Erroneous disclosure leads to unfair competition violation!

Does an erroneous disclosure on a sales portal constitute a violation of unfair competition law if the platform's algorithm lists the offer (incorrectly) as a "TOP OFFER"? Yes, according to the Higher Regional Court of Cologne (OLG Köln).

A car dealer advertised a VW Golf on a car sales platform (Autoscout24) stating a mileage of "2,040 km" for EUR 1,100. The offer was displayed by Autoscout24 as a "TOP OFFER". In reality, however, the mileage was not 2,040 km but actually 204,032 km. The erroneous disclosure regarding the mileage could be seen from a photograph of the speedometer inserted into the offer.

The lower court (Regional Court (LG) Bonn, Az. 14 O 151/19) had assumed that no misleading information was present, or at least that it was not perceptible. The relevant consumers would recognise the obvious data entry error due to the discrepancy and would be sufficiently informed by the photograph of the speedometer. The erroneous disclosure would thus not constitute a violation of unfair competition law. The legal dispute eventually reached the Higher Regional Court of Cologne (OLG Köln).

Court's decision

The Higher Regional Court of Cologne (OLG Köln) (order of 09.03.2020, Az. 6 W 25/20) ruled that even an erroneous disclosure, which automatically leads to advertising as a "TOP OFFER", is misleading.

A commercial practice is misleading if it contains information suitable for deception regarding essential characteristics of the goods or service. In assessing whether a commercial practice is misleading, what matters is the overall impression it creates on the relevant consumers.

On Autoscout24, the mileage specification in the offer text was, alongside the price, decisive for the platform's algorithm in evaluating an offer. Especially from the ratio of mileage to purchase price, the algorithm calculates the value and attractiveness of an offer, which then appears with an eye-catching highlighted notice in the respective offer. Thus, the incorrect specification in the offer text led to a rating as a "TOP OFFER", even though the offer did not actually meet the criteria for a "TOP OFFER" due to the high actual mileage.

This constitutes an eye-catching highlighted false rating, regarding which there is insufficient clarification.

Erroneous disclosure vs. algorithm

The crux of the matter was the question of whether the erroneous mileage disclosure and the automatic classification as a "Top Offer" by the Autoscout24 algorithm was attributable to the dealer.

The fact that the rating as "TOP OFFER" was not carried out by the dealer himself, but was based on an algorithm of the platform, does not preclude misleading information by the dealer. This is because the algorithm accesses the data provided by the offerors (including price and mileage) and thus the rating as "TOP OFFER" ultimately rests on the defendant's own action or that of his employee. This action is therefore attributable to the dealer as part of his offer.

Conclusion

Even an erroneous disclosure can lead to advertising that violates unfair competition law. This can be the case even when the advertising as a "Top Offer" (which does not correspond to the facts) takes place automatically as a result of an erroneous disclosure.