LTL 26,400 FINE FOR UAB INVESTMENT HOUSE FOR MISLEADING ADVERTISING
The Competition Council passed the Resolution whereby it recognized that UAB Investment House had infringed the requirements of Article 5 of the Law on Advertising by publishing its advertising statements inducing to invest and promising the investors high returns. A number of advertising statements proliferated by UAB Investment House, such as “earn LTL 125,000“, 47 % RETURN“; “...Overall project return –invest LTL 20,000 – gain LTL 60,000“; “Buy part of the business and earn LTL 125,000 in three years with a mere investment of LTL 30,000“, “Our project‘s return –47% a year!“; “… gross profitability – LTL 18-20 m, or 300-330%“ and a number of other similar statements were recognized by the Competition Council to constitute misleading advertising. The Company was obligated to discontinue the use of the advertising claims recognized as misleading where the actions were still continued.
For the use of misleading advertising UAB Investment House was subjected to a fine of LTL 26,400.
The investigation by the Competition Council established that UAB Investment House in different periods in October 2008, in the press and the internet website was publishing a number of advertising statements. The advertising statements induced investing into viable business mergers and development promising significant returns within a certain period of time. The Company created an impression to the advertising users that the services advertised were legitimate, i.e., the Company was authorized to provide such services and held the licence required to engage in this kind of activity. However, as stated by the Lithuanian Securities Commission the company was providing the services without having the appropriate licence. Without the knowledge of this information the advertising user could legitimately expect that having invested in the business offered by the Company he will surely earn the profit indicated in the advertising. It is highly probable that in case the advertising users were aware of the truthful information, i.e., that UAB Investment House was operating without the appropriate licence and that the returns indicated in the advertising statement were not guaranteed, the investor could have chosen a different investment company or would have decided not to invest whatsoever.
According to the Law on Prohibition of Unfair Business-to-Consumer Commercial Practices of the Republic of Lithuania any commercial practices are considered misleading if they manifest as false claiming or create an impression that a product can legally be sold.
The Competition Council having assessed the evidence supporting the correctness of the advertising statements published and other circumstances in its Resolution rightfully noted that UAB Investment House in any case was not assuming any risk and did not provide any guarantee that persons having availed themselves of the services offered in the advertising will surely gain the returns promised and will recover the funds invested. The Securities Commission of the Republic of Lithuania has also noted that the Company was not managing and had no intention to manage any investment risk and the returns advertised were not guaranteed or in any other way secured.
It should be noted that upon initiating the investigation concerning the advertising the Competition Council took all the necessary measures seeking to alleviate the possible damage and the irreparable consequences to persons or public interests. The ruling of the Vilnius Regional Administrative Court prohibited the use of the advertising of investment services pending the passing of the final decision by the Competition Council.Competition Council Spokesperson