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Unfair commercial practices

Unfair commercial practices

 

SUMMARY OF:

Directive 2005/29/EC concerning unfair business-to-consumer commercial practices

Directive (EU) 2019/2161 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU as regards the better enforcement and modernisation of EU consumer protection rules

WHAT IS THE AIM OF THE DIRECTIVES?

  • Directive 2005/29/EC:
    • defines the unfair business-to-consumer commercial practices which are prohibited in the EU.
    • applies to any act or omission directly related to the promotion, sale or supply of a product* by a trader to consumers*. It thus protects the economic interests of consumers before, during and after a commercial transaction has taken place.
    • ensures the same level of protection to all consumers irrespective of the place of purchase or sale in the EU.
  • Directive (EU) 2019/2161 on better enforcement and modernisation of EU consumer protection rules amends Directive 2005/29/EC, addressing new developments of the market, in particular in the digital area.

KEY POINTS

  • Unfair commercial practices are those which:
    • are contrary to the requirements of professional diligence* and;
    • are likely to materially distort the economic behaviour of the average consumer.
  • Certain consumers enjoy a higher level of protection due to their particular vulnerability to the practice or the product, their age (children or the elderly), their naivety or their mental or physical infirmity.
  • The directive distinguishes 2 categories of commercial practice that are unfair if they cause the average consumer to take a transactional decision that the consumer would not have taken otherwise: misleading commercial practices (by action or omission) and aggressive commercial practices.
  • Furthermore, Annex I to Directive 2005/29/EC contains a list of practices that are prohibited in all circumstances (‘blacklist’).

Misleading commercial practices

Misleading actions

A practice is misleading if it contains false or untrue information or is likely to deceive the average consumer, even though the information may be correct, and cause them to take a transactional decision they would not otherwise have taken. Examples of such actions include false or deceptive information regarding:

  • the existence or nature of the product;
  • the main characteristics of the product (its availability, benefits, risks, composition, geographical origin, results to be expected from its use, etc.);
  • the extent of the trader’s commitments (in codes of conduct by which the trader has agreed to be bound);
  • the price or the existence of a specific price advantage;
  • the need for service or repair.

Amending Directive (EU) 2019/2161 introduces a specific rule addressing misleading marketing of goods as being identical when in reality their composition of characteristics are different (often referred to as ‘dual quality’ goods).

Misleading omissions

  • A practice is also misleading if material information needed by the average consumer to take an informed transactional decision is omitted or provided in an unclear, unintelligible, ambiguous or untimely manner and is likely to cause them to take a purchase decision that they would not have otherwise taken.
  • The directive provides a general list of information that should be regarded as material, such as price and the main characteristics of the product. Amending Directive (EU) 2019/2161 includes additional requirements for online sales, such as: obligations for online marketplaces* to inform consumers about the main criteria determining the ranking* of the offers provided in response to a search query, and the obligation to inform whether and how the authenticity of consumer reviews is checked.

Aggressive commercial practices

  • Transactional decisions must be made freely by the consumer. A practice is aggressive and unfair if by harassment, coercion or undue influence* it significantly impairs the average consumer’s freedom of choice and causes them to take a transactional decision they would not otherwise have taken.
  • Several elements must be taken into consideration in order to determine whether a commercial practice is aggressive or not. These include:
    • the nature, location and duration of the practice;
    • the possible use of threatening or abusive language or behaviour;
    • the exploitation by the trader of any specific circumstance of such seriousness (e.g. a death or a serious illness) as to impair the consumer’s judgment in order to influence their decision with regard to the product;
    • any disproportionate non-contractual condition imposed on the consumer wishing to exercise their contractual rights (such as terminating or switching a contract).
  • Annex I to Directive 2005/29/EC contains a list of 35 commercial practices which are considered unfair in all circumstances.

Practices prohibited in all circumstances (‘blacklist’)

  • Directive 2005/29/EC contains a list of commercial practices that are prohibited in all circumstances. Amending Directive (EU) 2019/2161 has added to the list several additional practices prohibiting the publication of fake consumer reviews, hidden advertising in search results and resale of tickets that the trader has acquired using automated ‘bots’.

Redress and penalties

  • Amending Directive (EU) 2019/2161 seeks to ensure that consumers have the right to individual remedies (for example, compensation, a price reduction, etc.) when they are harmed by unfair commercial practices.
  • EU countries must introduce effective, proportionate and dissuasive penalties to punish traders who break national rules on unfair commercial practices.
  • Amending Directive (EU) 2019/2161 provides for criteria to be applied when imposing fines and requires EU countries to provide for fines of up to at least 4% of the trader’s turnover or €2 million when information about the turnover is not available when national authorities of several countries are working together on major cross-border infringements affecting consumers in several EU countries.

Guidance document

In 2016, the Commission issued updated guidance on the implementation and application of the directive. It explains key concepts and rules and gives practical examples taken from the case-law of the Court of Justice of the European Union and from national courts and administrations to make enforcement easier for national authorities and to ensure greater legal certainty for traders.

FROM WHEN DO THE DIRECTIVES APPLY?

  • Directive 2005/29/EC had to become law in the EU countries by 12 June 2007. EU countries had to apply the rules of the directive as of 12 December 2007.
  • Amending Directive (EU) 2019/2161 has to become law in the EU countries by 28 November 2021. EU countries must apply the rules of the directive as of 28 May 2022.

BACKGROUND

For more information, see:

KEY TERMS

Product: any good or service including immovable property, digital service and digital content, as well as rights and obligations.
Consumer: an individual who, in commercial practices covered by this directive, is acting for purposes which are outside their trade, business, craft or profession.
Professional diligence: the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers corresponding to honest market practice and/or the general principle of good faith in the trader’s field of activity.
Online marketplace: a service using software, including a website, part of a website or an application, operated by or on behalf of a trader which allows consumers to conclude distance contracts with other traders or consumers.
Ranking: the relative prominence given to products, as presented, organised or communicated by the trader, irrespective of the technological means used for such presentation, organisation or communication.
Undue influence: exploiting a position of power in relation to the consumer so as to apply pressure, even without using or threatening to use physical force, in a way which significantly limits the consumer’s ability to make an informed decision.

MAIN DOCUMENTS

Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘unfair commercial practices directive’) (OJ L 149, 11.6.2005, pp. 22-39)

Successive amendments to Directive 2005/29/EC have been incorporated into the original text. This consolidated version is of documentary value only.

Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules (OJ L 328, 18.12.2019, pp. 7-28)

RELATED DOCUMENTS

Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee — A New Deal for Consumers (COM(2018) 183 final, 11.4.2018)

Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004 (OJ L 345, 27.12.2017, pp. 1-26)

See consolidated version.

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 (SWD(2016) 163 final, 25.5.2016)

last update 20.05.2020

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