A changing consumer market
New digital services can make everyday life easier for many people. You can buy travel, services and goods online, administer your house sale yourself and check your health using a multitude of new apps. Digitalisation paves the way for more and more new players in what has become known as the sharing economy. It also makes it easier to market, buy and sell goods and services across national borders. The result is that it has become both easier and more demanding to be a conscious consumer.
In 2017, we will use our resources in areas that are important to people’s everyday lives. We will strive to ensure that consumers are given the information they need to make sound decisions on important matters. We will also work to ensure that business is conducted in a lawful and proper manner on both traditional and new platforms, whether customers are buying a new home, entering into loan and credit agreements or buying services via digital apps. People who seek alternative medicine must not be tricked by advertising into believing that expensive treatments can cure diseases and conditions, and consumers must not have to accept unreasonable terms to be able to use TV services.
We take our task seriously
Individual consumers cannot themselves influence how products are marketed or negotiate the terms and conditions of agreements. My job as Consumer Ombud is therefore to ensure that the interests of consumers as a group are safeguarded. I am convinced that most enterprises want to comply with the Marketing Control Act. Using dialogue, guidance and negotiation to arrive at voluntary solutions must remain an important principle in our activities. Those who break the law must be told what they need to do to rectify the situation, and there must be consequences for those who continue with unlawful practices. At the same time, we must quickly put a stop to marketing that is clearly illegal.
The Government is currently considering how the Marketing Control Act should be amended to make its enforcement more effective. Among other things, it is considering whether the Consumer Ombudsman should be given power of decision in all cases and have more power to issue penalty fines. The proposed amendments will strengthen consumer protection by ensuring that the Consumer Ombudsman can impose sanctions and put a stop to unlawful activities more quickly and effectively.
Trust and reassurance
To me, consumer rights and the protection of consumer interests are closely linked to the issue of trust and reassurance – being able to trust that what is shown in an advertisement is what you get, and having reassurance that you will not be bound by an agreement that only serves the interests of the seller and not your own.
I want people to keep trusting us to work on their behalf, and I want those who contact us to feel that they are taken seriously. With the rapid development we see today, the Consumer Ombudsman and the Marketing Control Act are more important than ever. I look forward to putting the activity plan for 2017 into practice.
Elisabeth Lier Haugseth, Consumer Ombud
Financial services encompass, among other things, loans and credit, payment, insurance and savings. These are services that all consumers depend on, but which can be complex and difficult to understand.
Payment services are among the services that consumers use most often and that they depend on the most. Services such as Vipps, mCash, MobilePay and Apple Pay have quickly become widespread. Contracts for using payment instruments must have reasonable and balanced terms and conditions, and must not be marketed in a way that may be misleading. The Consumer Ombudsman will intervene in cases of misleading marketing and unlawful contract terms and conditions from mobile payment providers.
Loans and credit are widely advertised. We supervise credit marketing in all media and work to ensure that these advertisements contain correct price information and that they are not aggressive and misleading. Prior to entering into a credit agreement, consumers must receive all necessary information and the process of entering into the agreement must take place in a satisfactory manner.
Private car leasing is a complicated and complex product containing more price elements than just interest and monthly rental fees that have a bearing on the total cost of the leasing period. A review of leasing contracts offered in Norway showed that the contracts are often highly unbalanced to the consumer’s disadvantage. In the year ahead, the Consumer Ombudsman will intervene in individual cases to ensure that leasing contracts are fair and balanced.
Many savings products are difficult to understand when it comes to content, lock-in period and risk. This particularly applies to pensions and pension savings products. In the year ahead, we will map the marketing of this type of product through supervisory campaigns. We will also consider individual cases if we discover any breach of the law.
Consumers spend large sums on insurance every year. Insurance marketing must not mislead consumers into believing that insurance policies cover more than they actually do. In 2017, we will supervise marketing of insurance products, with particular focus on misleading marketing.
Bank services are often very important to consumers’ financial situation. An important task for the Consumer Ombudsman is therefore ensuring that the agreement terms and conditions presented to the consumer are reasonable and balanced.
