Misleading websites – OFT takes action

Having registered for a European Health Insurance Cards (EHICs) on the NHS website earlier today, the story that three organisations who deceptively sold consumers  EHICs (which allow UK residents to obtain state-funded healthcare in other EU member states and are available free of charge from an NHS website) have given undertakings to the OFT under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).

Background on the Law

Consumer Protection from Unfair Trading Regulations

The Consumer Protection from Unfair Trading Regulations (SI 2008/1977) (CPRs) generally prohibits unfair commercial practices. A commercial practice is unfair if it contravenes the requirements of professional diligence and materially distorts the economic behaviour of the average consumer in relation to a product (or is likely to do so) (regulation 3CPRs).

Commercial practices are misleading if they give false information which deceives (or is likely to deceive) the average consumer and causes or is likely to cause him to take a transactional decision that he would not otherwise have taken (even if the information given is factually correct) (regulation 5CPRs).

Commercial practices are misleading if, taking into account the circumstances of the commercial practice and the medium used to communicate it, they omit, hide, disguise or delay material information so as to cause the average consumer to take a transactional decision that they would not otherwise have made (regulation 6, CPRs).

Electronic Commerce (EC Directive) Regulations

The Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013) provide that website operators must provide certain information in a form and manner which is easily, directly and permanently accessible (regulation 6, E-Commerce Regulations).

Facts

European Health Insurance Cards (EHICs) provides UK residents with access to state-provided healthcare when they visit another EU member state. UK residents can obtain an EHIC free of charge from the NHS.

Five online traders were offering the EHIC, typically charging £10 per application without clearly stating that they were not the official NHS website. The OFT launched an investigation after complaints were made to the Department of Health and Consumer Direct.

The websites claimed to offer a “review and forward” service for the applications, for which they charged the fee. However, many consumers believed that they were using an official site and were unaware that EHICs were available free of charge from the NHS.

Most search engines use keyword advertising, via which an advertiser can have its messages displayed beside natural search results. Certain websites had purchased sponsored search engine links and therefore featured prominently when consumers searched for EHIC. There are ongoing proceedings in various European countries about such activities, which are often brought under trade mark or passing off/unfair competition laws. (Please see my previous blog post on this subject)

OFT Action

The OFT determined that these organisations had breached regulations 3, 5 and 6 of the CPRs and regulation 6 of the ECRs because they were misleading in their presentation. The websites mimicked the EHIC brand, used an official-sounding domain name and omitted important information by failing to clearly disclose that they were not the official provider of EHICs.

Three traders have signed formal undertakings not to engage in deceptive selling practices. A fourth had its website domain suspended by its domain name registrar and the fifth voluntarily ceased trading.

The OFT will monitor the organisations’ activities and, if they breach the undertakings, it may take court action including applying for an enforcement order under the Enterprise Act 2002.

Gregory Abrams Davidson LLP

If you or your business have any questions relating to Corporate or Media Law matters and would like a free consultation with a member of our Corporate or Media Law Teams, please contact us on 020 8209 0166. If you prefer, you can contact us by email at jabrams@gadllp.co.uk.