The matter at hand
The Lithuanian State Consumer Rights Protection Authority (the ‘Authority’) imposed a fine on Gelvora, a debt collection agency, taking the view that certain practices which Gelvora engaged in to recover debts from its debtors constituted unfair commercial practices. In an action brought by Gelvora before the national court in Lithuania for the annulment of the Authority’s decision, the court referred several questions to the ECJ for preliminary ruling, asking, in essence, whether the legal relationship between a debt collection agency and a debtor falls within the scope of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and, if so, whether the practices which that company engages in to recover its debt fall within the concept of ‘product’ within the meaning of Article 2(c) of that directive.
The judgment of the ECJ
The ECJ first of all recalls that Article 2(d) of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market defines, “using a particularly broad formulation”, the concept of ‘commercial practices’ as ‘any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers’. The ECJ further recalls that the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market “applies to unfair commercial practices in which an undertaking engages, even outside any contractual relationship, either before or after the conclusion of a contract, or following the conclusion of a contract or during the performance thereof” (paragraph 20). Consequently, the directive also applies to any measure taken in relation to the performance of a contract, “and in particular the measures taken in order to obtain payment for the product” (paragraph 21).
The ECJ rules that debt recovery activities, such as those at issue in the main proceedings, may be regarded as a ‘product’ within the meaning of Article 2(c) of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market. “Although a debt collection agency, such as Gelvora, does not provide the consumer with a consumer credit service as such, the fact remains that the activity in which it engages, namely the recovery of debts which have been assigned to it, falls under the concept of ‘commercial practice’ which may be unfair, within the meaning of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, since the measures which it adopts are liable to influence the consumer’s decision in respect of the payment of the product” (paragraph 25).
On this basis, the ECJ rules that “the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market must be interpreted as meaning that the legal relationship between a debt collection agency and a debtor, who has defaulted under a consumer credit agreement and whose debt has been assigned to that agency, falls within the material scope of that directive. The practices in which that agency engages in order to recover that debt fall within the concept of ‘product’ within the meaning of Article 2(c) of the directive.”