NEWS | Wednesday, 04 June 2008

Consumer and Competition Division cannot take legal action against European City Guide scam

Charlot Zahra

The Consumer and Competition Division (CCD) has received 58 complaints in Malta about the European City Guide (ECG) advertising scam over the past four years, however it cannot take any legal action against the Spanish company, Business Today has learnt.
Asked what action the CCD (also known as the Office of Fair Competition) is planning to take if this scam is confirmed, a spokesperson for the Finance and Investments Ministry, which is politically responsible for Competition Policy, said:
“The CCD cannot use its legislation to investigate the company as consumer protection laws apply to contract with the consumer whereas the ECG targets businesses.
“The misleading advertising provisions in relation to business to business transactions are situated in the commercial code, therefore it is possible for the aggrieved trader to institute legal action against the defaulting trader by means of a civil law suit,” the spokesperson said.
The first complaint against the ECG scam was filed at the CCD on 29 December 2004.
In addition to the formal complaints, a number of telephone enquiries were answered by means of forms sent by e-mail or by mail. “Moreover, at the European Consumer Centre 17 complaints have also been received,” the Ministry spokesperson told Business Today.
Asked whether the scam was noticed as a result of the CCD’s own investigations or following a complaint from affected persons, the Ministry spokesperson said curtly: “The scam was first noticed by means of the above-mentioned complaint.”
Asked to elaborate more on the investigations conducted by the CCD on the ECG scam, the Ministry spokesperson said: “Although the cases are business to business transactions that therefore do not fall within the CCD competence, the CCD issued a specific press release on the matter in August 2005 and sent a letter to businesses that had complained about the directory. “A more general press release to cover all similar companies was released in 2007.
“Moreover, the CCD contacted the Valencian authorities on the subject and checks were done through the EU’s Consumer Protection Coordination Network (CPC),” the Ministry spokesperson added.
Jules Woodell, one of the victims of the CPC scam, fronting the lobby on the European Parliament to take action about the matter, explained how hundreds of companies across the EU were conned into booking ‘free advertising’ on the European City Guide website.
“The scam works by the mailing of a form disguised as a free offer. The ‘contractual agreement’ is hidden in the small print at the foot of the form.
“Furthermore the forms often have inaccuracies so the recipient is drawn to correcting their details, thus missing the contractual nature of the document,” Woodell told Business Today.
Once signed and returned the ECG keeps the form for 2-3 months before sending a proof and invoice. “Of course the recipient then says they expected a free entry and the ECG replies that they have signed a legally binding contract and the ‘cooling off’ period has expired,” Woodell insisted.
The businesses were asked to pay €900 a year for a three-year-contract.
“Most firms then refuse to pay, the ECG adds interest and fees and then uses debt collection agencies who add more fees and threaten legal action. These are very high pressure tactics and some people find this stage very distressing,” he added.
“As far as I can tell the ECG has never gone to court in pursuit of one of these alleged debts, the threats of legal action are false,” he insisted.
Asked by Business Today how many Maltese businesses were involved in the European City Guide scam, Woodell said: “I am not sure how many Maltese businesses are involved, it is several hundred.
“The last figure I have is for 2004, at that point 263 Maltese firms were listed on the ECGs website. In the UK the number of affected companies has doubled since 2004, so expect around 500.”

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