“Site Under Construction” - Websites Under Development Are Not Exempted From the Misleading Advertising Regulations

The Bulgarian Commission for Protection of Competition („CPC”) established in a recent decision (CPC Decision 944/19.09.2024 – SRT International EOOD ("SRT” or the “Claimant”)/Bulgarian Dream Travel EOOD ("BDT” or the “Defendant”)), that a website, which pursuant to the Defendant was still under development and not operative, infringes the general prohibition for dissemination of false information. 

With the above decision, the CPC established infringement of Article 31 of the Bulgarian Law on Protection of Competition (“LPC”), which prohibits merchants from deceiving about substantive characteristics of their goods or services, or with respect to the manner of use of goods or provision of services by asserting false information or misrepresenting facts. In the case at hand, the complaint was made by SRT - a company specialising in organising “university fairs” where higher education institutions advertise their programmes before potential students. The Claimant maintained that its competitor BDT, a travel agent, recently began operating a website advertising services for organising university fairs, summer school programmes and seminars. 

The CPC established that the information on the website misrepresented BDT as a well-known organiser of educational events while BDT lacked the actual experience. The website and the promotional materials created a false impression that BDT organises over 120 events annually and has a professional team. These claims were deemed misleading since BDT has not provided such services to actual customers. The CPC concluded that the behaviour of BDP was in breach of Article 31 LPC and imposed a fine in the amount of 8% of the total turnover in the preceding year. Although small in absolute terms, the fine is very high, near the maximum allowed under the LPC due to the gravity of the infringement.

Although the infringement seems straightforward, the peculiarity is that during the entire proceedings, the Defendant maintained that the website was still under construction, it was not functioning, the information provided on it was just for a test purpose, and it was not directed to customers. BDT even stated that the data available on the website was in fact created by a generative AI tool of OpenAI and it was not actual data provided by BDT. The CPC disregarded all these arguments explaining that indeed it was not clear whether the website was functional, and whether it served any commercial purpose, but the information was concrete and specific, and thus the website was capable of attracting the attention of potential customers and consequently to mislead them. In addition, the website contained contact information and any interested customer was able to contact the Defendant and eventually become a client. Also, the authority established that the notice “under construction” was published only after the complaint was filed. In CPC’s view, the responsibility of the Defendant was in place since the website was available and accessible for a significant period. The fact that no services were provided by BDT, or that the visitor traffic was low, was disregarded as irrelevant.

Key takeaways

With this decision, the CPC introduces a strict approach scrutinising websites under development, in cases where they are accessible by third parties. It is common practice for companies to create a website (e.g., presenting their future business or future intentions) and to make it available for a test period, but without directing it to potential customers, and even before any services are actually provided or even available. However, it seems that even within such test periods information provided on websites or companies’ profiles must be carefully checked for inaccuracies. This is even more important nowadays when many merchants use AI-based web design tools for the purpose of creating their websites. However, if the final product is not based on proper and verified actual data, the respective merchant risks being liable for disseminating false information.