Debt Profiteers come under pressure

March 10th, 2009

It is a shameful fact that whenever there are people in trouble or distress there will be others willing to profit from that distress. As such, it is particularly gratifying to hear that the Office of Fair Trading (OFT) is taking action against more than a dozen businesses which set up bogus repayment plans for people struggling with debt.

The watchdog says these debt management companies are deliberately misleading consumers by using website addresses similar to non-profit organisations. In actual fact, they are commercial enterprises.

The regulator says it believes a substantial number of consumers could have been deliberately misled. It has written to 13 companies who run 27 websites and has told them to shut them down.

The regulator says if the firms do not comply, they could lose their consumer credit licences. If the companies are not licensed, as seems likely, they could face prosecution.

The director of credit at the OFT said in a statement that, “there is a danger that with increasing unemployment, more people could run into financial difficulty and we are concerned that at the point where they are most vulnerable and seeking advice, they are being deliberately misled by people who are trying to gain a commercial advantage from them.”

The belief is that these companies are misleading consumers by holding themselves out as free advice agencies such as Citizens Advice, the Consumer Credit Counselling Service, the Money Advice Trust and Advice UK.

The OFT have not named the 13 companies involved, but Citizens Advice has been worried for some time about debt management companies which use words that could give the impression they are connected with government organisations or the CAB.

The Citizens Advice Bureau has said that they are very pleased action is being taken to stop unscrupulous businesses profiteering from their activities.

As the UK debt mountain has grown, the number of businesses offering advice and solutions has increased rapidly.

There are now countless debt management companies advertising online which are perfectly legal as long as they have a consumer credit licence and adhere to the OFT’s debt management guidance. They are also well within their rights to charge for their services.

But charities like the Money Advice Trust say this should be made clear. It is warning consumers to do their homework before signing up for a debt management plan.

The Money Advice Trust says that ‘if people aren’t sure if the advice really is free and independent, they should look carefully at the website. An easy way is to look at the ‘About Us’ section to find out who funds it and who is behind it.’

The OFT is urging consumers to be vigilant when searching for debt advice online. If people have concerns, they can check out companies and websites on the OFT’s consumer credit register.

This entry was posted on Tuesday, March 10th, 2009 at 11:26 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Debt Profiteers come under pressure

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