UWG: Risks for entrepreneurs

What is the UWG?

that UWG is part of unfair competition law, which in turn is part of competition law. It determines which economic acts are prohibited and came into force for the first time in 1896. The UWG applies exclusively in Germany and has no international significance. In general, commercial acts are considered unfair if they do not comply with corporate diligence. Companies must therefore act to the best of their knowledge and belief and ensure the usual level of care. The definition of the UWG is therefore broad. Defining the UWG more precisely is a challenge, because not all conceivable unfair acts can be recorded. The annex to the Act therefore contains numerous specific cases, which are in any case unfair. In addition, the UWG is regularly revised to meet changing market requirements.

What is the task of the UWG?

In short, the UWG determines what entrepreneurs can and cannot do on the market. It is intended to protect consumers, companies and the free market.It protects consumers by making unfair companies liable. Business acts are unfair when they influence or deceive consumers beyond a normal advertising purpose or have the potential to do so. On the other hand, the law secures the free market by enabling fair competition through equal opportunities. According to this, companies should not be able to gain an unfair advantage through unfair action, such as damage to a competitor's reputation.

What happens if the UWG is violated?

If the UWG is violated, there is a risk of warnings and financial penalties by regulatory authorities. Depending on the type of infringement, it is either a criminal offense or an administrative offense. The consequences vary accordingly. For example, advertising that contains falsehoods is subject to the criminal provisions of SECTION 16 UWG. Infringement could result in imprisonment of up to two years. Fines of several hundred thousand euros are also possible.

Challenges for companies

Because of the wide range of applications, it is difficult for many entrepreneurs to fully understand the UWG. The problem with that: Ignorance does not protect against punishment! As a result, warnings are often issued even without ill will.

Misleading advertising

Before taking a look at misleading advertising, it is important to understand that the UWG regulates all business activities of a company — i.e. all sales promotion measures. The interpretation of advertising according to the UWG is therefore extremely broad. In other words, almost every sales-related action of a company can be interpreted as advertising.Companies advertise misleadingly when false statements are made to promote sales. The information must be objectively or measurably incorrect. It is therefore about facts. Advertising in general is essential for companies as a means of promoting sales. Misleading advertising, on the other hand, is prohibited and differs from ordinary advertising in that it is likely to motivate the recipient to do business which he would not otherwise have committed. The advertising recipient does not have to be deceived first, because the possibility of deception is already sufficient for a violation to exist.

example: A watch store mistakenly advertises a new model due to a misunderstanding between colleagues, saying that the watch is waterproof up to 200 meters. In fact, the watch is only waterproof up to 20 meters. It is therefore already misleading advertising. It is irrelevant that the provider had no manipulative intent.

If, for example, a professional diver suffers physical damage or financial damage during a dive due to a watch malfunction, the watch shop faces massive penalties in the form of fines and compensation claims.

Purchased or fake reviews

Buying reviews is loud Section 5 Paragraph 1 No. 1 UWG illicitly, because reviews demonstrably shape the image that consumers have of a company. They therefore have the potential to influence consumers' buying behavior and distort the market. It is also prohibited to offer anything in return for a review.

example: If a bakery offered free coffee with every review, it would make itself liable to prosecution. Only true consumer experiences from real customers are therefore legally secure.

It is the same after Section 4 Paragraph 1 No. 1 & 2 UWG prohibited from influencing a competitor's reputation through fake, negative reviews. It is also only possible to delete reviews in exceptional cases, for example if it is a false statement or if the commentator had no previous points of contact with the company. However, verifying the legitimacy of comments is extremely difficult in practice.

example: A person writes a factual, negative review for a restaurant. The restaurant owner wants to delete the review in order to get a better overall rating on Google. As long as the person was actually a guest in the restaurant and the review does not contain any false statements, the review must not be deleted.

If you want to collect positive reviews in a legally secure way, you can use Socialwave's marketing package. The system collects in various ways positive reviews, filters out 100% legally compliant negative reviews and also collects contact data that can be used for subsequent marketing measures such as newsletters. Regardless of whether you already use the Socialwave Marketing Package — reviews are extremely important for the public image of companies. You can find more information on this topic in our articles:

More about purchased reviews

More about dealing with negative reviews

newsletters

In addition to GDPR The UWG also plays a role in the design and shipping of Newsletters. As one of the most popular marketing tools, they are used in many companies. The risk of a warning is particularly imminent if you contact consumers without their consent. Email newsletters without consent are valid after SECTION 7 UWG as unreasonable harassment. In order to obtain consent, a double opt-in is required. This is the recipient's double consent according to certain criteria. In practice, the process usually starts with a customer signing up for a newsletter (step 1). He will then receive an email asking him to confirm the registration (step 2). What most people don't know: The confirmation email is also subject to clear regulations regarding content and design. Anyone who does not comply with them is liable to prosecution. The Socialwave marketing package offers professional support for newsletters. The system automatically collects the contact details of your customers and the necessary consents at the same time. In doing so, it is 100% legally compliant throughout the process.

More about legally secure newsletters

More about the Socialwave marketing package

conclusion

For over 120 years, the UWG has been protecting the free market and its participants. In our article, we have explored some hidden risks so that you can operate safely and confidently in your company. If you want to get the most out of your marketing without having to worry about the legal security of your measures, competent partners such as Socialwave. With our WLAN marketing package, your customers/patients/guests advertise for you, are happy and recommend you to others.