At the end of last year the Competition Council of the Republic of Lithuania examined whether several advertising claims, which were used both by National Injury and Debt Recovery Centre (Ltd) and Real Estate Price (Ltd), comply with the Law on Advertising of the Republic of Lithuania requirements, and, in particular, whether these promotional statements are not considered as misleading advertising (Resolution No. 19/12/2013. 2S-15).
The Competition Council examined the following promotional claims as potentially misleading advertising: “Leader in debt recovery”, “Potential leader in debt recovery”, “Debt recovery solicitors”, “We select debt recovery solicitors”, “We are trying to work so that the client would say: leaders in debt recovery”, “National injury and debt recovery centre – the leader in debt recovery!”.
Both companies are specializing in legal services. National injury and debt recovery centre (Ltd) provides legal services related to the recovery of debts and injuries, as well as their prevention. However, like Real Estate Price (Ltd), it also offers legal services in family law area. The examined advertising claims were promoted on two vehicles and in used premises in Druskininkai.
Does the purchaser of the advertising coincide with the supplier of advertising?
In this case none of the companies declared, that they issued the aforementioned advertising statements. However, the Competition Council noted that a registered trademark and contact details, diplayed on both sides of the car, coincided with one of the companies’ contacts and trademark. In addition, the styling of the car was created with the request of one of the companies. Also, one of the companies has ownership rights to both cars. When examining the supplier of the outdoor advertising in the premises, the Competition Council noted that advertising consisted of records sealed on separate windows promoted the services of both companies. Premises lease was used by one of the companies that commissioned the above mentioned outdoor advertising. During the trial of the Competition Council, a representative of both companies stated that outdoor advertising was ordered not by the companies, but by the attorney-at-law with whom the companies signed legal services agreement. However, the Competition Council noted that the information and contact details belonged to these two mentioned companies, and the fact that the advertising was ordered not by the companies, but by another person in a contractual relationship does not repeal companies’ interest in such advertising.
The Competition Council also took note of the fact that the two companies worked together during the investigation. Specifically, information for the Competition Council was handed in on behalf of one company on a form with the names as well as contacts of both companies, but with the other company’s requisites. Moreover, some of the letters concerning different matters addressed to both companies separately were answered in one writing by the two companies together. It was also noticed, that Real Estate Price (Ltd) is the only shareholder of National Injury and Debt Recovery Centre (Ltd). Both companies are run by the same head, and their head office is operating at the same address.
Taking these circumstances into account, the Competition Council concluded that the promotional statements were emanating from both companies’ initiative and interest, therefore these companies must be regarded as the suppliers of the discussed advertising.
When a leader can be considered as a “leader”?
In this case, the statements “Leader in debt recovery” and “National injury and debt recovery centre – leader in debt recovery” were attached on two cars and spread through an outdoor advertising on the window of the premises. The Competition Council pointed out that one of the meanings of a word leader is “being first and ahead of others”. Consequently, the statement “leader in debt recovery” may sound ambiguous to an average consumer if he or she is prudent and informed. In other words, such consumer may wonder why the supplier of the advertising is ahead of other companies providing debt recovery services. Since none of the companies provided evidence to support the validity of this statement, the Competition Council concluded that these claims do not meet the accuracy criteria set in the Law on Advertising.
How does the promotional statement affect the consumer?
After determining that the promotional statmenets do not meet the criteria of accuracy established by the law the impact of this advertising on consumers’ economic behavior such as decisions or actions related to the acquisition of goods or services, economic, commercial, financial or professional activities must be measured. In this case there is no need to prove that a consumer, affected by the advertising, has made a decision and purchased goods or services. It is sufficient to predict the possibility that consumer’s economic behavior was affected.
Both companies presented themselves as leaders in the field of debt recovery using the aforementioned promotional statements. The advertising which provides relevant information to the customer seeking to recover debts may inevitably influence him or her when choosing a company providing debt recovery services. On the other hand, as pointed out by the Competition Council, if advertising encourages consumers to take an interest in the advertised information, such consumers’ actions show that their economic behavior was affected. In fact, it was found that the promotional statements “Leader in debt recovery” and “National injury and debt recovery centre – leader in debt recovery” lead to the influence in making decisions associated with choosing a debt recovery service provider as well as decisions regarding the search for additional information about the company and their services. Therefore, these promotional statements are considered as misleading advertising.
Other promotional statements, like “Debt recovery solocitors” and “Solicitors”, give reference to the legal services. However, the slogans do not clarify that the two companies are not registered law firms, they are purely intermediary services and lawyers are hired under a contract. Such activities are recognised as misleading commercial practices under the Law on Prohibition of Unfair Business-to-Consumer Commercial Practices and these promotional statements are misleading advertising.
Can misrepresentation be minimized or eliminated?
In assessing other claims used by the companies, the Competition Council noted that the statement “Potential leader in debt recovery” attached on the car is fundamentally different from the claim “Leader in debt recovery” because a word potential, taking into account social, cultural and linguistic factors, cannot give rise to specific expectations that a company is a leader in debt recovery services subject to an average consumer who is reasonably well informed and reasonably circumspect. Moreover, according to the Competition Council, an extract “trying to work in a way so that the customers would say” taken from the statement “We are trying to work in a way so that the customers would say: “a leader in debt recovery” attached on the car does not seem to suggest
However, when evaluating the promotional statement the visual part of it is as important as its meaning. According to the collected data during the investigation, it has been concluded that the discussed statements were presented in such a way that some of their parts were harder to see or read (e.g. the font size of word potential is smaller than that of the phrase “leader in debt recovery”, also the color in which the word potential is written is less visible than the color of the same phrase). Finally, the case materials show that the word potential is not visible or legible in photos depicting an overall image of the car. This suggests that the consumer will not be able to read or see this word in the promotional statement from a greater distance. Analogous conclusions were drawn for other analysed promotional statements.
Hence, taking these facts into account the Competition Council concluded that the presentation of the essential information crucially contributing to the meaning of the statement is less visible than the rest part of the statement. As a result, if the consumer is at a great distance from the promotional statements, he or she would not be able to see or read this fundamental information. Therefore, the aforementioned statements are also recognised as misleading advertising.
Is the duration of advertising the same as its scope?
In assessing the extent of the violation, the Competition Council primarily assessed the duration of the analysed statements. Since the investigation took place on a number of statements that have been used on different objects at different times, the Council assessed the earliest and the latest known notice periods of specific statements and stated that the advertising duration is determined jointly, i.e. by evaluation of the longest duration of the misleading promotional statement. It was stated that the total advertising time (at least from 6th May, 2011 until 3rd September, 2013) is very long, but the scope of advertising was different during different periods of time.
It is worth noting that the Competition Council assesses the scope of advertising based on the set circumstances during the investigation. In this case, the cars were either in a closed parking lot or in a particular place, and the outdoor advertising on the windows was diplayed only in specific premises in Druskininkai. After evaluating these facts the Competition Council found that the scope of advertising is small.
When deciding on the size of the fine the Competition Council noted that in light of the facts and the annual revenues of the companies as well as the fact that the companies did not have any mitigating or aggravating circumstances, the size of fines for violating the Law on Advertising reaching 3% of the gross annual income (maximum allowable amount) is unreasonable. This amount would be applied under aggravating circumstances. Thereby, in accordance with the principles of proportionality and justice, both companies are designated to 5,000 Litas fine for misleading advertising.