The Consumer Ombudsman has intervened in the case of two advertisements for fixed-term electricity contracts offered by the electricity company Väre. The printed advertisement did not provide the information required by the Consumer Protection Act regarding the basis for calculating the price of the electricity contract. The advertisement on Väre’s website, on the other hand, gave a misleading impression of how affordable the electricity contract would be. Väre has committed to changing their price marketing as required by the Consumer Ombudsman.
Väre had placed an advertisement for a 6-month fixed-term electricity contract (“Välkky”) in Helsingin Sanomat stating that the contract was “a monthly fee of EUR 0 for 6 months!”.
When a company is offering an electricity contract at a specific price, their marketing materials must state the full price or the manner in which the price is calculated. The price of the contract is material information that affects a consumer’s choice and decision to buy, which is why the price information provided in marketing materials has to be correct and sufficient. Electricity is also an essential service, which makes price information particularly important.
The Consumer Ombudsman stated that even though the full price of an electricity contract is often impossible to disclose due to the nature of the service, Väre should have mentioned the basis for calculating prices while they were marketing a specific electricity contract. In other words, the price of energy and the effect that consumption has on the price should have been mentioned. The Consumer Ombudsman also drew Väre’s attention to the fact that the energy prices and effects of consumption, which were missing from the printed advertisement, constituted a more significant part of the electricity contract’s price than the monthly fees did.
To find the missing price information, the consumers had to either visit the company’s website or call their customer service line. Because price information must be provided in marketing before a consumer makes a decision regarding consumer goods, Väre had acted in a way that neglected the trader’s obligation to provide information.
“Essential information must be provided to consumers in a comprehensive enough manner, so that the consumer does not have to specifically search for it, for example, on the company’s website. This is particularly important in the case of essential services, where pricing is based on several elements.”
The Consumer Ombudsman was of the opinion that the electricity contract’s price information that Väre presented concisely on its website could also have been presented in the newspaper advertisement. Thus, under the Consumer Protection Act, Väre did not have the grounds to omit the basis on which prices are calculated from their advertisement.
The Consumer Ombudsman required Väre to disclose all factors affecting pricing in their marketing materials – instead of just one – when they are marketing a specific electricity contract where the price is determined on the basis of several factors.
Unclear pricing can be misleading
The Consumer Ombudsman also evaluated whether or not Väre’s marketing was misleading. On Väre’s website, the 24-month fixed-term Välkky electricity contract was advertised as follows: “24-month fixed-term Välkky electricity now 7,84 cents/kWh.”
No other price information was provided in the advertisement or any other part of the landing page. However, elsewhere on the website, it was mentioned that the price of the fixed-term electricity contract in question included a monthly fee of EUR 3,98 in addition to energy prices, with consumption also affecting the price.
When material information is not provided in the advertisement, marketing can be misleading if the offer can be misunderstood. The Consumer Ombudsman was of the opinion that, because the price stated in the advertisement on Väre’s website was “now 7,84 cents/kWh”, the marketing gave a false impression that made the electricity contract seem like it was a fixed-price and fixed-term agreement, where the consumer would only need to pay the energy price stated in the advertisement.
The Consumer Ombudsman required Väre to commit to not providing misleading information regarding the price of electricity contracts and the factors affecting pricing, which they had been doing either by highlighting only one part of the electricity contract and omitting the rest or by disclosing other factors affecting the price in a less noticeable way.
The Consumer Ombudsman also noted that insufficient price information and the misleading overall impression caused can be considered particularly objectionable, because the product in question is an essential service, the price of which has varied greatly over the past few years.