CFTC orders Game Stores, MSB to desist from misleading advertising

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Created on Monday, 30 November -0001 00:00

The Competition and Fair Trading Commission (CFTC) has ordered Game Stores to cease and desist from engaging in prohibited unfair trading practices. This follows investigations the Commission conducted which established that the company engaged in misleading advertising by offering massive price discounts on products that were out of stock in violation of the Competition and Fair Trading Act and the Consumer Protection Act. The Commission heard that, between September and October 2013, Game Stores advertised price discounts on external hard drives that were out of stock at the time the promotion started.

 

In a related development, the Commission ordered the Malawi Savings Bank to cease and desist from engaging in prohibited unfair trading practices. This follows investigations the Commission conducted which established that the bank engaged in misleading advertising by providing insufficient information to the general public on the criteria for accessing a warehouse credit financing facility.

Under the advertised warehouse credit financing facility, the Bank claimed that it would extend credit facilities to farmers and traders who deposited their agricultural produce for sale at the AHL Commodity Exchange Ltd provided they opened an account with the Bank. It was, however, established that the Bank refused to extend the warehouse credit receipt facility to some farmers and traders on the premise that the applicants did not meet other criteria. 

Further, the Commission has ordered Malawi Savings Bank to publish a revised advertisement specifying all the material information necessary for farmers and traders to make an informed decision on this warehouse receipt financing facility.

Charlotte Wezi Malonda, Executive Director of the CFTC said it was important for advertisers to ensure that advertisements carry all the material information needed for consumers to make informed decisions. Malonda said:

“Advertisers must ensure that an advertisement is truthful and sincere. A good advertisement should not conceal or leave out important facts”.

Notes for Editors

1. CFTC is an autonomous agency of the government mandated to regulate, monitor, control and prevent acts or behaviour which are likely to of the adversely affect competition and fair trading in Malawi.
2. CFTC launched investigations against MSB and Game Stores following complaints received from Afriseed Ltd and Mr Benson Chimbindu respectively. Influenced by an MSB advert, Afriseed opened an account with MSB and deposited agricultural produce at AHL Commodity Exchange in order to benefit from an advertised warehouse receipt financing facility.
3. The CFTC reviewed the complaint against provisions of the Competition and Fair Trading Act (CFTA) and the Consumer Protection Act (CPA). In particular,

• • Section 43 (1)(k) of the CFTA states that a person shall not, in relation to a consumer, put out an advertisement which is misleading or deceptive.
  • Section 43(1)(d) of the CFTA states that a person shall not, in relation to a consumer, engage in conduct that is likely to mislead the public as to the nature, price, availability, characteristics, suitability for a given purpose, quantity or quality of any products or services.
  • Section 44(1) of the CPA states that an advertiser shall ensure that an advertisement (a) conforms to rules of decency, sincerity and truth (b) does not exploit superstition, ignorance or fear (c) is distinct in whatever form it takes.
  • Section 44(2) of the CPA states that any advertiser who puts an advertisement that constitutes a false or misleading offer or promotion of technology, goods, activities or services shall be guilty of fraud.

4.  An advert is misleading or deceptive if (a) it contains a false statement of fact; (b) it conceals or leaves out important facts; (c) promises to do something but there is no intention of carrying it out; (d) creates a false impression even if everything stated in it maybe literally true.

5.  Failure to comply with the Commission’s orders shall result in criminal prosecution in accordance with Section 50 and 51 of the Act.

 

Contacts for this Press Release

Lewis Kulisewa

Director, Consumer Welfare and Education                  

Competition and Fair Trading Commission, Private Bag 332, Lilongwe 3

Tel: +2651774838; Email: This email address is being protected from spambots. You need JavaScript enabled to view it. / This email address is being protected from spambots. You need JavaScript enabled to view it.