A proposal to amend the Debt Collection Act, among other acts, will help to allow some communication that must currently be sent by post, e.g. debt collection notices and demands for payment, to be sent electronically. We will work to ensure that consumers receive and are informed about invoices, debt collection notices and other important communication in a satisfactory manner.
New regulations can entail changes to the technical solutions for electronic ID, known today as BankID and Buypass. We will closely follow the changes in the regulatory framework and the information given to consumers about electronic ID to help to ensure that consumers receive essential information about this solution.
Different consumer problems can arise in the housing market when property is purchased, sold and rented. It is a precondition for consumers being able to make good and informed decisions that the standard contracts used are clear, fair and balanced and that marketing is not misleading. By actively supervising the housing market, the Consumer Ombudsman can help to ensure a more secure market and prevent civil disputes from arising following a sale or a tenancy agreement.
When consumers purchase projected housing, contracts are often entered into before the property has been completed. The buyer cannot therefore examine the property in advance or influence its progress. In 2017, we will review contracts for projected housing with particular focus on unclear deadlines as to when the property should be completed and unclear terms and conditions where the seller makes certain reservations.
Those who buy projected housing are largely at the mercy of the information provided by the developer and real estate agent. We see that developers and real estate agents now use new technology, such as VR glasses, which allow the consumer to visually experience the property. The Consumer Ombudsman will stay up-to-date with new forms of marketing and ensure that consumers are given a realistic impression of the property being marketed.
Disputes in connection with housing purchases primarily arise when the buyer believes that the housing is in worse condition than is stated in the advertisement. In 2016, Eiendom Norge took the initiative to appoint a team comprising estate agents, representatives from the advertising website Finn.no and the Consumer Ombudsman to find solutions that can reduce the level of conflict in housing purchases. This work will continue in 2017.
The use of misleading pricing practices, in which price estimates are set lower than the actual expected price in order to attract potential buyers to a viewing, are a consumer problem. The Consumer Ombudsman will continue to prioritise work aimed at preventing the use of misleading price practices.
Until recently, Finn.no was the dominant platform on which housing was advertised. We now see that both real estate agents and consumers who choose to sell housing themselves use social media to a greater extent, in addition to new portals such as Livvin and SeMinBolig. MegleSelv and Propr are new digital tools for consumers who want to sell housing without using a real estate agent. Digitalisation of housing sales presents many new opportunities, but also new challenges. In 2017, we will ensure that players in the housing market comply with the Marketing Control Act when putting new concepts and technology into use.
This year, we will also supervise change of ownership insurance. It is essential to ensure that consumers, regardless of which insurance provider they choose, understand the full implications of the contract terms and conditions so that they can make informed decisions about a purchase. The seller has extensive responsibility in accordance with the Alienation Act. We will pursue illegal and problematic marketing and contract terms and conditions used by change of ownership insurance companies.
Consumers who rent housing from professional rental firms must have clear and balanced tenancy agreements and all marketing must be in accordance with the Marketing Control Act. Based on reports made by consumers to the Consumer Ombudsman, it appears that certain professional rental firms require more of their tenants than they are entitled to pursuant to the Tenancy Act. In 2017, we will conduct supervisory campaigns to expose illegal marketing of rental housing and prohibit contracts that contain unreasonable maintenance terms and other illegal terms and conditions.
TV, internet and telecomunication
Products and business models in TV, internet access and telephony are in rapid development. An important aspect of the Consumer Ombudsman’s supervisory activities in these markets is to keep up-to-date with development in the market. Special provisions are included in the Act relating to Electronic Communications, which cover many of these services, but the Marketing Control Act’s general consumer protection provisions also apply.
For several years, the Consumer Ombudsman has worked to limit service providers’ use of unfair contract terms and conditions in the TV, internet access and telephony industries. Due to the rapid development in these markets, it is essential that we follow up established practices in relation to lock-in periods, periods of notice, notice requirements and other lock-in mechanisms to ensure that the contract terms and conditions of both new and established players are in accordance with the Marketing Control Act.
