1. Information on new legislation
Act on Legal Counselling
Since 1 July 2006, advisors without an educational background in law have been able to provide and market legal services in Denmark. Previously this was a privilege reserved for trained lawyers.
The Danish Consumer Ombudsman has been charged with the supervisory authority and the Danish Consumer Complaints Board is ready to handle complaints over legal advisors where no other appeal bodies are in place.
New Marketing Practices Act
A new Marketing Practices Act also took effect 1 July 2006. A significant number of changes were made to this Act. A description of individual counts follows below.
The principles of good marketing practices (the general clause)
Under the previous Act, business and trade should avoid acting in breach of the principles of good marketing practices. The new Act, on the other hand, induces traders to actively seek to display good conduct in marketing matters. This means that business and trade now have to take more care to engage in proper marketing activities – for the sake of consumers as well as other businesses.
Safeguarding children and young people
A new provision lays on business and trade to be particularly careful when marketing products to children and young people. Means such as violent behaviour and the use of drugs and alcohol are banned from marketing targeted to children and young people. Violations are punishable by fine.
The new Act also includes an express provision on how advertising should be clearly distinguishable as such. In other words, covert marketing activities become unlawful and violations are punishable by fine.
Price indications and extra charges
The rules on price indications and information are now incorporated into the Marketing Practices Act along with new legislation concerning price indications and services as well as extra charges and fees. The supervisory function to ensure compliance with this Act has thus been re-introduced and allocated to the Consumer Ombudsman.
Liberalisation and the public sector
From now on, the Marketing Practices Act also covers the supply of welfare services, traditionally administrated exclusively by the public sector. Now tenders are invited among public as well as private suppliers, thereby introducing market-like competition. Health care, education and social services are services that are typically thought of in this connection.
Substantial anti-spam fines
A Supreme Court judgment on the dissemination of spam recently set aside the anti-spam fine calculation model suggested by the DCO with a significant reduction of the size of the fine as the result.
In the final report regarding the bill, the standing parliamentary committee on industry and trade stressed the fact, along with the Minister, that the Consumer Ombudsman anti-spam fine calculation model should constitute the standard against which anti-spam cases are to be assessed. This means that a DKK 100 (€ 14) fine is given for one unsolicited message; however, the minimum fine is DKK 10,000 (€ 1,450).
Sales promotions and special offers
The present bans on sales promotion and quantity restrictions were repealed 1 January 2007.
However, to ensure price transparency in the future, a new provision lays down that offers which include some sort of sales promotion must indicate clearly and accessibly applicable conditions. The value of potential extra services should also be indicated clearly.
A new provision will regulate how extraordinarily favourable and advantageous offers are advertised. It must be indicated clearly if restrictions apply, e.g. if there is only a limited supply of the goods available. Violations are punishable by fine.
New and revised guidelines and guidance papers
Section 9 of the Marketing Practices Act on sales promotions and special offers took effect 1 January 2007. Danish shops and stores can now boost sales by offering an extra bargain if they make sure to follow a number of requirements as to how to advertise the offer.
New rules have been introduced in regard to covert advertising and marketing activities directed towards children and young people. The present guidelines on the respective areas therefore had to undergo a revision to incorporate the changes.
2. Success Stories
Consumer Protection in the the Telecommunication Industry
The mobile content service market abounds with services such as games and ringtones – often intended for children. Experience shows that price indications and terms of usage often cause problems for the consumers – and this is especially true of children who more than others are likely to have difficulties understanding applicaple conditions or potentially unclear prices. And the picture is the same throughout Scandinavia.
In March 2006 the Nordic Consumer Ombudsmen therefore issued a joint position statement on value-added content services which clarified the rules that mobile content service providers are obliged to observe when delivering logos, games etc. Concurrent with drawing up the statement, the Consumer Ombudsman called on the Danish telecommunication industry to improve their customer service procedures and to block access to their networks for non-complying external content providers.
A random sample of content services were screened for compliance with Danish law by the trade organisation Telecommunication Industries Association in Denmark (TI) as part of ongoing market surveiliance activities. The check-up revealed that whilst consumers were unlikely to suffer substantial losses even when content providers failed to comply with the law, half the content providers did not live up to the law on one or several counts. Insufficient compliance with the information duty set out in relation to the rules of right of cancellation and the time of charge/payment did, however, constitute the most serious and recurrent infringement. In this connection the Consumer Ombudsman stressed the need to address irregularities and violations continously.
However, other content services have also caused problems. In November 2006, a TV program showed just how easy it is for young people even below 16 to get adult content delivered to their mobiles. Not only a violation of the law, these services also breached the framework agreement in place in the telecom industry. The Consumer Ombudsman received an undertaking, a binding commitment to cease the performance of a specific marketing activity, from a number of telephone companies. They pledged to ophold their framework agreement as well as to establish a permanent control unit to screen and block adult content services on the market.
Airlines must quote total price for fares booked on the Internet
In autumn 2006 the Consumer Ombudsman received a complaint from a consumer who could not immediately locate the final, total price of a fare when booking online. A known and general problem in the airline business, the Consumer Ombudsman decided to investigate the matter thoroughly.
