Commission seeks to protect EU businesses against scams and unfair practices

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Small businesses around Europe are being harmed by rogue traders who use unfair practices, such as misleading advertising. The fraudsters hide behind national borders and exploit the vulnerability of companies - especially the small ones - when doing business in other EU countries. Professionals - such as doctors or lawyers - and civil society organisations can also be victims. To better protect them, the European Commission is launching a public consultation to gather more information from companies and others affected on the nature and scale of the unfair practices, including online scams. Following the consultation, the Commission will then assess how best to stop rogue traders exploiting loopholes in the rules and make sure that legitimate traders are effectively protected.

"Small businesses are the backbone of the European economy and can ill afford losing money to swindlers," said Vice-President Reding, the EU's Justice Commissioner. "We need solid and effective Europe-wide rules to crack down on unfair practices and to make sure the culprits cannot hide behind national borders."

Every day EU-based businesses, professionals and civil society organisations fall victim to unfair practices. These can range from omitting important information or providing false or deceiving information about the offer, in particular in the form of misleading advertising, to using harassment, coercion or undue influence.

The 23 million small and medium-sized enterprises (SMEs) in the EU represent 99% of EU businesses and are especially vulnerable to scams. However, sometimes even large EU companies get trapped by fraudulent schemes.

One common scheme is misleading directory companies. These firms send out forms to businesses asking them to update their details, seemingly for free. But once the victim agrees, they will be told that they have signed a contract and charged a significant yearly sum. A survey by the European Parliament in 2008 documented 13,000 complaints about company directory scams - thought to be just the tip of the iceberg. It found that companies were typically asked to pay €1000.

Companies often do not even report the unfair practices of which they are victims, because they lack time or do not know who to contact.

The Commission's public consultation will gather data from individuals, businesses and civil society. Following the consultation, the Commission will present in the first half of 2012 options for future EU action, which may include legislative changes.

Interested parties can submit their views here

The public consultation will run until 16 December 2011.

Background

EU legislation on misleading and comparative advertising (Directive 2006/114/EC of 12 December 2006) establishes a minimum legal standard for misleading advertising across the EU. It provides traders with protection against misleading advertising aimed at them. It also ensures that comparative advertising compares "like with like", that it does not denigrate other companies' trademarks and does not create confusion among traders. However, whilst current EU legislation protects consumers against all forms of unfair commercial practices (Directive 2005/29/EC of 11 May 2005), the same is not true for traders.

To strengthen the protection of commercial operators and improve cross-border cooperation between national enforcers, the Commission plans to publish a Communication in the first half of 2012. The Communication will give an overview of how EU legislation on misleading and comparative advertising is implemented in the Member States, identify problematic issues, and explore options for its possible review.

The European Parliament has also underlined the importance of this topic on many occasions. The problem of misleading directory companies in particular formed the basis for two important resolutions from the European Parliament, in 2008 and more recently on 9 June 2011.

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