Palo Alto, we have a problem: German court says Tesla’s “Autopilot” is false advertising

Tesla banned from using the term “Autopilot” for its driver-assistance system (Model 3) – because the name is misleading.

In its judgment of 14 July 2020 (case no. 33 O 14041/19), Munich’s regional court I (Landgericht München I) ruled that advertising claims made by Tesla in Germany amounted to misleading commercial practices under the country’s competition law, and prohibited Tesla from making the claims in any further advertising. The action against Tesla’s German subsidiary was brought by the private competition watchdog Zentrale zur Bekämpfung unlauteren Wettbewerbs e.V.

The watchdog had taken issue with specific claims made during the Model 3 order process pertaining to technical specifications about the system on offer. The claims included:

“Autopilot inklusive” (“Autopilot included”),
“Volles Potenzial für autonomes Fahren” (“Full potential for autonomous driving”),
“Navigieren mit Autopilot-Funktionalität” (“Navigate with autopilot functionality”) and
“Herbeirufen: Ihr geparktes Auto findet Sie auf Parkplätzen und kommt zu Ihnen”. (“Summon: Your parked car will come find you anywhere in a parking lot.”)

According to the LG Munich, these advertising claims – when taken as a whole but also individually – would lead the average consumer to believe that the vehicles are technically capable of driving autonomously and that this is also legally permissible, which is not consistent with the reality.

Extract from Section 5 of the German Act against Unfair Competition (UWG):

Misleading commercial practices

(1) Unfairness shall have occurred where a person engages in a misleading commercial practice which is suited to causing the consumer or other market participant to take a transactional decision which he would not have taken otherwise. A commercial practice shall be regarded as misleading if it contains false statements or other information suited to deception regarding the following circumstances:

1. the main characteristics of the goods or services, such as availability, nature, execution, benefits, risks, composition, accessories, method or date of manufacture, delivery or provision, fitness for purpose, uses, quantity, specification, after-sale customer assistance, complaint handling, geographical or commercial origin, the results to be expected from their use, or the results or material features of tests carried out on the goods or services;

[…]

The court found:

The advertised vehicles are in fact technically incapable of driving autonomously with the driver-assistance system, but rather meet “Level 2” of the autonomous driving classification system customary in the US and Europe – which always requires the full attention of the driver.

However, naming the driver-assistance system “Autopilot” would by definition already suggest the possibility of completely autonomous driving.

In addition, the term is inevitably associated with the English term autopilot, which is used in the field of aviation and refers to a system capable of completely controlling the aircraft without human intervention.

The resulting deception, or in any event the risk of deception, was not eliminated by the reference at the end of the configuration page either, since this did not satisfy the legal requirements of sufficient transparency and clarity.

Furthermore, the claims do not make it clear that autonomous driving is not permitted in the Federal Republic of Germany under the current Road Traffic Act (StVG), as this is not covered by the current regulations.

Taking into account the fact that the vehicles are sold as premium products with a hefty price tag, the court also found that the presumption of misleading advertising was, on the whole, proportionate.

It concluded that the claims would continue to be misleading to consumers as long as the legal framework for such functionality is not approved, and that any vehicle advertised with the functionality would not be able to drive completely autonomously.

Conclusion

Even Tesla can’t escape Germany’s strict competition law. It has no right to advertise fanciful functionality that doesn’t actually exist. A product catalogue is not a prospectus for investors: technical facts are what count, not commercial pipe dreams. Manufacturers of vehicles and other equipment would be well advised to be a little more realistic in their use of terms like “autonomous” and “autopilot”. For their part, buyers can cite misleading advertising as a reason to challenge and withdraw from purchase agreements, if an advertised feature was an important factor in their original decision to buy.

Welcome back and thank you for your information

The reason for the hefty fine was the illegal surveillance of several hundred workers by team leaders at an H&M service center in Nuremberg.

Since 2014, these managers were found to have been targeting staff returning from long periods of absence due to illness or vacation—by inviting them to “welcome back” meetings or even approaching them directly during their meal breaks. These conversations were held with around 700 unsuspecting workers, many of whom shared highly personal information, which the team leaders then wrote down and stored on a central network drive. The information was evaluated and used to systematically assess the workers’ performance and create profiles, and it ultimately played a crucial role in decisions concerning pay and promotions.

Apart from covering their vacations, the records also contained

details about when the workers were sick and when they took vacation,
medical diagnoses such as bladder weakness and cancer,
religious beliefs,
rumors and
highly private details of deaths in the family and other personal problems.

Not only was this data permanently accessible to at least 50 managers, but an IT error in October 2019 meant that for a few hours it was even available to every single employee in the entire company. This is when the data collecting came to light.

More than just a fine: Compensation of €2,500 per worker

When the issue was raised, the Hamburg DPA was quick to take action: The authority issued a freeze order to preserve evidence and ordered that the data set be handed over for inspection.

For its part, the company also reacted swiftly. It cooperated with the authorities, apologized to the workers affected, and also offered €2,500 in compensation to each of them who had been employed for at least one month.

This scramble to contain the fallout resulted in a considerably reduced fine for H&M, since the DPA’s fine is actually equivalent to less than 0.2 % of the H&M Group’s annual turnover of €21.9 billion. Considering the size of the fine, it seems that every Euro paid out to the workers is money well spent.

Standardized model for GDPR fines

Germany’s data protection authorities have published a for calculating fines. Based on this method of calculation, German privacy expert Christoph Schmidt developed the GDPR Fine Calculator. Authorities are of course free to decide independently, and on a case-by-case basis, how high fines should be, but the model can offer a reliable ballpark figure for companies and thus influence their corporate strategy.

Investigations: What resources do supervisory authorities have?

In addition, Art. 58 GDPR provides the supervisory authority with a variety of means, which it can use alternatively or cumulatively, to take action against offending companies.

Violations of the GDPR’s fundamental data protection principles of lawfulness, fairness and transparency

The Hamburg DPA found that the conduct of H&M’s managers constituted a serious disregard for the principles of European data protection law (the GDPR) and Germany’s national Federal Data Protection Act.

H&M’s data processing was found to be

unlawful, since there is no legal basis for this type of employee surveillance,
unfair, because the data was misused for inappropriate purposes, and
opaque, because the data was collected in secret.

Reputation tarnished and workers’ trust destroyed

The affair has already caused considerable damage to the company’s image. Even before the fine was announced, H&M won the 2020 BigBrotherAward in the “Workplace” category. These anti-prizes are awarded annually, and this year the jury selected H&M in recognition of:

“the long-standing, devious, and illegal collecting and processing of employee data distinctly protected by privacy laws”

Meanwhile, the workers affected are particularly angry that the very team leaders who spied on them also received compensation. Perhaps unsurprisingly, many of the employees have already resigned.

Conclusion

The fine imposed on H&M will serve as a deterrent and send a clear signal to companies and their compliance departments: Spying on your own workers is an expensive game.