The Office of Fair Trading (OFT) is taking action against over a dozen of debt management businesses online repayment plans that it thinks are deliberately misleading consumers by using web addresses similar to non-profit organisations.
The OFT believes many consumers have been mislead to believing their advice comes from non-profit making sites, and has therefore written to 13 companies who run between them 27 websites, telling them to shut them down.
If the businesses do not comply to the letter, the OFT says they will lost their consumer credit licences, and could thereafter face prosecution.
Ray Watson, director of credit at the OFT said: “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.
“We believe they 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.”
OFT Taking Action
The regulator has not named any names, but Citizens Advice has admitted that it has been worried that something along these lines would happen for a while.
“We are very pleased the OFT is now taking action,” were the words of the director of policy at Citizens Advice, Teresa Perchard.
“For several years now, we have been getting reports from people approaching the CAB who have been worried about sites and telephone calls they have had from people operating advice sites who have names very similar to ours. The action should mean that we see an end to that,” she continued.
As debt among the general population grows, so will the number of businesses that offer advice and solutions.
Don’t Be So Trusting, Do Your Research First
Even now, there are numerous legal debt management companies advertising online who have consumer credit licences and stick by the OFTs guidance. Many of these companies do charge for their advice, which is within their rights.
However, the Money Advice Trust has said that it should be made clear which companies charge for their advice, and that consumers should be careful and do some research before enlisting help.
“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,” advises Money Advice Trust’s Joanna Elson.
What Do You Think?
Have you been caught out by one of these sites? Do you have any advice on how to tell a good debt management site from a bad one? Leave your comments here.