Hagen Jorgensen, Danish Consumer Ombudsman - European
Commission, Annual Assembly of Consumer Associations,
Brussels, 12th-13th November 1998
The role of the Danish Consumer
Ombudsman is to keep an eye on commercial communications in
the broadest sense taking into account the interests of
consumers, business and society.
In Nordic law the word "Ombudsman" is
commonly used about an official whose task is to protect
the ordinary citizens against misuse of political or
administrative power, a guardian of the civil
The Danish Parliamentary Ombudsman still
has that task, whereas the Consumer Ombudsman - appointed
by the government - shall make sure that private and public
business activities are conducted in accordance with good
The Consumer Ombudsman in Denmark and in
Sweden, Norway and Finland is the dynamic public but
independent element in market supervision with the task to
actively influence development in the area of marketing
The Nordic Consumer Ombudsmen have no
powers to make binding decisions as to how the law should
be interpreted and complied with.
If business and trade will not comply
with the statements, suggestions or recommendations of the
Danish Consumer Ombudsman, the ombudsman could be forced to
ask the courts to issue injunctions. If for instance the
prohibition of misleading advertising in the Marketing
Practices Act is violated, the Consumer Ombudsman can act
as Public Prosecutor and ask the court to sentence the
companies that violate the law.
Cases of principle interest are tried by
the Maritime and Commercial Court of Copenhagen. The court
is composed of a legal judge and representatives from
business and trade and consumer representatives. Appeals
from this court go directly to the Supreme Court.
The Consumer Ombudsman's aim is to
protect the consumers on basis of an average norm. The
consumer who wants to seek restitution as a civil action
can go to the Danish Consumer Complaints Board or to one of
the number of private boards set up by trade associations
in co-operation with the Consumer Council and approved by
the Consumer Complaints Board.
However, the Ombudsman may intervene in
civil actions in order to support the individual consumer.
The Ombudsman may also claim restitution for the individual
consumer by means of a trial on illegal marketing
Class-action is not recognized in Danish
law, but if a number of consumers have equal claims of
compensation connected to a violation of the law the
Consumer Ombudsman can claim their compensation
There is no court practice with regard
to restitution or compensation for consumers, but a few
cases have been solved through negotiation.
The Consumer Ombudsman's efforts in
negotiation may be carried out individually with each
company, but often the problems are common to a trade or of
importance to the market in general. Over the years (we
started in 1975) the Danish Consumer Ombudsmen have made
several guidelines e.g. on price marketing, on the contents
of guarantees and contracts terms, on environmental claims,
on sex discrimination, on the ethics of advice given by
banks to customers, and on principles for
The guidelines are normally respected,
because they have been acknowledged by the trade
organizations and the Consumer Council. Otherwise it is of
no interest to keep such guidelines in force. They are
certainly considered as a blue stamp by the trade
organizations. Something they do not want to loose.
The work of the Consumer Ombudsman is
not in any way meant to hinder self control in the business
world. The codes of the International Chamber of Commerce
play an important role in interpreting what is fair
Self control in the individual company
is, however, the goal. The Consumer Ombudsman has produced
a booklet "Ethics, Dialogue, Responsibility" in close
co-operation with the leading Danish business schools. The
aim is to inspire companies to look at ethics as a tool in
value based management, where companies enter into dialogue
with their employees, with consumers, authorities, the
On our homepage www.consumer.dk you will
find all relevant data about consumer protection law,
guidelines, cases, initiatives, writs in civil cases, the
Consumer Ombudsman's projects and statistics.
Since 1990, when I came into office,
13.500 cases have been closed. The Prosecution has
conducted about 165 criminal cases at the city courts on
the request of the Consumer Ombudsman. At the same time the
Consumer Ombudsman has conducted more than 60 cases at the
Maritime and Commercial Court, the High Courts and the
Supreme Court for contravention of the Marketing Practices
Act, the Payment Cards Act, the Door-to-Door Selling Act
and the Act on Credit Contracts. In 49 cases the
Ombudsman's claim was sustained. About 25% of the cases
were civil cases.
The Consumer Ombudsman has no staff, no
budget. It is the National Danish Consumer Agency which
provides the secretariat functions. The Agency is also
secretariat for two other independent public institutions,
viz. the Consumer Complaints Board and the Government Home
Economics Council. At the same time the Agency is a
government institution implementing the functions in
relation to consumer interests on behalf of the Ministry of
Business and Trade.
Only 14 persons' work are provided by
the secretariat. None of the employees are working solely
for the Consumer Ombudsman. Indeed it is a very small unit,
but quite effective. The homepage, which started 2 years
ago, has improved our productivity immensely. It has more
than 5 million hits per year!
