The OFT has obtained assurances from a Latvian company that it will no longer promote and sell its impotency product, ‘STIFF Strips’, in the UK.
S.I.H.N sent mailings to UK consumers under the name of ‘Reprohealth’. The mailings claimed that STIFF Strips were ‘five times more powerful than any other impotency pill, spray or cure’ and offered packs of STIFF Strips for up to £45 for 168 strips.
Described as a ‘new discovery’ containing ‘powerful anti-impotency agents’, mailings made claims about the efficacy of the product, guaranteeing its effects within five minutes and including claims that ‘with STIFF Strips you can make love for hours’.
The mailings used explicit language to describe the effect of STIFF Strips and testimonials from men who claimed that the product had dramatically improved their sexual performance. The mailings also claimed that the product ‘works on women too’.
The OFT contacted S.I.H.N and requested evidence in support of the claims. The company failed to provide satisfactory evidence to support any of the claims made in the mailings and agreed to stop selling and promoting STIFF Strips in the UK.
Two UK based websites, http://www.shy-about-impotence.com and http://www.miraclestiffstrip.com, which also sold STIFF Strips and which made similarly misleading claims were shut down following approaches from the OFT.
Mike Haley, Head of Consumer Protection at the OFT said: ‘We will continue to act against misleading claims that exploit people’s health worries. Consumers should always be sceptical and seek professional medical advice before parting with any money.’
The OFT is today warning consumers to be careful before responding to unsolicited mailings which advise them to cancel existing individual voluntary arrangements (IVAs) and which suggest they opt for an alternative debt management solution such as bankruptcy instead.
Some such mailings sent out to consumers misleadingly suggest to recipients they may have been mis-sold the IVA and/or that bankruptcy may be more suitable for their circumstances when this may not be the case. These mailings are being targeted at vulnerable consumers in IVAs by companies who appear to have accessed their personal contact details from the public register of people in IVAs which the Insolvency Service is required by law to maintain. The OFT considers such claims to be in breach of its debt management guidance not only if they are misleading but also if they fail to explain the consequences of terminating an IVA agreement and going bankrupt which include:
* much of the initial monies paid to a company on setting up an IVA going towards meeting the insolvency practitioner’s fees and not paying off the debt itself. Therefore, if the IVA fails early on, creditors will not have received any payments, the consumer’s debts will not have decreased and their financial position is likely to have worsened.
* the option of bankruptcy having far reaching consequences including consumers losing control of their assets, potentially having their home sold and facing restrictions in carrying on businesses and obtaining credit.
The OFT has issued warnings to 12 businesses and has given them four weeks to respond. They have been told to amend any misleading claims made in their IVA advertising and promotional material and to be more transparent about the possible implications for consumers if they do terminate an IVA agreement. The OFT will consider taking action against any business that fails to address our concerns. Such action could include taking steps to revoke consumer credit licences held by the business.
‘Tackling companies who are engaging in unfair business practices by targeting vulnerable consumers with misleading advice and information, particularly if it leads to consumers becoming more over-indebted, is a key priority for the OFT. We expect any advice and/or information given to debtors to be in their best interests and it should include a full explanation of the implications of offers or advice’.
The OFT has today issued joint guidance with the Department of Trade and Industry (DTI) on the Distance Selling Regulations (DSRs) for businesses.
It replaces previous guidance on the DSRs issued by the OFT and the DTI.
The DSRs provide consumers with additional rights when buying most goods and services where there is no face-to-face contact with the seller, for instance when purchasing on the internet, by phone, fax or mail order or by other distance means under an organised scheme. The guidance sets out what these regulations are, when they need to be considered, how to comply with them, the consequences of non-compliance, as well as providing other sources of advice and information.
Although directed primarily at businesses, the guidance is also intended to assist consumer organisations and OFT enforcement partners, principally the local authority trading standards services to provide consistent advice to businesses and consumers on their rights and responsibilities under the regulations.
John Fingleton, Chief Executive of the OFT said:
‘The protection that the DSRs offer is important for consumers purchasing goods or services at a distance. Customer focused businesses also need to understand their obligations when engaging in distance sales. This guidance is intended as a useful source of information for businesses.’
Consumer Minister Ian McCartney said:
‘Consumers deserve protection whether they are buying from their local shop or online. But businesses need to have a clear idea of where the law stands. That’s why this joint guidance will support businesses in their efforts to operate distance sales and give consumers the protection they deserve.’
In response to the OFT’s statement of principles on the calculation of credit card default charges, credit card issuers have agreed to reduce their default charges - the majority by almost half.In April, the OFT stated that credit card default charges had been generally set at a significantly higher level than was considered fair and set a £12 threshold for OFT intervention unless there were exceptional business factors. Many card issuers have stated that they do not agree with the OFT’s view of the law and that they believe that their default charges were fair but, in view of the reduction in charges across the market, the OFT is satisfied that no further intervention is warranted in this area at this time and that this change has brought about substantial benefits for consumers.
The April statement also indicated that the OFT considers that the broad principles in relation to default charges are likely to be relevant to other standard agreements with consumers such as those for bank current accounts. The responses received from the banking industry have generally challenged this belief but the OFT remains of the view that the broad principles do read across to the retail banking area and has decided to undertake further work on the application of these principles to bank current accounts. In the course of this work the OFT will liaise closely with the Financial Services Authority (FSA) and hold discussions with the British Bankers’ Association (BBA) to ensure that distinctive features of retail banking and the circumstances in which default charges are applied are identified and taken into account. The OFT has also been made aware of concerns about the personal current account market in Northern Ireland by the General Consumer Council (GCC) and will consider its report as part of this exercise. This fact-finding exercise is expected to take between three to six months, at which stage the OFT will consider whether a further detailed investigation of the fairness of individual bank default charges is needed.
John Fingleton, Chief Executive of the OFT said:
‘The reduction of default charges on credit cards is great news for consumers. By taking an innovative approach to this issue, the OFT has brought about a significant change in one area of the financial services sector. We are now extending that work to inform ourselves about account default charges. We welcome the willingness of organisations such as the BBA to work with us in looking at the application of the principles we set out in the April to this area.’
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