OFT STOPS MISLEADING CLOSING DOWN SALE ADS

9 Mar 2005 11:15 AM

A national high street clothing retailer has given undertakings to the OFT that it will no longer publish advertisements which give the misleading impression that prices have been reduced as part of a closing down sale. Basebuy Ltd, trading as Eisenegger and Foxhole, used advertising in its shop windows stating: 'Closing down prices - absolutely everything reduced'. The OFT believed that these advertisements were misleading as they gave the impression that prices had been reduced in order to clear stock before closing down - when there was no evidence that the stores were closing down - and that price reductions were only likely to be available for a short period of time before the store closed down. Basebuy Ltd and its officers have given undertakings to the OFT under the Enterprise Act that they will not breach the Control of Misleading Advertisements Regulations. They have agreed that they will not publish any advertisements which give the impression that prices have been reduced as a result of the intended closure of the store in question when this is not the case.

If Basebuy Ltd or its officers breach the undertakings the OFT could seek a court injunction. Failure to obey a court injunction could result in proceedings for contempt of court.

Sir John Vickers, OFT Chairman, said:

'Traders should not mislead consumers with advertisements that imply the prices are reduced as a result of an intended store closure when this is not in fact the case.'

NOTES

1. The undertakings were signed on 16 February 2005 by Basebuy Ltd, Klassiker House, Avroe Court, Avroe Crescent, Blackpool, Lancashire FY4 2DP. Undertakings were also provided in a personal capacity by controller and former director Peter Donnelly, controller and company secretary Jill Donnelly and current directors John Taylor, Mary Fisher and Lee Hillier.

2. Part 8 of the Enterprise Act 2002 came into force on 20 June 2003. The Enterprise Act improves consumer protection by giving enforcers strengthened powers to obtain court orders against traders that breach a range of consumer legislation; controlling activities such as misleading advertising, misleading price indications, lotteries, sale of goods and services, underage sales, estate agency, misleading health claims, trade descriptions, mock auctions, timeshare, unfair terms in consumer contracts, doorstep selling, distance selling, package travel and consumer credit.

3. The Control of Misleading Advertisements Regulations (CMARs) 1988 (as amended), largely implement EU Directives on misleading and comparative advertising. They aim to protect the interests of consumers and businesses from misleading advertisements and advertisements that make prohibited comparisons.

An advertisement is misleading under the Regulations if in any way, including its presentation, it deceives or is likely to deceive the person to whom it is addressed or whom it reaches and if by reason of its deceptive nature, it is likely to affect their economic behaviour, or for those reasons injures or is likely to injure a competitor of the person whose interests the advertisement seeks to promote. 'Advertisement' for the purposes of the Regulations means any form of representation which is made in connection with a trade, business, craft or profession, in order to promote the supply or transfer of goods or services, immovable property, rights or obligations.

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