In brief
- The offence of misleading advertising is committed by a manufacturer or trader who, when offering or advertising products or services, makes false claims or attributes untrue characteristics that may cause serious and manifest harm to consumers.
- Not all consumers need actually to have suffered harm, and not every advertising exaggeration is an offence.
- The individual responsible may be punished with imprisonment of six months to one year or a fine of twelve to twenty-four months (day-fine system).
- The company may be criminally liable; the main penalty is a fine, and it may be exempt if it had an effective compliance programme (organisation and management model).
- Publication of the judgment may be ordered, with a significant reputational impact for the company.
The offence of misleading advertising (publicidad engañosa) is the one that protects consumers against offers or commercial messages that present as true characteristics that the product or service does not have.
Misleading advertising may give rise to administrative penalties, consumer claims and, in the most serious cases, criminal liability.
What does the offence of misleading advertising consist of?
This offence is committed by a manufacturer or trader who, when offering or advertising products or services, makes false claims or attributes untrue characteristics to the product or service in such a way that the conduct may cause serious and manifest harm to consumers.
Not all consumers need actually to have suffered harm. The offence may be complete once the false advertising is placed on the market and is objectively capable of causing serious harm. The protection extends to consumers as a whole, not only to a person who has entered into a contract or made a purchase.
The falsehood may concern, among other things, the composition, quality, performance, origin, type approval, results, availability, safety, price or essential terms of the product or service. It may also arise from omitting essential information where the way the message is presented creates a false impression of what is being offered.
Is every advertising exaggeration an offence?
Not every advertising exaggeration is an offence. Clearly evaluative or promotional messages, which the public recognises as a way of commercially highlighting a product, do not in themselves amount to a false claim about its characteristics. Criminal conduct requires a relevant falsehood or untruth and a serious capacity to cause serious harm to consumers.
What is the penalty for misleading advertising?
The individual responsible may be punished with imprisonment of six months to one year or a fine of twelve to twenty-four months. The specific penalty depends on the circumstances of the case, the seriousness of the conduct and the extent of the risk created for consumers.
Misleading advertising may concur with other offences. For example, if the false message is used to induce certain people to hand over money, liability for fraud (estafa) may also arise. In that case, the criminal response is not limited to the advertising offence and may include restitution of the money and compensation for the damage caused.
Publication of the judgment in official journals may also be ordered and, if the injured party so requests, its full or partial reproduction in another news medium at the convicted person’s expense. This consequence may have a significant reputational impact for a company.
Can the company be held criminally liable for misleading advertising?
Yes. Corporate criminal liability is expressly provided for this offence. The company may be liable where the advertising is carried out in its name or on its behalf, for its direct or indirect benefit, by its legal representatives, directors or persons with organisational and supervisory powers.
It may also be liable if the conduct is committed by an employee or subordinate in the course of the business activity and the offence was made possible by a serious breach of the duties of supervision, monitoring and control.
The company may be exempt where:
- before the acts, it had adopted and effectively implemented a compliance programme (organisation and management model) suitable for preventing offences of this kind;
- there was independent oversight of the model;
- and the offender fraudulently evaded the controls.
In small companies, these functions may be performed by the board of directors on the terms provided for by law.
The main penalty for the legal person is a fine. For this offence, it may be a fine of six months to two years or, if the resulting amount is higher, a fine of one to two times the profit obtained or that could have been obtained. In addition, the court may impose other penalties provided for legal persons, taking into account the seriousness of the case.
What civil liability may arise?
Anyone who is criminally liable is also civilly liable if the conduct causes loss or damage. Civil liability may include restitution of the sums paid, reparation of the damage and compensation for the pecuniary and non-pecuniary loss directly resulting from the offence.
In a misleading advertising case, depending on the circumstances, claims may be made for the price paid, the expenses incurred by the consumer, the cost of correcting the effects of the false offer and other proven damage. Not all the commercial expectations or profits that the consumer may have imagined obtaining are automatically compensated: the damage and its causal link with the unlawful advertising must be proven.
A legal person that is criminally convicted is jointly and severally civilly liable with the individuals convicted for the same acts. In addition, even where the company bears no criminal liability, there may be other grounds of civil liability where the company took part in the activity or benefited from it.
Business example
A company advertises a piece of industrial equipment stating that it reduces energy consumption by 40% and that it holds a particular technical certification. The company knows that it does not hold that certification and that the advertised saving has not been achieved in reliable tests.
The campaign targets a large number of business customers and may lead them to purchase the equipment on the basis of a cost and a performance that do not correspond to reality. If the falsehood is serious enough to cause serious and manifest harm, the conduct may go beyond the administrative sphere and become criminally relevant.
When is there a criminal risk for the company?
The risk increases where commercial claims:
- concern essential features of the product;
- reach a large number of recipients;
- rely on non-existent documents or certifications;
- and have been approved or tolerated by management.
To reduce it, the company should keep the documentation supporting its claims, carry out a technical review of campaigns before publishing them and establish controls over commercial communications, particularly in regulated or economically sensitive sectors.
Frequently asked questions
What is the penalty for misleading advertising?
The individual responsible may be punished with imprisonment of six months to one year or a fine of twelve to twenty-four months. Publication of the judgment may also be ordered.
Do consumers have to suffer actual harm?
Not all consumers need actually to have suffered harm. The offence may be complete once the false advertising is placed on the market and is objectively capable of causing serious harm.
Can an advertising exaggeration be an offence?
Not every advertising exaggeration is an offence. Clearly evaluative or promotional messages, which the public recognises as a way of commercially highlighting a product, do not in themselves amount to a false claim about its characteristics.
Can the company be exempt?
Yes, where before the acts it had adopted and effectively implemented a compliance programme (organisation and management model) suitable for preventing offences of this kind, there was independent oversight of the model and the offender fraudulently evaded the controls.