The legal framework governing misleading advertising under Georgian law is established under the Law of Georgia on Advertising, the Law of Georgia on the Protection of Consumer Rights, and the Law of Georgia on Competition. This article provides an overview of the legal framework governing misleading advertising under Georgian law.
Definition
The Law of Georgia on Advertising sets out a general prohibition of misleading advertising and provides a general definition. Under this law, misleading advertising is defined as an advertisement by which the advertiser intentionally misleads consumers, and which may harm a competitor. This definition is also fundamental for the purposes of the Law of Georgia on Competition.
Meanwhile, the Law of Georgia on the Protection of Consumer Rights introduces a more specific type of misleading advertising. It states that if goods or services are offered at a specific price without communicating important information, and a consumer incorrectly believes that they cannot receive these or similar goods or services through another means in the same period, quantity, and price, the advertising is misleading. Notably, for this specific type of advertising, intent is not a determining factor.
To determine whether advertising is misleading, Georgian law applies an “average consumer” standard. An average consumer is a person who is reasonably well-informed, observant, and cautious when deciding what to purchase. To satisfy this test, the advertisement must be likely to mislead such a consumer. Because of this standard, the law allows some room for advertising to be exaggerated, and an advertisement is not misleading if an average consumer understands that the information provided is an exaggeration. However, this line is very narrow, and every business should carefully evaluate whether its advertising could be considered misleading. This caution is especially warranted in cases that fall under the consumer protection law, where the trader’s subjective intent is not a determinative factor.
Legal Risks
Violation of the prohibition of misleading advertising can give rise to several legal risks, including both civil liability and administrative sanctions.
First of all, if an entity engages in misleading advertising, consumers have the right to file a lawsuit and claim damages. Additionally, under the consumer protection law, the Georgian Competition and Consumer Agency is empowered to investigate violations, and a company may be ordered to cease the action. If a company does not comply with this decision, the Agency may classify it as a case of non-compliance, and the company may be fined. The fines can be up to 2% of the trader’s annual turnover, but not less than 600 GEL. Furthermore, if the company commits the same violation within 12 months, the fine may be doubled.
Misleading advertising also raises risks under the Law of Georgia on Competition. This type of advertising may be considered an unfair practice. In this case, the Georgian Competition and Consumer Agency can also fine the company, leading to fines of up to 1% of the previous year’s turnover. If the company does not comply or repeats the violation, the fines can rise to 3%.
Misleading advertising is prohibited under Georgian law as part of the broader framework aimed at protecting consumers and ensuring fair competition in the marketplace. Businesses must ensure that their advertising materials are accurate, transparent, and properly substantiated in order to avoid legal and regulatory risks.
In conclusion, misleading advertisements are strictly regulated under Georgian law, and violating this prohibition can be costly and time-consuming for a company. Business entities should therefore analyze their advertisements deeply and carefully before launching them.