Pressure grows to deal with online debt advice scammers as ASA upholds complaints

StepChange Debt Charity welcomes the decision by the Advertising Standards Authority to uphold complaints made by the Money and Pensions Service, with the support of the charity debt advice sector, about misleading advertising undertaken by two debt lead generators, published today.

One of these advertisers, National Direct Service trading as Step Debt Support, was specifically upheld to have misled consumers by purporting to be associated with StepChange Debt Charity, among other misleading statements.

The decisions to uphold the complaints in full confirm what StepChange has been highlighting for several years: that misleading advertising by lead generators is putting people at risk of being pushed towards potentially inappropriate debt solutions. In the wake of Covid-19, as more people are experiencing financial pressure, it is more important than ever to ensure that consumers are not misled about debt advice and solutions.

StepChange says today’s ASA decisions represent just the tip of the iceberg in terms of how people are misled. The charity has identified at least ten websites associated with the two advertisers on which the ASA has ruled, and there have been numerous other examples of charity impersonation not associated with these particular advertisers. In the first few weeks of 2021 alone, the charity has already reported eight cases of trademark infringement to internet search engines, and two cases of advertisers in breach of their advertising policies.

The charity has also received many first-hand reports from people who have been contacted by telephone or email from organisations claiming to be StepChange, or claiming to have had people’s details passed on to them by StepChange, which have been gained through misleading advertising on social media platforms and internet search engines. Sometimes, people do not realise that the organisation they have been dealing with is not the charity until they contact StepChange with a query.

The ASA decisions helpfully give a clear signal to other advertisers about misleading practices that are widespread but unacceptable. However, they are sadly unable to solve the underlying drivers that cause such misleading advertising to exist in the first place. While the ASA can tackle misleading advertising when it occurs, action also needs to be taken by the regulators of the financial and insolvency sectors to deal with the problems at source.

The problems are particularly acute around Individual Voluntary Arrangements (IVAs), as a result of the commercial fee incentives that exist in this market, which can be poorly aligned with consumer interests. While IVAs can be a very good solution for some people (and StepChange recommends them to some clients), they can be high risk and expensive if they fail, so it is imperative that they are not mis-sold.

StepChange believes that regulatory reform is needed to deal with these misleading practices. First, there is a need to bring lead generators for debt solutions inside the scope of FCA regulation. In addition, there is a need to improve the IVA market to improve the alignment between commercial incentives and consumer interests.

While StepChange recognises that the Insolvency Service and the Recognised Professional Bodies for Insolvency Practitioners are both seeking to make improvements, the fact that these problems have become so entrenched for so long suggests a need for firmer action.

Richard Lane, Director of External Affairs at StepChange Debt Charity, said: “People who need help with their debts need advice, not a hard sell. It’s clear that there’s a need for better protection to prevent people being hoodwinked into thinking they are dealing with a debt advice charity, when in fact they are simply being lured to provide their personal details to lead generators working on behalf of commercial IVA factories.

“The ASA has confirmed what we already knew: there is a lot of misleading advertising out there, including from outfits impersonating legitimate debt advice organisations. Along with the FCA’s warnings about clone firms impersonating debt advice charities like us, this confirmation is helpful, but it cannot be the end of the story.

“What matters now is that there is more decisive action taken by regulators to tighten up the oversight of how firms who provide IVAs acquire their customers, so that people get better advice about all their possible options for dealing with debt before making a premature decision, especially one that may be based on unethical practices or false pretences.”