Over the past couple of years we have all become used to seeing a variety of advertisement from debt companies that offer to take control of our finances and debts, clear our debts within a relatively short space of time, and leave us debt free with no hassles or problems from creditors.

With the financial climate in its current state, and with households struggling to keep up with debt repayments, an increasing number of people have been sitting up and taking notice of these advertisements.

However, consumers are warned to be careful about the claims made in these advertisements, as government officials have stated that many of the claims made are misleading. In fact, the government has gone as far as to warn debt management firms that if they continue to run advertisements that contain misleading information they could face enforcement action.

The Justice Minister, Bridget Prentice, is determined to take action to put a stop to these misleading claims, as many consumers could end up going into the debt management process with no real idea of what the outcome will be.

A number of claims made be some debt management advertisements have been highlighted as being misleading by the Ministry of Justice. Amongst the misleading claims that were identified by government officials were claims of being able to get credit card debts written off within six weeks, claims of 100 percent success rates, claims of guaranteed positive outcomes, and claims that 80 percent of credit agreements were not enforceable. On the other hand, the government said that vital information that was needed by consumers was being left out of the advertisements which constituted a breach in regulations.

The Justice Minister stated: ‘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. We would urge anyone who is considering using a business offering such services to think carefully and seek independent advice before making any final decisions.’

The Office of Fair Trading has also made its views clear when it comes to misleading advertisements and claims from debt management companies with regards to what they can do for consumers.

One official from the OFT said: ‘The OFT will not hesitate to take enforcement action against licensed claims management businesses who engage in unfair business practices by deliberately misleading vulnerable consumers about the services they offer. Businesses should also be aware that if they offer debt counselling or debt adjusting services without holding an appropriate licence, they will be committing a criminal offence and risk prosecution, and that any agreements they enter into with consumers whilst unlicensed may be unenforceable.’

Many consumers who are worried about debt may find that the most effective option is to go through an agency that does not charge fees for assistance, and is more likely to offer objective advice that will help the consumer over the long term, such as the Citizen’s Advice Bureau.

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