Investigation into an online trader offering bogus investment opportunities
Complainant: OFT own-initiative investigation
Investigation against: The identity of the trader has not been disclosed so as not to prejudice any future action that may be taken by an agency in another European Member State.
Case opened: 18 November 2009
Case closed: 20 September 2010
Issue: The OFT formed the view a trader was offering bogus investment opportunities.
Relevant instrument(s): Enterprise Act 2002, Consumer Protection from Unfair Trading Regulations 2008 and the Electronic Commerce (EC Directive) Regulations 2002.
The investigation was opened following the receipt of a referral from the Trading Standards Service about a trader claiming to be based in their area allegedly selling bogus investment opportunities via its website. Information about the trader and consumer complaints relating to the bogus investments were forwarded to OFT by the Trading Standards Service.
Evidence available to the OFT indicates that UK consumers who invested money in the trader's investment plans subsequently received no return on their investments despite the trader 'guaranteeing' a return. Also, consumers were unable to contact the trader using the details provided on its website which included a false UK address.
The OFT formed the view that the trader had breached consumer protection legislation that would be likely to harm the collective interest of consumers by:
- Engaging in misleading actions in accordance with Regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). Regulation 5 states that a commercial practice is a misleading action if it involves a false or deceptive practice in relation to a specific list of key matters (which include the benefits of the product, the risks of the product and the geographical or commercial origin of the product).
- Failing to provide a geographic address at which the trader is established, and an electronic mail address, which make it possible to contact the trader rapidly and communicate with it in a direct and effective manner, in accordance with Regulation 6(1)(b) and 6(1)(c) of the Electronic Commerce (EC Directive) Regulations 2002.
Following concerns expressed by the OFT to the ISP hosting this trader's website, the website was suspended.
During its investigation the OFT identified a second website, which it thought was also offering bogus investment opportunities, which also appeared to be operated by this trader. Evidence available to the OFT indicates that funds flowing from this activity were being sent by the trader's payment service provider to individuals in another European Member State. As a result, the OFT has now referred this matter to the relevant agency in this European Member State using the EU Consumer Protection Cooperation Network, an EU network made up of public authorities from all Member States (and EEA countries) which are responsible for enforcing consumer legislation. The OFT has now closed its investigation into this matter.
Team lader: Tim Luckhurst (timothy.luckhurst@oft.gsi.gov.uk, 020 7211 8884)
Project director: Robert MacDougall (robert.macdougall@oft.gsi.gov.uk, 020 7211 5846)
Senior responsible officer: Heather Clayton (heather.clayton@oft.gsi.gov.uk, 020 7211 8826)
Case Reference: CRE-E/25219
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