The channel, run by Auctionworld Ltd, sells high-end goods such as plasma TVs and diamonds. According to Ofcom, it was the subject of an unprecedented number of complaints from consumers over the quality of its customer service and possible misleading and inaccurate guide prices.
The watchdog investigated and found that Auctionworld had committed several serious breaches of the Advertising Code, including a failure to handle enquiries properly, or to deliver goods within the advertised time.
Inadequate explanations from senior management as to the reasons for these failings were, said Ofcom, "symptomatic of a management failure to institute proper systems and control, or any proper structure for customer relations. The result has been a large number of very angry customers, demonstrable harm to consumers, and prejudice to the teleshopping sector as a whole."
Despite explanations from the company, Ofcom "considered Auctionworld's standard of customer service to be severely inadequate, whether viewed individually or in comparison with its competitors."
The regulator also found that the company had issued inaccurate guide prices for both loose diamonds and diamond jewellery, with the guide prices sometimes being set far in excess of those found in the high street. On one occasion, said Ofcom, a customer had been given a guide price of £14,000 for an item of jewellery that when later valued turned out to be worth only £500.
Such valuations, set by suppliers to the company, were "totally unacceptable," said the regulator.
Ofcom has therefore given notice to Auctionworld that it intends to revoke its licence, and will do so unless the company complies with eight steps set out to remedy the breaches within six months. These include a requirement that Auctionworld does not set guide prices for loose diamonds or diamond jewellery unless an independent expert approved by the regulator has verified the price.
Ofcom has also fined Auctionworld £450,000 and instructed the company to broadcast a statement on its channel detailing Ofcom's findings three times a day for three weeks.
"The decision to institute revocation of Auctionworld's broadcasting licence is not taken lightly given Auctionworld employs almost 300 people (employees and subcontractors) and its service has been broadcast for 3 years," said Ofcom in its ruling. "It has only been considered after all other avenues have been exhausted and is a final resort, taken only when Ofcom is satisfied that revocation is justified on the basis of detailed and robust evidence."