Advertising and Consumer Rights

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This article is part of our special report Food & Responsible Marketing.

Traditionally, EU laws on advertising applied to print and broadcast media, but as adverts increasingly migrate to an unregulated online world, lawmakers and consumer groups are exploring ways to ensure that digital marketing does not infringe consumer rights.

Background

The first EU law on advertising and consumer rights can be traced back to 1984 with the adoption of the Misleading Advertising Directive. As the broadcasting industry began to explode in the 1980s with the arrival of satellite television, so too did cross-border audiences. 

The EU responded with a Television Without Frontiers Directive in 1989 which established minimum harmonised standards on advertising, among other things. Member states could choose to build upon those standards but could not restrict the reception of broadcasts from other member states with lower standards. The directive covered teleshopping, sponsorship of television programmes and advertising, including a ban on ads for tobacco and prescription medicines. 

The directive was revised in 2004 to include interactive and virtual advertising. A beefed up version of the TWFD was created in 2007 and renamed the Audiovisual Media Services Directive to broaden its application across all audiovisual media services - that means traditional television (linear service) and video-on-demand (non-linear services) like BBC's iPlayer. 

The EU's Unfair Commercial Practices Directive came into effect in 2005 to protect consumers against misleading advertising. Under the directive, people affected by misleading advertising can either take the guilty parties to court or before the national regulator. 

Rules on advertising also fall under EU directives on consumer rights. At present, the contractual rights of EU consumers are set out in four separate directives on unfair contract terms, sales and guarantees, distance selling and doorstep selling respectively. These date from the 1980s and 1990s, while many EU countries have since adopted stricter rules themselves. 

The EU tabled a merger of these proposals into a single rulebook in 2008 called the Consumer Rights Directive. A clear majority of stakeholders are in favour of increased legal harmonisation on e-commerce, according to the results of a public consultation launched by the Commission. 

Issues

In principle, advertisers are bound by the code of conduct set out by the International Chamber of Commerce, but electronic communications is outgrowing current regulation and raising important questions regarding advertising and consumer rights in the online world. 

The EU consumer policy strategy 2007-2013 foresees that "the technological revolution brought about by the Internet" is paving the way for innovative ways to advertise goods and services, but concedes that the same revolution also presents challenges to self-regulation of advertising. 

Advertisers have unsurprisingly preferred a self-regulatory approach to their work. A report from the European Advertising Standards Alliance (EASA) outlines how advertisers regulate themselves.

The EASA argues that good self-regulation builds up greater trust between the consumer and the industry. The EASA represents Europe's advertising industry by bringing together national self-regulatory organisations, or SROs, at European level. 

National SROs, which exist in 22 of the 27 member states, differ slightly from country to country, primarily according to legal and cultural differences between EU member states, but all have the same goal of making sure that advertising standards remain within an acceptable boundary. 

The EU agrees in principle that advertisers should self-regulate but since the 80s, issues of consumer health, fairness and privacy, in large part driven by the evolution of borderless satellite and digital technologies, have seen the EU draft stricter advertising codes for the industry. 

Tobacco first to go

The EU hit out hardest at tobacco advertising with a strict no-tolerance policy on all media (EURACTIV 28/07/05). 

The Tobacco Advertising Directive, adopted in May 2003 and ready for implementation in 2005, effectively banned tobacco advertising in print, radio, broadcast media and its internet equivalents. It also forbids tobacco sponsorships of cross-border events and activities. 

The only member state to contest the tobacco directive was Germany whose appeal to the European Court of Justice for a partial annulment was dismissed in 2006 (EURACTIV 15/06/06). 

Airlines in the spotlight

The EU executive launched its first 'ticket sweep' in September 2007 to check that 386 websites selling airline tickets were complying with European consumer protection laws. Airlines were given four months to remove misleading information on flight prices and conditions from their internet pages (EURACTIV 15/05/09). 

The report showed that 137 of the 386 websites investigated were in blatant breach of EU consumer law, with misleading price advertising the most common offence. 

