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Social networking sites and blogs can be governed by the European Union's Unfair Commercial Practices Directive, according to new guidance published by the European Commission.

The guidance has been published to help countries and companies comply with a piece of legislation that poses "a number of challenges", according to the guidance.

"Since the adoption of the Directive, Member States have enacted national transposition laws. This poses a number of challenges, especially if one considers the legal impact of full harmonisation in an area characterised by considerable differences in national policy, style and enforcement techniques," it said.

"In order to ensure that both consumers and traders are subject to the same rules across the EU, it is very important that national authorities and courts contribute to the uniform implementation and consistent enforcement of the Directive. This document aims at providing guidance on the key concepts and provisions of the Directive perceived to be problematic."

It clarifies the status of the social networking activities that companies use to market and sell their goods and services.

"Social media, which include blogs, social networking sites, have become important avenues for commercial practices, especially hidden ones," says the guidance. "For example, several Member States have reported that cosmetic companies have paid bloggers to promote and advertise their products on a blog aimed at teenagers, unbeknownst to other users."

"In such cases, the authorities considered that the bloggers concerned were engaging in hidden commercial practices," it said.

The guidance also said that increasingly popular online price comparison websites could be controlled by the Directive, which was transposed into UK law as the Consumer Protection From Unfair Trading Regulations.

"Unfair commercial practices may also occur on price comparison websites," it said. "An obvious case is when an online price comparison service belongs to, or is linked to a trader and is used to advertise its products."

"For example, the site 'quiestlemoinscher.com' (literally 'whoisthecheapest.com'), a grocery price comparison service created by a French major supermarket company, was considered by French courts to be a trader's website and a tool for comparative advertising," it said. "In the case of professional but independent price comparison websites, the trader's activity consists of sourcing prices from retailers and passing this information on to consumer. Such service providers should therefore also be considered as traders and they would therefore be bound by the Directive's provisions."

The guidance focuses on other areas in which it thinks that legislators, traders and consumers might need advice. It covers definitions of 'traders' and 'transactional decisions'; guidance on the treatment of vulnerable consumers; misleading environmental claims; and confusing marketing.

The guidance also says that 'hidden traders' break the terms of the Directive. This includes the practice of 'astro-turfing', which is where a company pretends to be a consumer to leave positive online comments in imitation of real grass roots support.

Some examples of its guidance are:

* After-sales services should reflect what the trader has promised (for instance, where a computer is sold with a guaranteed free hotline, the trader is not allowed to charge for its use); and * 'Hidden' traders breaking the rules may be a hotel website including flattering comments supposedly by consumers which are actually drafted by the hotel owner; or a bookshop advertising its 'customers' choice' books where customers have never been consulted and the choice is made by the bookseller.

The guidance can be read here (pdf).

You can also read OUT-LAW Guide to Consumer protection from unfair trading regulations here.

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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