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News

Burden of proof for advertising fraud changed since 1 July 2016

maandag 18 juli 2016

Entrepreneurs regularly fall victim to advertising fraud. This involves misleading commercial practices. Certain (telephone) sales techniques are used to gain the entrepreneur's confidence and raise expectations. The objective is to have the entrepreneur enter into an agreement, after which the agreed performance is not or not properly delivered.

In practice, this is often an offer to place an advertisement or reference in a business directory or on the internet. The advertisement or reference is subsequently placed on an unprofessional website. Another common form of advertising fraud is the sending of invoices with no (legal) basis (so-called phantom invoices). The fact that this is a serious problem is evidenced by the estimated economic loss of € 400 million euros involved.

Until 1 July of this year, an entrepreneur who had fallen victim to advertising fraud had three legal remedies: a claim for fraud, a claim for error and/or a claim for breach of contract. One major disadvantage in such proceedings was the division of the burden of proof. The entrepreneur had to prove that he had been misled, had not agreed to the agreement or had received incorrect or incomplete information. As this was difficult to prove, entrepreneurs would either decide against taking (legal) action or lose the proceedings. The entrepreneur would be left with the loss.

All this changed on 1 July of this year. As a result of a legislative change, the burden of proof is now on the selling party, rather than on the aggrieved entrepreneur. It is now up to the selling party to prove that it provided the entrepreneur with correct and complete information. If it fails to provide the required evidence, it is easier for the entrepreneur to have the agreement declared invalid. The law has not just changed from a civil-law point of view, but from a criminal-law point of view as well: violations can lead to a prison sentence of up to two years.

For questions about this subject, contact our office 0031 10 209 2777 or by e-mail info@lvh-advocaten.nl.

Michelle Reevers

aviation, commercial contracts, business and shareholders

+31 (0)10 209 27 75 reevers@lvh-advocaten.nl
Peter Verheijden

commercial cooperations, mergers and acquisitions, employment law and employer representation 

+31 (0)10 209 27 75 verheijden@lvh-advocaten.nl
Rob Steenhoek

insolvencies and reorganisation, business and shareholders

+31 (0)10 209 27 52 steenhoek@lvh-advocaten.nl
David Harreman

Enterprise and government, Enterprise and shareholders, National and International Tax Law

+31 (0)10 209 27 77 harreman@lvh-advocaten.nl

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+31 (0)10 209 27 75 reevers@lvh-advocaten.nl
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