Improved consumer protection
New name and stronger sanctions – what does it mean?
Important consumer law changes took effect at the turn of the year. Our supervisory role has been emphasised in our new name, the Consumer Authority, and we can now impose more effective sanctions for breaches of the law. The Consumer Authority has power of decision in relation to traders, and the Market Council is the appellate body for such decisions. We can also choose to make decisions in cases without prior negotiations with the trader concerned when the breach of law is obvious and we consider it necessary to react by imposing prohibitions and financial sanctions.
These changes form the backdrop to the priorities in this year’s activity plan. Our main focus areas have been chosen based on an assessment of which cases are important to the general public and where we can best contribute to improving consumer protection. We will use the measures at our disposal to change illegal practices, both in marketing and in contract terms and conditions. Traders will feel the consequences of obvious breaches of the law more quickly than today. They shall not benefit from breaking the law in order to increase sales.
The core of our mission remains the same, however. We work on behalf of the consumers, and fundamental consumer rights are at the heart of everything we do.
Issues of importance to the general public
In 2018, we have chosen to prioritise issues and areas that are important to the general public in terms of security, financial and practical aspects.
We will give particular priority to work concerning:
- A more secure housing market
- Consumer loans and credit
- A secure digital life
We will contribute to a more secure housing market and thus prevent disputes from arising following a sale or a tenancy agreement. We will supervise credit marketing in all media and work to ensure that it contains correct price information and is not aggressive or misleading. We will also work to ensure that digital marketing and commerce give consumer reasonable and understandable contract terms and conditions, as well as correct and sufficient information to allow them to make informed choices.
As Director General of the Consumer Authority, I want people to be able to trust the work we do for them, and those who contact us should experience that they are heard and taken seriously. The changes that took effect at the turn of the year mean that the Consumer Authority will be able not only to point out illegal practices, but also to impose financial sanctions on those that fail to comply with the regulatory framework.
Financial services covers loans and credit, payment, insurance and savings. These are services that all consumers depend on, but which can be complex and difficult to understand.
Loans and credit are widely advertised, and household debts are increasing. In its allocation letter, the Ministry of Children and Equality requested the Consumer Authority to give priority to this area. We will supervise credit marketing in all media. It is also important to us to ensure that these advertisements contain correct price information and that they are not aggressive or misleading. Consumers must receive the necessary information before entering into a credit agreement, and the process of entering into the agreement must take place in a satisfactory manner.
Payment services are among the services that consumers use most often and depend on the most. Norwegian services such as Vipps have quickly become widespread, and we expect new services such as Apple Pay and Ali Pay to be introduced in Norway in the near future. Contracts for the use of payment instruments must have fair and balanced terms and conditions, and must not be marketed in a misleading way. The Consumer Authority will intervene in cases of misleading marketing and unlawful contract terms and conditions from mobile payment providers.
Private car leasing is a complicated and complex product containing more price elements than interest and monthly rental fees that have a bearing on the total cost of the entire 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 to come, the Consumer Authority will continue to raise single 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 applies to pension savings products in particular. In the year to come, we will put in place a guide to responsible parties on the marketing of individual pension savings (IPS) products and consider singular cases if breaches of the law are uncovered.
Bank services are often very important to consumers’ financial situation. Therefore, an important task for the Consumer Authority is to ensure that the contract terms and conditions presented to the consumer are fair and balanced.
New regulations may entail changes to the technical solutions for electronic ID, where BankID and Buypass are the best known providers in Norway. We will closely monitor 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 service.
The Consumer Authority will contribute to more secure housing transactions and a more informed housing market. We work to prevent disputes from arising following a sale or a tenancy agreement.
Purchase contracts for planned and new housing shall contain clear deadlines for take-over, and they shall be fair, balanced and clear.
More special housing concepts, such as ‘rent to own’ arrangements with a gradual transition from a lease to ownership, must be clear and balanced so as to protect the interests of buyers with little experience of the housing market.
Untraditional ways of presenting housing, for example by means of video or VR glasses, must give a realistic impression. Creative housing advertising that promise something extra thrown into the bargain, for example an electric car or smart house services, must not overshadow important information about the property. The Consumer Authority works to ensure that consumers are not misled by marketing using incorrect prices or illustrations of e.g. the surrounding area that do not reflect the reality.
The reported level of conflict in the housing market is too high. Disputes in connection with housing sales primarily arise when the buyer believes that the house or flat is in worse condition than what was stated in the marketing. While we are waiting for concrete measures to ensure a more secure and informed housing market, the Consumer Authority will use the current regulatory framework and instruments at its disposal to limit disputes and dissatisfaction.
