HomeInsightsNew guidance for digital businesses on the Unfair Commercial Practices Directive

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On 17 December 2021, the European Commission published extensive guidance of the applicability of the Unfair Commercial Practices Directive (UCPD) to several industries, including digital content and services. The guidance also aims to increase awareness of the UCPD and replaces the previous guidance issued in 2016.

Although this is new guidance, the UCPD is not new law. It is worth noting however that the guidance does account for the upcoming changes introduced by the Omnibus Directive (Directive (EU) 2019/2161) which Member States must implement as national legislation by 28 May 2022.

Key topics for digital content providers and services include the following:

  • The UCPD applies to platforms and to the traders using the platform to promote their products to consumers (online platforms will need to consider whether it’s a “trader” or “acting in the name of or on behalf of a trader”).
  • Following the amendments of the Omnibus Directive, online marketplaces (which are online platforms enabling consumers to buy products offered by third party suppliers), include app stores that provide digital content and services. The Court of Justice in the Wathelet case, which concerned the liability of an offline intermediary, could be relevant for other intermediaries under EU law, including in any online context. In particular, online intermediaries could be found liable for the trader’s obligations regarding pre-contractual information or contractual performance, where, from the point of view of the consumer, the online marketplace presented themselves as traders under the (proposed) contract. Further guidance on this point is expected in the pending Tiketa case (C-536/20).
  • Games studios which include promotions and advertisements in their games need to ensure these are made sufficiently clear and are separate from gameplay, otherwise this could amount to a ‘misleading practice’.
  • The prohibition of direct exhortation to children was mentioned several times throughout the guidance. The Commission provided the example of putting pressure on a child to buy an in-game item or persuading a parent to buy it. Games with a child audience therefore need to be particularly careful with any in-game marketing messaging.
  • When offering in-game purchases, traders must ensure they comply with information obligations under Article 7 UCPD and the Consumer Rights Directive. For example – the prices of virtual items should be clear and in fiat currency.
  • Paid random content (e.g. loot boxes) should be clearly disclosed to the consumer, including an explanation of the probabilities.
  • Only games in which in-app purchases are optional can be presented as ‘free’ without misleading consumers. It will not be ‘free’ if the game cannot reasonable be played without making in-app purchases.
  • For the purposes of the UCPD, the guidance makes it clear than an influencer would qualify as a “trader” or as a person “acting in the name of or on behalf of a trader”, and therefore caught by the UCPD. Failure to declare a “commercial element” of their content (e.g. promoting a brand on their profile including by the use of paid posts, affiliate content, retweets or tagging) could amount to a ‘misleading practice’, falsely representing oneself as a consumer, or in severe cases an ‘aggressive commercial practice’.
  • A “commercial element” is broad in its scope and is considered to be present whenever the influencer receives “any form of consideration for the endorsement” including “payments, discounts, partnership arrangements, percentage from affiliate links, free products (including unsolicited gifts), trips or event invitations etc.”.
  • Depending on the circumstances, the breach could be attributed to the influencer and/or to the brand itself. A factor for the brand being liable is the presence of editorial control.
  • Traders can develop “personalised persuasion practices” because they benefit from superior knowledge based on aggregated data about consumer behaviour, preferences and consistent testing (e.g. A/B testing). Such practices could often be employed without the full knowledge of the consumer – it’s possible these commercial practice “may be manipulative” and, hence, unfair under consumer law, and may also breach transparency obligations under data protection legislation. This may have a more significant effect on vulnerable consumers; the concept of vulnerability under the UCPD is “dynamic and situational”.
  • ‘Dark patterns’ may also amount to a ‘misleading practice’ or an ‘aggressive practice’. The UCPD does not require intention for the deployment of a dark pattern. Such practices may include visually obscuring important information as well as using “trick questions and ambiguous language”.
  • Misleading free trials and subscription traps are also labelled as ‘dark patterns’. Traders should follow the principle that “unsubscribing from a service should be easy as subscribing to the service”.

The full guidance from the Commission is available here.