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Credit firms 'breaking rules with internet ads'

Pa
Monday 12 May 2008 10:07 BST
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Some credit companies are breaking advertising rules when they use social networking sites to tout for business, a charity has warned.

Credit Action, a national charity which aims to educate people about money, has written to the Office of Fair Trading about the adverts.

It has also set up a Facebook group named Debt can seriously cramp your style! to encourage the website's users to report adverts which do not meet industry rules.

A spokesman for the charity said: "Social networking sites, Facebook in particular, have become hugely popular in recent times, and not just with users.

"Lots of credit companies, especially payday and logbook loans companies are using the medium to advertise their products.

"It is such a popular method because they can target young people with whom the site is so popular.

"Research by Credit Action has shown that much of this advertising breaks the rules on advertising credit and so we are campaigning to encourage Facebook users to report ads which break the rules."

The national charity, which is based in London, said some adverts do not give an annual percentage rate (APR) for interest on the loan.

The APR must be included if an advert offers incentives like a payment-free period or a free gift. The rate must also be given in the advert if it suggests it offers a better rate of credit than other companies or it implies its loans are suitable for people with a poor credit history.

A guide to spotting adverts which break the rules is on the charity's website www.creditaction.org.uk

Malcolm Hurlston, chairman of Credit Action's board of trustees, told the BBC he has written to the Office of Fair Trading to ask for an investigation into adverts on social networking sites.

"Advertising rules are there for a reason," he said. "They are there to make it clear to people from the beginning what they are letting themselves in for."

He said some adverts do include the APR but only if you look in the frequently asked questions section, not prominently on the advert as the rules require.

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