The European Parliament has received over 400 petitions from small businesses across the EU which claim to have fallen victim to misleading advertising by business-directory companies. These companies invited them to complete a form to renew their business details. The victims were told that the information would be updated free-of-charge, but not that by signing the form, they were also signing a contract committing them to place an advertisement in a business directory for a minimum of three years and at an annual cost of €1,000.
An own-initiative report by Simon Busuttil (EPP-ED, MT), unanimously adopted by the Petitions Committee on Thursday, condemns these practices and underlines the cross-border nature of the problem. It points out that thousands of small firms, but also schools, libraries and local social clubs, have suffered significant financial loss due to these abuses.
MEPs call on Community institutions to provide a reasonable remedy to victims, such that the validity of contracts concluded on the basis of misleading advertising and inducements is terminated. They also say that the victims should be reimbursed.
Scam victims urged to report cases
The committee urges business scam victims to report cases to national authorities, and calls on Member States to provide small firms with the "know-how" needed to file complaints and to ensure that victims seek appropriate advice before they pay fees demanded by business directory companies in these cases. Member States should also set up a centralised database of the complaints, it says.
Need for international co-ordination
The report welcomes action taken by Italy, Spain, Netherlands, Belgium, the UK, and notably Austria, to try to prevent business directory companies from using misleading practices, but says that these efforts remain inefficient and need to be co-ordinated internationally.
MEPs regret that the EU directive on misleading advertising, which applies to business-to-business transactions, appears insufficient and asks the European Commission to report by December 2009 on the feasibility of including a blacklist of misleading practices in the directive.
The committee also regrets that Member States appear reluctant to extend the scope of the EU directive on unfair commercial practices to business-to-business transactions, and asks the Commission to report by December 2009 on the feasibility of this measure.
Austria, an example of good practice
The report welcomes the example set by Austria, which specifically prohibits advertising in business directories unless prospective clients are unequivocally and clearly informed that such advertisement is solely an offer for a contract against payment. MEPs note that the Austrian experience shows that the right of victims to have collective legal action taken against directory companies by trade associations appears to be an effective remedy, which could be replicated in the initiatives currently being considered by the Commission.