After a second on-the-spot check of 67 major airlines carried out in March 2009, 52 were either give a clean bill of health or took clear steps to correct the ambiguities. 

Ryanair, EasyJet, Wizzair, Austrian Airlines, LOT and Lufthansa were singled out as operators with outstanding problems. 

Advertising to children

A voluntary pledge to change food and beverage advertising on TV, print and internet to children under the age of 12.was taken by Burger King, Coca-Cola, Danone, Ferrero, General Mills, Kellogg, Kraft, Mars, Nestlé, PepsiCo and Unilever in 2008. 

However consumer groups continue to rally the Swedish presidency to push for stricter rules on food and drinks advertising targeted at children. 

The pan-European consumer group, BEUC want to ban the advertising of food and drink high in fat, sugar or salt to children from 6-9pm and to extend such restrictions to all forms of marketing such as viral online campaigns and text messages. 

Tackling obesity

Consumer groups have also been calling for colour-coded nutrition labeling on food sold across the EU. 

In 2006 a stakeholder group chaired by the consumers group BEUC concluded that "the proliferation of many different simplified labelling schemes is a cause of unnecessary confusion." 

In early 2008 the EU proposed a new regulation on nutritional information to consumers in order to simplify regulation, make it more efficient and provide more information. The proposal suggested mandatory nutrition labeling and minimum standards to improve legibility and origin declaration. 

In response to the European Commission’s Proposal for a Regulation on the Provision of Food Information to Consumers, the European Public Health Alliance recommended a mandatory European labeling scheme on the front and back of food packaging, with a traffic light system explaining which food group – fats or proteins – each colour denotes. 

However food manufacturers and retailers immediately expressed serious concerns over the proposal, describing it as "unworkable" (EURACTIV 31/01/08). The proposal is currently being reviewed by the European Parliament and may be adopted by 2010. 

Advertising and new media

As the crash in global financial markets had a devastating effect on print advertising and the industries dependent on it, the online market for advertising continued to boom with the uncontested popularity of the internet. Search-related advertising and classified ads drove the boom according to data from the Interactive Advertising Bureau Europe (IAB). 

As advertisers migrate to the Web, advertising standards have attracted attention. The internet has also blurred the lines on the definitions of advertising. In 2008 negotiations between the EASA, advertising agencies, associations and national self-regulatory organisations produced a Digital Marketing Communications Best Practice guidebook which is intended to define what kind of online content falls under the agreed advertising codes. 

But EU lawmakers and consumer groups continue to question whether these rules are robust and transparent enough to address consumer protection issues that arise in the online sphere. 

The lack of harmonised rules in advertising means that an image or a product that would be acceptable in one member state may be unacceptable to a user accessing the internet in another member state. 

The Commission launched the European Consumer Summit in 2009 inviting leading industry figures to participate in a consultation on consumer protection and privacy in relation to online advertising in Europe in April 2009. 

A particular concern raised at the summit was behavioural advertising which involves building a profile of information about users based on which websites they visit helping ad companies display advertisements that are more narrowly targeted to the interests of individual users. 

The Commission's proposed Directive on Information to Patients attempts to set down rules on providing online information on medicines (EURACTIV 18/2/09). 

To clarify information, the Commission calls for advertising of prescription medicines to be scrapped and wants to introduce stricter rules regarding the content of pharmaceutical adverts, including those on the Internet, in the form of an EU code of conduct. 

Positions

The World Federation of Advertisers warns of the "potentially counter-productive effects of restrictions on advertising freedom" and warns that advertising "powers economic growth" by helping companies to succeed and "increases value for consumers" by stimulating competition. 

The role and value of effective self-regulation has been well acknowledged by the [European] Commission, notably in the EU Advertising Roundtable report and in the recently adopted AVMS directive," said Ildiko Fazekas, chairman of the European Advertising Standards Alliance  (EASA). 

In a separate report on consumer privacy and online advertising, the Alliance recognised that privacy is a significant issue for the advertising industry. EASA is currently looking into whether self-regulation can play a role. 

