OFT Revokes Licenses of Two Credit Brokers, Warns Others
Europe, Middle East and Africa
The UK Office of Fair Trading (OFT) has announced that credit brokers must improve dealings with customers in relation to upfront fees or risk losing their license. The warning comes after the OFT revoked the licenses of NIZ Financial (UK) Ltd (NIZ) and First Money Direct Ltd (First Money) following a finding that the companies were employing unfair business practices. The OFT found that NIZ had:
- “debited the current debit or credit cards of consumers without their authority;
- taken upfront brokerage fees – often after claiming that loan applications had been ‘pre-approved’ or ‘approved in principle’ – when no loan was provided or it was later offered at a higher annual percentage rate/lower amount”;
- “not refunded brokerage fees when requested to do so”; and
- been using the trading name Bentley Cooper, despite it not being on the license.
First Money engaged in misleading conduct in relation to the brokerage service and failed to provide fee refunds when required to do so.
OFT’s media release (11 February 2011)
Testimonials on Facebook, Twitter and Youtube Held to Be Breach
The Australian Competition and Consumer Commission (ACCC) has announced that Allergy Pathway Pty Ltd and its director Paul Keir have been fined A$7,500 each for breaching court undertakings that prohibited representations about the company’s supposed allergy treatment on sites such as Facebook, Twitter and Youtube. These representations included testimonials written and posted by clients as well as by Allergy Pathways on behalf of clients. According to a 2009 undertaking, the company had agreed not to make representations in relation to the accurate testing, identification and treatment of allergies.
ACCC’s media release (11 February 2011)
Telco Ads Declared Misleading and Deceptive
The Australian Competition and Consumer Commission (ACCC) has announced that Optus advertisements about its ‘unlimited’ broadband plans have been declared misleading and deceptive. The plans in fact contained a condition that the speed of the service would be scaled back to 256 kbps once consumers reach a certain data allowance, and evidence showed that the service is practically unusable at this speed. Optus advertisements had failed to “sufficiently and prominently” explain “the effect that throttling would have on the functionality of the consumer’s user experience”. Optus has also admitted to misleading and deceptive conduct in relation to certain pre-paid offers and bundle plans.
ACCC’s media release (14 February 2011)
Vending Machine Scam Operators Give Up US$3 Million
The US Federal Trade Commission (FTC) has announced that it has recovered over US$3 million from the operators of a DVD vending machine scam, which will be distributed to victims of the scam. The defendants caused investors to pay between US$28,000 to US$37,500 for video rental vending machines, promising them returns of US$60,000 to US$80,000 a year, or a return of their initial investment.
FTC’s media release (17 February 2011)
Former Senior Employee Pleads Guilty to Fraud and Manipulation
The US Federal Bureau of Investigation (FBI) has announced that former Sky Capital chief operating officer Stephen Shea has admitted to his role in a scheme to defraud investors through securities broker dealers The Thornwater Company and Sky Capital. During the period 1998 to 2006, Shea was involved in a scheme “to defraud investors through material misrepresentations and omissions that induced people to invest in private placements and other purported securities investment opportunities”. The investments were instead used to pay secret commissions to brokers, refund victims who had lost money in prior investments and to enrich the defendants. Additionally, Sky Capital brokers illegally controlled stock of affiliated entities so as to inflate prices.
FBI’s media release (14 February 2011)