The Essentials of Switzerland’s Digital Law: Part 2: Consumer Protection Under the Swiss Federal Act Against Unfair Competition (UCA) of 1986.

The Swiss Federal Act Against Unfair Competition (UCA) of 1986 serves as a fundamental pillar of Swiss commercial legislation, aimed at safeguarding fair competition by banning practices that are deceitful, misleading, or unjustly restrict competitive activity. Since its main objective is to ensure fair and authentic competition for the benefit of all stakeholders involved, the Act is a robust framework designed not only to ensure fair play among businesses but also to throw a protective arm around consumers, ensuring they’re not at the mercy of misleading practices or false advertising. Let us unpack the way the UCA of 1986 shields consumers.

Advertising

At its core, the Act insists on honesty in marketing. This means all advertising must be truthful and not mislead consumers about the nature, quality, or origin of a product or service. It protects consumers from falling prey to false claims that could influence their buying decisions. Sales promotions, discounts, and special offers must be presented transparently, without hidden conditions that could deceive consumers. This means businesses must clearly state the terms of a deal, avoiding any bait-and-switch tactics that lure consumers under false pretenses.

Article 3 of the UCA protects consumers from mass advertising. In relation to the sending of unsolicited automated mass advertisements, which encompass emails, SMS, automated calls, and fax messages, the UCA typically mandates that the recipient must have given prior approval, known as ‘opt-in’. However, there are exceptions where bulk advertisements can be dispatched without the recipient’s consent:

1. If the sender obtained the contact details during the sale of their products or services;
2. If the recipient was offered a chance to decline the use of their contact information at the time it was gathered (opt-out); and
3. If the bulk advertisement pertains to products or services similar to those offered by the sender.

Moreover, emails used for mass advertising must include the sender’s legitimate name, address, and email for contact, and must offer an uncomplicated, free method for recipients to ‘opt-out’ from receiving future advertisements.

In Switzerland, direct marketing through telephone calls is not inherently forbidden, provided it is conducted in a non-aggressive manner, such as avoiding repeated calls to the same individual. However, Art. 3 of the UCA prohibits direct marketing via telephone under the following circumstances:

1. If the intended recipient is not included in the Swiss telephone directory, or is listed but has expressed a preference not to receive advertisements from individuals with whom they have no existing business relationship; or
2. If the person making the call is using a telephone number that either is not registered in the Swiss telephone directory, is not displayed during the call, or is not authorized for their use.

Article 3a. Ban on Geo-Blocking.

On January 1, 2022, Switzerland implemented a new regulation, Article 3a, within the Swiss Unfair Competition Act (UCA), aimed at curbing discriminatory practices such as geo-blocking and price discrimination that adversely affect Swiss consumers in remote commerce transactions. This move was influenced by the “Stop the high price island – in favor of fair prices” (Fair Price Initiative) initiated in 2017 via a federal popular initiative, which sought to tackle the issue of higher costs for goods and services faced by Swiss consumers compared to those in adjacent countries. The initiative called for actions, including a prohibition on geo-blocking, to allow Swiss consumers to “shop like a local.”

In response, the Federal Council suggested an indirect counterproposal that, following refinement and approval by Parliament, resulted in modifications to the Unfair Competition Act of 1986. Specifically, Article 3a(1) of the UCA makes it now unlawful to discriminate Swiss consumers in e- and distance commerce—due to their nationality, place of residence, location of business, location of payment service provider, or location of payment method issuance—in terms of pricing, access to online platforms, or forced redirection to an alternative version of an online portal, as unfair. However, exceptions are provided in Article 3a(2), which does not apply to certain sectors like financial, healthcare, gambling, private security, and audiovisual services.

Article 3a of the UCA is notably more inclusive, applying not only to consumers and companies purchasing as end-users but also to all purchasers within Switzerland, including those buying for redistribution or further processing. However, Art. 3a of the UCA focuses on preventing discrimination within Switzerland and does not mandate businesses to deliver goods or services in Switzerland nor addresses discrimination against customers outside of Switzerland.

Article 8. Use of Improper Terms and Conditions of Business

Under Art. 8 of the UCA “anyone using general terms and conditions that significantly and unjustifiably tip the balance of contractual rights and obligations against the consumer, in a manner that contradicts the principles of good faith, constitutes unfair behavior”. The seller must not draw up its terms and conditions so that they serve only its own interests and expose the consumer to a situation of marked and unjustified disproportion.

Furthermore, the Federal Ordinance on Price Indication (PIO) is applicable to any party that offers or markets goods or services to consumers. The UCA does not provide a definition of a consumer contract. Consumer contract is defined under PIO and under Art 120 (1) of the Federal Statute on Private International Law 2017 as contracts on supplies for ordinary consumption intended for the personal use of the consumer or his family and offered by the other party in the course of its professional or commercial activity.

Enforcement and Remedies

Article 9 of the UCA of 1986 outlines the right to take legal action. It provides that individuals harmed by unfair competition have the right to pursue legal actions to forestall prospective damages, claim redress for losses sustained, and seek a formal adjudication of the wrongful acts, particularly when the effects are ongoing and detrimental. Additionally, they are entitled to demand that rectifications or the judiciary’s verdict be communicated to concerned third parties or made public.

Article 10 of the UCA specifically states that “the actions under Article 9 are also available to customers whose economic interests are threatened or damaged by unfair competition”. It also stipulates that under specific circumstances consumer organizations as well as the state secretariat for economic affairs acting on behalf of Switzerland may act based on Art. 9. For example, they may enforce the invalidity of “general terms and conditions of business” based on Art. 9 UCA.

The UCA also penalizes for a breach of the utilization of data sourced for example, from call centers not adhering to compliance. Deliberate violation may result in a prison sentence of up to three years or a financial fine. In addition to the regulations of the UCA, the foundational data protection guidelines outlined in the Federal Act of Data Protection of 2023 are also relevant to electronic marketing activities, such as gathering and managing email lists or handling any other form of personal data.

Conclusion

In essence, the Swiss Federal Act Against Unfair Competition of 1986 creates a safer, more transparent marketplace for consumers. It ensures that the excitement of discovery and the joy of purchase are never tarnished by deceit or manipulation. By fostering an environment where trust thrives, the Act not only protects consumers but also enhances the overall quality and integrity of the Swiss market.

This focus on consumer protection is a beacon for businesses, signaling the importance of integrity in every transaction. For small businesses, legal professionals, and online marketers, understanding and upholding these protections is not just a legal obligation but a cornerstone of building lasting relationships with consumers.

Please also see Part 1:  Part 3:

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