Fourteen Million Czech Koruna Fine and Revocation of Trade License? Finally!

Inspectors of the Czech Agriculture and Food Inspection Authority (SZPI) succeeded in proving unfair commercial practices carried out by the seller of food supplements BEAUTY LINE s.r.o. The company mainly engaged in distance selling of cosmetics, through letters sent mainly to seniors, and in particular in the form of consumer competitions for prizes and cash prizes (BEAUTY LINE offered consumers cash prizes worth several hundred thousand Czech koruna for the purchase of products). The SZPI received dozens of complaints about the company's practices from consumers themselves.

Withing the scope of six administrative proceedings, inspectors repeatedly proved the use of unfair commercial practices and failure to comply with the imposed cooperation. The company was then fined a total of CZK 13,945,000 (EUR 550,000) for these offences. SZPI also filed a complaint with the Trade Licensing Department of the Prague 12 Municipality to revoke the trade license. The Office complied with the complaint and revoked the company's trade licence for a period of three years.

The inspectors found violations of the legal provisions in particular in creating a false impression regarding "free" products offered for which consumers had to pay for the ordered food supplements. Furthermore, the company gave the misleading impression that consumers would win a cash prize if they ordered the products for free testing. In these cases, however, consumers had to expend funds because receipt of the prize was conditional on the consumer purchasing the goods from a catalogue and paying the shipping and packaging charges. The company also offered the goods through a competition for prizes of up to millions without these prizes being awarded. They even extended their practices by using a fortune teller who contacted the seniors to inform them that they were about to get lucky and win

A further offence was the use of prohibited medical claims when offering food supplements, contrary to the requirements of the EU Regulation. Food supplements are classified as food and cannot be attributed curative effects.

The seriousness of the breach of the legislation is seen by the SZPI in the fact that there was a long-standing behaviour of the company which distorted the economic behaviour of consumers, where the company addressed consumers informing them that they were prize winners, but the receipt of the prize was conditional on the consumer making a financial outlay and what is more, the consumer never received the prize after the payment.