Magilex partner Siim Mägi published an article about recent practice in Estonian real estate market where developers are using fake bookings in order to make objects more appealing to potential buyers.
Peep Sooman, a member of the management board of Pindi Kinnisvara, said yesterday in the article “Developers are shopping for the number of apartments sold” through the portal Kinnisvarauudised.ee that real estate developers operating in Estonia have started to use fake bookings on development websites. However, fake booking is a misleading commercial practice within the meaning of the Consumer Protection Act and its use is prohibited.
What is the purpose of fake bookings?
The purpose of using fake bookings is to show the development project more successful than ever and to make potential buyers feel that it is an attractive object that sells well.
While Sooman referred to the contradiction of fake bookings with the general marketing ideology, under the Consumer Protection Act, such activity is even prohibited.
Unfair commercial practices are prohibited
In particular, the Consumer Protection Act prohibits the use of unfair commercial practices. Unfair commercial practices in particular are misleading or aggressive commercial practices. False bookings are obviously a misleading commercial practice in that the consumer is given incorrect information about the availability of the goods.
What are the consequences of using unfair trading practices?
Breach of the prohibition on using an unfair commercial practice does not automatically lead to a transaction being void, but can still be an argument, for example, when withdrawing from a transaction or claiming damages. In addition, of course, the user of fake bookings runs the risk of the Consumer Protection Board’s proceedings and the resulting sanctions and reputational damage.
The article has been published on Kinnisvarauudised.ee.