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ASA rules against claims firm ad

Banned press ad was 'likely to mislead'

The Advertising Standards Authority (ASA) has banned a press ad for www.Loan-Free.co.uk which claimed that credit cards or loans taken out before April 2007 ‘could be completely unenforceable and will not need to be repaid’. 

The ASA found that www.Loan-Free.co.uk’s parent company, Debt Free UK Ltd, was unable to substantiate claims made in the advert and that the wording of the ad ‘was likely to mislead readers to the likelihood of their debts being written off’.  

The firm was also accused of failing to make its charges clear to prospective clients. In its adjudication the ASA stated that ‘We noted that, whilst consumers might be likely to expect to incur some costs in the event that they had a case for writing off one or more credit agreements, the ad did not make it clear that Debt Free charged fees to conduct initial reviews of credit agreements, and that, whilst these were refunded in the event the solicitors could not assist further, a £50 charge per agreement was still applied.’ 

Ministry of Justice guidance

Earlier this year the Ministry of Justice issued new guidance for claims management firms, highlighting misleading statements in adverts. In a statement the Justice Minister, Bridget Prentice, said, ‘Vulnerable people facing debt problems need help and support. We have produced this guidance to protect innocent customers from being misled by businesses advertising easy and quick arrangements for outstanding loan, credit card and other similar debts to be written off and compensation to be obtained.’

For further details see http://www.claimsregulation.gov.uk

Which? advice

On the wider issue of debt and debt advice, Which? spokesman Martyn Saville said, ‘Rather than seeking to write off their debts by responding to unsubstantiated advertising claims, individuals struggling with debts should seek independent, free debt advice directly from organisations such as the Consumer Credit Counselling Service (0800 138 1111), National Debtline (0808 808 4000) or their local Citizens Advice Bureau (number in the phone book).
Consumers should avoid commercial debt management companies and loan write-off companies – why pay for a service that is available better and free elsewhere?’

Which? has also reported another claims handling company to the Ministry of Justice for making exaggerated claims with regard to credit card agreements. Watch out for the story in Consumer News in August’s edition of Which? magazine.  

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