Challenges and some B2C enforcement actions

New technologies have developed new business models and more sophisticated marketing techniques: in fact, the internet has fundamentally changed the way consumers shop and businesses advertise and sell their goods and services. It has created innovative ways of accessing, sharing and evaluating information, for example on prices, technical product characteristics and quality reviews. 2012).

Despite the UCPD offers a robust framework ensuring to the consumers safety, information, education, rights, means of redress and enforcement, several unfair practices, such as the lack of essential information at the advertising stage and misleading description of products, have been reported in different fi elds.

As pointed out by Mrs. Viviane Reding (Vice-President of the European Commission) at the Consumer Summit held in 19 March 2013 in Brussels, the travel and transport, digital and on-line, fi nancial services and immovable property markets are major sectors where consumers continue to lose out.

Recently, in order to detect promptly new trends increasing consumers’

confi dence in internal market and especially in e-commerce, which is a potential tool for development and revitalization of the production system, the AGCM ordered rogue trader to take their websites off-line pursuant to article 27, para.

3, of the Consumer Code and to articles 14, para. 3, 15, para. 2, and 16, para. 3, of Legislative Decree No. 70/2003, that transposed the Directive No. 31/2000.

In detail, in some recent cases, in the Energy and Manufacturing Sector, the AGCM invited the domain name holder to interrupt contents transmission and to disable any access to the website from web consumers based in Italy. For instance, the AGCM ordered a trader to stop all activities aimed to advertise, on Google Adwords or on other websites, the use of free software that can be downloaded from a specifi c web address (PS7444, Italia – Programmi.

net-abbonamento per software) because such behavior was a misleading advertising. Likewise, a similar order was issued by the AGCM against a trader

whose website was fi lled with misleading information concerning both the availability of the goods advertised and the time of delivery (PS7677 Private outlet – Mancata consegna merce).

Moreover, in 2013 the INDICAM (Istituto di centromarca per la lotta alla contraffazione), a private body aimed at fi ghting against counterfeiting of goods, in order to grant protection of Made in Italy, lodged some complaints against rogue traders that sold on line (guccioutlet-italy.org and www.pradaborselinea.

com; www.discountraybansunglasses.org and www.raybanstores.com; www.

emporioarmaniwatchesuk.uk.com) counterfeit goods prompting consumers to buy, at a reduced price, goods presented as original and that gave misleading information about the guarantee and the right of withdrawal. The AGCM initiated still pending proceedings (PS8757, PS8758, PS8976, PS8985) and issued an interim measures (in cooperation with the Italian Financial Police) ordering to take off line the websites.

A recurring problem is the incorrect or misleading information on legal rights and warranties. For instance, Apple was involved in two proceeding before the AGCM: in the fi rst one (PS7256) the American company was investigated for two unfair commercial practices, namely for: i) the refusal to grant the “legal guarantee”, also through misleading or omissive information about its contents;

ii) the offer of the additional assistance services (called AppleCare Protection Plan) that cover the two year legal warranties, also through misleading or omissive information about their contents.

With the ruling No. 23155 of 21 December 2011, the AGCM did not accept the commitment submitted by Apple and imposed fi nes for overall 900.000 € ordering the company: i) to modify the package of the Apple Protection Plan; ii) to publish on the website a brief summary of the AGCM decision for 30 days;

iii) to present in 60 days measure to cease the practices and to comply with the AGCM decision. The second (non-compliance) proceeding (IP151) was started against Apple because the measures adopted up until 10 November 2012 were considered insuffi cient for both the previous condemned commercial practices.

The AGCM fi ned Apple 200.000 €. Anyway, due to this enforcement action, Apple adopted – from 10 November 2012 – new measures and relevant changes of its commercial policy as the company modifi ed completely the way to convey to consumers the information on the legal warranty, clarifying its existence in every relevant part of the website (as well in the FAQ and in the Terms and conditions). Besides, Apple decided to sell the APP only through the website and modifi ed the package, taking off any reference to duration and coverage.

The AGCM investigated also on the information given by several air carriers or by some travel agencies on their websites, notably the lack of transparency of costs. In fact, often the packages, fl ights and hotels still advertised on the websites at very special prices turned out to be run out (while traders should keep their offers updated); furthermore, the price consumers were charged for travel services at the end of the on line booking process turned out to be higher than the one they have viewed (and agreed) at the start of the booking process as all applicable, unavoidable and foreseeable taxes, charges, surcharges and fees were not included in the price.

In a case 5 commercial practices were alleged and assessed to an air carrier, namely: i) misleading advertising (press/trader’s Italian website) concerning fl ights that the consumers could not fi nd and buy; ii) additional costs (i.e.: web check-in fee, credit card surcharge, VAT on domestic fl ights) that were not shown in the air fare, but were automatically added during the on line booking process;

iii) lack or not working after-sales consumer care to get the refund of the tickets (or of a part of them) in case of non-use of the fl ight, both for trader’s choice and for passenger’s choice; lack of a toll-free phone number to contact the trader; iv) the General conditions of carriage on the Italian trader’s website were published in English; v) additional charges in case of date, time, passengers names and fl ight segments changes or in case of reissue of the boarding pass at the airport (PS892, Ryanair fi ned for overall 502.500 €; later a non-compliance proceeding was started (IP117) and ended with a ruling that imposed to Ryanair another fi ne as the air carrier did not submit the compliance report within sixty days from the date of the notifi cation of the previous AGCM decision with regard to two (of the fi ve assessed) commercial practices).

