Unfair Commercial Practices Directive, Chapter 1, Article 2, (b) Unfair Commercial Practices Directive, Chapter 1, Article 2, (d) Unfair Commercial Practices Directive, Chapter 2, Section 2, Article 8 Unfair Commercial Practices Directive, Chapter 2, Section 2, Article 9, (b)

(1) The performance of debt collection services is a "commercial practice", and the performer of such activity is a "trader", both notions as defined in the UCP Directive. 

(2) The practice of a trader whereby standard warning letters sent to debtors/consumers list certain legal steps which will be undertaken by the trader against the debtor/consumer, whereas in reality such steps require additional intervention by courts, court bailiffs or competent authorities whereby additional conditions must be satisfied before such legal steps can be invoked, constitutes a misleading and aggressive commercial practice.

The defendant is a debt collection service provider. The defendant sent out warning letters to debtors of its clients threatening to take certain procedural steps in case the debts were not voluntarily paid. The letters claimed that the defendant would arrest and auction properties of the debtor and its relatives, arrest monies in bank accounts, arrest real property, initiate criminal proceedings for fraud and that the defendant would initiate legal proceedings against the debtor in person. 

The Consumer Rights Protection Centre (CRPC) accused the trader of infringing the prohibition on misleading and aggressive commercial practices since with respect to the majority of the threats included in the letter, the defendant could only materialize them through competent courts, court bailiffs and state police, whereas the letter falsely created the impression that the defendant itself would take such actions.

(1) Is the performance of debt collection services a "commercial practice", and the performer of such activity a "trader", both notions as defined in the UCP Directive? 

(2) Does the practice of a trader whereby standard warning letters sent to debtors/consumers list certain legal steps which will be undertaken by the trader against the debtor/consumers, whereas in reality such steps require additional intervention by courts, court bailiffs or competent authorities whereby additional conditions must be satisfied before such legal steps can be invoked, constitute a misleading and/or aggressive commercial practice?

(1) The CRPC found that the provision of information to debtors about activities which could allegedly be performed by the defendant in the debt collection process (i.e. contacting debtors via warning letters, calls, etc.), is directly related to the economic activity of the defendant. As a result, the CRPC held, the defendant and its services fall under the definition of "trader" and "commercial practice" in accordance with the Unfair Commercial Practices Prohibition Law (UCPPL) which implements the UCP Directive.

(2) Next, the CRPC found that the warning letters were drafted in such a way that it was not clear for an average consumer without consulting a legal practitioner. According to the CRPC, consumers were induced to believe that the defendant could at any time at its discretion visit the consumer and its relatives at their residence and arrest, take out and auction properties without any effective court ruling. Furthermore, the CRPC held, the letter induces an average consumer to believe that the defendant already possesses information that the consumer is avoiding fulfillment of its obligations in bad faith or that it has committed a crime.

The CRPC therefore found that the defendant is providing inaccurate information to consumers on the debt collection process and on the rights of the plaintiff in such process. The CRPC further ruled that the defendant was using undue influence by threatening to take actions against consumers which the plaintiff itself was not legally entitled to take. Taking into account recitals 11 and 16 of the UCP Directive, such activities are considered to influence the decision making of the consumer.    

URL: http://www.ptac.gov.lv/upload/ptac_lemumi/2012/19.01.2012_ik_regnus_lemums_par_komercpraksi_noraksts.pdf

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The defendant was penalized for having infringed the prohibition on unfair and aggressive commercial practices.