"As technologies advance and new advertising media emerge, so the importance of ensuring they adhere to the same principles that other advertisers follow becomes paramount," Guy Parker, chief executive of the UK Advertising Standards Authority, said of online advertising. 

On advertising on the Internet, UK Conservative MEP Malcolm Harbour said "the responsibility lies firmly with advertisers and technology companies, who are obliged to inform customers exactly what it is they're opting in to". 

"[We] strongly believe that self-regulatory initiatives and leading business practices offer the most effective framework to protect consumers and allow for further innovation in the area of online advertising, in particular with regard to the more widespread use of behavioral advertising," read a joint statement from the European Association of Communication Agencies  (EACA), the European Newspaper Publishers' Association (ENPA), the European Federation of Magazine Publishers (FAEP), the European Publishers' Council (EPC), the Federation of European Direct and Interactive Marketing (FEDMA), the Interactive Advertising Bureau Europe (IAB) and the World Federation of Advertisers (WFA). 

The statement also acknowledged the additional challenges presented by dynamic content on the Internet, where sometimes boundaries which may be clear in the offline world could become blurred. The associations say they have addressed these challenges head on: "We share the concerns of the European Commission and do not support misleading practices, such as marketing that is disguised as editorial content." 

On behavioural advertising, EU Consumer Affairs Commissioner Kuneva, warns that "there is a lack of consumer awareness surrounding the collection of data. We are stepping into unknown territory, but will continue to follow this topic, and again and again seek industry input." 

She added "personal data is the new oil of the Internet and the currency of the digital world," a reality that consumers have to accept in exchange for free content online. 

Greek MEP Stavros Lambrinidis, the European Parliament's rapporteur on strengthening security and fundamental freedoms on the Internet, stresses the necessity of prescribing limits to the consent that can be obtained from users regarding the processing of their personal data in the digital marketplace. 

"One thing you have to realise is that online, we're all learning. It's very new," said Olivier Fleurot, chief executive at  advertising and public relations firm Publicis. "I think newspapers still have a lot more to do towards providing more data, but quality data. It's easy to say, 'I have one million unique users a month.' But that doesn't mean anything. You need to go much further, and qualify who these people are, and, with the one million unique users, which ones can really be interesting for advertising," he said. 

On food advertising to children, BEUC warns that "alongside 'conventional' advertisements in magazines or on TV, we are now seeing adverts on the Internet, via sponsorship of sports gear in schools, in product placement at the cinema or in SMS competitions [...] This puts unacceptable pressure on children – and their parents – to make them eat unhealthy food, and goes against all the declarations made by Europe's decision-makers in support of the fight against obesity".

The Confederation of Family Organisations in the European Union  (COFACE) argues that allowances must be made for vulnerable consumers, "those who lack access to information, or may have lower educational attainments". 

On advertising to children, Ed Mayo, chief executive of Consumer Focus, said placing all children's websites under the supervision of the UK Advertising Standards Authority would be an important step for children's rights. "At the heart of our request are recent research findings that UK children really do not understand that the company websites they use are designed as a marketing activity to build brand loyalty and to generate sales," Mayo added. 

Timeline

  • 1984: Commission adopts Misleading Advertising Directive. 
  • 1989: Television Without Frontiers Directive introduced. 
  • 1999: Creation of the first EU Safer Internet Programme for children and young people. 
  • May 2003: Commission adopts Tobacco Advertising Directive. 
  • May 2005: Unfair Commercial Practices Directive adopted. 
  • March 2007: Commission adopts Consumer Policy Strategy. 
  • Dec. 2007: Audiovisual and Media Services Directive replaces Television Without Frontiers Directive. 
  • 2008: Commission tables Consumer Rights Directive, merging four existing directives. 
  • April 2009: First ever EU Consumer Summit. 
  • May 2010: Possible adoption of Commission proposal on food labelling. 
  • 2010: Commission to launch a Stakeholder Forum on Fair Data Collection. 

Further Reading

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