In marketing material, most of the negative information about the condition of the housing is only found in the property description and its enclosures. The advertisements often appear unbalanced by focusing exclusively on the positive aspects of the property. The advertising thus often gives a misleading impression because important circumstances relating to the property are either concealed, under-communicated or presented in an inexpedient manner. Many disputes in connection with housing sales could have been avoided if such essential information had been presented to potential buyers in an easily understandable manner in the advertisement, or provided in an easily accessible manner in the property description. The Consumer Authority will continue to work with real estate agents in 2018 on how to avoid misleading consumers when advertising housing.
Many properties are marketed digitally, for example in social media. The available information about a property must give the same impression across platforms and not mislead consumers. Our aim is to ensure that advertisers comply with the Marketing Control Act when using new technology and new concepts.
Real estate agents’ quotations and price lists vary in terms of their layout and the terminology used. The Consumer Authority is of the opinion that a clearer layout and more uniform terminology would make it easier to navigate the market. The Consumer Authority will follow up practices to ensure compliance with statutory requirements and that the solutions provide good guidance to consumers.
The work on monitoring misleading pricing practices, in which price estimates are set lower than the actual expected price in order to attract potential buyers to a viewing, will be continued if necessary.
Consumer protection in the digital economy
Technological developments bring new players and services to the market all the time. There is reason to expect big international players that offer both services of their own and platforms for marketing, buying and selling to impact consumers’ everyday digital lives. It is often still the case that new digital services and marketing methods are launched without taking into consideration consumers’ rights and need for information. This is more prevalent in the digital economy than in traditional marketing methods and sales via physical shops.
Through national and international cooperation, the Consumer Authority will ensure that there is a basis for maintaining Norway’s traditional high level of consumer protection in the digital economy as well.
Digital marketing and commerce should give consumers correct and sufficient information to allow them to make informed choices. Contract terms and conditions shall not be long and complicated, and their content shall not be unfair.
The Consumer Authority will therefore pursue single cases of misleading marketing and unclear or unfair terms for the use of digital services, connected devices and platforms that have significant harmful effects on the interests of consumers. We will also prioritise important matters of principle with significance to the further development of consumer protection in the digital economy.
The collection and use of consumer data must comply not only with the privacy protection legislation, but also with the Marketing Control Act. Data-based services and business models must be organised in accordance with the consumer protection legislation so that consumer rights are safeguarded and consumers can make informed financial choices in the market. We will therefore raise single cases where consumer data are collected and used in a manner that may be unfair or misleading under the Marketing Control Act.
Consumers have a right not to be exposed to hidden or intrusive advertising. This right must be safeguarded even if new marketing methods are developed. In 2018, the Consumer Authority will give priority to intervening in relation to hidden or intrusive advertising and manipulative marketing methods, particularly in relation to children.
Access to infrastructure such as broadband and mobile telephony must be provided on fair terms. Consumers must not be subjected to unreasonable lock-in mechanisms that prevent them from changing or cancelling services. Information about prices and other material information must be presented in an accurate and expedient manner to allow consumers to make informed choices.
The Consumer Authority will supervise marketing and terms and conditions used by TV, mobile telephony and internet providers and intervene in single cases as indicated by the seriousness of the matter and consumer interests.
We will also follow up on traders that we have been in contact with regarding unlawful use of expensive special phone numbers for customer service purposes, and ensure that they have discontinued this practice. We will also consider whether to impose sanctions if they do not offer a customer service number at the ordinary rate.
The prices of goods and services are essential information that consumers need in order to find their bearings in the market and make informed decisions. In its simplest form, the requirements for price labelling entail 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 via the internet. In 2018, we will conduct supervisory campaigns and consider singular cases to ensure that the rules are complied with.
Sales marketing, price comparisons and lowest price claims are often used by traders, since they have proven to be effective marketing messages. Before-prices and other price comparisons must be correct to ensure that consumers are not tricked into buying products and services that are not as favourably priced as the marketing suggests. Only traders genuinely offering the lowest price may use this claim in their marketing. The Consumer Authority will keep an eye on price marketing in several different industries in 2018 and put a stop to misleading price marketing.
Telemarketing is on the top of the Consumer Authority’s complaints statistics. And the number of complaints received in 2017 was 35% higher than in 2016. Many of these complaints concern calls to consumers who have registered in the national opt-out register. Some consumers also experience that telemarketers do not give correct information about the products they sell.
Stricter rules for telemarketing were introduced at the turn of the year, and one of the main reasons was to try to reduce the problem of consumers who have opted out still being called against their will. The rules on how permission can be obtained to call consumers who have opted out, for example through online competitions, have therefore been tightened. It is also prohibited to use withheld numbers or unlisted numbers that are not searchable via phone directory services for telemarketing purposes.
The Consumer Authority will follow up the new rules in relation to the telemarketing industry with information about the new regulations, enforcement measures and sanctions where required.
E-commerce and fraud
Many consumers are unfortunately tricked into unwanted subscriptions. Others experience unauthorised charges on their payment cards, or receive other goods than they believed that they ordered, for example counterfeit branded goods.