The Consumer Ombudsman reached an agreement with the cable TV operators that, during the course of 2016, it should no longer be a requirement that consumers purchase TV services in order to buy internet access, also known as forced tie-in-sale. We will continue to monitor developments in the market, both for new product tying and conditions that contribute to reducing or obstructing the consumer’s choice of services or service provider. We will also closely monitor the situation as regards marketing campaigns and other sales promotion to ensure that these cannot mislead consumers at a stage where the market is rapidly changing.
Last year, we started negotiations with all the big TV companies about which rules apply if they wish to make changes in agreements with consumers. We will continue negotiations with the TV companies on the content of standard contracts in 2017.
Several mobile phone companies include a period of notice in their contract terms, which entitle the mobile companies to receive payment for a service after the company has stopped providing the service and the customer has switched to a new company. In practice, this means that the consumer pays double costs in the period after the switch. In 2017, we will examine whether such clauses are in breach of the Marketing Control Act’s prohibition of unfair terms and conditions.
Internet access can be a costly service for many households, particularly in cases where the service providers needs to install infrastructure to the household, typically fibre access. These services are often sold by door-to-door salespersons. Consumers who have contacted us have reported that they were given insufficient information about prices, obligations and other essential information when entering into an agreement. Certain sellers resort to exaggerated claims about the advantages of their technology and play to the consumer’s fear of missing out on new technology. In 2017, we will inform the industry about the requirements set out in the Marketing Control Act and the Cancellation Act and pursue individual cases involving clear breaches of the law.
Today, mobile phone subscriptions are often sold as a package, where the amount of mobile data determines the price you pay. It is often difficult to find information about the price of services that are not included in the package. The Consumer Ombudsman has supervised marketing of data speed in the mobile phone industry over the past few years and will continue to consider new measures if service providers do not provide sufficient information about data speed in their marketing. In 2017, we will intervene in and stop misleading marketing of mobile telephony in serious cases where such action is indicated.
The Consumer Ombudsman believes that it is in breach of the Marketing Control Act to refer consumers who wish to contact a company they have an agreement with to a five-digit number that has a rate higher than the basic rate. The matter is currently being considered by the European Court of Justice, but will most likely be decided during the course of 2017. We will follow up the decision when it is pronounced and the outcome may have implications for the pricing of such service numbers for Norwegian Companies.
Consumer protection in the digital economy
Consumer protection must remain strong, also in relation to new emerging marketing and business methods. In 2016, the Consumer Ombudsman received project funding from the Ministry of Children, Equality and Social Inclusion. This gave us the opportunity to prioritise supervision in several important areas of the digital economy.
We will follow up these topics in 2017. Preventing hidden advertising in social and editorial media is a main priority in our supervisory activities. All players who conduct marketing must comply with the Marketing Control Act, and if consumers are exposed to advertising, they must be made aware of this. In 2017, we will launch an updated version of our guidelines regarding advertising in social media. We will follow up on this work with supervision.
The contract terms and conditions for digital services are often extensive and take time to read through. Often, the contracts are entered into on the small screen of a mobile phone. In 2017, the Consumer Ombudsman wants to intensify its efforts to ensure that consumers can make informed decisions about which agreements they should enter into by obtaining the right information at the right time. This regards both payments and consumers’ personal data, and applies to all digital services from simple apps to sharing economy platforms. Agreements included as part of the digital economy must not contain surprising or unfair terms and conditions.
Many consumer issues related to the digital economy involve challenges that reach far beyond national borders. The companies often offer their services worldwide. Effective consumer protection therefore requires both national and international cooperation between supervisory authorities. In 2017, we will work to achieve international agreement on how consumer rights can be safeguarded internationally in the digital economy. In this way, both Norwegian and foreign consumer authorities can carry out their supervisory activities in an effective manner. In order to be capable of taking an active role in safeguarding consumer rights in the digital economy, we are applying for funds from the Ministry of Children, Equality and Social Inclusion for a targeted effort in this area.
The market for alternative medicine is big in Norway, with over 200 different forms of treatment on offer. The marketing of alternative medicine is governed by a strict regulatory framework. Among other things, it is illegal to claim that the treatment is effective against specific illnesses and conditions.
