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OFT and misleading advertising

This entry was added to http://www.reckon.co.uk/headlines-franckblog on 2 November 2005.
Full blog table of contents available at Contents | viewpoint: Franck.

Several of the links on this page are now broken.

I have a vague recollection of reading the OFT press notice of 5 October 2005 noticing the somewhat unusual step taken by the OFT of hiring Amanda Holden to "launch" some leaflet or other. But I have to say that the matter went quickly out of my head that day.

Where Amanda had failed to attract my attention, a BT phone box in London displaying an OFT advert succeeded.

"OFT: Buy with confidence when you see this sign", said the box, which looked similar to the advert under Amanda's photo here.

Perhaps I don't have much confidence in the OFT, or it may have been simply that I have never knowingly bought anything from it? Anyway I stopped and read on.

"OFT stands for the Office of Fair Trading. We aim to make sure businesses look after their customers."

I knew that (at least the first bit).

"If a company is displaying the Approved code logo it means they are promising to treat you fairly if things go wrong."

Well I expected all companies to have a duty to treat me fairly if things go wrong, irrespective of any logo. But still, it seemed okay. I remembered the Amanda piccies, thought it was all a bit strange but probably harmless, and ran to get my train.

With my interest further aroused by a colleague's comment about a similar advert, I eventually found myself with a few minutes to spare and looked for a statement of what it was all about (Google: OFT Amanda).

I found the full leaflet (6 pages, PDF), which says on page 2 (it does not have many words per page):

"We're a government consumer body — so you can be sure that the code has been rigorously checked before they can use our logo" ...

Fair enough: no reason to believe that the OFT does not try to check these things properly.

... "and [you can be sure that] you will be treated fairly if problems arise when you buy from them."

Now that's a lie, I think. I cannot be sure that I will be treated fairly if problems arise.

As far as I can see, the only two things I can be reasonably sure of are:

Indeed, this is what the BT phone box was saying. Somehow the OFT's standards of internal review seem to be lower for leaflets than for BT phone boxes. (I assume that no-one at OFT set out deliberately to mislead the public here.)

I turned to the inside of the leaflet to see whether to smaller print tries to cancel out that error, and found that it does not.

Instead, the OFT misleads me further into thinking that if a firm displays the OFT Approved code logo it:

"will use clear and fair contracts".

How would the OFT know that? Years of enforcing the various generations of unfair terms in consumer contracts regulations should have taught it that unfair terms do still occur from time to time.

Presumably the trade associations promoting OFT-approved codes do not have to impose uniform terms and conditions on their member firms? The OFT core criteria and guidance (44 pages, PDF) for approval of codes confirm this:

"If code sponsors do not have model terms, we do not insist that they produce them." (page 19)

So that's another lie then.

Going further through the leaflet, it does not get any better. In answer to the key question, "How do I know the standards will be kept up?", this is what the leaflet has to say:

"If individual businesses do not deliver on their code to consumers the trade bodies will be prepared to take away their membership. And the OFT can remove the approval (and use of the logo) if a trade body consistently fails to keep up the standards."

Read this again: the trade bodies "will be prepared to" take away the membership of non-compliant traders. No statement that they will, or even that they should or that they have promised to. Sorry, this fails to answer the question "How do I know the standards will be kept up?".

The real answer to the question is: you don't know. And neither does the OFT. They might hope that the standards will be kept up, they might even exert reasonable efforts towards securing that the standards are kept up, but they don't know.

Even if the OFT knows that the standards have not been kept up, all it can do is withdraw the approval — by which time it is too late for the punters who had "bought with confidence".

Can the punters complain to the OFT about being misled by the incredible marketing power of the OFT's logo? The OFT has a "making a complaint" leaflet (6 pages, PDF), and the answer is no:

"The OFT is not able to offer advice or resolve your individual dispute. If your complaint involves a breach of any of the consumer protection laws it would be to the benefit of all consumers if you send the details to us."

So lets get this straight: (1) OFT misleads punter into buying with undue confidence; (2) punter loses his shirt; (3) OFT can't help, but would love to hear the story so that it does not have to find out about it itself. And the address is not even Freepost.

What does the OFT do with the story of the poor punter? I'm not sure. The OFT is not even committed to withdrawing approval from codes that are not complied with. According to the withdrawal guidance (4 pages, PDF):

"The OFT will consider each case on its own merits, taking into account the nature and seriousness of the failure to meet the criterion/criteria and its effects."

Whatever that may mean, it does not seem to me that it means that consumers should buy with confidence on the basis of an OFT logo.

Control of Misleading Advertisement Regulations

The OFT is also in charge of enforcing the Control of Misleading Advertisement Regulations, which arise from some EC directive.

Could someone complain about this OFT leaflet? According to the OFT's guidance:

"An advert is misleading if it deceives or is likely to deceive its audience and affect their economic decision-making. [...]
An advert will be likely to affect the economic decision-making of readers if, for example, it persuades them to part with money. [...]
An advert can be deceptive in various ways, for example, if it [...] promises to do something but there is no intention of carrying it out; [or] creates a false impression, even if everything stated in it may be literally true."

I think that's a yes:

Someone should try it.

What about competition?

There is one last point that worried me about this leaflet, and indeed about the scheme itself. Apparently,

"If a firm displays the OFT Approved code logo you can have confidence that they [...] will offer you more rights than the law gives you."

Rather unspecific. The OFT core criteria and guidance (44 pages, PDF) does not seem to explain, or at least I can't find a clear basis for the statement from the leaflet quoted above.

Giving the OFT the benefit of the doubt, I assume that it is at least a criterion for approval that the code should give more rights than the law gives consumers. In other words, the code should prohibit a "race to the bottom" in terms of things like cancellation rights, warranties etc.

I also note that requirement 1a in the the criteria and guidance is that the code sponsor (e.g. trade association)

"should have a significant influence on the sector".

Let me rephrase that: the OFT wants trade associations that have a significant influence on their sector to develop agreements that are binding on their members and that restrict the ability of these members to compete on some dimensions of product characteristics, such as by offering a "cheap and cheerful" service with lower prices and a lower (but still legal) level of consumer protection.

And there was I thinking that the OFT was responsible for enforcing Article 81 and the corresponding provisions of the Competition Act 1998. There is no mention of either in the criteria and guidance. Indeed the word "competition" does not appear once in the 44 pages.

Am I missing something here?

Key links

Entry added by Franck Latrémolière on 2 November 2005

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Last changed by Franck at 8:02 AM on Thursday 12 April 2007.

Reference for this page:
Reckon Open "OFT and misleading advertising | viewpoint: Franck" 2007-04-12T08:02:44