Debt firm warned over misleading on website

A debt advice firm that is operating in the UK has been issued with a stark warning from the UK watchdog, the Office of Fair Trading, which has told the firm to stop using misleading content and false statements in its marketing and advertising materials. The warning has been issued to Money Advice Direct Limited, which has been trading as UK Insolvency Helpline.

The firm focuses on matching those that are struggling with their debts with debt management companies who may be able to offer solutions. However, the firm is said to have been using advertising materials and statements that make it appear as though it offers its services for free, which is not the case. The OFT said that the statements and content being used in the advertising can easily lead consumers to believe that this is a charity that is aimed at helping those with debt problems rather than a profit making company.

As the company operates under the name of UK Insolvency Helpline it has also been told to change its name by the OFT. The watchdog said that this name makes the company sound too officials and makes it sound like it could be a government run program designed to help those struggling with debt when this is not the case. However, many consumers could get confused and assume that this is the case.

One debt industry official said: “In the personal debt industry we are working with people who are often in extremely vulnerable situations. There is a responsibility to ensure that we give the right advice and that people understand exactly what is being suggested, who they will be dealing with and the associated costs involved.”

An OFT official added: “It is important that consumers seeking help for debt problems know who they are dealing with and whether the company is providing an actual service or is simply a lead generator.”

Tags: United Kingdom, Financial Services, stark warning, Business and Economy, Credit Services, lead generator

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Consumers caught out by “misleading” small print

The Office of Fair Trading (OFT) has said consumers should be able to expect “no unwelcome surprises” in the small print of contracts.

Some 20% of people experienced a problem with misleading contracts over the past year, accounting for 70% of the OFT’s enforcement cases.

The trade watchdog said problems arose when a term buried in the small print of a contract substantially altered the overall deal as understood by the consumer or complicated language made deals hard to understand.

An investigation by the OFT found that misleading contracts led to customers losing £3 billion over the past twelve months with telecoms and internet service providers causing the most problems. One fifth of all consumer problems are thought to be related to goods and services sold via contracts.

Mary Starks, the author of the report, said: “People should be able to concentrate on the main elements of the deal, not worry about small print traps.”

The OFT study found that only 23% of consumers read their contracts in full. The poll of 4,000 people found the over-55s experienced marginally fewer problems than the under-35s, suggesting that older consumers are more likely to scrutinise contracts they sign.

The OFT stopped short of naming any companies that may have flouted the law but said that, aside from the telecoms and internet sector, problems were found in contracts relating to mobile phones, home entertainment, home improvement, home deliveries, travel, and in-home services and repair.

The regulator also identified shortcomings in deals relating to football season tickets that did not guarantee seats, extended warranties that offer limited cover, complicated cancellation terms used by gyms and contracts with deferred charges.

Heather Clayton, a spokesperson for the OFT, said: “On the one hand, we all know that people don’t read the small print of contracts. On the other, small print is a necessary fact of life and consumer law isn’t there to protect the careless or the over-hasty.

“This report reconciles the need for small print with the real life behaviour of consumers and sets out the OFT’s expectation that consumers should be free to focus on the main elements of the deal, confident that there will be no unwelcome surprises in the small print.

“This report gives clear guidance to businesses and it will help them to assess whether their contracts need reviewing to make sure that their customers are treated properly. Transparent business practices build trust in markets, allow people to shop around to find the best deal for them, stimulating effective competition and strengthening innovation and growth.”

The OFT report said the point-size small print is written in does not deter consumers from reading the finer details of a contract but the quality of the paper it is written on does. The thinner the paper a contract is printed on, the less likely consumers are to read it in full.

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OFT warns debt management service over misleading claims

The Office of Fair Trading (OFT) has taken action against a company for making misleading claims in its advertising that suggested it was a debt charity.

The trade body told Money Advice Direct Limited, a debt management lead generation firm, that it was concerned about content in its marketing material and on its website that encouraged consumers to believe that it was a not-for profit-organisation offering debt management services.

Money Advice Direct Limited, which traded as The UK Insolvency Helpline, is a commercial business that passes the details of debtors on to paid-for debt management companies in return for a fee.

The OFT compelled the company not to imply that it is a publicly funded body or a debt charity and to make clear to potential customers that it does not “provide or administer debt solutions”. It must also not give the impression that its advice is impartial or independent and “ensure advertising of its debt management services is consistent with the standards set out in the OFT’s Debt Management Guidance.”

Ray Watson, the OFT’s director of consumer credit, said: “It is important that consumers seeking help for debt problems know who they are dealing with and whether the company is providing an actual service or is simply a lead generator.

“We would advise anyone in financial difficulty to seek free debt advice or check whether the company they are in touch with is a member of the Debt Management Standards Association, which has an OFT-accredited code.”

The regulator also wants the firm to change its trading name and intends to refuse its application to add the domain names “www.ivahelpline.co.uk” and “www.insolvencyhelpline.co.uk” to its license. It is thought that these names make the company sound to official.

Martyn Saville, Which? credit and debt expert, said: “A quick Google search for debt advice throws up a variety of sponsored links from commercial debt management companies and lead generators. I think it is unethical for fee-charging firms to promote themselves in this way. For company websites to compound the confusion in consumers’ minds is shameful and the OFT is to be congratulated on clamping down on these rogue firms.”

If the company fails to comply with the OFT’s ruling it could face a £50,000 fine and lose its consumer credit license.

Consumers struggling with debt problems can contact a number of free services that provide debt management solutions like Payplan and the Consumer Credit Counselling Service (CCCS). The OFT published its debt management compliance review in September of last year which revealed that it had warned 129 paid-for debt management firms that they must improve their standards.

Una Farrell of the CCCS said: “This is a very positive development. Dealing with unmanageable debt is incredibly stressful. Trying to work out where to seek help only adds to this stress, so it is important that those offering advice clearly state what they are providing.

“It is particularly important that consumers are not misled into believing a service is free when it is not, or that they are dealing with a charity when they are not.”

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