Dixons Stores Group, the UK’s largest retailer of electrical and electronic products, was warned on Wednesday that it’s torrent of ads offering purportedly “interest free” credit – also touted as ‘0% finance’ – were misleading consumers and in breach of the law.

The Office of Fair Trading has instructed DSG (owner of The Link, Currys, PC World and Dixons retail chains – between them totalling around 1,000 outlets) to cease advertising so-called interest free deals – which require payment within a shorter time frame than those openly charging interest.

Interest free, the watchdog ruled, such deals decidedly are not. Not if the consumer fails to repay the whole of the outstanding balance at the end of the shorter repayment term; by default he or she is then hit for interest of up to 29.9% on the entire purchase price despite the fact that a proportion of that sum has already been repaid.

Other retailers were also instructed to stop running such ads which, according to the OFT, breach section 7(c) of the Consumer Credit (Advertisements) Regulations 1989. This effectively prohibits any ad that states or implies the consumer can get interest-free credit when they would be liable for contractual charges.

Says the director general of fair trading John Vickers: “I welcome the decision taken by these companies [to cease such advertising] and urge other companies to follow without delay. When a consumer signs an interest free deal they need to know that they are getting just that.”

Data sourced from: BBC Online Business News (UK); additional content by WARC staff