The Directive on unfair commercial practices defines the commercial practices which are prohibited in the European Union (EU). It thus protects the economic interests of consumers before, during and after a commercial transaction has taken place. It has been implemented into Icelandic law with Act No. 57/2005.
Unfair commercial practices are those which:
- do not comply with the requirements of professional diligence ;
- are likely to materially distort the economic behaviour of the average consumer .
The Directive defines two specific categories of unfair commercial practices: misleading practices (by action or omission) and aggressive practices.
A practice is misleading if it contains false or untrue information or is likely to deceive the average consumer, even though the information given may be correct, and is likely to cause him to take a transactional decision he would not have taken otherwise. Examples of such actions include false or deceiving information on:
- the existence or nature of the product;
- the main characteristics of the product (its availability, benefits, risks, composition, geographical origin, results to be expected from its use, etc.);
- the extent of the trader's commitments;
- the price or the existence of a specific price advantage;
- the need for a service, or repair.
Consumers’ transactional decisions must be made freely. They cannot be taken following the use of harassment, coercion or undue influence .
Several elements must be taken into consideration in order to determine whether an aggressive commercial practice occurs. These include:
- the nature, location and duration of the aggressive practice;
- the possible use of threatening or abusive language or behaviour;
- the exploitation by the trader of any specific circumstance affecting the consumer in order to influence his/her decision;
- any disproportionate non-contractual conditions imposed on the consumer who wishes to exercise his/her contractual rights (such as to terminate or switch a contract).