SME Chamber

Protecting businesses against misleading marketing practices

GRTU has this
week written to Government with its position on the Commission communication on
Protecting businesses against misleading marketing practices and ensuring
effective enforcement.

GRTU stated that it welcomes
the communication on misleading marketing practices and supports the
Commission's view that stricter regulation is required to effectively ban and
enforce exemplary and dissuasive sanctions against, certain aggressive directory
company sales practices.

GRTU is very pleased with the
suggested actions against misleading company directories, i.e. fraud cases
where small companies are invited by a business directory to update their
contact details under the false impression that they will be listed free of
charge, only to discover later that they have unintentionally signed up to a
paid contract. EU-wide rules are fundamental in this respect as scammers
increasingly operate cross-border, which makes enforcement very difficult.

This is something we have
experienced the negative effects of first hand with thousands of Maltese micro
and small businesses falling victims of such deceptive marketing practices.
Misleading company directories in particular have been a scourge for SMEs for
decades. Cases are now on the rise, as technology makes it easier and
cheaper  for scammers to mass mail their
fake offers. GRTU has taken up responsibility at national level, with actions
ranging from and awareness raising to legal disputes

Given its nature, GRTU
believes that the appropriate legal basis should include, but cannot be limited
to, the Treaty's provisions on the internal market and its scope of application
should not be restricted to cross-border transactions. Furthermore, the GRTU
warns of the need to give attention to the trans-European nature of many of
these practices, which requires coordinated international action.

As rightly pointed out by the
Commission, the hardest cases to tackle are those involving scammers operating
crossborder within the EU. Small companies rarely have the means to bring
forward a court case against a misleading company directory based in another
Member State, both in terms of costs and in terms of legal knowledge. Clearly
banning such practices in the whole EU, increasing penalties for infringements,
designating an enforcement authority in each Member State and having these
authorities cooperate cross-border will go a long way towards reducing
deceptive marketing techniques in the EU. The communication will however not
make a difference for SMEs unless it is followed up by a concrete legislative

GRTU urges the Commission to
develop and enforce complementary measures to improve information and
dissemination; cooperation between administrative authorities, public-private
platforms and stakeholder representative organisations; and rapid reaction
mechanisms in order to put a stop to these practices and ensure damage
compensation, namely through the immediate creation of a European judicial system
for group action, which was announced over thirty years ago and then
successively delayed.

In view of the urgency to take
an immediate position on this issue and the estimated magnitude and seriousness
of these practices in economic terms at the European level, GRTU agrees that
the Commission should immediately present a specific legislative proposal on
this issue. We hope that the Commission will do so as soon as possible. It
already has all the evidence it needs about the benefits of EU-wide rules, so it
must act now as a matter of urgency.

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