Unfair Commercial Practices Directive
The Directive prohibits unfair commercial practices in business to consumer arrangements and was implemented into Irish Law by the Consumer Protection Act 2007.
In the Directive a commercial practice is defined as "any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers" (Article 2).
Article 5 of the Directive prohibits unfair commercial practices which includes any commercial practice which is contrary to the requirements of professional diligence and materially distorts (or is likely to materially distort) the economic behaviour of the average consumer whom it reaches or to whom it is addressed.
Article 6 of the Directive prohibits misleading actions which include commercial practices which contains false information and deceive or are likely to deceive the average consumer as to matters such as the main characteristics of a product or its price and as a result cause him (or are likely to cause him) to take a transactional decision that he would not otherwise have taken.
A Hungarian consumer was attempting to change cable TV supplier and coordinate the expiry of his current contract with a new contract with another supplier. He sought details as to when the period covered by his last payment would expire and requested that his service be disconnected on that date. Because of incorrect information provided by his current supplier the consumer incurred subscription charges from both suppliers for a short period of time.
The Hungarian Supreme Court referred two questions to the ECJ for a preliminary ruling:
Firstly, where a commercial practice amounts to a misleading action (under Article 6), is it also necessary to show that it is contrary to the requirements of professional diligence (under Article 5) in order to establish unfairness?
Secondly, can the communication of incorrect information by a trader to a consumer be a misleading commercial practice, even though that information concerns only one single consumer?
The court answered the first question in the negative pointing out that this issue has already been considered in the case of CHS Tour Services GmbH v Team4 Travel GmbH.
In relation to the second question the cable company had argued that in order to be prohibited under the Directive, any act or omission must be recurrent and concern more than one consumer. The ECJ rejected this argument stating firstly that the wording of the Directive does not set out any explicit threshold as to frequency or number of consumers concerned and secondly given that the purpose of the Directive is to protect consumers, it could not be interpreted so as to require any such threshold.
The Court also noted that such an interpretation would give rise to legal uncertainty and would require consumers to establish that other individuals have been harmed by the same operator which could be difficult to do.
While the Court pointed out that it was irrelevant that the conduct was allegedly unintentional and that the cost to the consumer was insignificant it should be noted that Section 78 of the Consumer Protection Act 2007 states that it will be a defence to any criminal proceedings for the accused to prove both of the following:
commission of the offence was due to a mistake or the reliance on information supplied to the accused or to the act or default of another person, an accident or some other cause beyond the accused’s control;
the accused exercised due diligence and took all reasonable precautions to avoid commission of the offence.
Furthermore Section 71 of the Act (which allows for civil proceedings by way of prohibition order) states that the court shall have regard to the nature and extent of the prohibited act or practice.
Businesses dealing directly with consumers should carefully note the fact that even a single act of prohibited conduct can constitute an offence.