The Consumer Ombudsman has now informed airline companies operating on the Danish Market that according to the Marketing Practices Act it is not acceptable to keep the final, full price undisclosed until the middle of an online order placement. Nor is it sufficient to state the price inclusive of all costs immediately after indicating the price of the fare exclusive of all extra charges – not even if the prices are indicated in the same display or image. That said, his letter to the players in the market went on, once having stated the total price airlines were free to itemise the total price and individual charges and taxes.
The Consumer Ombudsman is of the opinion that the price exclusive of fees and taxes is irrelevant for the consumer and her price estimation. Airline companies are now required to inform the consumer about the total price the first time a fare is introduced in an electronic medium.
A major player in the market announced in January that changes to its website were well under way to meet the requirements set out in the Marketing Practices Act.
3. Case studies
E-traders and information about the law
In the spring of 2006, Consumer Ombudsman staffers swept 15 websites to check-up on Danish e-traders’ compliance with the law, including the Marketing Practices Act, the E-commerce Act and certain aspects of the Consumer Agreements Act and the Sale of Goods Act. The sweep took its point of departure in an investigation of statutory requirements related to price policies, order information, the order process and newsletters.
The objectives of the investigation were to inform the e-trade business about the requirements set out in the law; to form an impression of what type of rules the traders fail to observe; and to enforce the law, possibly by means of bringing actions against specific businesses which had failed to meet the law.
The investigation showed that the major problems in relation to Danish law were found in the following areas:
• Lack of information about terms of contract, including rights of cancellation;
• Potentially unfair reservations and disclaimers;
• Lack of information about the Sales of Goods Act;
• Distribution of newsletters/emails without consent; and
• Lack of information about how the contract is kept and its accessibility.
Offenders were contacted afterwards to have infringements corrected.
As of February 2007, a campaign to bring awareness of cancellation rights is about to take off as part of the ICPEN FPM initiative. Major players in the market such as trade organisations and the eCommerce Foundation which administers the Danish e-commerce trust mark are involved in the project. Moreover, consumers are encouraged to report infringements of cancellation rights to the Consumer Ombudsman. A mail box has been created for incoming notifications, and follow-up activities are envisaged.
The Consumer Ombudsman investigated 7 online auctions and their websites in spring 2006. It turned out that many of the auctions failed to get very basic and fundamental principles of law right or bended the rules as appropriate.
Online auctions are very popular trading venues and hence of great interest to many consumers. The combination of these two factors made great copy and an article in a major Danish newspaper reported how disappointed the DCO was with the outcome of his investigation. Unfair limitations of liability, too restrictive limitations on the access to complain and unsolicited dissemination of e-letters were some of the problems encountered; however, the (lack of) cancellation rights accorded to the bidders represented the most seriously compromised aspect.
After having concluded the investigation – which did not include bids or purchases - the Consumer Ombudsman contacted the respective auctions and called for a fairer approach in general while also pointing to more specific counts that the individual auction houses had problems complying with.
Follow-up on best practice in the telecommunications industry
In April 2005 a guideline on best practice in the telecommunications industry, issued by the Consumer Ombudsman, took effect. The guideline, a result of constructive negotiations with major trade and consumer organisations, laid it on the telephone companies to state the total price inclusive of all costs in marketing and advertising material. A number of other requirements in relation to terms and conditions as well as customer service were advanced to ensure a fair treatment of the consumers.
In 2006 a follow-up showed that not all telephone companies conformed their practices to the new standards. A sweep had been arranged prior to convening the trade organisations for a new round of negotiations in order to get an impression of the nature of the irregularities and infringements.
At present, the billing method (whether charged per minute rounded upward to the next whole minute or for the total time elapsed during the call) gives rise to concern as it is not always clarified in the advertising.
This may become an explicit requirement. The speed of the internet connection, including possible limitations and/or restrictions to obtain the advertised speed, is another problem which may be dealt with in the upcoming revision.
Although not part of the follow-up, individual complaints have been investigated concurrently with the revision of the guidelines. More enforcement activities aimed at rooting out infringements may be envisaged to improve compliance.
4. Important news and events
New Consumer Ombudsman takes office
Henrik Saugmandsgaard Øe was appointed Consumer Ombudsman in Denmark from 1 November 2006. Henrik Øe took the seat after Hagen Jørgensen, 70, who retired from the office he had held for 16 years.
Henrik Øe, 42, is lawyer, and comes to this position after having worked as Head of Division in the law department in the Ministry of Justice. Among other things, he has also served as legal secretary at the EC Court of First Instance in Luxembourg.
EC regulation on consumer protection cooperation
1 January 2007 the new EC Regulation on consumer protection cooperation (CPC) took effect.
The Consumer Ombudsman administers 12 of the 15 directives under the Regulation which makes him competent authority (CA) according to the terminology of the Regulation. Furthermore, he also acts as national contact point and single liason office (SLO), coordinating the contact between the other Danish CAs and the EU.