I put strong emphasis on my co-operation
with the other Nordic Consumer Ombudsmen. At our frequent
meetings we have found that there are many common problems.
We have issued several Nordic guidelines, among which I
would like to mention "Guidelines on Environmental Claims"
(1994). We believe that such a guidance to business and
trade is still much needed and we have decided to review
the guidelines, taking into consideration the latest
developments in international standardization (ISO).
The Danish Consumer Ombudsman is one of
the founding members of The International Marketing
Supervision Network (IMSN). In 1990 the Nordic Consumer
Ombudsmen took the initiative to create the IMSN (see the
Nordic Seminar- and Working Report. 1992:547 "Supervision
of Marketing - Nordic and European").
The IMSN now consists of the leaders of
marketing supervision in European countries, Canada, USA,
Mexico, Australia, Japan and South Korea. The IMSN keeps a
frequent contact, and discusses practical measures to
prevent unethical cross-border marketing practices. Of
course the Internet has become of great interest to all
members of the Network, and certainly a challenge to
supervisors, along with the development of new methods of
marketing and advertising.
At present Belgium holds the
chairmanship of the ISMN. The Network has its own homepage.
Links can be found on our homepage.
Yes, the Internet is an important matter
for consumers. Therefore, 1 have tried, and tried real
hard, through the past six months to negotiate ethical
guidelines for marketing and trade on the Internet.
Recently, the negotiations collapsed. When it came to the
point, business and trade organizations were not prepared
to give the consumers the necessary protection.
The Internet is a good and cheap
possibility of getting the attention of the consumers. But
the main problem is that the business world is not willing
to limit the means they intend to use in order to contact
the consumers. By way of example, business representatives
claim that it should be legal to send unsolicited e-mails
to consumers. Another problem in the negotiations was the
need to protect children and young persons.
However, developments are on the way: On
the European Council of Consumer Ministers' meeting on the
3 rd of November a council resolution was made on "the
Consumer Dimension of the Information Society". This
resolution includes a paragraph saying that a necessary
condition for establishing consumer confidence, trust and
participation in the information society among other things
is the protection of the consumers against unsolicited,
misleading and unfair marketing practices, including
Another progress is that the hard line
of business and trade in this matter is softening, and will
probably soften more, since the Danish Minister of Business
and Trade last week at a conference on electronic trade,
arranged by the Danish Industry Association and the Law
Society, strongly urged trade and industry to return to the
Consumer Ombudsman's negotiation table with the intention
of taking the needs of the consumers into consideration. As
the minister expressed it: "If business will not think of
consumers, consumers will not think of business - at least
From "The Board of Webgrrls, Copenhagen"
I have received an e-mail supporting my negotiation
"We, The Board of Webgrrls, Copenhagen.
have been asked to comment on the question about ethic
guidelines for trade and marketing on the Internet. We are
of the opinion that the Consumer Ombudsman and the Consumer
Council are visionary when they require stricter claims in
connection with marketing over the Internet than off-line.
There is an extremely urgent need for protection of
information which may be related to persons, because this
kind of information will become very valuable, and already
it is negotiated on a large scale. Therefore, we want to be
asked before personal related information is used by
others, and also we want to be asked before marketing
material is distributed. Thus, we prefer to actively say
"yes please" instead of, as it is to-day, to have to say
"no thank you". It will be almost impossible to keep
control of the digital society. At the same time we want a
guarantee that our information is not sold on to others,
when we accept marketing material from traders. With the
new Data Register Law, which will soon be implemented when
Danish legislation is adapted to a EU-directive on this
subject, we are worried about how personal related
information will be used in the future digital society.
That is why we want an optimal protection."
At a meeting in October between the
Nordic Consumer Ombudsmen it was decided to develop, as
soon as possible, a common position with regard to
marketing and trade on the Internet. This is not meant to
hinder any negotiations with our respective national trade
and consumer organizations. But it will make it clear that
the Nordic market supervision authorities stand on common
ground in this matter.
The work of the Commission's DG XV on
commercial communications should be observed with the
utmost attention by all consumers.
The Commission's strategy for optimizing
the Internal Market includes an assumption that a long
series of laws and administrative practices in the member
states, mostly covered by the expression "general goods",
makes it difficult for the companies to reap the benefits
of commercial communications within the market. The
strategy is to remove, if necessary by harmonization, such
hindrances for commercial freedom of expression. The law of
the country of origin should according to this philosophy
be applied to commercial communications.
