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Too good to be true on the internet

61/04    1 April 2004

An international sweep of the internet has found 176 websites based in the UK that are making claims that are 'too good to be true'.

The OFT and 30 local trading standards departments (see note 1) were among 24 enforcement agencies in 31 countries surfing the internet for websites that make misleading claims, as part of the International Consumer Protection and Enforcement Network (ICPEN) sweep (see note 2). 1847 sites were identified worldwide.

Initial results show that UK sites making 'too good to be true' offers included: 90 working from home schemes, 52 get rich quick schemes, 20 lottery scams, 15 free prize offers, and 4 sites offering educational qualifications.

More than 234 breaches of consumer protection legislation were identified during the sweep including: Control of Misleading Advertising Regulations, Ecommerce Regulations, Distance Selling Regulations, Trade Descriptions Act and Education Reform Act.

The lure of quick and easy money makes such schemes attractive to consumers. Common pitfalls include start up fees, added costs and grossly exaggerated earning potential which can lead to people losing significant amounts of money. Tips to avoid getting caught by the scams include:

• avoid promises of instant wealth, 'free' gifts and incredible discounts and bargains
• be wary of personal accounts claiming astounding results
• read all the terms and conditions
• research the business, do a internet search on the product/company name and verify any contact details.

UK based sites identified by the sweep as potentially breaching consumer protection regulations are being pursued by local trading standards or the OFT with a view to taking further action.

Christine Wade, Director of Consumer Regulation and Enforcement at the OFT said:

'The internet is used by fraudsters who seek to take advantage of international boundaries to avoid detection. Cross border cooperation is therefore important for combating this area of consumer detriment.'

This is the sixth time the OFT has participated in a 'global internet sweep' conducted under the auspices of ICPEN (see note 2). The main objective is to prevent deceptive marketing practices internationally and tackle consumer problems connected with cross-border transactions for goods and services.

Derek Allen, Executive Director of LACORS who were involved in organising the sweep in the UK, said:

'The results of the sweep conducted by the OFT and Trading Standards highlights the growing number of websites making misleading claims. The continued work and vigilance of local authorities and the OFT will help ensure that consumers can avoid getting caught up in such scams'.

ANNEXE

Examples of claims identified during the sweep:

• a working from home scheme offering business opportunities that will significantly increase income, e.g. over £2,500 per month, without specifying how this is done and only provided mobile telephone numbers
• a lottery scam which provided no contact details but claimed '100 per cent guaranteed, no risk of loss whatsoever...'
• a free prize draw offering '£3 a night for a luxury hotel accommodation' but consumers must send £49.95 obtain a Directory which contains discount vouchers.
• a 'get rich quick' scheme claiming that in 24 hours people could raise £198000.

NOTES

1. The following 30 Trading Standards Departments participated in this year's sweep: Aberdeenshire Council, Argyll & Bute Council, Blaenau Gwent County Borough Council, Bournemouth Borough Council, Buckinghamshire Trading Standards, Cambridgeshire Trading Standards, Cheshire County Council, City of Newcastle Upon Tyne, Cornwall County Council, Devon County Council, Dorset County Council, East Riding of Yorkshire Council Trading Standards, Fife Council Trading Standards, Glasgow City Council, Hertfordshire Trading Standards, London Borough of Ealing, Milton Keynes Council, Moray Council, Nottinghamshire County Council, Renfrewshire Council, Shetland Islands, South Lanarkshire, Stirling Council, Suffolk County Council, Surrey, The Highland Council, Torbay Council, Wandsworth Council, Warwickshire County Council and West Sussex County Council.

2. ICPEN is a membership organisation consisting of the trade practices law enforcement authorities of more than 31 countries.  The mandate of the Network is to share information about cross-border commercial activities that may affect consumer interests, and to encourage international cooperation among law enforcement agencies. The Network operates under a rotating presidency. The OFT will be taking over presidency of the International Consumer Protection Enforcement Network from August, with Christine Wade, Director of Consumer Regulation Enforcement as President.

3. LACORS (the Local Authorities Coordinators of Regulatory Services), a local government central body, seeks to make a major contribution to the development of high quality consistent and coordinated local authority regulatory services across the UK. Please visit www.lacors.gov.uk for further information.

UK legislation

4. Control of Misleading Advertising Regulations (CMARs) 1988 came into force on 20 June 1988 implementing an EC Directive on misleading advertising. The role of the OFT under the regualtions is mainly to support and reinforce the controls exercised by other bodies where they have been unable to take effective action. The OFT will step in only when these bodies have been unable to deal adequately with a complaint and where it is in the public interest that an advertisement is stopped by means of a court injunction.

5. The OFT can only act when a complaint has been received. To come within its scope an advertisement must be misleading (i.e. it must deceive or be likely to deceive the recipient and affect their economic behaviour, or for those reasons harm the interests of a competitor), and be published, 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.

6. 'Advertisement' means any from of representations that 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, right or obligations.

7. The Consumer Protection (Distance Selling) Regulations 2000, commonly referred to as the Distance Selling Regulations (DSRs) give additional rights to consumers in the area of home shopping. Under the regulations consumers have additional rights including rights to: clear information, a seven day cooling off period and further protection against fraudulent use of payment cards. The regulations provide that consumers who receive unsolicited goods or services have no obligations to pay for them. The DSRs apply to almost all types of distance shopping but there are exceptions.

8. Ecommerce Regulations include provisions for the information an online service provider must give a consumer including discounts and offers in online advertising.

9. Trade Descriptions Act 1968 makes it an offence for a trader to: apply a false trade description to any goods; or supply or offer to supply any goods to which a false trade description is applied; and knowingly or recklessly make a false statement about certain aspects of any service provided in the course of business.

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