims with appropriate evidence. Consequently, claims should be based on robust, independent, verifiable and generally recognised evidence which takes into account updated scientific findings and methods.

The fact that the burden of proof rests on the trader reflects the principle in Article 12(a) of the UCPD that enforcement authorities should have the power ‘to require the trader to furnish evidence as to the accuracy of factual claims in relation to a commercial practice’.

In order to ensure that environmental claims are substantiated, traders should either have the evidence necessary to support their claims from the time the claims are put into use or be certain that it can be obtained and presented upon request.

A Memorandum by the Danish Consumer Ombudsman laying down documentation requirements applicable to Section 3(3) of the Danish Marketing Practices Act reads:

‘A trader must be able to substantiate factual statements made in marketing communications by documentation. However, the time when the documentation must be available does not explicitly follow from the provision.

(…)

The requirement of section 3(3) of the Marketing Practices Act is: ‘must be capable of being substantiated by documentation’. The wording thus does not expressly determine when the documentation substantiating the factual statements must be available. Neither does this appear explicitly from the travaux préparatoires of the Marketing Practices Act or from the Directives on Misleading and Comparative Advertising or the Unfair Commercial Practices Directive, to which the travaux préparatoires of the Marketing Practices Act referred. Nor is the Consumer Ombudsman aware of any case-law determining whether the documentation must be available at the time of marketing. However, in the Consumer Ombudsman’s opinion, the wording implies a requirement of certainty that the claims made in the marketing communication are capable of substantiation by documentation.

Moreover, the provision must be interpreted in the light of Article 12 of the Unfair Commercial Practices Directive. In the Consumer Ombudsman’s opinion, the purpose of the documentation requirement has to be that a trader must be certain that factual statements are true at the time of marketing so as not to mislead consumers. This means that the trader must either have the documentation ready when the marketing communication is published or be certain that it can be presented upon request. Otherwise, there is a substantial risk that the trader will market his product by means of false claims.

In this light, and as also reflected in Article 8 of the Consolidated ICC Code of Advertising and Marketing Communication Practice (2011), it must be considered good marketing practice if a trader is in possession of the documentation at the time of marketing or is certain that it can be obtained and presented.’

Although a claim may be correct and relevant to a product when the claim is first made, it could become less meaningful with time. In order to ensure that they are in a position to provide necessary documentation to national authorities in line with Article 12 of the Directive, traders should make sure that documentation for claims is up to date for as long as the claims remain in use in marketing.

In their ‘Compliance Criteria’, the multi-stakeholder group on environmental claims considers that:

‘If a trader uses environmental statements in its company name, product name etc., and the name is used for marketing purposes, such marketing is subject to the same documentation requirements as those which apply to other environmental claims in marketing communications, unless the company can prove that this name has no environmental connotation or existed already before environmental issues were taken up on the political/business agenda. However, in order to be contrary to the UCPD, a name used in marketing will need to mislead the average consumer and be likely to cause him to take a transactional decision he/she would not have taken otherwise.’

In their ‘Compliance Criteria’, the multi-stakeholder group on environmental claims considers that:

'Evidence should be clear and robust, and claims should be measured using the most appropriate methods. Independent third party testing should be made available for the competent bodies if the claim is challenged. If expert studies give rise to significant disagreement or doubt over environmental impacts, the trader should refrain from marketing the message altogether.

The content and scope of the documentation will depend on the specific content of the statement. The complexity of the product or activity will be of relevance in this respect.

Claims should be reviewed and updated regularly to ensure that they remain relevant. Claims should be reassessed and updated as necessary, in view of technological development, and the emergence of comparable products or other circumstances that may affect the accuracy or currency of the claim.'

'Environmental claims should not relate to an improvement compared to a product from the same trader or a competitor that is no longer available on the market or the trader no longer sells to consumers, unless this improvement is significant and recent.'

5.1.6Application of Annex I to environmental claims

The following practices listed in Annex I are particularly relevant to environmental claims:

This provision clarifies that traders should not mislead consumers by unduly emphasising attributes that come from regulatory requirements.

5.1.7Comparing environmental claims

Environmental claims may suggest that a product has a more positive impact on the environment or is less damaging to the environment than competing goods or services. Products bearing such comparative should be assessed against similar products.

National enforcers and self-regulatory bodies usually interpret this principle to mean that comparisons should refer to products within the same product category. However, it would seem equally important that the method used to produce the information is the same, that it is applied in a consistent manner (i.e. the same methodological choices and rules are applied, results are reproducible), and that the method applied allows comparisons, otherwise any comparison becomes less meaningful. 265  

Directive 2006/114/EC on misleading and comparative advertising lays down the conditions under which comparative advertising is permitted. Comparisons of the environmental benefits of products should, among other things:

1.not be misleading within the meaning of Articles 6 and 7 of the UCPD;

2.compare goods or services meeting the same needs or intended for the same purpose;

3.objectively compare one or more material, relevant, verifiable and representative features of those goods and services.

5.2Online sector

As pointed out in Section 1, the Directive has a very broad scope of application as it covers the totality of business-to-consumer transactions, whether offline or online.

It is technology neutral and applies regardless of the channel, medium or device used to implement a business-to-consumer commercial practice.

