Misleading business directories

Last Monday, I presented to the European Parliament's Petitions Committee my draft report on the misleading business directories.

I have been working on this issue for quite a while now and have undertaken a series of consultation meetings over the past weeks.

The issue concerns business scams whereby people fall victim to offers from a misleading business directory that approaches them with what seems to be an offer for a free listing in the directory, only to discover later that, in fact, that they were unintentionally led into signing a three-year contract binding them to advertise in the directory at an annual cost in the region of €1,000.

It may seem like a trivial matter for some. It is not.

Hundreds of Maltese people, typically small businesses, have fallen victim. Some Maltese schools, NGOs and even band clubs are also known to have been caught. The business directory company that is most active in the Maltese market is known as the European City Guide.

In Europe, the victims run into several thousands.

The European Parliament received no fewer than 400 petitions on this issue alone.

Since I have now completed my draft report, I would therefore like to share with readers my main findings and I hope that this column can help to raise further awareness about this problem and empower more and more people to avoid becoming victims in the first place.

First of all, the report considers that there is indeed a problem, a problem which is widespread, which is of a cross-border nature (because directories are often established in different countries than the victims) and which also has a significant financial impact, especially on small businesses.

These elements make for sufficient grounds for this matter to be addressed at EU level. Indeed, for this reason I argue that the European Union should strive to provide an adequate remedy to victims. By "remedy" I mean that the validity of the contracts concluded on the basis of misleading advertising could be contested and annulled and that victims should be able to obtain a reimbursement of the money they paid.

Here are the measures that I propose in order to combat misleading business directories.

First, victims are urged to report cases of business scams to national authorities and to seek appropriate advice before they settle fees demanded from them by misleading business directory companies or by their debt-collection agencies. In other words, do not pay until you are fully aware of your rights.

Second, awareness must be stepped up because it is key to ensuring that victims do not feel on their own and, more importantly, that people avoid becoming victims in the first place. A lot is already being done to step up awareness, not least by business organisations that are to be commended for their work. But, given the widespread nature of this problem, it is clear that more needs to be done.

Third, existing EU law on misleading advertising appears to be inadequately enforced at national level largely because there is no across-the-board prohibition of the practice; so national authorities and courts deal with complaints on a case-by-case basis.

I therefore call upon the European Commission to step up its monitoring of the enforcement of EU law. Indeed, whereas it is up to national authorities to enforce EU law in each member state, it is nevertheless up to the Commission to make sure that member states are doing so.

Other legislation, such as EU law on unfair commercial practices, is also inadequate because it only applies to consumers and, therefore, cannot be invoked in cases, such as these, where the victims tend to be businesses.

There is also inadequate cooperation among national authorities in combating misleading practices of a cross-border nature, where two or more countries are involved. This means that, whereas it is easy for the misleading directory company to sell its scam in other EU countries, it is less easy for victims to seek protection beyond their own country.

The report also gives credit to some best practices which ought to serve as an example for EU countries.

Austria, for instance, took the initiative to change its national law by introducing a specific prohibition on misleading business directories unless prospective clients are clearly informed that such advertisements are solely an offer for a contract against payment. This example seems to have worked and it can be adopted in other countries or, better still, introduced in EU law.

My draft report is now available for viewing on my website and comments and suggestions to improve it are most welcome.

Readers who would like to ask questions to be answered in this column can send an e-mail, identifying themselves, to contact@simonbusuttil.eu or through www.simonbusuttil.eu.

Dr Busuttil is a Nationalist member of the European Parliament.