TOLL-FREE NUMBER FOR CONSUMERS SET UP FOR REPORTING OF MISLEADING ADVERTISING AND IMPROPER BUSINESS PRACTICES
PRESS RELEASE
PRESS RELEASE
ANTITRUST AUTHORITY MAKES AVAILABLE TOLL-FREE NUMBER FOR CONSUMERS. MISLEADING ADVERTISING AND IMPROPER COMMERCIAL PRACTICES CAN BE REPORTED
The number, 800166661, is operational from Monday to Friday, from 10 a.m. till 2 p.m.
Between May 2005 and September 2007, over 9 million euros in fines imposed for 457 violations: growing phenomenon of finance companies that do not advertise their products correctly. Blacklist of the most improper conduct.
Beginning today, Monday 12 November 2007, the Italian Competition Authority has set up a special toll-free number (800166661) for consumers who want to report alleged cases of unfair business practices and misleading advertising. If such reports reveal instances of serious breaches of current regulations, the Authority's offices will then carry out more detailed investigations.
The call center, whose experimental hours of operation are from Monday to Friday from 10 a.m. to 2 p.m., reports to the Directorate General for Consumer Protection and will be in contact with the Authority's External Relations Directorate and Cabinet Office. This new service is one of the initiatives launched by the Antitrust Authority following approval of the two legislative decrees that have expanded its jurisdiction and powers in matters of misleading advertising and improper commercial practices (the innovations include the option of launching an investigation ex officio, the strengthening of powers of inspection with the assistance of the Guardia di Finanza and increased fines, whose maximum is now 500,000 euros instead of 100,000 euros). This initiative will also be promoted by way of a special information campaign that will shortly be shown on television and a primary schools project (see the site www.agcm.it) that began early in November in a number of Italian Regions.
The number of consumer protection cases has rapidly increased within the overall activities of the Antitrust Authority since May 2005, when the Giulietti law came into force conferring new powers to fine wrongdoers. The fines levied between May 2005 and September 2007 totalled Euro 9,051,600 and concerned 457 cases of misleading advertising. The industries most at risk of these practices, in the period in question, were once again those of telecommunications (Euro 3,318,000 in fines for 96 violations); diets and pseudo-pharmaceutical products (Euro 1,906,500 in fines for 84 violations); tourism, industry and services (Euro 2,183,500 in fines for 149 violations); while in the last year there has been a rapid increase in cases involving the credit and finance industry (47 violations in all, 28 in 2007 alone, for a total of Euro 787,400 in fines).
Beginning with this last sector, there follows a summary of the most recurrent kinds of commercial abuses that cause damage to consumers.
LOANS AND FINANCING
The Antitrust Authority deemed misleading many advertisements promoting loans and financing to consumers.
This is an alarming phenomenon that has led to ever more constant monitoring by Authority staff: many offers demonstrate a serious lack of completeness and clarity in information, even though they are directed to persons who presumably find themselves in a particularly weak psychological state due to their economic condition and the difficulty in gaining access to other more traditional and official financing channels.
The misleading aspects particularly had to do with the time for obtaining the loan, the identity of the lender and the cost of the loan.
- Timing and Identity of the Provider of Finance.
B. Cost of the Loan
The advertisements, even if they include a table with a few examples of loans and the relevant repayment instalments, often do not show the essential elements for determining the exact cost of the loan. The TAN [annual rate] and the TAEG [effective overall annual rate], indices that allow the consumer to evaluate and calculate the exact cost of the entire financial operation, are often shown in such a way as to make it impossible to read them. The absence of precise TAEG data, in particular, prevents the consumer from adequately assessing just how interesting the offer really is, because it deprives him of a tool for establishing the overall cost of the operation, i.e. the cost including interest and all charges associated with acceptance of the loan.
