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In this edition of Right On, we travel to Italy to find out more about so-called “unfair commercial practices” and how to avoid them.
Sometimes, the scams are obvious, such as miracle cures, for example. But others are hidden in places you don’t expect to find them: in loans, or between the lines of too-good-to-be true promotions.
We meet an Apple consumer, Giorgio Nobili, who fell into the trap:
“When I bought my computer, nobody told me that all consumer goods bought in Europe have an automatic two-year guarantee. The salesman said my computer only had a one-year guarantee, but that this would be extended to three years if I purchased the AppleCare plan, which cost me an extra 400 euros.”
But what Apple omitted to tell Giorgio was that the computer he was buying was automatically guaranteed for two years, for free, under EU legislation.
Under the directive, customers can return any good up to two years after purchase.
Instead, Apple offered its client a so-called extended warranty, that, in fact, overlapped the free, statutory two-year warranty.
“As Apple is such a big company, I wasn’t expecting to be ripped off. I thought that what they told me was true, so I signed and ended up paying much more than necessary. I feel they’ve made a fool of me, I feel duped and cheated,” Giorgio told us.
Apple was fined 900,000 euros. The case was brought by Italy’s Antitrust Authority back in 2011. The company, however, has not changed its practices in the rest of Europe.
Consumers’ associations play an important role in fighting unfair commercial practices like these. They receive the complaints and pass them on to the Italian Antitrust Authority. Altroconsumo was one of the associations that fought the Apple case:
“Apple was forced to update the information given on its website, where the two-year free warranty wasn’t mentioned, and they were also forced to give their salespeople new guidelines,” says Marco Pierani of Altroconsumo.
According to the European Directive, there are two main categories of unfair commercial practices: aggressive and misleading. The latter, be it through action and omission, pushes the average consumer to take decisions he would otherwise not have taken. Misleading advertising is one example.
Roberto La Pira, a journalist specialised in consumer protection, tells us about the Danone case:
“This (advertisement) is a typical example of misleading advertising because it includes unconfirmed scientific data that confuses consumers. It says 50% of women don’t take in enough calcium, but that’s not true. It says that your diet cannot supply you with the daily amount of calcium needed, but that’s absolutely untrue. The problem is that it was broadcast over a two-year period and people believed it. It’s been censored, but nobody reported that, it wasn’t in the papers or in other media. So the advert worked.”
The advertisement was aired in Italy between February 2010 and June 2012. Danone was fined 170,000 euros for it.
Unfair commercial practices are everywhere and involve companies one wouldn’t suspect.
Italian car giant Fiat, for example, was fined for promising motorists they would save a lot of money on fuel if they bought its car.
Even Italy’s government-run train operator Trenitalia was sanctioned after it promoted 9-euros tickets that were virtually impossible to get hold of.
“No one really talks about misleading advertising because it’s big business. Nine out of ten of large companies have been fined at least once. A typical example is telecommunication companies. Phone companies have been handed at least 100 fines, they don’t play fair and they don’t change their ways. Fines are included in their budgets,” says Roberto La Pira.
Misleading advertising is only a drop in the ocean of unfair commercial practices. Door-to-door selling for example can easily turn into an aggressive practice. The EU has drawn up a black list of practices regarded as unfair and thus banned.
The EU Directive, adopted in 2005, replaced national legislation. Making sure it is enforced, however, is another kettle of fish.
Member states deplore a lack of resources, the complexity of internal procedures and the absence of sanctions:
“Each European country relies on a different body to check that the Directive on Unfair Commercial Practices is implemented. The problem is to communicate and share good practice and efficient decision-making,” says Altroconsumo’s Marco Pierani.
The legislation is in place. The goal now is to harmonise its implementation in order to make sure that what you pay for is what you get.