OFT Closes Look-Alike Debt Advice Websites

Citizens Advice Bureau Welcomes Closure of Debt Management Websites

Mar 7, 2009

In a climate of increasing personal debt levels more people than ever have been turning to debt advice or debt consolidation companies for help.

A quick Internet search using the keywords "debt consolidation" or "debt advice" will reveal a large number of companies offering help in this area. The dilemma for many people is which one to choose and of course it’s human nature to pick one with a familiar sounding name.

Therein lies the problem, a number of companies have established websites with names very similar to a number of free, trusted advice websites and impartial government information sites. They are legitimate in that they have a consumer credit licence as UK law requires, and work within with the relevant regulatory guidelines but they can be very confusing for consumers.

Citizens Advice Bureau

The UK Citizens Advice Bureau has said: “These websites have been misleading the public by marketing themselves on the back of extremely well known and well trusted charities and government information services. Instead of free impartial debt advice consumers could find themselves charged fees, sold products or offered paid for debt management plans.”

The good news for those looking for free and impartial debt advice is that the Office of Fair Trading (OFT), the UK’s consumer and competition authority, has taken steps to close down 27 of the potentially misleading websites, which are run by 13 different companies.

Free Debt Advice

Ray Watson, Director of Credit at the OFT, said: “ We believe they are misleading consumers by holding themselves out as free advice agencies such as Citizens Advice, the Consumer Credit Counselling Service, the Money Advice Trust and Advice UK.” Although this is a UK story it is unlikely that this practice is confined to these shores. It’s a warning perhaps to people around the world who are seeking free and impartial debt advice.

The websites to be closed were not named by the OFT, although a careful look online reveals a number of the most obvious offenders.

Debt Management Plan

For example those completing a debt management plan with them might expect to see around 17.5% of their monthly payments being taken for ‘administration costs’. That is 17.5 % less per month going to creditors to repay debts which inevitably adds to the length of time it takes to repay the outstanding debt. It is also the case that the many reputable debt management companies out there will also charge similar amounts for their service.

Free and Impartial Debt Advice

Of course as the 27 websites close others may take their place. It makes it essential then that anybody seeking free and impartial advice from an online source should thoroughly research the company before accepting help from them. They should ask the question: "Is this advice free or not?"

One way to do this is to click on the websites' “About Us” section to find out who is behind the company and who finances the company. Although it must be said that some sites keep this information well hidden, they all must be listed on the OFTs Consumer Credit Register, which is available online. The UK government financed Consumer Direct website also offers some helpful advice.

This information is obtained from the reputable sources listed below but is not offered as financial advice.

The copyright of the article OFT Closes Look-Alike Debt Advice Websites in Personal Debt Management is owned by Neil Gunn. Permission to republish OFT Closes Look-Alike Debt Advice Websites in print or online must be granted by the author in writing.