MEPs call for coordinated action against misleading advertising by business directory companies

The European Parliament, further to 400 complaints from small firms across Europe reporting they had been misled into committing themselves to pay for adverts costing 1,000€ per year, has decided to take action on those behaviours. MEPs also call upon the Commission to introduce a blacklist of such misleading practices, and upon victims to report business scams.

Business-directory company usually approached businesses by mail, inviting them to complete or update their business name and contact details and giving them the false impression that they will be listed in a business directory free of charge. Signatories later discover that they have, in fact, unintentionally signed up to a contract, normally binding them for a minimum of three years, to be listed in a business directory at a yearly charge of some 1,000€.

The Parliament has received more than 400 petitions from small businesses who claim to have been victims to such misleading advertising by business-directory companies.
In this report adopted in Plenary Session, MEPs express their concern at the problem raised by the petitioners and underline the cross-border nature of this problem. Not only small businesses but also non-profit making entities such as NGOs, charities, schools, libraries and local social clubs have suffered financial loss due to these abuses.

In order to tackle such situation, the Parliament considers that the validity of contracts should be annulled or terminated based on misleading advertising, and victims should be reimbursed.

The Parliament also encourages victims to report cases of business scams to national authorities and asks 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. Member States are urged to set up and maintain a centralised database of complaints.

International coordination

The report welcomes action taken by some Member States such as 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

EP also regrets that the EU directive on misleading advertising, which applies to business-to-business transactions, appears as 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 European Parliament 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.