COMMUNICATIONS
There is still too much misleading advertising in fixed and mobile telephony. This is a particularly serious phenomenon, given the extreme variety and rapid changes that mark commercial offerings and that may disorient consumers. The Authority will continue to monitor this industry very carefully and reiterates the need for operators to provide clear and complete advertising messages. The Authority has identified the major information gaps that make the advertisements misleading: these are the ‘camouflaged’ costs (costs and conditions of the advertised offer that the advertisement fails to mention); the technological skill level necessary to make use of some services (the need to check signal coverage for the service offered, as in the case of UMTS services or for viewing TV programs on a cellular phone); so-called ‘forever’ offers that are misleading because in reality there is a deadline by which the service, at that price, must be used; and finally, hidden obligations (for example, it must be made clear when, in order to take advantage of the offer or use a mobile phone on the advertised conditions, it is necessary to sign up for a particular tariff plan for a given period).
TOURISM, INDUSTRY AND SERVICES
From 2005 to the present, the Authority has intervened a number of times in the tourism industry following complaints from individual consumers and associations.
These are widely-used services where advertising is often untruthful and may prejudice the economic conduct and wellbeing of consumers. Indeed, of the 20 proceedings relating to the broader tourism sector, 19 were concluded in the last year and a half with a finding of misrepresentation.
The misrepresentation findings mostly had to do with advertisements for hotel facilities, tourist villages, wellness centres, airfares, cruises and packaged holidays. The most common medium for this form of publicity is the Internet. The description of the facilities on some sites is incomplete or totally false, and in any case may mislead a consumer who doesn't have enough by which to assess the offer or even has false information.
Some of the more frequent cases have to do with establishments that have given themselves more “stars” than those assigned by the relevant local tourist board.
Numerous other proceedings have to do with the description of tourist villages in tour operators' catalogues, where such descriptions often diverge radically from the reality.
FOOD, SLIMMING PRODUCTS AND PSEUDO-PHARMACEUTICALS
The advertisements found to be at fault are generally characterised by the fact that they propose products intended to produce slimming or tonic effects without the need to follow a diet or to exercise.
Many of these advertisements omit information: in the Authority's view, not providing directions as to the need for a prior consultation with a doctor and other warnings, such as keeping to the recommended dose and not making prolonged use of the pharmaceutical, may lead consumers to overlook normal prudent behaviour with dangerous consequences for their health. In one specific case, in determining the fine, the Authority also established the principle that consumers with weight or cellulite problems find themselves in a situation of “particular psychological weakness”. They are therefore weak consumers who must be protected with higher fines.
| Up-to-Date Data January 2007 - September 2007 | ||||||
| Industry Sector | Misleading | Non-Violation | Non-Compliance | Decree not Applicable | Total | Fines (in Euros) |
| Energy | 0 | 2 | 0 | 0 | 2 | 0 |
| Communications | 26 | 4 | 4 | 0 | 34 | 1,232,000 |
| Banking and Insurance | 28 | 3 | 0 | 0 | 31 | 416,300 |
| Food, Pharmaceuticals and Transport | 32 | 1 | 2 | 0 | 35 | 628,600 |
| Industry and Services | 59 | 5 | 5 | 0 | 69 | 1,025,500 |
| Miscellaneous | 10 | 1 | 1 | 12 | 205,700 | |
| Overall Total | 155 | 16 | 11 | 1 | 183 | 3,508,100 |
| Data from May 2005 - September 2007 | ||||||
| Industry Sector | Misleading | Non-Violation | Non-Compliance | Decree not Applicable | Total | Fines (in Euros) |
| Energy | 2 | 2 | 0 | 0 | 4 | 9,100 |
| Communications | 84 | 10 | 12 | 0 | 106 | 3,318,000 |
| Banking and Insurance | 45 | 6 | 2 | 0 | 53 | 787,400 |
| Food, Pharmaceuticals and Transport | 80 | 8 | 4 | 0 | 92 | 1,906,500 |
| Industry and Services | 133 | 18 | 16 | 3 | 170 | 2,183,500 |
| Miscellaneous | 29 | 1 | 1 | 1 | 32 | 847,100 |
| Overall Total | 373 | 45 | 35 | 4 | 457 | 9,051,600 |
Rome, 12 November 2007