5.2.1Online platforms 

The term "platform" is not defined in the UCPD and its use has no impact on the application of the Directive. However, the term can be useful in order to describe some of the business models that are emerging along with the digital economy.

Platforms generally provide infrastructure and enable interactions between suppliers and users for the provision of goods, services, digital content and information online.

On-line platforms work according to many different business models: their behaviours range from merely allowing users to look for information supplied by third parties to facilitating, often against remuneration, contractual transactions between third party traders and consumers or advertising and selling, in their own name, different kinds of products and services including digital content. This box provides some examples of business models often referred to as "platforms".

5.2.2The applicability of the UCPD to online platforms 

Given that the UCPD only applies in B2C situations, the first step in assessing whether this Directive is applicable to any given online platform provider should be to evaluate whether it qualifies as a "trader" under Article 2(b) UCPD.

According to a case-by-case assessment, a platform provider may be acting for purposes relating to its business whenever, for example, it charges a commission on the transactions between suppliers and users, provides additional paid services or draws revenues from targeted advertising.

The second step in assessing whether the UCPD is applicable should be to evaluate whether the platform provider engages in “business-to-consumer commercial practices” within the meaning of Article 2(d), towards users (suppliers and recipients) who qualify as "consumers" within the meaning of Article 2(a) UCPD.

A platform qualifying as a "trader" must always comply with EU consumer and marketing law as far as its own commercial practices are concerned. In particular, traders are subject to the transparency requirements of Articles 6 and 7 UCPD, which requires them to refrain from misleading actions and omissions whenever engaging in the promotion, sale or supply of a product to consumers.

Furthermore, under Article 5(2) UCPD, no platform provider qualifying as a "trader" should act contrary to the requirements of professional diligence in its commercial practices towards consumers. Under Article 2(h) UCPD, ‘professional diligence’ means the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, commensurate with honest market practice and/or the general principle of good faith in the trader’s field of activity.

The professional diligence duties of these traders vis-à-vis consumers under the UCPD is different from, whilst complementary to, the regime on exemptions from liability established under Article 14 of the e-Commerce Directive for illegal information hosted by service providers at the request of third parties.

In particular, Article 14(1) is often invoked by some platforms, which argue that they merely act as intermediaries providing hosting services, as defined in that provision, and that they are thus not liable for the information stored.

Furthermore, Article 15(1) of the e-Commerce Directive prevents Member States from imposing on such "hosting service providers" a general obligation to monitor the stored information or to actively engage in fact-finding.

The above provisions of the e-Commerce Directive have a broad scope of application and are relevant in relation to different kinds of illegal information hosted by platforms, including information in breach of consumer law, information infringing copyright rules, hate speech, criminal content (terrorism, child sexual abuse), defamatory statements, etc, as well as information regarding illegal activity.

This Guidance document is not meant to provide clarification of the relevant provisions of the e-Commerce Directive. The role of platforms in general will be assessed within the framework of a comprehensive analysis on the role of intermediaries. 269 This Guidance only refers to provisions of the e-Commerce Directive in relation to their interplay with the UCPD. Its sole purpose is to clarify and facilitate enforcement of the UCPD vis-à-vis online platforms against the background that they often argue that they can invoke, in particular, Article 14 of the e-Commerce Directive.

The Court of Justice has interpreted Article 14(1) of the e-Commerce Directive as regards the liability of hosting providers in several cases, notably, Joined Cases C-236/08 to C-238/08, Louis Vuitton, (para. 113-119) and Case C-324/09, L'Oreal (para. 123-124, emphasis added), where it concluded that this provision:

"must be interpreted as applying to the operator of an online marketplace where that operator has not played an active role allowing it to have knowledge or control of the data stored. The operator plays such a role when it provides assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting them.

Where the operator of the online marketplace has not played an active role within the meaning of the preceding paragraph and the service provided falls, as a consequence, within the scope of Article 14(1) of Directive 2000/31, the operator none the less cannot, in a case which may result in an order to pay damages, rely on the exemption from liability provided for in that provision if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale in question were unlawful and, in the event of it being so aware, failed to act expeditiously in accordance with Article 14(1)(b) of Directive 2000/31."

On the one hand, "the mere fact that the operator of an online market place stores offers for sale on its server, sets the terms of its service, is remunerated for that service and provides general information to its customers" does not prevent that provider from relying on this exemption from liability (see para. 115 of the L'Oreal judgment). On the other hand, the hosting service provider does play an active role, which prevents it from being able to rely on this exemption, inter alia, when "it provides assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting" those offers (see para. 116 of that judgment). Similar conclusions were drawn in Joined Cases C-236/08 to C-238/08, Louis Vuitton, concerning the sale by Google of keywords containing trademarks ('adwords'). 270  

Whether a hosting service provider plays an active or a passive role, as explained by the Court of Justice, must be assessed on a case-by-case basis. While it is ultimately only for the Court of Justice to rule on the interpretation of this provision of Union law, it can be noted that there is substantial case law from national courts on this issue, but going in often opposite directions. 271 In accordance with the case law of the Court of Justice, 272 the key element in these rulings relates to the platform provider's capacity to have knowledge of or control over the stored data.