The OFT has told 11 financial management businesses with 'look alike' websites posing as governmental or charity advice sites to close them down immediately, and is warning consumers to take care when searching for debt advice online.

The sites use similar or slightly amended domain names which imply that they are affiliated to organisations such as Citizens Advice, Advice UK, National Debtline or the Consumer Credit Counselling Service. Some of the website names also imply that they have some official status or sanction from the Government.

Parts of the content of these 'look alike' websites are often copied from legitimate sites offering free advice, despite the companies involved charging fees.

Consumers are advised to take particular care when searching for terms such as 'citizens advice' or 'government advice' to ensure that they are dealing with a genuine charity-based help and advice service. Consumers should also be careful not to deal with traders who are unlicensed.

Most businesses that offer credit or lend money, including those that offer advice on debt, must be licensed by the OFT and they must notify the OFT of all the trading names they intend to use. Trading names should not be misleading or otherwise undesirable. Failure to comply with an OFT warning can result in a business being subject to licensing action or criminal prosecution for unlicensed trading.

The OFT do not provide advice or deal with consumers directly.

Source: www.oft.gov.uk

DebtWizard Comment

Here, the Office of Fair Trading (OFT) had received complaints that consumers were being mislead by websites set up to appear as genuine debt advice charities. The problem being that once a consumer had made contact with the misleading website the firm gained a commercial advantage as the consumer's details could then be passed on to other agencies providing loan and Individual Voluntary Arrangement (IVA) services.

Unfortunately the sites (and the firms that owned these sites) that have been told to shut down these sites cannot be named because of disclosure restrictions under Part 9 of the Enterprise Act 2002.

I am pleased that the OFT has come down hard on these 11 firms as its action should remove an undesirable element from the debt advice industry which over the years has been making strenuous efforts to improve its level and quality of debt advice services.

There is of course nothing wrong with a firm making a charge for its professional services provided the consumer is aware. A firm that charges a fee often delivers an enhanced level of service compared to that of a free debt advice charity.

In the majority of Individual Voluntary Arrangements, IVAs, the fees are actually paid by the creditors and not the consumer. The issue here is that the website operaters were acting as lead agencies with a view to selling on the lead, i.e. the details of the consumer, to another company with a view to setting up debt management plans, IVAs or to selling a loan.

As they do with health care and education services, consumers should have a choice. If they want to pay for debt advice and bypass free debt advice charities, then they should have the opportunity to do so. There is nothing wrong or illegal about paying for debt advice but they should be aware at the outset with whom they are dealing.

More can be found here on the pros and cons of using a fee charging or a non fee charging debt management company