In my view there is much more reason in
applying the law of the country of the market place where
the competitors and the consumers meet. This is already the
case with regard to the 1984 Directive on Misleading
Advertising. This was recognized by the Court of Justice of
the European Communities in the case of
Konsumentombudsmannen v. De Agostini and TV-Shop
If the choice is the country of origin
there will be no end to "forum shopping", and business and
trade will constantly claim that the consumer protection in
their country should be softened in order to obtain equal
conditions for competition.
In its efforts to promote commercial
communications the Commission should focus much more on the
interest of consumers. The principle of subsidiarity should
not be claimed in support of the view that a harmonized
consumer protection is unnecessary, while at the same time
harmonization is applied in favour of commercial
Transborder marketing in the Internal
Market requires in my mind a common set of rules with
minimum requirements for fair trading and for protection of
consumers - a common general clause. The higher the level
of protection is made through harmonization, the less need
there is for drawing up national rules for consumer
As an active participant in the
International Marketing Supervision Network the Consumer
Ombudsman wants to emphasize that European measures in this
field should take the international aspects into account.
Unfortunately, the grand OECD conference in Ottawa in
October did not reach an agreement on a recommendation of a
"Code of Conduct" in electronic trade. I am afraid this was
due to the influence of big business who prefers self
regulation to government interference. How much genuine
consumer protection do you think will be the result of such
business self regulation!
The financial sector is important to all
consumers. Many of its services must be considered services
of necessity for the ordinary consumer. Then, why is it,
that development of consumer protection in this sector is
always lacking behind? There is certainly a need for a
minimum protection of the consumer, but the sector seems
often to be able to call for exemptions from harmonization
measures. 1 could mention the Directive on Unfair Terms in
Consumer Contracts and the Directive on Distance
Years later, after much pressure from
the consumer associations, comes a proposal for a Directive
on Distance Selling of Financial Services based on the
principle of maximum harmonization. Seen from a consumer
point of view minimum directives should be used.
The arguments for a special treatment of
the financial sector with regard to harmonization are in
general, that the sector is under heavy financial
supervision, which makes special consumer protection
unnecessary. However, financial supervision is basicly
concerned with securing the solvency and liquidity of the
banks, insurance companies etc. and not with consumer
contract terms, commercial communication etc.
My, experience about the Danish
financial sector is that it always tries to buy time. The
later the banks and the insurance companies need to react
to consumer demands, the better. This certainly is also the
philosophy of the very influential European Advisory
Banking Committee, of which I was a ministerial member in
the 80'es. In Denmark years and years are spent on studies,
negotiations and endless court cases with the banks. The
patience of legislators seems to be unlimited.
In the September-edition of "Commercial
Communications - the Journal of Advertising and Marketing
Policy and Practice in the European Community", which is
sponsored by DG XV, the "One-Stop Shop" of the Internal
Market is promoted. A diagram shows the commercial
communications' chain. Then you can identify where
restrictions would have hampering effects in the
communications' efforts to reach the target group.
Quite a military strategy.
If you look at commercial communication
in a more balanced way, a number of problems arise seen
with a consumer's eye. Let me mention a few:
Acts of violence, suicide or ethnic
tragedies, for instance in the Balkan areas, as reported
through the news media are being commercialized into
something which can catch the eye of consumers and provoke
the media, the public and the authorities at the same time
increasing the effect of the marketing.
This is in clear conflict with Art. 4,
points 2 and 3 of the ICC, International Code of
Advertising Practice. All the Nordic Consumer Ombudsmen
have reacted towards this kind of advertising.
The study made in 1996 by BEUC and the
Dutch Konsumentenbond on "Children and Advertising"
expresses profound concern at the proliferation of
marketing practices aimed at children using increasingly
more sophisticated and often covert marketing
The Danish Consumer Ombudsman has drawn
the attention of the American companies Walt Disney and
Kellogg's to this study. The two companies' homepages
"www.disney.com and www.kelloggs.com are systematically
applying interactive marketing to children and young
persons in such a way, that the borderline between
commercials and entertainment is undistinguishable. The
companies have told me, that they will only comply with
American laws, i.e. the law of the country of origin. I
have warned them that they should also comply with the laws
of the country to which the marketing is directed, and that
they risk court cases in Denmark.
The Internet is a global media which
means that their commercials are not only aimed at the
American market, but at many others, incl. the Danish
market. It is evident that the homepages of the two
companies are closely linked with the domestic marketing
efforts, at any rate in Denmark. Both companies refer to
their US homepages on the products they sell in Denmark.
Kellogg's homepage address is found on packages of
corn-flakes, Disney's on posters for Disneypictures.
In August this year I issued guidelines
on "Children, Young people and Marketing Practices". The
guidelines include provisions with regard to children as a
target group, school sponsorships, special types of
marketing practices and marketing in television commercials
and on the Internet.
