Misleading claims by modelling agencies

Office of Fair Trading (OFT) closed consumer enforcement case.

Case information

Investigation into alleged misconduct of certain traders claiming to be modelling and entertainment agencies including 1st Class Trading Ltd, Model Factor and others.

Complainant: OFT investigation following referral from the Advertising Standards Authority (ASA) and receipt of consumer complaints.

Investigation into the activities of the following business entities:

  1. 1st Class Trading Ltd (1st Class)

  2. Model Factor LLP (also trading as Celebrity Factor) (Model Factor)

  3. Runway Models Ltd (also trading as On the Runway and Models and Extras) (Runway Models)

  4. Model Model (BVI) (Model Model)

  5. six individuals who were directors and/or members of, or otherwise involved in the activities of, the business entities named above

Issue

Misleading acts and omissions (including misleading representations/website) by traders (including individuals) using various names to hold themselves out as being able to provide a service of getting consumers modelling and entertainment work. Also not giving consumers a right to cancel agreements made in this regard. Consumers pay upfront fees for services that are partially or never provided.

Relevant instruments

Part 8 of the Enterprise Act 2002; the Consumer Protection from Unfair Trading Regulations 2008; and the Cancellation of Contracts made in a Consumer's Home or Place of work etc Regulations 2008.

The OFT was assisted by: the Companies Investigation Branch and the Employment Agency Standards Inspectorate at the Department of Business Innovation and Skills; and Wigan, Lancashire, Maidenhead and Windsor Trading Standards.

Background

The investigation was initiated as a result of a referral from the ASA about 1st Class, Model Factor and other traders (including individuals) claiming to be modelling and entertainment agencies.

Other traders included Runway Models (also trading as On the Runway and Models and Extras) and Model Model and six individuals.

During the investigation the OFT received consumer complaints and other information which caused it to believe that the traders (including individuals) mentioned above engaged in a business operation the aim of which was to target consumers who hoped to obtain modelling or wider entertainment work. The OFT's understanding of the business operation from 2009 to 2010 is summarised below.

Up to April 2009

The business operation involved placing advertisements in a variety of local newspapers around the country. The adverts advised that 1st Class 'an agency' was looking for people to undertake catalogue, photographic, film TV extra and fashion work. Typically, offers of a free photo test shot and a photograph were made and the open 'auditions' usually took place at a local venue. At the 'auditions' consumers were asked to complete an application form prior to having a photo taken. The OFT believes that misleading statements were made by one or more of the traders (including individuals) about their chances of securing work in the modelling and entertainment industry, the nature of that work and the amount of remuneration they could receive. Consumers then paid a fee of around of £200 or more in order to receive a portfolio of photographs and a CV, which would be sent either by 1st Class or the consumers themselves to relevant agencies.

Soon after, consumers were contacted by a second agency, Model Factor, and asked to sign up for work. In order to sign up with Model Factor consumers were asked for a further fee of around £99.

The OFT believes that consumers were induced to pay by misleading statements about the availability of work. As far as the OFT is aware, in most cases such work did not materialise.

In some cases consumers were approached again for a further fee for a more specialised service (for example, often identified as Celebrity Factor). Consumers have claimed that at this stage they declined, fearing they had been victims of a scam.

September 2009 to November 2009

Model Factor set up in offices in Maidenhead in September 2009 and 'audition' events were held in that month, having been advertised in the local press and online. Consumers attended Model Factor events received a free photo and the OFT believes that as a result of misleading statements as to the likelihood of securing work, the nature of that work and the level of remuneration, paid for a portfolio of photographs, which were placed on the Model Factor website for a monthly fee. The fee charged was in the region of £300 to £350.

Consumers have alleged that statements were made during presentations of the type of work available and specific high profile retail names were mentioned as needing models, etc. As far as the OFT is aware, no consumer got any work with any of the well known names. The traders (including individuals) who were the subject of this investigation had no meaningful business links with the brand names they mentioned in events and presentations and were unlikely to be able to obtain the work promised to consumers.

February 2010 to date

From February 2010 Runway Models began advertising photo shoot events in local press in a number of areas including Hull, Sheffield and Wigan. As a result of the information it received, the OFT believes that the business operation in this instance was similar to the one described above save that consumers are subsequently contacted by Model Model rather than Model Factor.

Consultation

The OFT sought to consult with all the traders (including individuals) mentioned above from August to November 2010. During that period the OFT sent out a comprehensive consultation letter to all of them setting out the legislative basis of its investigatory powers, its views, findings and concerns, requesting an explanation and requesting all the traders (including individuals) to sign undertakings by which they would undertake to not continue or repeat certain misconduct which related to the business operation mentioned above, including making false and or misleading representations and failing to provide material information. Further written and oral communications were had with most of the traders (including individuals) involved as part of the consultation process.

The result

In response to the consultation the following have signed the undertakings sent by the OFT under cover of its consultation letter of August 2010:

  1. Three individuals 

  2. Runway Models Limited (also trading as On the Runway and Models and Extras)

  3. Model Model (BVI)

1st Class and Model Factor were dissolved as business entities during the consultation period. As a result, they no longer carry on business.

If these traders (including individuals) breach the undertakings the OFT can exercise its power to take appropriate court action under the Enterprise Act 2002.

On sending his clients signed undertakings the solicitor representing one individual stated that his client had made 'no specific admissions as to past conduct'.
 
In response, the OFT reserved its right to make the contentions it had made during the course of its investigation in respect of past conduct in any future action it may take if the undertakings were breached.
 
OFT warning letters were sent to three other individuals. The letters confirmed the OFT's findings in relation to their involvement in the business operation and warned that if they are found to have engaged in this type of business operation again the OFT may take appropriate court action against them without notice.

Having secured these results, the OFT has now closed this investigation.

The OFT will continue to monitor the traders, including the individuals who have given undertakings and are subject to warnings, to ensure compliance.

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