In 2017, we will supervise the marketing of alternative medicine. Our particular focus will be on marketing claims that alternative medicine is effective against serious illnesses and conditions. We will also update the guidelines for alternative medicine marketing and actively communicate them to industry organisations and individual enterprises in the industry.
In recent years, we have seen a great increase in the development of mobile health apps. Consumers can use these apps to measure breathing and heart rate, take pictures of suspicious-looking moles or keep a training and diet log for the purpose of losing weight.
In 2017, we will help to ensure that health apps are not misleading and that consumers are not given the impression that the applications can prevent or cure specific illnesses or conditions. We will also help to make sure that contracts entered into when buying and downloading health applications are safe.
The Consumer Ombudsman has seen an increase in the marketing of cosmetic treatments such as Restylane and Botox, and a variety of health food products. Children and young people are active users of social media, and marketing via channels such as blogs and Instagram can reach a very young audience. Particular caution must be exercised when a commercial practice is aimed at children or can be seen or heard by children.
In 2017, we will conduct supervisory activities to uncover illegal marketing of cosmetic treatments and health food products and consider individual cases that involve strong consumer considerations.
E-commerce and telemarketing
E-commerce, subscription traps and telemarketing have been highly prioritised in the Consumer Ombudsman’s work the past few years. Through this work, we have achieved a great deal that benefits many consumers.
As in previous years, we have received many complaints regarding unwanted and illegal telemarketing, and this sales method brings with it a wealth of problems. The most common consumer complaint is that sellers do not respect the fact that they have registered in the national opt-out register. The Government has proposed amendments to the regulations for telemarketing and the Consumer Ombudsman will follow up on any amendments that are made. We will update our guidelines to the regulations for telemarketing and will inform enterprises about the regulations to ensure that the new rules are complied with.
The Consumer Ombudsman, the Norwegian Consumer Council and the European Consumer Centre Norway receive many complaints about what is known as subscription traps, where consumers have ended up with unwanted subscriptions for different goods and services. We see that many of the most problematic enterprises are based abroad. In 2017, we will therefore mainly pursue our international work in this area.
E-commerce is widespread and continues to grow. Through our work, we see that many enterprises do not comply with all of their obligations under the Marketing Control Act and the Cancellation Act. Online shops that sell fake brand-name goods or whose entire concept is fraud are also flourishing. In 2017, we will endeavour to ensure that consumers receive helpful guidance and are referred to the correct body, and that enterprises are informed about and comply with the regulations.
The prices of goods and services is essential information that consumers need in order to find their bearings in the market and to make informed decisions. In its most simple form, the requirements for price labelling mean that prices must be indicated on each product and that there must be sufficient shelf labelling in shops. In other circumstances where prices are a more complicated matter, a more extensive price list and examples of prices may be required. It is also important that price information can be found online, as more and more purchases and information searches take place on the internet. In 2017, we will conduct supervisory activities and consider individual cases to ensure that the regulations are complied with.
Businesses often advertise sales and discounts, since this has proved to be an effective marketing tactic. Before-prices and other price comparisons must be accurate and correct to ensure that consumers are not lured into buying products and services that are not as favourably priced as their marketing suggests. In 2017, we will consider individual cases involving clear breaches of the Marketing Control Act and advise enterprises about the requirements for using sales and discounts.
Cheapest price claims, price guarantees and price promises can greatly mislead consumers if the claims are not correct. In addition to giving a misleading impression of price levels, it can also mean that consumers do not take the time to investigate and compare prices in the market in the belief that the marketing claims are accurate. For this reason, the Market Council and Consumer Ombudsman set strict requirements for this type of marketing. In 2017, we will check that cheapest price claims, price guarantees and price promises are not misleading and put an end to those that are.
Protecting children and young people
Norwegian children have a particular protection against unfair commercial practices, and the rules that apply to marketing are more strictly assessed when children are exposed to advertising. Directly encouraging children to buy a product or service is also prohibited, as is encouraging children to nag their parents or guardians to buy something.
The Consumer Ombudsman will cooperate with other supervisory bodies and organisations to ensure that children can be safe consumers. The Consumer Ombudsman will also inform enterprises about the regulations to prevent illegal marketing targeting children.
