• Lending money to a company for the purchase of dairy cattle with the promise of earning up to 16 per cent a year?
• To encourage such investments, Farma Mleka claimed that it already had several hundred cattle and intended to increase the herd to 10,000 within 3-4 years, while it had really only bought 11 cows.
• For misleading consumers, the company faces a fine of up to 10 per cent of its annual turnover while its president may receive a fine of up to PLN 2 million.

The Office of Competition and Consumer Protection has repeatedly advised consumers to approach offers of so-called alternative investments with caution and to check everything carefully before making a decision. An example of such an unusual investment might be a loan for the purchase of dairy cattle. The company Farma Mleka from Poznań urged consumers to invest at least 7.5 thousand zloty in a herd of cows, promising them profits of up to 16 per cent a year. UOKiK President Tomasz Chróstny has put forth allegations against the trader related to misleading consumers.

"In its advertising materials and during webinars, Farma Mleka boasted about the number of cattle it already has, its collaboration with farmers and dairies as well as its dynamic growth plans. Our findings show that this information was far from the truth. As a result of the misrepresentation, consumers may have taken unfavourable financial decisions," says Tomasz Chróstny, President of UOKiK.

"Mystery shopper" at a webinar

In the course of an investigation conducted in June 2021, the President of the Office of Competition and Consumer Protection ordered an inspection at the company using the institution of a "mystery shopper". It involves an UOKiK employee who, with the court's approval, undertakes actions aimed at concluding an agreement with an entrepreneur. This enables the verification of how the offer is presented to consumers and whether the company complies with the information obligations required by law. A recording of such actions may constitute evidence in proceedings.

Acting as a "mystery shopper", an employee of the Office took part, among other things, in one of the webinars organised by Farma Mleka for potential investors. It was led by the company's president, who asserted that the company already works with 7 farms and has approx. 300 cows. He also pointed out that within 3-4 years Farma Mleka wants to expand its cooperation with farmers to 50 farms and increase its herds to 10,000 cattle. He also mentioned that the company is considering eventually buying its own dairy. The president of the company emphasised the secure nature of the investment, pointing to farm insurance and agreements with dairies.

The Office's findings to-date

Information obtained from the Agency for the Restructuring and Modernisation of Agriculture, which maintains a register of branded livestock, shows that Farma Mleka has bought only 11 cows throughout its operation, with the herd more than halving by February 2022 as 6 animals died. The Office of Competition and Consumer Protection reached out to the only farm with which the company had an agreement. It was terminated through the fault of Farma Mleka in April 2021 because it had, among other things, failed to meet its commitment to purchase the agreed number of cows and had not even insured the herd. According to the information obtained, the company did not have a contract with the dairy either, the milk was sold directly by the farmer.

What sanctions may be imposed?

If the allegations of violating the collective interests of consumers by misleading them are confirmed, Farma Mleka faces a fine of up to 10 per cent of its annual turnover. In addition, the President of UOKiK may also impose financial sanctions on the president of the company if it is confirmed that he intentionally committed these violations. In this case, he will face a fine of up to PLN 2 million.

Moreover, the President of the Office has initiated proceedings to impose a penalty on Farma Mleka for its failure to provide the requested information. Let us remind that, according to the regulations, entrepreneurs are obliged to cooperate with the President of the Office of Competition and Consumer Protection during explanatory proceedings – answer questions and make documentation available. If they evade this obligation, they face a fine of up to EUR 50 million.

The Office also notified the public prosecutor's office of the possibility that the president of Farma Mleka had committed fraud.

Consumer support:

Phone No. 801 440 220 or 22 290 89 16 – consumer hotline
E-mail: porady@dlakonsumentow.pl
 Consumer Ombudsmen – in your town or district

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL