Newsroom

OFT stops collector involved with deceptive 'charity' adverts

211/04    17 December 2004

A door-to-door collector of donated clothing has been stopped by the OFT from being involved with misleading advertisements that may lead people to think the collections are for charity.

Nicholas Rees from the West Midlands made door-to-door collections in connection with flyers from Kosta Ltd. The flyers were posted through letterboxes appealing for donations of unwanted clothes and household items, and gave the impression that the items were to be collected and used for charitable purposes.

The advertiser claimed to support 'H.K.L. Charity' in Lithuania and included statements in its flyers such as: 'Please help those who really need your support!', and 'We will be grateful if you could kindly donate…' The style of the flyers was similar to that used by genuine charities carrying out door-to-door charity collections.

The OFT found the advertisements to be misleading in view of evidence suggesting that the collections were made for commercial purposes with the donated items being sold for profit. Kosta Ltd is not registered with the Charity Commission and is a dissolved company. H.K.L. Charity is not recognised in Lithuania.

Mr Rees was prosecuted by Birmingham City Council in June 2004 for unlicensed door-to-door collecting. He gave undertakings to the OFT under the Control of Misleading Advertisements Regulations after evidence from this case was passed to the OFT. Mr Rees has undertaken that he will not be involved again with the publication or dissemination of advertisements which falsely give the impression that the advertiser is:

• a charity 
• requesting and collecting donations on behalf of a charity 
• requesting and collecting donations for charitable, benevolent or altruistic purposes
• a bona fide registered limited company.

If Mr Rees breaches the undertakings the OFT could seek an injunction against him in the High Court. Failure to obey an injunction could result in proceedings for contempt of court.

The OFT is aware of a number of other similarly deceptive flyers promoting commercial collection schemes. The people behind these schemes are often difficult to track down as the flyers give no genuine contact details and the details registered with Companies House are false. The schemes can be shut down and new ones started up very quickly. The OFT is continuing to work with the Charity Commission, police, local trading standards services and the Advertising Standards Authority to stop them.

It is estimated by the Association of Charity Shops that the potential value of donated clothing and other items 'lost' to legitimate charities as a result of this type of deceptive advertising amounts to at least £1m per annum.

John Vickers, OFT Chairman, said:

'The perpetrators of these schemes are profiteering from peoples' goodwill and depriving genuine charities of much needed support. Householders getting flyers promoting collection schemes should beware that some bogus operators are posing as real charities.'

If a householder has any doubts about a leaflet asking for donations of clothing or household items, they should:

• contact the Charity Commission helpline on 0870 333 0123 to check whether the collection is for, or on behalf of, a registered charity 
• contact their local authority to see if the collector has been licensed  
• give direct to a local charity shop instead or donate to a charity shop collection sack. These should make clear reference to the charity registration number and many will also carry the Association of Charity Shops Kitemark.

NOTES

1. Kosta Ltd (company number 04377177) was dissolved on 25 November 2003. 

2. There is no connection between the dissolved company Kosta Ltd (company number 04377177) and the building company Kosta Limited (company number 05040148), which is based in north London.

3. The Advertising Standards Authority adjudicated against Kosta Ltd on 26 March 2003.

4. Nicholas Rees was prosecuted by Birmingham City Council on 11 June 2004 for unlicensed collecting under the House to House Collections Act 1939. He was fined £500 and costs of £430 were awarded against him. The House to House Collections Act states that (with some limited exceptions) no collection in any locality for a charitable purpose may be made unless the promoter is licensed by the Licensing Authority for the area comprising that locality and the collectors are authorised by the promoter.
 
5. Nicholas Rees was formerly a company secretary of Green Valley Clothing Ltd, a company which collected used clothing for export to Lithuania. He resigned on 30 November 2002.

6. The OFT issued a consumer alert regarding misleading advertising of commercial collections in January 2004  

7. 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.

The OFT can take action against anyone appearing to be concerned or likely to be concerned with the publication of a misleading advertisement.  It can apply to the courts for an injunction ordering such persons to comply with the law in future. It can also accept undertakings from those involved in lieu of action.

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