Another commercial practice that was assessed unfair concerned the optional insurance fee (in case of non-use of the fl ight) offered on an “opt out” basis with the need for the consumer to remove a tick from a box to opt-out (PS583 Opodo, Agenzie di viaggi on line).

Recently, the AGCM investigated also collective purchasing website.

In particular, the main objections notifi ed to a trader were: i) misleading information on the essential characteristics of the goods and services sold, the percentage rebate applied and the fi nal price; ii) unfair conditions and terms even concerning trader’s liability; missing information on the conditions of payment (e.g. timing of charging); iii) prolonged refusals to refund to the consumers the amounts charged or blocked for cancelled purchases or not successfully ended deals; iv) inadequate customer service: only a free e-mail contact was available;

the traders’ answers to consumers’ complaints (regarding diffi culties in using

the coupons with the traders’ partners) were generic, late and confused. The proceeding ended without infringement as the AGCM accepted the commitments set up by the trader during the proceedings. The commitments concerned: some Terms of General terms and Conditions; the implementation of the monitoring activities on partners including control procedures and a black-list of less reliable partners; a clear indication of any restrictions the coupons were subject to; the improving both the procedure for repayment of the amounts paid by the consumers and the procedure for managing complaints and repayments; a clear indication of the way to contact the traders (email, phone numbers) in order to get information about the availability of the products/services and to exercise the after-sale guarantees or to complain. (PS6903, Groupalia).

Other relevant enforcement actions involved “green claims” – namely any commercial communication (including logos, symbols and photographs) intended to suggest that the product and/or the service advertised have a reduced environmental impact or is less damaging to the environment than competing goods or services – that need to be drawn up in a clear, truthful, accurate, not misleading or ambiguous way. Green marketing, indeed, is a powerful tool for traders, likely to weight on consumer’s choices – as consumers turn to be very sensitive to environmental issues and prefer to buy products that are more

“sustainable” to the environment – and it protects traders that make genuine claims from unfair competition from those making unfounded environmental claims.

Even though only single sectorial community laws provide for specifi c rules on the environmental performance of a category of products or for specifi c prohibition of misleading use of the claim, logo or label (in absence of a EU legislation specifi cally harmonizing environmental marketing), signifi cant principles and criteria are established in several international documents, such us the UCPD Guidelines of the European Commission (December 2009), the International Chamber of Commerce (January 2010) and the OECD (Environmental claims, March 2011) and were applied by the AGCM a number of times.

With regard to the following, repeatedly emphasized claims “the additive ECM makes packaging and plastic products completely biodegradable” and

“if a plastic product contains at least 1% of additive ECM, in relation to the weight, the entire product will be completely biodegradable”, related to plastic shoppers, the AGCM banned them because they were not supported by scientifi c evidence so that both plastic manufacturers and consumers were wrongly induced to believe that goods that have been treated with the additive ECM

have a reduced environmental impact (due to the rapidity and completeness of their biodegradation; PB385 Italcom – ECM Biodegradabili).

In another case, the AGCM considered misleading the claim, printed on the mineral water bottle, “0 Impact. Respect the nature. “Ferrarelle offset the CO2 emitted to produce this bottle with the creation of new forests” because the statement on the total compensation of the negative environmental effects due to the bottle production turned to be overvalued as the trader did not mentioned that the compensation was limited to two months; it concerned a specifi c number of bottles; and that the effects will occur in the medium-long term (seven years;

PS7235, Ferrarelle impatto zero). A recent proceedings concerned the claim of biodegradability and compostability of diapers, including the spending the label “Compostable CIC” issued by the Italian Composting Association, as well as additional voluntary environmental claims relating to the alleged reduction of CO2 emissions and spending by local authorities and families directly related to the production and use of advertised diapers than conventional diapers.

Lastly, it is worth mentioning few proceedings opened on pyramid selling schemes (banned by art. 23, para. 1, lett. p), of the Consumer Code and by the Legislative Decree No. 173 of August 17, 2005). In the fi rst one, a complex marketing and sale system of a fruit juice, called “XanGo Juice”, turned out to be an unfair commercial practice in which recruits that registered at the trader’s website became an “agent” or a “preferred customer”, upon payment of a registration fee and upon purchase of a minimum quantity of fruit juices.

The gains were related to the possible establishment of a network up to nine levels, so that the recruits were encouraged to seek out a growing number of other persons to join the scheme. The AGCM issued an interim measure against the trader ordering to stop any recruitment and registration activities (order No. 21917 of December 15, 2010); at the end of the proceedings, the trader was fi ned 250.000 €. The AGCM pointed out that all the rewards recruits have been promised were not based on product sales, but on some essential subjective requirements related to the recruiting process as the agents were bound to make monthly purchases of the drinks, could not resell the products and did not get any commissions on their purchases, but made every efforts to introduce to the scheme other agents according to a Compensation Plan. (PS6425, Xango – Prodotti con succo di mangostano). Afterwards, the AGCM initiated another proceedings bringing against the same rogue trader the indictment of non-compliance with the previous inhibitory ruling and fi ned him 50.000 € as the new Compensation plan still linked the rewards recruits to the recruiting process (IP120, Xango – Prodotti con succo di mangostano).

Also another trader was fi ned 250.000 € as he had carried out a marketing and sale system of dietary supplements and cosmetics that turned to be, in the light of the fi ndings of the investigatory proceedings, an unfair commercial practice which implied a registration to the company’s website, the payment of an entrance fee and the purchase of a kit; besides, the agents could recover the amounts paid only through the sponsorship and the entry of other persons into the scheme (PS4893, Agel enterprises – integratori).