The Netherlands Consumer Authority fines providers of misleading sales demonstrations during coach trips
The Netherlands Consumer Authority has imposed fines for an amount totalling EUR 630,000 on three companies that organised coach trips accompanied by misleading and aggressive sales demonstrations. Two of these organisations were German and one Dutch. The German organisations were operating in the Dutch market under the name ITC Reisclub. The Dutch organisation used the name Pro-Actief Plus.
Personally addressed written invitations were used to invite primarily older consumers to take part in a day trip. During this day trip, sales demonstrations were held, in which health products were sold to the consumers in a coercive manner. Incorrect or other misleading information was also provided during these demonstrations, causing consumers to make purchases that they would not otherwise have made. Bernadette van Buchem, Director of the Netherlands Consumer Authority: “Through these decisions, we have established that the commercial practices adopted during these sales demonstrations were in contravention of the law. We are imposing these fines on these companies because of the very serious nature of the offences involved. These practices are particularly unacceptable because these coach trips often involve vulnerable consumers. These fines are sending a very clear signal.”
Background to the decisions
The Netherlands Consumer Authority received a number of complaints about day trips involving misleading sales demonstrations via its information desk ConsuWijzer. This prompted the Netherlands Consumer Authority to launch an investigation into ITC Reisclub. During the investigation, it was found that two German companies were involved in the organisation of day trips involving sales demonstrations: Goltex Vertriebs GmbH & Co. Kommanditgesellschaft (hereinafter: Goltex Vertriebs) and R&S Handelsvertretung GmbH (hereinafter: R&S).
The organisations were holding four to five sales demonstrations at four locations in the Netherlands on a weekly basis. Older consumers were targeted primarily, receiving a personal invitation to take part in an enjoyable tourist day trip at a discounted price. By taking part, various prizes and free items would be received. Older, less affluent consumers with a smaller social network felt particularly tempted by this offer. However, what had been presented as a tourist trip proved to be a sales demonstration instead. Participants were taken by coach to a remote party centre, where sales demonstrations were held all day, primarily for health products, such as diet supplements, health mattresses or vitamin pills. The sales representatives sold these expensive products in a misleading and aggressive manner. The sales practice used was misleading, because no price information was provided, for example. It was also found that the free products or meals promised were only free for consumers that bought a product in a higher price category.
During the demonstrations, the sales representatives claimed that the products being presented were beneficial to good health and they deliberately honed in on the concerns that the older consumers present had about their health. Consumers were also put under pressure, causing them to make purchases that they would not otherwise have made. The Netherlands Consumer Authority regards this undue influencing as an aggressive sales practice.
After R&S ceased its activities for ITC Reisclub in the Netherlands, Pro-Actief Plus B.V. (hereinafter: Pro-Actief Plus) started to organise day trips and sales demonstrations for the same target group, often to the same locations and with products that were similar to those offered by ITC Reisclub. The sales representatives were often the same individuals that had worked for ITC Reisclub. The Netherlands Consumer Authority believes that the sales demonstrations organised by Pro Actief Plus also involved commercial practices that were misleading and aggressive.
Based on the Unfair Commercial Practices Act (Wet inzake oneerlijke handelspraktijken), the Netherlands Consumer Authority is imposing the following fines on:
- Goltex Vertriebs, the German organisation that sent invitations to consumers in the Netherlands for day trips plus sales demonstrations under the name ITC Reisclub: EUR 300,000;
- R&S, which organised and held sales demonstrations in the Netherlands under the name ITC Reisclub: EUR 180,000;
- Pro-Actief Plus, which organised day trips and sales demonstrations in the Netherlands under the name Pro-Actief Plus: EUR 150,000.
It is still possible for these traders to appeal against the decisions by the Netherlands Consumer Authority.