The Office of Fair Trading has decided to withdraw the consumer credit licences of Colorvision, the television and video stores chain, after a series of alleged dishonest practices including supplying second-hand goods, presenting them as new.
But the company will retain the licences until the outcome of an appeal lodged against the decision with the President of the Board of Trade, Ian Lang.
The OFT had threatened to revoke the licences in October, following customer complaints. An OFT adjudicating officer found the Liverpool-based company to have committed offences under consumer protection legislation and to have "engaged in business practices appearing to him to be deceitful or oppressive or otherwise unfair or improper".
If Mr Lang upholds the OFT's findings, Colorvision will not be able to deal in any form of consumer credit or credit brokerage. That would be a serious blow for the group, which makes about 45 per cent of its sales under credit arrangements.
The complaints included giving misleading price indications and dishonestly supplying second-hand or ex-display goods, telling customers they could not cancel agreements when it was within their rights to do so and altering details on agreements without consumers' consent after they had been signed.
Other wrong-doings were using advertisements which were deliberately misleading about the goods available, not offering refunds where consumers had a right to them, and failing to carry out services agreed in repair contracts within a reasonable time or at all.
The director-general of fair trading, John Bridgeman, said: "Revoking a consumer credit licence is not something we do lightly, given the effect it is likely to have on a business. But no company should be in any doubt that its licence can be revoked if it is treating its customers unfairly or dishonestly."
The OFT said Colorvision had 10 convictions for trading offences such as false and misleading advertisements, while its subsidiaries had 10 similar convictions.
But Alan Tinger, its managing director said the company would be "vigorously" appealing against the OFT's decision.
In a statement the group said: "The adjudicating officer found that Colorvision had been convicted of 20, mainly advertising, offences in the space of 11 years. But in his detailed determination, the adjudicating officer accepted that the company had 'improved its business practices' in this area and had gone to great lengths 'to ensure that it kept its advertising within the law'."