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Office of Fair Trading
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OFT warns debt management businesses over cold calling
The OFT has told six debt management businesses and four cold-calling companies to stop using unsolicited and misleading calls to advertise their services or face formal enforcement action.
The action has been taken after the OFT and the Information Commissioner's Office received complaints from consumers that they had been cold-called either without prior consent or despite registering with the Telephone Preference Service (TPS). The OFT also found that most of the information given to consumers was potentially misleading or inaccurate, or missed out vital facts about the purpose of the call and the identity of the caller, for example:
* some calls misled consumers into believing that they were one of the 'few chosen individuals' contacted as part of a government scheme to help wipe out consumer debt;
* some recipients were transferred to a commercial debt management business on the pretext of talking to a not-for-profit debt adviser; and
* once referred to a different business, consumers were often not told that there was a fee payable for both the initial advice and the debt solutions offered.
The businesses warned today may also have broken the law by pestering individuals who had not given their consent to be called and/or who had registered to the TPS.
Nigel Cates, Deputy Director of Consumer Credit, said:
'Taking advantage of people who are suffering distress through debt problems is completely unacceptable and this practice of illegal or misleading cold-calling for debt management services must cease immediately. The current economic climate means that it is vitally important vulnerable consumers are protected. We will not hesitate to take action against any business that uses misleading calls to advertise debt management services.'
Mick Gorrill, Assistant Information Commissioner at the ICO, said:
'Under the Privacy and Electronic Communications Regulations (PECR), organisations should not make automated marketing calls without the prior consent of the subscriber. The ICO has received a large number of complaints about automated marketing calls promoting debt management schemes. We have worked closely with the OFT on this issue and welcome the action taken.'
NOTES
1. The OFT is not able to name the 10 businesses warned about unsolicited cold calling because of disclosure provisions under Part 9 of the Enterprise Act 2002.
2. This action stemmed from evidence received from complainants and submitted to both the OFT and the Information Commissioner's Office (ICO) that these companies were engaging in practices, contrary to the Privacy and Electronic Communications (EC Directive) regulations 2003 (PECR) and the OFT's debt management guidance.
3. The OFT has worked in partnership with the ICO on this issue. It supplemented OFT complaint information by providing vital evidence regarding a number of licensed companies.
4. The OFT published Debt Management Guidance for licensees in December 2001, updated in September 2008. This outlines minimum standards expected of licence holders providing debt management services. It states that advertisements and other promotional material must not mislead, either expressly or by implication or omission. Marketing includes texts and faxes as well as telephone, and the use of such mediums for marketing purposes will also need to comply with the Guidance. Whilst the use of cold calling by telephone as a means of marketing is not prohibited by the Guidance it is implicit that such business practices must be transparent and must not mislead consumers either expressly, by implication or omission.
5. Whilst the use of cold calling by telephone as a means of marketing is not prohibited by law there is legislation in place which regulates how it should be done. This provides that a trader must not transmit, or instigate the transmission of, communications comprising recorded matter for direct marketing purposes by means of an automated calling system unless prior consent is provided. It also says that a trader must not use or instigate the use of, a public electronic communications service for the purposes of making unsolicited calls for direct marketing purposes where the subscriber has notified the trader that they do not wish to receive such unsolicited calls, or where the number of the line in question has been registered with the Telephone Preference Service (TPS).
6. Consumers who are concerned about automated cold calls should contact the ICO in the first instance. For further information, see http://www.ico.gov.uk.
7. Consumers wishing to avoid receiving unsolicited and unwanted calls may wish to contact the TPS. The TPS is a free service administered by the ICO. It allows consumers to register to opt out of receiving unsolicited sales and marketing telephone calls to their home or mobile telephone numbers. Further details can be found at http://www.tpsonline.org.uk/tps
8. For advice on dealing with debt, see Directgov at http://www.direct.gov.uk/en/campaigns/RealHelpNow/index.htm or visit your local Citizens Advice bureau.
PUBLIC enquiries: 0845 7224499
enquiries@oft.gov.uk
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