OFFICE OF FAIR
TRADING News Release (26/09) issued by COI News Distribution
Service. 7 March 2009
The OFT has told
11 financial management businesses with 'look alike'
websites posing as official or charity advice sites to close them
down immediately, and is warning consumers to take care when
searching for debt advice online.
The sites use similar or slightly amended domain names which
imply that they are affiliated to organisations such as Citizens
Advice, Advice UK, National Debtline or the Consumer Credit
Counselling Service. Some of the website names also imply that
they have some official status or sanction from the Government.
Parts of the content of these 'look alike' websites are
often copied from legitimate sites offering free advice, despite
the companies involved charging fees.
The OFT has told the companies to stop using the trading names
immediately and for those companies who were trading without a
licence to stop trading completely or face prosecution. The OFT is
also working closely with internet service providers to ensure
that the websites are taken down promptly.
The action followed complaints from a number of debt advice
charities including Citizens Advice.
Consumers are advised to take particular care when searching for
terms such as 'citizens advice' or 'government
advice' to ensure that they are dealing with a genuine
charity-based help and advice service. Consumers should also be
careful not to deal with traders who are unlicensed.
Most
businesses that offer credit or lend money, including those that
offer advice on debt, must be licensed by the OFT and they must
notify the OFT of all the trading names they intend to use.
Trading names should not be misleading or otherwise undesirable.
Failure to comply with an OFT warning can result in a business
being subject to licensing action or criminal prosecution for
unlicensed trading.
Ray Watson, OFT Director for Consumer Credit said:
'The OFT will take action against businesses that use
'look alike' websites to mislead consumers into
believing they are dealing with established charitable and
not-for-profit organisations.
'Consumers are also reminded that they should not deal with
any company that does not have a consumer credit licence. These
unlicensed businesses are unregulated and consumers may have no
means of redress if things go wrong'.
Consumers can check whether a business holds an appropriate
consumer credit licence by searching the OFT consumer credit
register at http://www.oft.gov.uk/consumercreditregister.
NOTES
1. The Consumer Credit Act 1974 requires most businesses that
offer goods or services on credit or for hire, lend money to
consumers, or offer debt counselling or debt adjusting services,
to be licensed by the OFT. For more information go to:http://www.oft.gov.uk/advice_and_resources/resource_base/credit-licence/applying
2. It is a criminal offence to carry out any activity that
requires a consumer credit licence before a licence has been
issued. If a trader has a licence, it is an offence to carry out
any licensable activities that are not covered by that licence or
engage in licensable activities using a trading name that does not
appear on the licence.
3. Consumer credit licence holders are required to notify the OFT
of all names that they intend to trade under. It is an offence
for a licensee to carry out business under a name not specified on
the licence. The OFT will not issue a trading name for a licence
unless it is satisfied that the name or names are not misleading
or otherwise undesirable.
4. The OFT published guidance for debt management companies in
2001 which applies to all those providing financial management
services including IVAs, personal bankruptcy and commercial credit
repair. It sets out minimum standards of behaviour expected of
licence holders engaging in the provision of debt management
services, which seek to re-schedule customers' repayment of
debt and charge for doing so. A key principle of the Guidance is
the requirement to act in the best interests of the consumer. The
Guidance also states that advertisements and other promotional
material must be accurate and clear and must not mislead, either
expressly or by implication or omission.
5. The OFT is not able to name the 11 companies warned about
misleading websites because of disclosure restrictions under Part
9 of the Enterprise Act 2002.
6. Customers of unlicensed traders are not covered by the
alternative dispute resolution scheme operated by the Financial
Ombudsman Service which only extends to those businesses who hold
a consumer credit licence.
7. Some genuine websites of not-for-profit debt advice
organisations include:
* Citizens Advice Bureaux (http://www.citizensadvice.org.uk)
*
Advice UK (http://www.adviceuk.org.uk)
*
National Debtline (http://www.nationaldebtline.co.uk)
*
Consumer Credit Counselling Service (http://www.cccs.co.uk)
*
Parents, Pennies and Pounds (http://www.moneystuff.co.uk)
http://www.oft.gov.uk
PUBLIC enquiries: 0845 7224499 enquiries@oft.gov.uk
OFT
reports and consumer information leaflets are available free
from:
OFT, PO Box 366, Hayes UB3 1XB 0870 6060321 oft@eclogistics.co.uk