The Office of Fair trading (OFT) is warning consumers not to be taken in by businesses claiming to help them become debt free by 'buying' or 'selling on' their debts.
This is not to be confused with unenforceable credit card and loan agreements which is totally different.
The warning follows a significant increase in the number of adverts on the internet and in newspapers from debt and claims management companies that misleadingly state they can take over liability for debts or write off debts by purchasing consumers' credit agreements.
In fact the law does not allow the sale of debt without the lender's permission and so businesses that suggest otherwise are making clearly misleading claims. Brokers who introduce clients to debt and claims management companies that say that they can 'buy' and 'sell on' consumer debts are also misleading consumers.
Consumers need to be aware that if they 'sell' their debts to one of these businesses, either directly or through a broker, they will still be liable for their original repayment obligations as well as losing the money they paid for this false service.
Consumers will also still be subject to any debt collection activity and negative credit scoring associated with the original debt.
The principal regulator for claims management companies is the Ministry of Justice. Those businesses that operate in the credit/debt sector also need to be licensed by the OFT. Some of the firms offering these services do not have consumer credit licences and the OFT is working in partnership with local trading standards services to prosecute them for unlicensed trading. Formal licensing enforcement action has already been initiated against licensed companies whose advertising or websites are making these misleading claims.
Consumers can check whether a business holds an appropriate consumer credit licence by searching the OFT's online consumer credit register.
oft.gov.uk
Debtwizard comment
It really annoys me to hear about these scams as these firms and individuals are preying on the desperate, vulnerable and often gullible consumer.
You cannot just simply sell on your debt and its liabilities. Anyone that feels they have a debt problem should seek advice from our list of helpful organisations or ask Debtwizard.com for a review of their finances.
This is not to be confused with unenforceable credit card and loan agreements which is totally different.
