May 9^th 2008

Money charity targets dodgy credit ads on social networking sites                              

 

Lenders offering ‘sub-prime’ credit cards, payday and logbook loans are cynically targeting the young through extensive and illegal advertising on Facebook according to an investigation by Credit Action, the national money education charity.

 

With credit becoming less available from traditional high street sources, social networking sites such as Facebook, hugely popular among young people[1], are seen as fertile marketing ground for expensive credit.

 

The research shows that many of these ads contravene credit advertising regulations. As a result Malcolm Hurlston, chairman of Credit Action has written to the chairman of the Office of Fair Trading. Credit Action is galvanising other members of Facebook to launch an avalanche of complaints in a co-ordinated campaign.

 

Commenting on the research, Malcolm Hurlston said:

 

“Many of the ads for payday loans are from small US-owned firms branching out to a new market, and who may have neglected to take note that UK credit advertising is more heavily regulated than in the US.  Nonetheless there are also illegal ads from a number of big-name companies, active in the UK for many years, suggesting that in the rush to exploit the potential of this new medium some companies and their agencies have let their traditionally rigorous compliance standards slip.

 

“These are the day-to-day realities of the credit crunch – creditors thinking up new ways of offering the young and the less well-off the credit they need, or think they need, in new forms such as against their car (logbook loans) or against their salary (payday loans).  We must be sure that such creative products concur with existing rules and regulations and offer customers the full protection of the law”.

 

Currently many of the Facebook ads do not even display the name of the company, let alone the APR, according to Chris Tapp, Director of Credit Action.

 

 He said: “The widespread flouting of the credit advertising regulations will no doubt fuel the debate over the vulnerability of consumers on social networks to underhand marketing practices. However, the interactive nature of these networks - for example the facility allowing individuals to report any ad on Facebook - also offers an extremely simple and direct method for consumers themselves to engage with the problem in a way not possible with other forms of advertising. We encourage as many as possible to do so to send a clear message on this issue that sharp practice won’t be tolerated.”

 

Credit Action’s social networking site is the Facebook group, ‘Debt can seriously cramp your style’.

 

See attached guide on how to spot an illegal Facebook ad and how to report it to Facebook.

-ends-

 

Contact: Chris Tapp (Credit Action, Director)

Email: c.tapp@creditaction.org.uk

Mobile: 07813 442 569

 

Alternative contact: Joel Lewis (Press Officer)

Email: jlewis@hurlstons.com

Mobile: 07960 920 666

 

Notes for editors:

 

1.         Credit Action is a national money education charity which aims to encourage better thinking about money and to help people stay in control of their finances. (www.creditaction.org.uk)