I have also found it necessary to take
steps versus a marketing consultant company for its
development of a marketing strategy towards children, "the
future consumers". The strategy refers to children as a
very interesting target group in marketing. The concepts of
"pester power" and "character licencing" are explained, and
constitutes an integral part of the strategies, as positive
and important components in marketing towards children. By
using children and young people as a target group also with
regard to products meant for adults, it is possible to take
advantage of the "pester power", i.e. children's ability to
pester their parents.
The strategy paper says that "pester
power" and "character licencing" (which is the use of for
instance Barbie, Winnie the Pooh, Batman, etc.) is closely
linked. The combination is able to exploit the parents'
indulgence and reluctance to face conflicts when they are
The strategy as a whole is a guidance
and an appeal to business and trade, which clearly is in
conflict with the ICC International Code of Advertising
Practice, article 14b. The Code states that "advertisements
should not undermine the authority, responsibility,
judgement or tastes of parents, taking into account the
current social values. Advertisements should not include
any direct appeal to children and young people to persuade
their parents or other adults to buy advertised products
But of course it is also a violation of
the Danish legislation on good marketing practices.
I am afraid that this is not an isolated
case. We see quite a number of important business
conferences on "Kids in Marketing" etc. following the same
line of marketing strategy. My Nordic colleagues tell me
that the situation is the same in their countries. It seems
that an extremely heavy pressure of advertising is directed
to children, and we have only seen the top of the
You can find several reasons in to-day's
welfare societies: typically both parents have full-time
jobs, while the kids are in schools and day-care centres.
More money is available for consumption than earlier.
However, many consumers tend to zap away from television
commercials. But the kids see them! So why not use a
combination of "pester power" and "character licencing" to
circumvent such hindrances for commercial communications to
reach the target group.
When accused of exploiting children' s
natural loyalty towards their parents, companies often
defend themselves by saying that it is the responsibility
of the parents to educate their kids to resist the effects
of such marketing efforts.
Another side of commercial communication
is the hidden advertising.
In my capacity as Consumer Ombudsman I
am a member of the Danish Radio and Television Advertising
Board, which has the authority to stop unethical or
otherwise unlawful advertising in those media. The last
couple of years the Board has had the competence to
evaluate the presence of hidden advertising in radio and
TV-transmissions. The Board only has limited resources at
its disposal, but on the basis of about a dozen test cases
the Radio and Television Board has now been able to give a
report to the Minister of Cultural Affairs.
In summary the Board concludes that
hidden advertising often is found like
- appraisal or particularly detailed
mentioning of products etc. in non-commercial
transmissions, sometimes including information about
contacts, phone numbers etc.
- so-called "product placement", where
different products are placed in the transmissions
- in connection with sponsoring of
programmes with prize competitions
The Board proposes that hidden
advertising is expressly forbidden in the Marketing
Practices Act in the same way as misleading advertising to
make it quite clear to advertisers that they risk penalty
for violating such provisions. To-day it is stated in the
Act on Radio and Television Transmission that it should
always be possible to identify advertising. This provision
is aimed at the transmission companies, not the
With regard to product sponsoring the
Board suggests that the products may only be mentioned in a
short and neutral manner. In children' s programmes the
sponsored prizes should not be shown at all.
Recently I have asked the Press Council
to investigate a case of violation of responsibility under
the Press Act by hiding advertising in an apparently
editorial text. The Press Council has informed me that the
case raises principal questions, which will be discussed at
a plenary meeting in the Council in December.
When the Consumer Ombudsman has taken up
cases about marketing which violates the Marketing
Practices Act I am often accused by the editorials of the
newspapers that I am violating the freedom of expression of
commercial communication. I do respect that freedom, as
long as it respects the principles of good marketing
practices. Those principles include that it is not allowed
to try to cheat consumers.
The proliferation of editorial text with
hidden advertising is not only a manipulation of the
consumers, it also harms the fundamental freedom of speech,
i.e. the freedom of the press. Because if readers, viewers
and listeners no longer dare to believe in the objectivity
and neutrality of the journalist or the medium, then you
end up in a situation where freedom of commercial
communication suppresses the freedom of the press.
That would be detrimental to the media
as well as to the free debate in society.
My final remark would be, that in the
Commission' s work towards the so-called One-Stop Shop of
the Internal Market the Commission should not only promote
commercial communication which obviously can benefit
businesses as well as consumers, but should pay equal
attention to the interests of the consumers in a fair
trading environment with a sufficient and effective level
of consumer protection. That is the way to obtain consumer
confidence and trust in "The Information Society".
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