Credit companies 'flouting ad rules'

Last Modified: 12 May 2008
Source: ITN

Some credit companies are breaking the rules when they advertise on social networking sites, a charity has warned.

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

The charity has 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."

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

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