Misleading debt management firm rapped by OFT

14/07/2010

The OFT has imposed requirements on a debt management company, Carefree Group Ltd, in respect of its advertising of debt management services.

The requirements also apply to an associated licensee, trading as Carefree Debt Solutions, and cover all types of advertising, including websites.

As a result of the requirements the OFT has imposed, Carefree Group Ltd’s advertising and promotional materials must not claim or imply that the service is free if a fee is payable at any stage and include details of all fees prominently in the advertisement.

The firm has also been banned from claiming or implying that savings will be made by rescheduling debts, without making it equally clear that this will lead to an increase in the sum to be repaid and the length of the repayment period.

Carefree has also come under fire for stating that it could guarantee a favourable outcome when negotiating with creditors.

The OFT also ruled that it could not claim that the debtor will be debt free in a certain period of time without explaining the adverse consequences on a consumer’s credit rating, and that Carefree Group must explain all of the advantages and disadvantages of each debt solution when providing advice to the consumer.

The West Yorkshire-based company, whose website is currently under construction, does not appear to be too notorious on consumer forums, although one consumer called Linda posting on iva.co.uk branded the group “rude”, writing: "Received a phone call from these people when I got home from work, I think they have been mentioned before. It was very unprofessional and I was also very annoyed as he said, ‘Is that Linda?’, when I replied he said he was from the Carefree Group and he was calling about my IVA.

“I put the phone down on him but felt very angry as I could have been anybody on the phone. How about data protection?”
Ray Watson, Director of the OFT’s Consumer Credit Group said: “The OFT will not hesitate to take action against any debt management business which uses material that misleads consumers. The requirements imposed on Carefree Group Ltd will ensure that the company’s advertising will not in future contain claims that are inaccurate. We will monitor these requirements closely and take further action if necessary.”

Original Article: Debt Management Today