Unfair commercial practices
A commercial practice shall be unfair if it is contrary to the requirements of professional diligence and if it materially distorts or is likely to materially distort the economic behaviour of an average consumer (or the average member of the group of consumers) with regard to the offered product.
Unfair commercial practices shall be prohibited. Any commercial practices corresponding to the signs indicated above may be recognised as unfair.
Misleading commercial practices and aggressive commercial practices are the most common unfair commercial practices.
Misleading actions or misleading omissions shall be regarded as misleading commercial practices.
Misleading actions shall be the provision of misleading information or information which, even if factually correct, deceives or is likely to deceive the average consumer in relation to one or more of the elements referred to in Article 5 (1) of the Law on the Prohibition of Unfair Business-to-consumer Commercial Practices (such as the existence or nature of the product, the main characteristics of the product, the commitments of the trader, the objectives of the commercial practice and the method of selling the product, the price of the product or the manner in which the price is calculated, or the existence of a specific price advantage, the need for a service, pars, replacement or repair of the product, the name or identity of the trader or his agent, etc.) and causes or is likely to cause him to take a transactional decision that he would not have taken otherwise.
Taking into account the limitations of the means of information communication, actions that cause or are likely to cause the average consumer to take a transactional decision that he would not have taken otherwise shall be considered as misleading omissions, i.e. omission or hiding of material information, its provision in an unclear, unintelligible, ambiguous or untimely manner, or failure to identify the intent of the commercial practice if not already apparent from the context.
A commercial practice shall be regarded as aggressive if by harassment, coercion, including the use of physical force, or undue influence, it significantly impairs or is likely to significantly impair the average consumer’s freedom of choice or conduct with regard to a product and thereby causes him or is likely to cause him to take a transactional decision that he would not have taken otherwise.
The Law on the Prohibition of Unfair Business-to-consumer Commercial Practices (Article 7 and Article 8(3) establishes a ‘black list’ of cases of unfair commercial practices which inter alia prohibits the following:
- the false claim that a trader is bound by a code of conduct;
- displaying a trust mark, quality mark or an equivalent mark without having been granted such a right;
- making a commercial offer indicating the price without disclosing the existence of any reasonable grounds the trader may have for believing that he will not be able to offer for supply, or to designate another trader to supply, those products, or equivalent products, at that price for a period that is, and in quantities that are, reasonable having regard to the product, the scale of advertising of the product and the price offered;
- making a commercial offer at a specified price and then refusing to show the advertised product to consumers or refusing to take orders for the product or to deliver it within a reasonable time or demonstrating a defective sample of it, with the intention of promoting a different product;
- the false claim that a product will only be available for a very limited time, or that it will only be available on particular terms for that period of time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice;
- the false claim or the creating of an impression that a product can legally be sold;
- presenting the rights granted to consumers under legal acts as a distinctive feature of the trader’s offer;
- the false claim concerning the nature and extent of the risk to the personal security of a consumer or his family if the consumer does not purchase the product;
- promoting a product similar to a product made by another manufacturer in such a manner as deliberately to mislead a consumer that the product is made by that other manufacturer;
- the false claim that the trader is about to cease trading or change a point of sale;
- the claim that products are able to facilitate winning in games of risk or chance;
- the false claim that a product is able to cure illnesses, dysfunction or developmental disorders;
- the passing on of materially inaccurate information on market conditions or information where to find a product with the intention of inducing the consumer to acquire the product at conditions less favourable than normal market conditions;
- offering a competition or prize promotion but without awarding the prizes described or an equivalent;
- describing a product as ‘extra for the same price’, ‘without charge’ or similar if the consumer has to pay anything other than the unavoidable costs related to the acquisition, collection of the product or payment for its delivery;
- including in marketing material an invoice or similar payment document which gives the consumer a false impression that he has already ordered the marketed product;
- establishing, operating or promoting a pyramid scheme of distribution of goods where a consumer is provided with the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products;
- advertising a product through the mass media for payment or any other consideration from the trader where such advertising is not properly marked or separated from the editorial content by images or sounds clearly identifiable by the consumer as advertising;
- creating an impression that a consumer cannot leave the premises until a contract is formed;
- conducting visits to a consumer’s home ignoring the consumer’s request to leave or not to return except in circumstances and to the extent justified, under the provisions of other legal acts of the Republic of Lithuania, to enforce a contractual obligation;
- making persistent and unwanted solicitations by telephone, fax, e-mail or other remote media except in circumstances and to the extent justified, under the provisions of other legal acts of the Republic of Lithuania, to enforce a contractual obligation;
- including in an advertisement a direct exhortation to children to buy advertised products or persuade their parents or other adults to buy advertised products for them;
- demanding immediate payment for the products supplied by a trader, as well as demanding deferred payment or demanding to return or keep such products where a consumer did not order them, except for the cases where the consumer and the trader have agreed before entering into contract or under the contract that should the trader fail to get the product ordered by the consumer, he can supply the consumer with another product of the same quality and price;
- explicitly informing a consumer that if he does not buy a product, the trader’s job or livelihood will be in jeopardy;
- creating a false impression that a consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either there is no prize or other equivalent benefit, or taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost;
Can business entities also complain about misleading advertising?
In accordance with Article 2(17) of the Law of the Republic of Lithuania on Advertising, consumer of advertising means a person for whom advertising is intended or whom it may reach. Therefore, Article 2 of the Law of the Republic of Lithuania on Advertising, which defines the main terms of the Law, establishes a specific definition of the term ‘consumer of advertising’ and it does not define that only a natural person can be a consumer of advertising. Therefore, based on Article 2(17) of the Law of the Republic of Lithuania on Advertising, either a natural or a legal person shall be considered a consumer of advertising (the Supreme Administrative Court of Lithuania also takes the same view), so business entities who have encountered possibly misleading advertising have the right to appeal to the State Consumer Rights Protection Authority.
What liability arises for an infringement of the Law of the Republic of Lithuania on the Prohibition of Unfair Business-to-Consumer Commercial Practices?
On 01/09/2019, a new version of the Law of the Republic of Lithuania on the Prohibition of Unfair Business-to-Consumer Commercial Practices entered into force. It establishes higher fines for infringements of the Law of the Republic of Lithuania on the Prohibition of Unfair Business-to-Consumer Commercial Practices: a warning may be issued to or a fine of up to EUR 100 000 may be imposed on traders, but the fine may not exceed 3 percent of their annual income for the past financial year. In the event that an infringement of the Law is repeated within one year, a penalty of up to 6 percent of their annual income for the past financial year, but not exceeding EUR 200 000, may be imposed.
When imposing a sanction, in all cases, the individual circumstances of the situation, nature of the infringement, its scope and duration as well as mitigating and aggravating circumstances shall be taken into account. The amount of the sanction to be imposed for an infringement of the Law of the Republic of Lithuania on the Prohibition of Unfair Business-to-Consumer Commercial Practices shall be calculated in accordance with the 18-09-2019 Description of the Procedure of the Issue of Warnings and Imposition of Fines for Infringements of the Law of the Republic of Lithuania on the Prohibition of Unfair Business-to-Consumer Commercial Practices approved by the Decision No 970 of the Government of the Republic of Lithuania:
Do you need consultation?
Contact the Unfair Commercial Practices and Advertising Division of the State Consumer Rights Protection Authority for consultation: http://vvtat.lt/struktura-ir-kontaktai/kontaktai/593/nesaziningos-komercines-veiklos-ir-reklamos-skyrius/d29) or ask your question by e-mail at email@example.com.
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