The channel, run by Auctionworld Ltd, sells high-end goods such
as plasma TVs and diamonds. According to Ofcom, it was the subject
of an unprecedented number of complaints from consumers over the
quality of its customer service and possible misleading and
inaccurate guide prices.
The watchdog investigated and found that Auctionworld had
committed several serious breaches of the Advertising Code,
including a failure to handle enquiries properly, or to deliver
goods within the advertised time.
Inadequate explanations from senior management as to the reasons
for these failings were, said Ofcom, "symptomatic of a management
failure to institute proper systems and control, or any proper
structure for customer relations. The result has been a large
number of very angry customers, demonstrable harm to consumers, and
prejudice to the teleshopping sector as a whole."
Despite explanations from the company, Ofcom "considered
Auctionworld's standard of customer service to be severely
inadequate, whether viewed individually or in comparison with its
competitors."
The regulator also found that the company had issued inaccurate
guide prices for both loose diamonds and diamond jewellery, with
the guide prices sometimes being set far in excess of those found
in the high street. On one occasion, said Ofcom, a customer had
been given a guide price of £14,000 for an item of jewellery that
when later valued turned out to be worth only £500.
Such valuations, set by suppliers to the company, were "totally
unacceptable," said the regulator.
Ofcom has therefore given notice to Auctionworld that it intends
to revoke its licence, and will do so unless the company complies
with eight steps set out to remedy the breaches within six months.
These include a requirement that Auctionworld does not set guide
prices for loose diamonds or diamond jewellery unless an
independent expert approved by the regulator has verified the
price.
Ofcom has also fined Auctionworld £450,000 and instructed the
company to broadcast a statement on its channel detailing Ofcom's
findings three times a day for three weeks.
"The decision to institute revocation of Auctionworld's
broadcasting licence is not taken lightly given Auctionworld
employs almost 300 people (employees and subcontractors) and its
service has been broadcast for 3 years," said Ofcom in its ruling.
"It has only been considered after all other avenues have been
exhausted and is a final resort, taken only when Ofcom is satisfied
that revocation is justified on the basis of detailed and robust
evidence."
