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Misleading domain name ads stopped

First UK/US joint action

PN 53/02     29 August 2002

In the first case of its kind the OFT has stopped two companies from publishing misleading advertisements for website domain names that are difficult to view on the world wide web. The OFT worked alongside the US Federal Trade Commission on this case.

Quantum Management Ltd and TLD Network Ltd, based in London, were advertising and selling domain names with suffixes such as .brit, .usa, .scot and .sex to UK and US consumers. Most domain name suffixes such as .com, .net or .uk can be accessed by all internet users. However, the domain names offered by the two companies can only be accessed through alternative networks and will not be found by a normal search function without a modified web browser.

Quantum Management and TLD Network sent out unsolicited email and advertised on their websites promising that 'the latest domain name extension had arrived'. The OFT took the view that the adverts gave the impression that the domain names on offer operated in the same way as top-level names such as .com and that this was misleading.

Thomas Goolnik, who is the director of both companies, has given written assurances to the OFT that he will not publish these or other similar adverts for the registration of domain names. Edward Goolnik, the former Company Secretary of both companies, has also signed similar assurances.

Welcoming the assurances John Vickers, Director General of Fair Trading, said:

'It is important that consumers and businesses seeking domain names know exactly what they are buying and how accessible the domain names will be.

'This case illustrates that consumers can be protected wherever traders are based. The OFT will cooperate with international enforcement partners to achieve this.'

NOTES

1. The Control of Misleaegulationsding Advertisements R 1988 came into force on 20 June 1988, implementing an EC directive on misleading advertising. The role of the OFT under the Regulations is to support and reinforce existing controls, not to replace them. The Regulations give the OFT the power to step in if the public interest requires that advertisements complained of should be stopped by means of a court injunction. Alternatively, the OFT can seek assurances or undertakings.

2. The OFT can act only when a complaint has been received. To come within the scope of the Regulations, an advertisement must be misleading (i.e., must deceive or be likely to deceive and affect economic behaviour or injure a competitor), and be published in connection with a trade, business, craft or profession to promote the supply or transfer of goods and services, immovable property, rights or obligations. This includes representations made orally, in writing or in pictures.

3. The US Federal Trade Commission alerted the OFT to this case as part of the on-going cooperation among the international enforcement community to tackle problems arising from cross-border trading.

4. In this press release the functions of the Director General of Fair Trading (DGFT) under the Regulations are for simplicity described as the functions of 'the OFT'. The Enterprise Bill proposes to replace the office of the DGFT with the OFT, to which would be transferred the DGFT's functions.

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