DKK 16.9 million fine for misleading marketing practices

About the case

Between 2016 and 2017, the insurance company promoted its car insurance through a commercial featuring statements like, "If you file a claim, we won't raise the price".

At the same time, the company's insurance terms stated that the price of the insurance could increase following a claim, and, in some cases, a claim could result in the deferral of an annual premium reduction and an increase of the insurance excess.

The Supreme Court's reasoning and ruling

The Supreme Court found that the advertising claim was likely to give the average consumer the impression that filing a claim would be price neutral for the customer, implying that the insurance company could not raise the premium following a claim. Furthermore, essential information regarding deferral of premium reductions and increase of the excess was omitted.

Based on this, it was found that the insurance company had breached section 5(1) and section 6(1) of the Danish Marketing Practices Act, see section 8(1).

The Supreme Court stated that it was irrelevant whether the insurance company had actually exercised the option to raise the price or the excess following a claim, or to defer the annual premium reduction as outlined in the insurance terms.

Like the High Court, the Supreme Court ruled that when determining whether insurance marketing is misleading, the product's features, as specified in the agreed terms, are decisive. That is because an insurance is a contract-based product where the policyholder's legal position is defined in the insurance terms.

Therefore, the Supreme Court's ruling holds significant importance in relation to insurance contracts. However, as also noted by the Danish Consumer Ombudsman's press release, it may also have implications for other non-fixed term contracts, for instance loan agreements and subscription services.

Amount of the fine

As the marketing activities occurred in 2016 and 2017, the Supreme Court did not apply the new model when calculating the fine, as it only came into effect on 1 January 2022. The new model is designed to raise fine levels and base them on the company's turnover, among other things. Instead, the Supreme Court relied on the previous rules for determining fines, which generally required consideration of the severity, scope, and intended financial gain.

In this case, no information was available regarding the profits obtained or intended by the advertising campaign. However, it was stated that the marketing costs for the campaign amounted to approximately DKK 8.45 million.

The Supreme Court concluded that the substantial marketing costs suggested that the insurance company had either gained or intended to gain significant profits, and accordingly set the fine at DKK 16.9 million, double the marketing costs.

Although only one out of 104,651 policy holders had complained about the statements in the commercial, and the insurance company had halted the marketing campaign immediately after receiving the Consumer Ombudsman's consultation letter, these factors were not considered when determining the fine.

The fine remains the highest imposed fine for breaching the Danish Marketing Practices Act's prohibition of misleading customers.

Do you want to know more?

If you would like to know more about the rules on misleading marketing, please contact Plesner's Marketing and Consumer Law team.

Read the Supreme Court's judgment of 25 September 2023 (in Danish)