Relentless crackdown on unfair trading practices against consumers in Hungary

By Dániel Aranyi, László Zlatarov

06-2020

In the last eight months, the Hungarian Competition Office (“GVH”) initiated a host of inspections and imposed unprecedented fines on operators of online and electronic communication services for unfair trading practices against consumers. A trend seems to unfold of the GVH shifting its focus to consumer protection cases and relentlessly cracking down on especially foreign-based online platforms and service providers.

As earlier reported, the trend began at the end of 2019 with GVH’s decision No.Vj-85/2016/189, on Facebook’s statements “it’s free and anyone can join” and “it’s free and always will be” (the “Facebook Decision”). According to the GVH, it follows from Facebook’s business model (“zero price model”) that users offer their data in exchange for access, and that Facebook uses such data to sell targeted advertising to clients. Therefore, the GVH found that Facebook falsely claimed its services as “free” which is an infringement of the Hungarian Unfair Commercial Practices Act (“UCPA”). The GVH imposed a fine of HUF 1.2 billion (ca. EUR 3.6 million) on Facebook for this practice.

The Facebook Decision was followed by a fine of HUF 1.8 billion (ca. EUR 5.2 million) on Telenor Magyarország Zrt., one of the main domestic electronic communications service providers (decision No. Vj-13/2018/66., the “Telenor Decision”). The GVH investigated Telenor’s commercial practice of promoting mobile phones or other devices as free or at a reduced price, if consumers chose a specific tariff package called Telenor Blue. The GVH established that Telenor infringed the UCPA by failing to inform its customers that if they obtain a device in the framework of this promotion, the monthly subscription fee will be higher than if they had only concluded the subscription contract without purchasing a device.

On 28 February 2020, the GVH issued a press release on its recently commenced competition control proceedings against Viber. Similarly to the Facebook case, the GVH is investigating whether Viber may describe its services as “free”. In this respect, the GVH stresses that consumers must submit some of their personal data in order to register and use the service. The GVH also investigates whether Viber misleadingly claims its services to be “secure", because in certain situations (e.g. communication with chatbots) the end-to-end encryption does not apply.

The largest single fine ever imposed by the GVH came on 28 April 2020 in its decision No. Vj-17/2018/110. Booking.com B.V. was fined HUF 2.5 billion (ca. EUR 7.2 million) for infringements of the UCPA (the “Booking.com Decision”). The most questionable commercial practices according to the GVH were the pressure selling tactics adopted by Booking.com. This included adding statements such as “32 more people are also watching”, “one person is considering booking this accommodation right now”, or “Highly sought after! Booked 17 times in the last 24 hours”. The GVH considered this to be an unfair commercial practice due to its effect on the decision making process of consumers by applying psychological pressure (“fear of missing out” effect). Furthermore, the GVH also objected to the practice of promoting “free cancellation” of certain accommodations, as in many cases it was later found that consumers had to pay a higher price for the “free cancellation” option to be included.

Most recently, on 5 May 2020, the GVH published that it launched an investigation into allegedly aggressive commercial practices of Alza.hu Kft. and Alza.cz a.s. applied on the www.alza.hu online marketplace.

The Facebook Decision can be found here (only in Hungarian), and the English language press release can be found here. The Telenor Decision can be found here (only in Hungarian), and the English language press release can be found here. The Viber press release can be found here (only in Hungarian). The Booking.com Decision can be found here (only in Hungarian), and the English language press release can be found here. The alza.hu press release can be found here (only in Hungarian).

For more information contact László Zlatarov and Dániel Arányi.