It is often difficult to stop those responsible for this type of fraud, because most of them are based abroad. The Consumer Authority will carry out active information work to warn consumers against fraudulent online shops and other forms of online fraud.
The Cancellation Act and the Marketing Control Act are intended to contribute to making e-commerce safe, and the Consumer Authority will provide guidance to traders about the applicable regulations and follow up Norwegian traders that do not comply with them.
In its role as national contact point for e-commerce, the Consumer Authority will answer traders’ questions and enquiries regarding the regulations for e-commerce.
The new sharing economy with services such as Airbnb is increasingly influencing the transport and travel and tourism industries. The Consumer Authority will actively monitor the situation to ensure that marketing and contract terms and conditions are legal.
The Consumer Authority will work on new regulations for package tours to ensure that consumer rights are reflected in the standard agreements entered into with consumers.
We will also work to ensure that transport companies offer public transport passengers terms and conditions that comply with EU legislation and Norwegian law.
The electricity market is complicated, with more than 100 suppliers, many price elements and different contract terms and conditions. It is therefore important that consumers receive correct and sufficient information in marketing material and when entering into contracts to purchase electricity.
The Norwegian Water Resources and Energy Directorate (NVE) has initiated several processes that will lead to significant changes over the next few years for all electricity customers in Norway. The work on a new model for determining tariffs for household customers is of particular importance, and a transition to demand tariffs has been proposed. This could lead to significant changes in the network charges that individual consumers pay. The roll-out of smart meters (AMS) has come half-way, and will be completed in the course of 2018. We will follow these processes in the time ahead and engage in ongoing dialogue with NVE, Energy Norway and the Consumer Council to safeguard consumer interests.
The Consumer Authority receives many complaints every year about telemarketing of electricity. In 2018, the Consumer Authority will focus in particular on electricity suppliers that engage in telemarketing to ensure that they comply with the regulatory framework for telemarketing, including the changes that took effect on 1 January this year.
Big global players, e-commerce and marketing across national borders make international cooperation crucial in the field of consumer protection. For many years, the Consumer Authority has prioritized to train the entire organisation in international thinking and strengthen cooperation with consumer protection authorities in other countries.
Most of the regulations that the Consumer Authority enforces are EU regulations and directives. The Consumer Authority prioritises providing input both at the international and the national level to ensure that new EU legislation does not result in a weakening of Norwegian consumers’ rights and protection.
The Consumer Protection Cooperation (CPC) Regulation facilitates binding cooperation between the enforcement authorities in Europe for the purpose of protecting consumers against illegal marketing and unfair contract terms and conditions in EU/EEA countries. Participating in this work is one of the Consumer Authority’s priorities. A new CPC Regulation which will give all these authorities stronger sanctions in relation to traders that act in breach of the regulatory framework, will be implemented by January 2020. The Consumer Authority will play an active part in this process.
The Consumer Authority also participates in the International Consumer Protection and Enforcement Network (ICPEN), which is an informal network of consumer protection authorities from more than 50 countries. One of the things that ICPEN is working on is a project concerning contract terms and conditions, consumer protection and protection of privacy in the digital economy. This project is led by us. We also cooperate with the consumer protection authorities in the Nordic countries on this topic, as well as on other matters of interest to all the Nordic countries. The Consumer Authority also contributes input to consumer protection processes in the OECD.
Marketing of alternative treatment
About one in four Norwegians saw an alternative therapist in 2016. Their marketing is subject to strict regulations which, among other things, prohibit them from promising that the treatment is effective against specific diseases and disorders. The Consumer Authority regularly receives complaints and tip-offs about alternative therapists who promise more than they are allowed to. A supervisory campaign carried out in autumn 2017 uncovered many violations of the law. In 2018, we will follow up practitioners who do not comply with the regulations, and consider on a continuous basis whether we should intervene in relation to more practitioners.
Advertising targeting children
Children in Norway enjoy special protection against unfair commercial practices. The marketing rules apply more strictly to advertising directed towards children, or may be seen or heard by children.
Children are exposed to targeted marketing and commercial pressure via digital channels all the time. When advertising is incorporated into entertainment or invites children to share content in their social networks, it may be difficult to recognise it as advertising.
Children shall not be exposed to direct messages encouraging them to buy anything or to other forms of illegal marketing. The Consumer Authority provides guidance to traders about the regulations, and about the requirement to exercise particular care when children are exposed to advertising. The Consumer Authority will also follow up complaints concerning direct encouragement to buy or other forms of illegal marketing.
Many traders signal that they exercise social responsibility by highlighting the environmental or ethical advantages of their businesses and products.
We want consumers to be able to make good and sustainable choices. This requires the information provided in marketing to be correct and sufficient, and to provide a good basis for comparison.
In 2018, the Consumer Authority will keep an eye on and obtain knowledge about how arguments based on sustainability and environmental factors are used in marketing. We will use this as a basis for deciding which markets are most in need of follow-up