ACM as the guardian of consumer interests? An overview of ACM’s enforcement practice and case law in 2019 and 2020
In the past two years ACM as well as the European Commission, significantly stepped up their consumer protection enforcement efforts despite the COVID-19 crisis. A striking feature is the focus on digital products and services.
For instance ACM called on merchants and online platforms – such as bol.com, Marktplaats and Amazon – to tackle misuse of the COVID-19 crisis by sellers. In addition, the Dutch regulator published various guidelines and tools to guarantee the interests of consumers.
This blog grants an overview of the major enforcement practices and case law with regard to consumer protection law in the Netherlands in 2019 and 2020.
Consumer protection law policy of ACM
In recent years ACM formulated various guidelines with a view to better consumer protection. In September, ACM published its consultation Sustainability Claims Guideline. This guide contains rules of thumb to assist companies in making claims about the sustainability of their products. It is especially important that the claims are clear and factually correct so that no misleading information about the sustainability of a product is spread about.
ACM also took steps in the area of digitalisation. ACM researched whether (online) sellers inform their consumers sufficiently when they buy ‘smart devices’. These are devices that use software and the Internet to provide certain functions, for instance a digital assistant such as Google’s Alexa or Apple’s Siri, or a smart thermostat. ACM has addressed and urged various sellers to inform consumers better about the characteristics and risks of smart devices. Larger retail chains such as bol.com, Coolblue and Mediamarkt have now adjusted this.
In addition, ACM provided clarity about misleading online in its Guidelines on the protection of the online consumer. Prior to the sale of a product companies must inform consumers in a complete, accurate and understandable way. Moreover, sellers are not allowed to capitalise on the vulnerability of certain groups in the online world, such as the elderly and children. As a supplement to this guideline ACM also published certain Rules of Thumb for online platforms with regard to information and transparency obligations as well as organisational and control obligations for online platforms.
The European Commission is also active in the area of consumer protection. With its Consumer Agenda the European Commission sets five objectives on which it will focus in the coming years, namely a (i) digital and (ii) sustainable transition, (iii) more flexible international cooperation, (iv) stronger enforcement and (v) better protection of vulnerable groups.
ACM’s decision-making practise
ACM uses the guidelines and researches referred to above to develop its enforcement policy. In the past two years ACM took action on various occasions against violations of consumer protection law. Partly because the online sale of products increased sharply due to COVID-19, ACM started to take tougher enforcement action against online shops. For instance, the regulator took action against Stay Healthy Products. This online provider of nutritional supplements and care products profiled itself with products that were supposed to be free. However, these products were only free if they were returned within a certain period at the consumer’s own expense. ACM reprimanded this company for this misleading practice. Now consumers don’t have to return the product or pay for it. In addition, many consumers complained to ACM about We Love Musthaves. The company did not deliver or delivered late and did not refund its consumers, contrary to the statutory cooling-off period. In addition, the web shop was difficult to contact for questions and complaints. ACM imposed an order on the company subject to a penalty. The web shop had to adjust the website and refund customers. The owner of the websites Goedkoper.nl and Euroknaller.nl has also been forced by ACM to make adjustments after the regulator received complaints with regard to non-delivery, late delivery and refunds to customers. Consumers that did not receive their order have in the meantime been refunded their purchase price. Consumers who make use of their cooling-off period will now receive the purchase amount refunded within the legal period of 14 days.
Moreover, at the end of 2019 ACM imposed a fine on four telecom providers for representing inaccurate and incomplete information about the telephone subscriptions they provided. Many consumers complained on ConsuWijzer about unexpected costs and high bills for their subscriptions from KPN, Tele2, T-Mobile or Vodafone. ACM had already formulated several starting points and discussed them with the telecom providers. However, several months later it appeared that the companies still gave ambiguous and inaccurate information on their websites. It was ambiguously stated on the websites that a one-off fee was payable when a subscription was taken out. It was also wrongly stated that the data, call and SMS bundles were unlimited, while this was not the case. Vodafone did not mention on the subscription price shown that it only applied to consumers who were already a customer of Ziggo. The fines for this violation ranged from EUR 2,715,000 to EUR 3,907,000.
ACM also enforced consumer protection law with regard to platforms. For example, bol.com was addressed to inform consumers (more) clearly who the actual seller is on the platform. It must be clear to consumers who they are dealing with and who they can contact with any complaints. Knaek, the company behind the Knaek-app with which students in the Netherlands and Flanders can obtain a discount from various companies and supermarkets has been reprimanded by ACM that it should include more clearly in its terms and conditions that the subscription can be terminated every month after the initial fixed subscription period has ended. The company has now adjusted this. Moreover, from this year onwards ACM will also tackle fake likes and fake reviews.
ACM established that Dutch companies provide such fake reviews whether or not for payment on platforms such as Facebook, Instagram, YouTube and Google in order thereby to improve the image of the company.
The regulator is going to find the providers of these services and instruct them to stop these practices, in connection with which customer bases could be demanded. If the companies refuse to cooperate a fine may be imposed on them.
The tougher enforcement policy of ACM with regard to consumer protection law often resulted in warnings and several orders subject to incremental penalties. Several court cases arose as a result from this. This overview discusses the major administrative court cases in the Netherlands with regard to consumer protection in 2019 and 2020.
