Cyriel Ruers and Manon Dupont recently wrote a chronicle for the Tijdschrift voor Consumentenrecht & handelspraktijken (TvC) on the main developments in unfair commercial practices in 2020-2022. The chronicle was recently published in TvC issue 6. In this blog, we address some remarkable profile cases of the Netherlands Authority for Consumers and Markets (ACM) that illustrate the boundaries for sales to consumers via online shops, and look ahead to 2024.
Fake likes and fake followers for food supplements (2023)
The police tipped off ACM in mid-2023 that Bicep Papa – which sells dietary supplements under the name MB Nutrition – had bought a large number of fake followers and fake likes on Instagram. The ACM’s investigation showed that 98,000 followers and 27,000 likes were involved for three Bicep Papa-affiliated Instagram accounts.
In the ACM’s opinion, buying fake followers and fake likes is prohibited because traders thereby mislead consumers about the popularity and quality of their products. The large numbers of fake followers and fake likes (inauthentic engagement) allegedly paint a more positive picture than consumers actually have. The impression that consumers have about a trader plays a role in their purchases, according to the ACM.
The ACM believes that Bicep Papa violated Article 6:193c (1)(c) and (f) of the Dutch Civil Code (DCC). That article prohibits a trader from spreading misleading information about its status and accreditation, among other things. Bicep Papa was furthermore guilty of fraudulently impersonating a consumer, in violation of Article 6:193g(v) DCC. Article 6:193g DCC is on the so-called ‘black list’ of unfair commercial practices that are misleading and prohibited in all circumstances.
Neither of the provisions invoked by the ACM was specifically written to prohibit the use of fake likes and fake followers, since the violations predate the modernisation of the consumer rules (known as the Omnibus Directive). Under the current regime, the use of fake likes and fake followers is expressly prohibited under Article 6:193g(aa) DCC: “posting or arranging for the posting of fake consumer reviews or recommendations, or misleadingly presenting consumer reviews or social media recommendations, in order to promote products”.
The ACM imposed an order subject to a penalty on Bicep Papa on 24 November 2020 to put a stop to these unfair commercial practices within one month. However, verification by the ACM showed that Bicep Papa had failed to comply with the order. After a partially successful objection by Bicep Papa, the ACM decided to recover €37,000 in forfeited penalty payments. Bicep Papa appealed that decision before the Rotterdam District Court. The court dismissed the appeal. Bicep Papa had insufficiently demonstrated timely compliance with the order.
As far as we know, this is the first case in which the ACM has imposed a sanction for the use of inauthentic engagement. Influencers have already stopped using fake likes and fake followers after warnings from the ACM. The case is also in keeping with the trend of an increased focus of the ACM on online deception of consumers.
Manipulation of consumer product reviews (2022)
The ACM fined TrendX €100,000 in 2022 for misleading consumers in online sales. TrendX was a webshop that sold around 90% of its product range via ‘dropshipping’. Dropshipping means that the selling webshop itself orders products from other (often cheaper) webshops and has these products sent directly to its customers. Dropshipping as such is not prohibited under Dutch law.
After several reports about TrendX on its ConsuWijzer, the ACM launched an investigation into TrendX’s commercial practices. The investigation showed that TrendX posted unauthentic positive reviews for several products on its website. As many as 184 reviews were left using one single e-mail address of a TrendX employee. TrendX also made use of a system to hide reviews of three stars or lower from consumers.
TrendX argued that negative reviews were first checked before publication. In practice, however, this check rarely took place and negative reviews were therefore not published. TrendX was also unclear about the delivery time of products purchased from it. For instance, different delivery times were stated in various places on the site and in the confirmation email after a product was purchased.
According to the ACM, these commercial practices are in violation of Article 6:193c(1)(b) and (c) and Article 6:193g(v) DCC. As explained above, the unfair commercial practices referred to in Article 6:163g DCC are blacklisted and are therefore misleading and prohibited by definition. The ACM found that the delivery time of a product is one of the most important features for a consumer and that if the delivery time is significantly longer, the consumer is likely to decide against the purchase.
Misleading omissions in telecom contracts (2023)
The ACM launched an investigation in 2017 into compliance with legal duties to inform on the websites of telecom providers. In 2019, it imposed fines on KPN, Vodafone, T-Mobile and Tele2 (the Telecom Providers).
According to the ACM, the Telecom Providers were unclear about the one-off costs when they offered a contract, making the offer appear cheaper than it actually was. Tele2 and T-Mobile furthermore stated that data bundles were ‘unlimited’, while that was not the case in the EU. KPN offered ‘unlimited’ calling and texting bundles, while a cap applied. Vodafone offered a contract without clearly stating that the reduced price applied only to Ziggo customers.
According to the ACM, the Telecom Providers thereby provided incorrect information or omitted information that was relevant to consumers. This is in violation of Article 6:193c(1)(b) DCC (misleading information) and Articles 6:193d and 6:193e(1)(a) and (c) DCC (misleading omission in invitation to purchase). KPN, Vodafone, T-Mobile and Tele2 were fined €3.4 million, €3.1 million, €3.9 million and €2.7 million, respectively.
