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Beware of misleading debt advice, charities warn

Paloma Kubiak
Written By:
Paloma Kubiak

Debt charities have urged those in arrears who are seeking online help with financial problems to be alert to deceptive advice.

People are urged to be cautious when looking on search engines and social media for help with problem debt, as StepChange, Citizens Advice and Money Advice Trust warn they can be rife with misleading advertising.

Online scammers have also been claiming to offer consumers free advice and solutions to manage and combat financial problems.

And the charities revealed they’ve also faced issues with impersonation, as ads seek to mimic their branding to dupe people into thinking they’re dealing with a debt advice charity.

It comes as the charities report spiralling demand for debt advice, with an increasing number of people who are  suffering financially as cost burdens mount.

In the first half of this year StepChange has witnessed a 17% year-on year rise in client volumes.

Adverts should be carefully considered

Richard Lane, director of external affairs at StepChange Debt Charity, said: “Ads offering to ‘write-off up to 90% of your debt’ or ads specifically targeting certain demographics such as ‘help for women in debt’ are common, but aren’t always what they seem.

“They tend to be run by lead generators, who collect individual’s personal details in order to sell them onto a commercial firm for a fee.

“This can lead to someone being sold a debt solution that might not be appropriate for them, and may worsen their finances in the long run.”

Lane added that if someone struggling with debt does go through a lead generator, they may be pushed toward an Individual Voluntary Arrangement (IVA) or a Protected Trust Deed (PTD) in Scotland, a type of debt solution that comes with fees.

He said IVAs and PTDs can be suitable in certain circumstances, but if mis-sold and they fail, it can be harmful for someone’s finances.

Just last month the Financial Conduct Authority said it will ban debt advice referral fees where clients pay for often unsuitable debt options.

“That’s why it’s essential that people struggling with problem debt receive free and impartial debt advice from a reputable organisation before taking up any debt solution,” he added.

‘Bombarded with quick-fix debt solutions’

Meanwhile Matthew Upton, acting executive director of policy and advocacy at Citizens Advice said people seeking debt help should be able to trust the advice they get. “Instead, they are being bombarded with adverts promising quick-fix solutions and huge debt write-offs.

“The reality is that these tactics are deceptive and lure people into fee-paying debt solutions like IVAs which they so often can’t afford.

“When you’re in debt, receiving the right advice is vital, because getting it wrong can make things much worse.”

Jane Tully, the director of external affairs and partnerships at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “Too often we see examples of misleading adverts targeting people in financial difficulty, in some cases posing as free debt advice providers.

“The firms behind these often push people towards debt options that may not be suitable for their circumstances.”