This year ACM imposed on Netflix an order to terminate the violation within three months on pain of a penalty of EUR 15,000 per day, because in contravention of Section 3:15d BW Netflix did not provide any electronic mailing address for consumers on its website. Netflix only had a LiveChat on its website. The streaming platform stated that this LiveChat complied with the obligation to provide information under Section 3:15d of the Dutch Civil Code. The District Court of Rotterdam emphasises that pursuant to Section 3:15d of the Dutch Civil Code only the contact details, including the electronic mailing address of the service provider, must be easily, directly and permanently accessible. In the court’s opinion, LiveChat on the Netflix website constitutes a fast and effective form of communication, which is also available 22 hours a day in Dutch and 24 hours a day in English. The LiveChat therefore complies with the obligation to provide information of Section 3:15d of the Dutch Civil Code.
Inadequate information provision
In September 2020, ACM imposed an administrative fine of EUR 1,250,000 on an energy supplier for not mentioning reasonable termination fees in the agreements. The energy supplier – on the basis of ACM guidelines – used a different amount for consumers and small business users, but insufficiently assessed the capacity in which a customer concluded the agreement. In addition, the company included in the agreements both the termination rates for consumers and those for small business users, including the capacity in which the customer purchased the contract. The judge for interim relief held in its judgment that merely referring in contracts to standard conditions for different groups of consumers cannot be considered as stating reasonable termination rates. The judge for interim relief also ruled that the supplier has a duty to ascertain in order to adequately check the capacity of the customer.
ACM also imposed a fine on Vodafone for misleading consumers with regard to a subscription fee. It was stated in small print that the monthly fee shown only applied if the consumer was already a customer of Ziggo. ACM was of the opinion that this constituted a misleading omission. In its decision of 24 December 2019 the judge for interim relief took as a starting point what the average consumer experiences or can experience as clear. It held that it concerned information on the basis of which the consumer takes a decision with regard to an agreement which would otherwise not have been taken. It was not immediately clear to the average consumer that the price stated on the home page only applied to Ziggo subscribers. The practice therefore amounted to misleading information.
Equality principle and enforcement
The District Court of Rotterdam ruled on 23 May 2019 that ACM rightly imposed a fine on Seats and Sofas amounting to EUR 350,000. The furniture seller advertised so-called “was” prices, which gave the consumer the impression that a product has been more expensive before but has now been discounted. However, the furniture seller never actually applied the higher prices so that this commercial practice was qualified as misleading. In addition, the furniture was not provided with price tags: the price was only announced when the consumer asked for it. This is in violation of the Dutch Prices Act (Prijzenwet) because consumers must be able to determine the price of products independently. Seats and Sofas thought that ACM violated the equality principle by imposing the fine solely on Seats and Sofas. According to furniture seller there were other undertakings that were also guilty of such commercial practices but were not fined. The Trade and Industry Appeals Tribunal held in appeal that the equality principle does not reach so far that a fine has been imposed wrongfully purely because a possible (other) offender had not been fined. That would only be different if there was unequal treatment of similar cases. However, ACM had provided sufficient insight that Seats and Sofas distinguished itself from other sellers by its misleading advertisements and by being the subject of a large number of complaints on ConsuWijzer. Therefore the equality principle had not been violated.
ACM did not violate the equality principle either when on 7 June 2019 it imposed a penalty on Duinzigt Wonen B.V., which demanded a commission fee for its activities as a mediator from both the consumer-tenant as well as the landlord. This is in contravention of the prohibition of double commission in Section 7:417, subsection four, of the Dutch Civil Code. Duinzigt Wonen B.V. alleged that ACM acted in contravention of the prohibition of acting arbitrarily and the equality principle by imposing only on it a fine or order subject to a penalty, while other alleged offenders went unpunished. The District Court of Rotterdam held that the regulator must make choices in view of its enforcement capacity. It is not for the court to determine the way in which ACM must deploy its limited enforcement capacity. Therefore, the imposition of the fine on Duinzigt Wonen B.V. did not constitute a violation of the equality principle.
Unfair refund policy
The Trade and Industry Appeals Tribunal adjusted and reduced in its decision of 5 February 2019 a fine of EUR 500,000 imposed by ACM on TOM B.V. – for which its two directors were jointly and severally liable up to the amount of EUR 125,000. TOM B.V. sold bicycles, sportswear and accessories to consumers through multiple web shops. The web shops structurally violated consumer protection law in connection with cancelling and returning orders by applying a “Squeaky Wheel System”. Customers were only reimbursed after repeated insistence, and in addition they first received a voucher instead of the purchase amount. The Trade and Industry Appeals Tribunal confirmed that ACM correctly established that this is an unfair commercial practice. However, the Trade and Industry Appeals Tribunal did not endorse the liability of the directors. According to the Tribunal this construction does not fit into the system of the General Administrative Law Act.
On 27 January 2019 the District Court of Rotterdam slightly mitigated a fine of EUR 375.000 by ACM on the debt collection agency Credit Invest. The debt collection agency collected on the basis of invalid agreements. Consumers who asked for clarification were often ignored. In addition, the debt collection agency conducted a policy of putting consumers under pressure, for instance by threatening them with expensive legal actions. Although ACM had established the duration of the violations partly incorrectly, the fine had been imposed rightfully according to the Trade and Industry Appeals Tribunal.
Consumer protection law has been a hot topic the past year. In the coming year, ACM will undoubtedly take even more and stricter action against violations of consumer protection law. The emphasis appears to be particularly on informing the consumer better and more honestly. This obligation to inform ranges from information with regard to the characteristics of the products to the underlying sellers. This will most likely also increase case law with regard to consumer protection law. Not only does ACM (and the European Commission) want to protect consumers’ justified confidence in producers and their products, it also represents a major step in the envisaged sustainable and digital transition. Consumer protection law is therefore adapting quickly to the current zeitgeist.