In 2017, we will participate in an expert committee on children and gambling. We will develop guidelines for marketing aimed at children at events and pursue individual cases that involve strong consumer considerations.
Figures from Virke show that over 70 per cent of all travel is purchased online. Travel can be purchased directly from airline, hotel and package tour company websites, but also through internet-based travel agents, hotel booking websites, search engines for air tickets and similar. Several of these companies disclaim all liability for the travel itself.
Several internet-based enterprises charge a payment fee when customers pay with a card, and consumers complain of these fees being high. Pursuant to the Consumer Rights Directive, companies cannot charge a credit card fee that exceeds the actual cost of the transaction, and we can intervene in cases where fees are unreasonably high.
Several of the companies also sell cancellation insurance and a variety of service packages. It is important that these are marketed in a manner that does not mislead consumers into believing that they provide better protection than they actually do.
Long delays on long-distance journeys, airline bankruptcy and extensive airport closures in Europe due to volcanic eruptions and bad weather have demonstrated the importance of passenger rights in connection with air travel. A review has shown that the standard terms and conditions used by airlines do not always reflect the consumers’ rights pursuant to EU regulations and international conventions.
At the same time, a market for companies that help consumers to claim compensation that they may be entitled to has emerged. It is important that companies that sell claim assistance do not use misleading marketing or have standard terms and conditions that exploit consumers’ insufficient knowledge of their own legal rights.
The number of public transport passengers is increasing, but passengers have traditionally had less rights in connection with public transport than with air travel and package tours. In 2017, we will supervise transport companies to ensure that they comply with current and future EU regulations on passenger rights.
Electricity is a necessity that often accounts for a large proportion of the household budget each year (approx. NOK 25,000 per year for one family). The electricity market has over a hundred suppliers and there are numerous types of products to choose between for consumers attempting to find the best offer. The electricity market appears relatively complicated for many consumers and can be hard to navigate. It is therefore particularly important that consumers receive correct and sufficient information in marketing and when entering into contracts to purchase electricity.
It is also essential that electricity suppliers and network companies use fair and balanced terms and conditions in their contracts. In collaboration with the industry organisation Energy Norway, the Consumer Ombudsman in 2016 developed a revised set of standard terms and conditions for supplying electricity to consumers. In 2017, the Consumer Ombudsman will follow up this work and check that the industry has adopted the new terms.
The Norwegian Water Resources and Energy Directorate (NVE) currently has several processes under way that will lead to significant changes over the next few years for all buyers of electricity. A new model for determining tariffs for household customers is of particular importance, with a possible transition to effect-based tariffs. The roll-out of smart meters (AMS) will also continue during the course of 2017. We will follow these processes in the time ahead and engage in ongoing dialogue with NVE and the Consumer Council to safeguard the best interests of consumers.
We have seen a development over the past few years of more targeted attempts by foreign enterprises to mislead Norwegian consumers in internet marketing. This makes it essential for the Consumer Ombudsman to participate in international work to protect consumers against cross-border breach of consumer protection legislation and put a stop to fraud.
The consumer ombudsmen in the Nordic countries have annual meetings at the management level, cooperate on individual cases that are relevant to all of the Nordic countries and seek to develop common positions towards more general consumer issues.
Most of the regulatory framework that the Consumer Ombudsman supervises consists of EU regulations and directives incorporated into Norwegian law. The Norwegian consumer policy agenda is to a large degree influenced by ongoing EU processes. The Consumer Ombudsman prioritises providing input both to the European Commission and through national processes to ensure that EU legislation provides satisfactory protection and rights to Norwegian consumers.
The Consumer Protection Cooperation (CPC) Regulation facilitates binding cooperation between the enforcement authorities in Europe for the purpose of protecting consumers against unfair commercial practices and contract terms and conditions in EU/EEC countries. Participating in this work is highly prioritised by the Consumer Ombudsman.
We also participate in the International Consumer Protection and Enforcement Network (ICPEN), which is an informal network of supervisory bodies from more than 50 countries. The work includes cooperation on concrete cases and the sharing of information.
The Consumer Ombudsman has in recent years prioritised the task of training the entire organisation in international thinking and building up a positive cooperation with supervisory bodies in other countries.