Barclyacard Adverts: A Seduction Too Far

6.26.32pm GMT Tue 18th Nov 2003

Barclaycard has had to withdraw adverts promoting its '0% forever' credit card after the Office of Fair Trading (OFT) ruled it was illegal and created a 'highly misleading impression'. Barclaycard Chief Executive Mr Barrett famously told MPs recently that he did not borrow on credit cards and advised his children not to as well.

Malcolm Bruce MP, Liberal Democrat Shadow DTI Secretary, said: "If this 0% rate were true perhaps even Mr Barrett might decide to use a credit card. Unfortunately it is another example of highly misleading advertising by banks and credit companies."

"The disturbing fact is that misleading advertising like this seduces people into borrowing beyond their means and suddenly find themselves faced with penal rates of interest."

"The OFT have ruled this particular advert as a seduction too far. These introductory offers should be issued with a financial health warning."

ENDS

Notes

The OFT considered this advertising to be highly misleading. It contained the incorrect claim that the 0% APR was for ever. The 0% rate is in fact only available on balance transfers and only if the consumer uses the credit card to make purchases which attract interest at the higher standard rate. Monthly payments by the consumer clear the balance transfer first and so the consumer cannot keep the transferred balance at 0% for ever.

Commonly the Barclaycard adverts state, in large type, that 0 per cent APR is to be offered 'forever'. Most of the advertisements explain in smaller type that this relates only to balance transfers and that this rate only applies if the cardholder spends £50 or more each month; otherwise a rate of 6.9 per cent applies. Elsewhere, and with less prominence and clarity, it states that the monthly payments will be used to meet the transferred balance first.

All new purchases incur interest charges in line with the rate stated on the advertisement (e.g. 17.9 per cent APR). The OFT challenged the legality of Barclaycard's advertisements, which it considered to be in breach of s46 of the Consumer Credit Act 1974 which provides that an advertiser commits an offence if a consumer credit or consumer hire advertisement conveys information which is in a material respect false or misleading