The Telecoms Providers appealed the penalty decisions. The Rotterdam District Court upheld the violations established by the ACM but nevertheless significantly reduced the fines imposed, because the ACM had insufficient substantiated the amount of the fines in relation to the seriousness of the violations.
The violations by KPN, Vodafone and T-Mobile were upheld in the appeal proceedings before the Trade and Industry Appeals Tribunal (the Tribunal). The Tribunal did find, however, that the ACM could not impose a fine for the fact that contract costs were not visible until after the consumer clicked on an information button. According to the Tribunal, the ACM’s interpretation of the legal provisions governing the use of an information button was contradictory. It furthermore (again) reduced the fines imposed. This left KPN with a fine of €375,000. Vodafone was ultimately fined €1.7 million because – unlike the other Telecom Providers – it had appealed only the fine for the misleading omission. The Tribunal set the fine imposed on T-Mobile at €300,000. The fine for Tele2 was dropped in its entirety.
Unfair terms in general terms and conditions of an auction website (2022)
In October 2022, the ACM imposed an order subject to a penalty on the www.mijnprivileges.nl website (Privileges). Privileges offers consumers a paid membership through its website, giving them access to online auctions, puzzles, giveaways and discount campaigns.
In July 2021, the ACM launched an investigation into Privileges’ commercial practices, following reports from consumers about restrictions when cancelling their memberships. Consumers furthermore complained that, after cancellation, they received letters threatening them – with reference to the general terms and conditions – with fines due to invalid cancellation.
On the basis of its investigation, the ACM found that the following provisions in the general terms and conditions constituted violations: (i) a contract can be cancelled only in writing, while registration can (also) take place digitally; (ii) the contract is automatically extended by one year without the possibility of premature cancellation; and (iii) the general terms and conditions contain a penalty clause for invalid cancellation and hindrance of the contribution collection.
Under Article 6:236(o) and Article 6:236(j) DCC, these provisions are unreasonably onerous and therefore voidable (Article 6:233 DCC) in the civil law relationship between the user of the general terms and conditions (in this case Privileges) and the other party (in this case the consumer). It is less well known that, under Article 8.3 in conjunction with Article 2.15 of the Consumer Protection Enforcement Act (Wet handhaving consumentenbescherming), the ACM may furthermore take administrative action against a trader if that trader uses provisions in its general terms and conditions that are voidable and that bind consumers. In that case, the ACM may impose a fine or an order subject to a penalty. According to the ACM, the threat of a fine in the event of premature termination furthermore constitutes an aggressive commercial practice within the meaning of Article 6:193h(1) DCC.
The ACM imposed an order subject to a penalty on Privileges that obligated Privileges to amend its general terms and conditions, to share the amended general terms and conditions with its existing customers (duty to information) and to expressly draw attention to the amended provisions.
Privileges objected to the order subject to a penalty and requested the Rotterdam District Court to grant preliminary relief. The court largely ruled in favour of the ACM. According to the court, the ACM exceeded its powers only by requiring of Privileges – in addition to its duty to inform – that it expressly draw its existing customers’ attention to the amended provisions. The ACM subsequently amended its decision.
Privileges then again requested preliminary relief before the Rotterdam District Court, in response to a letter from the ACM stating that Privileges was in breach of its duty to inform. In these second proceedings, the court ruled entirely in favour of the ACM. According to the court, a pop-up message on the website about the new general terms and conditions is insufficient to meet the duty to inform. Privileges should have actively informed its members (by letter or e-mail) of the amended general terms and conditions.
Look ahead
The cases referred to above are in keeping with a trend of increased enforcement of the Unfair Commercial Practices Act (Wet oneerlijke handelspraktijken) by the ACM in the digital domain (see also this blog). They demonstrate that the ACM does not shy away from applying existing provisions of the law – originally applied mainly analogously – also to online practices of traders.
New rules have furthermore been introduced in recent years also to tackle unfair commercial practices specific to e-commerce. The trend of stricter rules for online commercial practices is also reflected in the Commission’s revised Unfair Commercial Practices Guidelines and the ACM’s (revised) Guidelines on the Protection of the Online Consumer, with a greater focus on more subtle forms of influencing consumers, such as website design and so-called dark patterns (see also this blog).
Webshops should take into account that the authorities’ focus on online commercial practices is only expected to increase in the coming years. In 2022, for instance, the Commission launched its Fitness Check of EU consumer law on digital fairness, to evaluate whether existing regulations still sufficiently protect online consumers. As recently as October, the ACM also took enforcement action against an online shop that manipulated online reviews and announced it would crack down on online shops using fake discounts. These developments, combined with the millions in fines imposed by the ACM in recent years, justify the expectation that there is still a great deal to come in the field of online commercial practices.
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