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OFT to crack down on misleading business names

OFT to crack down on misleading business names

Category: Debt

Updated: 29/01/2013
First Published: 20/04/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Businesses have been warned that they will not be allowed to use misleading trading names such as 'helpline' or 'debtline'.

The new guidance is part of the Office of Fair Trading's (OFT) campaign against certain debt firms, with more than 100 debt firms warned to change the way they conducted their business in 2011.

This new initiative will look to stop firms using names that imply they offer free advice or are charity organisations.

Names that suggest that firms are part of Government organisations offering help to consumers in debt will also be prohibited.

They include names such as 'Citizens Advice Bureau' or 'Government'.

"As a general principle of fair business practice, names used by a commercial enterprise should never seek to mislead consumers looking for free, impartial, charitable or public sector assistance," said the OFT.

It means that company names such as 'Cheap Loans for All', which suggests anybody can access cheap credit, would be challenged, as would names that imply no interest or lowest interest.

The decision has been welcomed by charities and consumer groups.

The Consumer Credit Counselling Service said that the guidance would be important in establishing a dividing line between debt charities and debt management companies.

Adam Scorer, director of policy and external affairs at Consumer Focus, said: "Companies trading to make a profit should not be able to mislead consumers by calling themselves a helpline or any similar title. This is a common sense move which will help reassure consumers."

In December 2010, the OFT refused an application from Baker Evans Limited to use the trading names 'The Bankruptcy Helpline' and 'The Insolvency Helpline'.

In October 2011, the OFT also stopped Money Advice Direct Limited (MADL) using its former existing trading name, 'The UK Insolvency Helpline' and proposed domain names including the word 'helpline', because they failed to make the commercial nature of the business clear to consumers.

"Businesses are free to choose trading names as long as they are not misleading or otherwise undesirable," said David Fisher, director` of consumer credit at the OFT.

"For example, where they do not make clear the nature of a business or where it pretends to be something it is not. The name of a business can be important to consumers when choosing a supplier and they should not be misled in this regard."

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