Unfair Commercial Practices And Unfair Terms

When we speak of commercial practice we refer to any act, omission, conduct, statement or commercial communication, including advertising by any means and marketing, that a trader engages in for the promotion, sale or supply of goods or services to consumers.

Article 20 of the Consumer Code prohibits unfair commercial practices understood to be a commercial practice “contrary to professional diligence, and which is false or is likely to distort to an appreciable extent the economic conduct of the average consumer whom it reaches or to whom it is addressed, or of the average member of a group where the commercial practice is targeted at a particular group of consumers, in relation to the product”.

Unfair commercial practices include misleading and aggressive practices.

The term misleading commercial practices refers to those practices by which the trader provides consumers with incorrect or untrue information about a particular good or service in order to induce them to make decisions that they would not otherwise have made. The information may concern, for example, the existence or nature of the product, its main characteristics, its price or the way in which it is calculated, the consumer’s rights in relation to the sale of that product or service, etc.

A commercial practice is also misleading if it omits relevant information (which the consumer needs in order to make a decision) or conceals or presents the relevant information the consumer needs to make a decision in an unclear, incomprehensible, ambiguous or inappropriate way.

Article 23 of the Consumer Code lists a number of commercial practices that are considered misleading, including:

• the untrue statement that a trader is a signatory of a code of conduct;
• displaying a seal of trust, seal of quality or equivalent seal without having obtained the necessary authorisation;
• claim that their code of conduct, product, business practices or the company in question have been approved or authorised by accredited institutions or bodies;
• invitation to purchase products at a certain price without indicating that they are supplied by a third party and without stating that they may not be available at the indicated price and delivery dates;
• inducing the consumer to proceed with the purchase immediately by stating, contrary to the truth, that it is a limited-time offer or that it is about to expire;
• ensuring that the consumer receives after-sales service in their country and in the same language used for the purchase, and denying this possibility after confirmation of the order;
• sell similar products to those of other manufacturers, leading people to believe that the product is from the same manufacturer;
• threatening the health of the consumer in the event of non-purchase of the product or claiming, contrary to the truth, curative powers of the item being sold;
• using pyramid selling schemes;
• soliciting consumers to purchase through promoting the sale as extraordinary due to discontinuation;
• conducting prize competitions and not paying out the promised prizes;
• sending invoices to lead the consumer to believe that they have already placed the order;
• describe the product as free of charge and then charge for delivery;
• falsely claiming not to be a professional.

Aggressive commercial practices refer to those actions that may induce consumers, by harassment or other undue influence, to make commercial decisions they would not otherwise have made by restricting their freedom of choice.

For example, aggressive commercial practices include all those cases where sellers use physical or verbal threats, use a serious tragic event or fact to influence the consumer, impose onerous or disproportionate obstacles – not foreseen in a contract – to the consumer’s freedom to enforce their contractual rights, threaten to take legal action while knowing that they would be unfounded.

Article 26 of the Consumer Code describes those commercial practices that are considered aggressive, which include:

• giving the impression that the consumer cannot leave the business premises until the contract is concluded;
• making visits to the consumer’s home, ignoring the consumer’s invitations to leave or not to return;
• making repeated and unsolicited commercial solicitations by telephone, fax, e-mail or other means of remote communication;
• using forms of advertising that urge minors to buy;
• demanding or soliciting payment for an order that the consumer has not placed;
• inducing the consumer to pay a fee in order to receive a prize.

Clauses are considered unfair if they significantly imbalance the contractually agreed rights and obligations in favour of the trader.

By way of example, clauses that provide for excessively heavy penalties to be imposed on the consumer for non-performance or late payment; or clauses that establish a place of jurisdiction for any disputes in a place other than the consumer’s residence or domicile; or that allow the trader to unilaterally change the terms of the contract; or to increase the price of the good or service without providing that the consumer may withdraw if the final price is excessively high compared to the price originally agreed are unfair.

Article 33 of the Consumer Code lists a number of clauses that are presumed to be unfair until proven otherwise, which must be provided by the trader, who must either prove that the clause does not entail a significant imbalance that goes against objective good faith, or that the clause was the subject of specific negotiation with the consumer (so-called grey list). This includes clauses the purpose or effect of which is to:

• exclude or limit the liability of the trader in case of death or personal injury to the consumer resulting from an act or omission of the trader;
• exclude or limit the consumer’s actions or rights against the trader or another party in the event of total or partial non-performance or defective performance by the trader;
• impose the payment of manifestly disproportionate penalties;
• recognise only the professional’s right to withdraw from the contract and retain the amount paid by the consumer, not recognise the consumer’s right to claim against the professional double the amount paid;
• give the trader the right to unilaterally modify the contract without allowing the consumer to withdraw.

Article 36 of the Consumer Code also lists a series of clauses that, even if negotiated or signed by the consumer, are nevertheless null and void (the so-called black list). These purpose or effect of these clauses is to:

• exclude or limit the liability of the trader in case of death or personal injury to the consumer resulting from an act or omission of the trader;
• exclude or limit the consumer’s rights against the trader or another party in the event of total or partial non-performance or defective performance by the trader;
• providing for the consumer’s acceptance as being extended to terms that the consumer did not, in fact, have the possibility of knowing prior to the conclusion of the contract.

The nullity applies only to the consumer and may be raised ex officio by the court.

Typically, the oppressive nature of a term is evaluated by considering the type of product or service outlined in the contract, taking into account the circumstances at the time of its formation, and examining other terms within the contract or any connected agreements.

In case of doubt as to the meaning of a term, the interpretation most favourable to the consumer shall prevail.

Clauses considered unfair are null and void, while the contract remains otherwise effective.

The authority with the power to halt ongoing unfair commercial practices targeting consumers or investigate the unfairness of a clause in consumer contracts is the Competition and Market Authority. You can submit a claim through their website: www.agcm.it. The AGCM, however, is limited to imposing sanctions on the trader responsible for engaging in unfair commercial practices or including unfair terms. Therefore, seeking compensation or terminating the contract may require legal recourse through the courts if an out-of-court resolution is not feasible.